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DRIVING THE DAY: RUSSIA Sanctions AT RISK OF DELAY       

AMBASSADORS DISCUSS LATEST PACKAGE: EU ambassadors will meet this morning at 9 a.m. to discuss the latest package of sanctions against Russia, with the biggest component being a price cap on Russian seaborne oil exports — a measure agreed in principle by the G7 group of advanced economies that now needs to be put into action.

Pressure is mounting on the EU to deliver on its promise of a fast and determined response to Moscow’s latest moves, especially after Russian President Vladimir Putin on Friday annexed four Ukrainian regions. However, as six diplomats told Playbook, a number of Countries are still putting up roadblocks — Hungary, unsurprisingly, but also Cyprus, Greece and Malta, whose tanker fleets transport most Russian oil.

WILL HUNGARY RISK CREATING A DELAY? That was the question many of the diplomats posed, pointing out that a compromise proposal circulated by the Czech Council of the EU presidency on Sunday morning had already addressed many of Hungary’s concerns.

One of the points Budapest insisted on was a “derogation for regional trade” that would allow Hungary to re-export to neighboring EU countries the Russian oil it continues to receive (thanks to an exemption in a previous sanctions package) and process it in refineries. The concern within the Commission and among other EU countries is that this would give Hungary an unfair advantage in the single market. Many believe it’s already enough that Hungary got the exemption to continue importing Russian pipeline oil.

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… or is it overplaying its hand? Diplomats were spooked by a remark by Hungary’s permanent representative at Friday’s meeting, warning that the country had a number of open questions and was not able to commit to a deal on the sanctions package in time for the meeting of EU leaders at the end of this week.

But the general feeling is that “Hungary is just trying to squeeze out as much as it can,” one diplomat said.

With or without you: One senior diplomat said Hungary should remember that if it overplays its hand, other EU countries might use similarly tough tactics and decide to impose new tariffs on pipeline oil (which as a trade measure only requires a qualified majority vote in the Council and therefore Budapest could not vetoe this).

All in all, Hungary may pose a smaller problem compared to another one: the shipping industry.

THAT BRINGS US TO CYPRUS, GREECE AND MALTA: These three countries are worried the EU will shoot itself in the foot by banning their tanker fleets from transporting Russian oil (sold above a certain price cap) without making sure the same ban is also imposed by other major shipping countries, such as Turkey, India and Indonesia, which could just take over the shipping business, some diplomats argue.

However, diplomats from other countries also say asking for a delay until India is on board is essentially the same as asking for the sanctions not to be imposed.

Patience running low: One diplomat warned that many countries had sacrificed income and lucrative businesses for the bigger goal of ending the war and discouraging Russia, while another diplomat warned Cyprus and Greece should remember they have also relied on EU solidarity vis-à-vis Turkey.

What’s next: With those obstacles in mind, ambassadors are now bracing for additional meetings later this week. “I believe we will need one or two more” Coreper meetings of country representatives to reach an agreement, one senior diplomat said. EU ambassadors will discuss the issue again on Wednesday, but want to sign off on the package before the leaders’ meeting on Friday.

One thing is clear, another diplomat told Playbook: “There will be no sanctions package without the oil price cap.”

PROTECTING INFRASTRUCTURE: European Council President Charles Michel said EU leaders will also discuss the security of critical infrastructure during their meeting on Friday.

MACRON-SCHOLZ MEETUP       

ALL EYES ON BERLIN: German Chancellor Olaf Scholz and French President Emmanuel Macron are meeting this evening for a working dinner in Berlin with a lot to discuss — not least of which Germany’s massive €200 billion gas price cap.

Playbook’s prediction: That scheme will keep other leaders and the Commission busy over the coming days. Diplomats mentioned two immediate problems: First, Germany’s mega subsidy scheme risks exacerbating the gas price crisis for other EU countries (since Germany can outbid others on the gas market, leading to an increase in market prices). Second, the subsidy will inevitably drive a wedge between richer and poorer EU countries.

Germany will not just subsidize gas for its consumers, but also for companies, big and small. This means companies can produce at cheaper prices in Germany, while poorer EU countries face the prospect of de-industrialization through no fault of their own. At the same time, Berlin is opposing European-level measures in Brussels, such as an EU gas price cap.

EU Internal Market Commissioner Thierry Breton was one of the first to publicly speak out Friday: “While Germany can afford to borrow €200 bn on financial markets, some other Member States cannot,” he tweeted. “We need to reflect urgently on how to offer Member States — which do not have this fiscal room for manoeuvre —the possibility of supporting their industries & businesses.”

