The Luxembourgish EU Presidency and Financial Services – July-December 2015
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The Luxembourgish EU Presidency and Financial Services – July-December 2015 The Luxembourgish EU Presidency and Financial Services 1 July – 31 December 2015 Kreab Brussels 2 avenue de Tervueren, 1040 Brussels, Belgium www.kreab.com/brussels – @KreabEU 1 The Luxembourgish EU Presidency and Financial Services – July-December 2015 Contents Political Context of the Luxembourgish Presidency 3 Priorities of the Luxembourgish Presidency 4 Key Financial Services Initiatives and Legislative Dossiers 5 Organisation of the Luxembourgish Presidency 12 Annex I – Contact Information 13 Permanent Representation of Luxembourg to the European Union 13 Economy and Finance 14 Government of Luxembourg 16 Ministry of Finance of Luxembourg 17 Bank of Luxembourg 18 Financial Regulatory Body of Luxembourg 20 Annex II – CVs of Key Luxembourgish Ministers 21 Annex III – Provisional Calendar 23 Annex IV – Key Council Meetings 25 Annex V – Country Fact Sheet 26 Annex VI – The EU Presidency 28 2 The Luxembourgish EU Presidency and Financial Services – July-December 2015 Political Context of the Luxembourgish Presidency The Grand Duchy of Luxembourg will assume its twelfth Presidency of the Council of the European Union on 1 July 2015. Luxembourg is one of the smallest countries in the EU, but it is also the wealthiest per capita. Following Italy and Latvia, Luxembourg is the third in this Presidency Trio, and will be the second full Presidency to work with the new Commission headed by compatriot and former Prime Minister Jean-Claude Juncker. Luxembourg is the seat of several major institutions such as the European Court of Justice, the European Investment Bank, and the Court of Auditors. Attitude toward the EU Luxembourg is one of the six founding members of the European Union and has historically played a key role in its formation. For instance, Luxembourg City served as the original seat of the European Coal and Steel Community (ECSC), the country was one of the driving forces in the creation of the Economic and Monetary Union (EMU). It has supplied three Commission Presidents: Gaston Thorn (1981-1985), Jacques Santer (1995-1999), and current President Juncker. Luxembourg is one of the most pro-EU countries with 51% of the population having a positive perception of the EU, 80% support the Euro, and 67% are optimistic about the EU’s future (Euro Barometer of Autumn 2014). Mainstream political leaders from across the political spectrum are supportive of a further strengthening of the EU, fostering the Eurozone economy, and implementing reforms to combat the financial and economic crisis. Domestic Political Scene Luxembourg is one of the smallest nations in the EU and has a relatively stable political scene, as is demonstrated by the fact Juncker remained Prime Minister for 19 years. However, he resigned in July 2013 after accusations of acquiescence to disproportionate wiretapping and spying activities by intelligence services. Despite this his party, the Christian Social People’s Party (CSV), remained top in the December 2013 general election with more than 30% of the vote. However, after succeeding in sidelining the CSV, Xavier Bettel from the liberal Democratic Party (DP) became Prime Minister. Bettel leads a ‘grand coalition’ of liberals, socialists, and ecologists with Etienne Schneider of the Socialist Workers’ Party (LSAP) his Vice-Prime Minister. Luxembourg’s economy is mainly built on an efficient financial services sector. In spite of this, the economy successfully managed to navigate the recent financial crisis relatively well when compared to certain other EU member states, such as Ireland or Portugal. European Political Scene One consequence of the European elections with particular implications for Luxembourg was the nomination of Juncker as President of the Commission. Juncker had previously been first President of the Eurogroup from 2005 to 2013. The country has only six representatives in the European Parliament (EP). Three in the European People’s Party (EPP, Christian Democrat/centre right), and the remaining three are spread over three political parties: the Socialist and Democrat group (S&D, centre left), the Alliance of Liberals and Democrats in Europe (ALDE, centre), and the Green Party (left). Frank Engel (EPP) is full member of the Tax Rulings and Other measures similar in Nature or Effect (TAXE) Committee. In Engel and Mady Delvaux (S&D), Luxembourg has two substitutes in the Economic and Monetary Affairs (ECON) Committee. Former Commissioner Viviane Reding sits on the International Trade Committee (INTA). 