The holy quest to agree on the EU’s new fiscal rules

Good morning. Migration is back as Europe’s most consequential political battleground, a point made stark by Ursula von der Leyen’s decision to meet Italian prime minister Giorgia Meloni on the Italian island of Lampedusa yesterday, and the European commission president’s promise to both help Rome and demand other EU countries share the burden.

Today, I explain the ambitious crusade to agree a new EU fiscal rule book in the next two months, and our Balkans correspondent has the details of a most audacious crime.

Wing and a prayer

Spain’s economy minister referred to it as “The Santiago Way”, evoking the city’s famous pilgrimage in an exhortation to her EU colleagues to agree new rules governing the bloc’s budget rules before the end of the year.

For that, divine intervention may well be necessary.

Context: Reforming the Stability and Growth Pact, which governs national spending and borrowing, is supposed to better tailor the rules to individual countries’ economic circumstances. The rules, suspended during the Covid-19 pandemic, come back into force in 2024, reformed or not.

At a two-day gathering of finance ministers in Santiago de Compostela that ended on Saturday, Spain’s Nadia Calviño said she would present a new draft of the reform at a meeting of ministers in Luxembourg next month, with the intention to agree on it and begin trilogue negotiations with the European parliament in November.

That’s an ambitious timetable. Especially as France and Germany are still at odds over key elements of the reform, whose first iteration was proposed by the commission five months ago.

There are two major sticking points: the rigidity of the rules; and who gets to oversee them.

Germany, backed by Finland, Sweden and others, wants fixed figures on spending caps and debt reduction targets. France, Italy and others are calling for flexibility — for, say, higher defence spending in response to the war in Ukraine. In addition, states are at odds over how much enforcement power the commission should have.

Without a deal between Paris and Berlin, the reform is toast. And there was little sign of that this weekend.

“Was there any further movement [towards compromise] by France and Germany . . . in the statements they made? The answer to that question is no,” said a person briefed on the discussions.

Spain is undeterred. “We’re just going to have to schedule more meetings, and have as many as necessary,” said one senior official. Many ministers said they were open to scheduling additional gatherings.

The next talks will be at a meeting of the Economic and Financial Committee in Madrid in a couple of weeks.

“There’s a great deal of commitment around the table to agree by the end of the year,” Calviño said after the meeting.

That optimistic spin had some rolling their eyes. But, said one participant, “you need to be ambitious, otherwise nothing happens”.

Chart du jour: The beautiful game

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European football’s income has ballooned over the past 20 years, but transfer fees and wages are soaring. Josh Noble asks: can European football clubs ever be profitable?

Smash and grab

An audacious robbery captivated Montenegro last week, with a plot that stands out even in the heartland of some of the world’s busiest organised crime routes where drugs and weapons flow towards western Europe, writes Marton Dunai.

Context: Organised crime has long been one of the main problem areas for Balkan nations seeking EU membership and tackling it is one of Brussels’ key demands.

It began with a whiff of fresh air — odd in the cellar storage area of the Podgorica High Court, which had just recently tried one of the country’s most notorious crime gangs. The court had just returned from its summer holiday, and something was amiss.

Misplaced items and an unusual draft led court clerks to discover a tunnel, about 30 metres long, leading to a basement apartment across the street. Rented by a woman with a fake ID since July, the apartment was the launch pad of an elaborate evidence heist.

The room was a criminal’s dream: drugs, weapons and documents were stored there, valuable on the market but also as key evidence for use in legal proceedings.

“Certain items could potentially bring down the investigation against a serious criminal group tomorrow . . . the ‘Kavac’ drug gang,” acting police chief Nikola Terzić told local television.

The room contained at least 19 missing guns. Police quickly identified six suspects, who dug the tunnel over a month-and-a-half, about two feet per day, until they reached the court’s storage rooms.

Last week justice minister Marko Kovač said the missing guns had been connected to several cases, some open, some closed, some new, some dating back 20 years, to when the country was still united with Serbia.

On Friday premier Dritan Abazović said police had identified the robbers. “We will solve this case quickly,” he pledged.

What to watch today

1. G7 foreign ministers meet on the sidelines of the UN general assembly in New York.

2. EU agriculture and fishery ministers meet in Brussels.

Now read these

• Meloni’s money: As Italy unveils its budget, investors are watching to see if Rome will uphold its pledge of fiscal discipline.

• Russian rock star: ‘Millions are afraid to think, afraid to speak out’, says Russia’s Boris Grebenshikov.

• Enlargement envy: Across the Balkans, governments are wary of Ukraine jumping the EU membership queue.