7. The Policy Watch

The Policy Watch is a weekly update which aims to provide concise insights into the current policy landscape. Tailored for our members and individuals interested in international affairs, this update offers a brief yet comprehensive summary of key developments affecting policy decisions and political trends in the UK, Sweden, and the EU.

SINN FÉIN LEADING THE IRISH POLLS MIGHT BE A THREAT TO BRITISH SECURITY INTERESTS 

According to a report by the Policy Exchange, the polls show that ‘Anglophobic’ Sinn Féin is on the verge of forming a government after the expected Irish elections this year. If this is to be the case, the report concludes that Ireland would no longer be a friend to the UK and could also threaten the UK’s strategic interests.

UK TO PUSH EU ALLIES FOR A BAN ON RUSSIAN LNG

The UK is set to push its European allies to stop importing Russian liquefied natural gas (LNG) due to concerns about its potential entry into the UK’s energy system. Despite the UK banning Russian LNG imports in 2023, complexities in European gas networks leave room for continued exposure. The UK Energy Secretary, Claire Coutinho, will address this issue at an International Energy Agency meeting in France later this month.

While the EU has reduced reliance on Russian gas, countries like Spain, France, and Belgium remain major importers. The UK government will call for closing loopholes and pressure allies to cease fossil fuel imports and the funding of Russia’s war machine.

KING CHARLES DIAGNOSED WITH CANCER

In a statement from Buckingham Palace, the Royal Family has announced that H.M. King Charles III has been diagnosed with “a form of cancer”. It was during a prostate exam that the cancer was identified, although the statement says that they were not related. His Majesty will continue his state businesses and official paperwork as usual, although some public-facing duties are postponed during his treatment.

SWEDISH ‘CASE CLOSED’ ON NORD STREAM SABOTAGE-INVESTIGATION

The Swedish investigation into the sabotage of Nord Stream in 2022 is set to be closed, according to Expressen and its German news partners. The decision to close the investigation follows months of scrutiny into the explosion targeting the gas pipelines in international waters but within Sweden’s economic zone.

Despite the closure of the Swedish investigation, the German and Danish inquiries continue, with Swedish evidence potentially playing a crucial role in the ongoing investigations.

HUNGARY POSTPONE THE ANTICIPATED NATO VOTE

The extraordinary parliamentary session to vote on Sweden’s NATO application, called for by the Hungarian opposition, was blocked due to a ‘boycott’ by the Ruling party Fidesz and its cooperation party KDNP. The absence of the two parties’ members meant not enough MPs were present in the Parliament for a quorum to take place. The ruling party Fidesz is calling for Prime Minister Ulf Kristersson to come to Budapest for a meeting with his Hungarian counterpart, Viktor Orbán, before they can ratify Sweden’s accession to NATO.

According to Reuters, Fidesz’s ‘blocked’ vote in the Parliament has led to disappointment in the US, which has threatened Hungary with potential sanctions if the country does not let Sweden into NATO. Meanwhile, Germany urges Hungary to ratify Sweden’s application as “a matter of loyalty”.

‘CLASH OF TITANS’ ON THE MERCOSUR DEAL

German Chancellor Olaf Scholz and French Prime Minister Gabriel Attal clashed over the EU’s potential trade agreement with Mercosur during a press conference in Berlin on 5 February. Scholz advocated for a swift conclusion, citing its importance for Europe’s geostrategic position and Germany’s export-dependent economy. However, Attal voiced strong opposition, emphasising concerns about unfair competition for European farmers and environmental standards. This disagreement reflects broader tensions within the EU regarding trade policy and environmental commitments, potentially jeopardising the agreement’s timeline.

IN THIS WEEK’S EPISODE OF ‘TRUMP SCARING THE PANTS OF EUROPE’…

During a campaign rally in South Carolina on Saturday, Former President Donald Trump said that he would not protect non-paying NATO members from a Russian attack and “in fact, I would encourage them to do whatever the hell they want.”