3 The Luxembourgish EU Presidency and Financial Services – July-December 2015 Priorities of the Luxembourgish Presidency Luxembourg will be the third Presidency of the Council of the European Union in the current Presidency trio, following Italy and Latvia. It is worth noting this term comes eight months into the new Commission, new both in terms of structure and function, which is emphasising a more political than legislative approach in comparison to its predecessors. Consequently, there has been a reduction in new legislation proposed during the first half of the year, and a large majority of the dossiers which are currently progressing have been inherited from the Barroso Commission. Although the Luxembourg Presidency does not expect a high number of new proposals during its term, there are certain key areas of focus. The Digital Single Market (DSM), the Capital Markets Union (CMU), and Security have been identified as three core issues. On the Digital Single Market, the focus will be with the Commission in terms of new proposals, but Luxembourg can deliver an impetus to the process. Completing work on the General Data Protection Regulation (GDPR) is seen as a key first step, opening the door to advancing work on other related issues. Advancing the Digital Agenda will update the Single Market for the digital era. Capital Markets Union (CMU) will feature very high on the agenda, with an action plan due in September and the first related legislative proposals (on securitisation and prospectus) likely to follow relatively swiftly thereafter. Alongside the development of the European Fund for Strategic Investments (EFSI) and work to loosen the regulatory burden, CMU is seen as the main tool for facilitating investment and promoting growth in Europe. Luxembourg’s work relating to Foreign Affairs will generally follow the roadmap as set out. Regarding Ukraine, with sanctions recently renewed and now due to run until the end of 2015, Luxembourg is likely to evaluate how closely the Mink Agreement has been followed. It is also worth noting that internal political issues are likely to require careful handling and a level of involvement from the Presidency. Greece’s negotiations of IMF bailout terms will remain a priority for the Eurogroup, and the UK’s wish to renegotiate aspects of membership has pushed the reform agenda back up the priority list. In both cases, some demands seem likely to be met, while others look less achievable. In the case of the UK, other Member States agree that certain issues regarding broader EU reform merit reflection, yet all sides are aware of the political constraints. Overall, the Presidency programme is aligned with the priorities of the Commission, with a focus on facilitating the implementation of existing legislation. A special emphasis will be on growth, investment, and the digital agenda. Within the structure of the Presidency Trio (Italy, Latvia, Luxembourg), Luxembourg’s work is likely to focus on ensuring a high degree of consistency and coordination on EU policy. As such, it will seek to guide legislative proposals from the previous Commission and the Italian and Latvian Presidencies through the legislative process. 4 The Luxembourgish EU Presidency and Financial Services – July-December 2015 Key Financial Services Initiatives and Legislative Dossiers The Luxembourgish Presidency will have a mix of old and new legislative proposals on the table to negotiate. The majority of these are carried over from the previous legislative cycle, but Luxembourg will also have the task of kicking off discussions on some new initiatives. More concretely, it will likely commence internal Council discussions on the first two legislative proposals of the Capital Markets Union: The revised Prospectus Directive, and the legislative proposal on securitisation. Another example is the non-bank recovery and resolution Directive, expected before the end of the year. Given the expected timings for the new proposals, it seems unlikely that the Luxembourg Presidency will be able to significantly advance discussions. Instead, they could ensure a first exchange run through of the files, perhaps identifying the key political, substantive elements for the next Presidency to tackle. The taxation initiatives on tax rulings and corporate taxation adopted in the first half of 2015 will also require Luxembourg’s efforts. The most important legislative file in this regard is the extension of the Directive on Automatic Exchange of Information to cover information on tax rulings. This review was sparked by the ‘Lux leaks’ and is expected to be finalised during the Luxembourgish Presidency. Limited work on new files will likely be more than compensated for by the more complex files which still need to be concluded. More than one year after the European Parliament (EP) elections in May 2014, and eight months since the entry into office of new Financial Services Commissioner Hill and the other members of the Juncker Commission, there remains a significant amount of unfinished business. The Latvian Presidency has managed to clear various dossiers out of the way, but for several, agreement between the EU legislators is still to be completed. Notably, this includes Bank Structural Reform (BSR), Money Market Funds (MMFs), and the Benchmarks Regulation. Rules on shareholders rights and pension funds (IORP II) must also be tackled. At the same time, Luxembourg will benefit from the work of its trio colleagues from Italy and Latvia. After a somewhat slower Italian Presidency (July-December 2014) marked by the institutional changes, Latvia can claim various successes in its term.