Remember: A very similar problem emerged during the COVID crisis, when Germany decided to introduce a massive stimulus to keep its companies afloat — and other EU countries, including France, warned of the huge distortions this could create in the single market. Eventually, Germany agreed to common EU borrowing to at least partly compensate countries with less fiscal capacity and prevent the single market from breaking apart.

The big question is: Will Macron convince Scholz that EU solidarity is in dire need again — and will Scholz agree to another round of joint borrowing?

ALSO ON THE AGENDA: The French and German leaders will also discuss the reform of EU unanimity rules.

As Playbook reported last month, Germany says it wants to ditch national vetoes against sanctions by changing voting rules on foreign policy. However, it is also one of the 11 countries that signed a letter criticizing the Commission’s plans for a new trade sanctions hammer, which would effectively allow the EU to adopt countersanctions with just a qualified majority of support.

Scholz is also likely to raise the Midcat pipeline project that runs from Spain through France, on which Playbook also previously reported. On Wednesday, Scholz will hold government consultations with Spanish PM Pedro Sánchez, and both leaders vowed to discuss the pipeline plans to connect Europe’s south and north.

ELECTION WATCH       

BORISSOV SET TO WIN IN BULGARIA … Boyko Borissov, a bodyguard turned former prime minister, looks set to win Bulgaria’s election held Sunday. Partial results showed Borissov’s center-right GERB party was on course to win around 25 percent of the vote in Bulgaria’s fourth general election in 18 months, meaning he will now have to try to cobble together a coalition in a highly fractured political landscape. 

This need to pull together a government will only be complicated by Borissov’s toxic reputation. People poured into the streets of Sofia and other cities in 2020 to protest about his government’s connections to the mafia and Bulgaria’s “captured state.” Christian Oliver has more.

Russia’s friend no more: Despite Borissov’s history of often cozy relations with the Kremlin and Russian energy companies, the burly former karate champion tried to style himself as a pro-EU Atlanticist during this election. Given the war in Ukraine, Borissov now insists that he is (finally) willing to talk tough with Russian President Putin, a man to whom he once gave a puppy and consistently strove to please with favorable schemes for gas export monopoly Gazprom.

… WHILE PM KARIŅŠ WINS IN LATVIA: Prime Minister Krišjānis Kariņš’s New Unity party won Latvia’s national election on Saturday, according to provisional results. Kariņš’ told Reuters he will work to craft a coalition of like-minded parties.

IN BRAZIL, LULA AND BOLSONARO HEADED FOR RUNOFF: The world’s fourth-largest democracy on Sunday voted in a historic election — but it’s not over yet. Since neither far-right President Jair Bolsonaro nor center-left former President Luiz Inácio Lula da Silva secured more than 50 percent of the vote, they are headed for another round on October 30. It is no secret that in the EU, most leaders prefer Lula, whom they see as a more reliable ally in the fight against climate change and biodiversity loss.

The EU’s trade agreement with South America’s Mercosur bloc — of which Brazil is the biggest member — also hinges on this election, since it will be next to impossible for the deal to pass votes in the Council and Parliament with Bolsonaro in power. Bolsonaro has not only insulted the looks of French President Macron’s wife Brigitte, but EU leaders as well as NGOs accuse him of facilitating the destruction of the Amazon.

7 NIGHTMARES IN THE MAKING FOR MELONI: Giorgia Meloni and her Brothers of Italy party emerged as the clear winners in the September 25 election, putting her on course to form a new coalition in Rome at a fraught time for the country’s economy. With a splintered opposition, analysts predict she could stay the course longer than many of Italy’s notoriously short-lived administrations. But it likely won’t be an easy ride. Hannah Roberts and Jacopo Barigazzi have a great explainer here on the seven major challenges Meloni will face, from the budget and recovery plans, to finding unity with allies in deciding how to handle Russia. 

HOW THE FAR RIGHT MADE IT OUT OF THE DOG HOUSE: Meloni’s triumph in Italy, along with recent historic results for nationalist parties in France and Sweden, may make it seem like far-right parties are riding a brand new wave of success in Europe. But an analysis by our colleagues Barbara Moens and Cornelius Hirsch shows that the Continent’s far-right parties on average did not increase their support by even 1 percentage point between the start of Russia’s invasion of Ukraine in February and today. Overall, the results indicate that if an increase in support occurred for far-right parties, it happened several years ago. Read the full story here on how the far right has gradually moved from the fringes of politics into the mainstream.

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EU-ISRAEL       

SUMMIT EXCITEMENT DIMS: Buzz around the much-anticipated EU-Israel Council Association meeting today has started to fizzle out.