Following the statement, reactions have been coming in from ‘all over the place’. Trump’s former National Security Advisor, John Bolton, commented on the statement on MSNBC, saying that “when he says he wants to get out of NATO, I think it’s a very real threat.

Polish Deputy Foreign Minister Paweł Zalewski stated that “these are the words of a serious candidate for president, so they should be treated seriously” he further added that Trump “correctly calls on member countries to spend more on defence, but he also calls on Russia to attack. This is completely incomprehensible.”

Secretary-General of NATO, Jens Stoltenberg, said, “Any suggestion that allies will not defend each other undermines all of our security”. President of the European Council, Charles Michel, stated that Trump’s statement “ serve only Putin’s interests”, and Germany’s Foreign Ministry tweeted “’One for all and all for one’ — This NATO creed keeps more than 950 million people safe”

COMMISSION PROPOSE A 90% EMISSION REDUCTION TARGET BY 2040

On 6 February, the European Commission proposed a 90% decrease in net greenhouse gas emissions by 2040 compared to 1990 levels, positioning it as the EU’s 2040 climate target. This target is intended as an interim goal between the 2030 objective of a 55% emissions reduction and the 2050 climate neutrality target. Achieving this target will require extensive stakeholder engagement, legislative action after European elections, and a focus on industrial decarbonization and competitiveness. In conjunction with announcing the target, the Commission released a communication on industrial carbon management, highlighting the importance of carbon removals in reaching the 2040 goal.

COUNCIL AND PARLIAMENT REACH PROVISIONAL AGREEMENT ON MOVING TRADE FLOWS FROM LONDON

After extensive negotiations, the Parliament and the Council have reached a provisional agreement on new regulations aimed at promoting clearing activity within the EU. This agreement follows the Commission’s suggestion to redirect a significant portion of trading and clearing activity from London to EU clearing houses. Under the new rules, major financial institutions engaged in substantial derivative trading would be required to clear a segment of their volume within the EU rather than in external jurisdictions. Consequently, EU clearing houses are expected to experience heightened trading volumes, allowing Union supervisors to better evaluate associated risks, although the finalized agreement falls short of the Commission’s initial proposal.

According to the EU’s legislative process needs to be endorsed and formally adopted by both the European Parliament and the Council of the EU.

PROVISIONAL AGREEMENT ON THE NET-ZERO INDUSTRIAL ACT

The Council and the European Parliament have come to a provisional agreement on new regulations designed to enhance the EU’s capacity for manufacturing net-zero technologies. The Net-Zero Industry Act seeks to encourage investment in EU-based manufacturing of such technologies, thereby expediting their implementation while safeguarding the EU’s supply chains. Notably, the initiative outlines a selection of key technologies, the manufacturing of which should benefit from expedited permitting procedures and easier access to financing, including renewable energy, nuclear fission, energy storage, and carbon capture, storage, and utilisation technologies.

PROVISIONAL AGREEMENT ON AMENDMENTS ON THE CSRD

On July 31, 2023, the Commission proposed amendments to the Corporate Sustainability Reporting Directive (CSRD) for cross-cutting standards for sustainability reporting, to be followed by sector-specific and SME standards by June 30, 2024, applicable to third-country companies with a €150 million EU turnover and at least one subsidiary or branch in the EU.

The newly agreed directive postpones the adoption of these standards to June 30, 2026, allowing for focused implementation of the first set of standards and additional time for sector-specific and third-country company standards. The application date for third-country companies remains the 2028 financial year as outlined in the CSRD

FORMER PM ALEXANDER STUBB IS THE NEW FINNISH PRESIDENT

The former liberal-conservative prime minister, Alexander Stubb, won the presidential runoff in Finland. The, form here forth, President Stubb is in charge of Finnish foreign policy and is Finland’s commander-in-chief. Due to the Finnish President’s powers and Finland’s strategic location as NATO’s and EU’s eastern border with Russia, the election has been closely watched in European capitals.

Stubb has vowed a hard line against Russia but noted after the election that his campaign message of “War, Defence, and NATO” was a message ‘of peace’.