Israel PM Yair Lapid, very much a driver of the rapprochement, won’t make it to Brussels, opting instead for a video call. Lapid’s domestic priorities, including an election campaign, means he has no time to pop into the Brussels bubble, Ilya Gridneff and Leonie Kijewski report.

Various NGOs have responded with alarm to the EU-Israel reboot. “The EU must not forget its responsibility towards the Palestinian people impacted daily by the policies and practices of an expansionist state operating with full impunity,“ said Oxfam.

Human Rights Watch called on the EU and its member states to condemn Israeli’s “crimes against humanity of apartheid and persecution.” 

Similarly, hardliners in Israel see the olive branch to Brussels as a worrying sign of Lapid going soft on Palestine and Iran. Israeli PM hopeful Naftali Bennett last week blocked a prior Israeli decision to join the EU’s “Creative Europe” funding program because it prohibits funding for artists in West Bank settlements, East Jerusalem and the Golan Heights. Israeli media also report that the EU’s Middle East peace envoy Sven Koopmans is struggling to get an audience with senior Israeli officials, including PM Lapid. And so it goes.

GREECE IN THE HOT SEAT       

COMMISSIONER JOUROVA PUSHES FOR DEMOCRATIC RIGHTS: During a visit to Athens late last week, EU Values Commissioner Věra Jourová discussed the dire situation for the media in Greece and made recommendations to national authorities to improve the rule of law.

Jourová said she welcomed the fact that Athens is now planning to change its so-called fake news law — which threatens journalists with imprisonment for writing what the government considers false. She said the European Commission will continue to monitor the situation.

The controversial legislation, passed by the government of PM Kyriakos Mitsotakis, gives authorities the power to jail people for up to five years for publishing reports “capable of causing concern or fear to the public or undermining public confidence in the national economy, the country’s defense capacity or public health.”

SURVEILLANCE LAW: Jourová also mentioned another contentious law passed by Athens, which forbids Greek citizens from finding out if they have been under surveillance by the state spy agency.

Jourová said that on the contrary, the right for citizens to be informed if the government has spied on them “should be guaranteed by the law.”

“I got quite strong commitments by the prime minister that he will be considering increasing again the rights of the citizens,” Jourova said in an interview.

LEGAL ATTACKS: International press freedom groups have expressed concern about legal attacks against veteran journalist Ioannis Stevis, the director of local media outlet Astraparis.gr on the island of Chios.

Stevis is being sued for €200,000 by the director of a public hospital over his reporting on multiple issues related to her management of the public health institution.

The two libel lawsuits are claiming damages for alleged moral injury and were filed by the administrator of the General Hospital of Chios, as well as the president of the hospital’s board. The Journalists’ Union of the Athens Daily Newspapers (ESIEA) condemned the initial lawsuit in 2021.

MINISTER WEIGHS IN: Greece’s Migration Minister Notis Mitarachi, elected in Chios, has sided with the hospital manager. In October 2021, when Stevis requested a postponement of a court hearing, Mitarachi posted on his Facebook page: “A quiz from Chios: Who pretends to be a hero and a fighter on the internet, but asks for postponements in court?”

Mitarachi defended his actions when speaking with POLITICO: “As a local MP, I expressed my opinion on an issue that concerns public figures and the local community. However, it is hypocritical for a journalist to complain about a lawsuit when he himself has taken legal action against another journalist for a publication concerning him.”

On Friday, Mitarachi openly accused Stevis of hypocrisy, referring to a lawsuit he filed against another local journalist for defamation and even copied in Stevis’ daughter, who is the New York Times’ Brussels bureau chief.

IN OTHER NEWS       

GAIN FOR UKRAINE: Ukraine has claimed control of a Russian logistics hub, seeking to cut more supply lines to its troops, Reuters reports.

SPOT WHO’S MISSING: The presidents of nine Central and Eastern European countries on Sunday declared that they would never recognize Russia’s annexation of Ukrainian regions.

Hungary and Bulgaria were conspicuously absent from the signatories of the joint statement. The nine leaders also encouraged “all allies to substantially increase their military aid to Ukraine,” according to the statement, and backed a path toward NATO membership for Ukraine.

NUCLEAR WARNING: U.S. Defense Secretary Lloyd Austin said he expects Putin to continue to threaten to use nuclear weapons — and that it is possible he could actually do so.

LEAK OVER: The Nord Stream pipelines have stopped leaking, the Danish Energy Agency said over the weekend.

TORY TROUBLE: Splits in the governing U.K. Conservative Party burst out into the open Sunday as senior Tory Michael Gove suggested he could vote against the “profoundly concerning” budget unveiled by new Prime Minister Liz Truss.

Meanwhile, King Charles won’t hold a speech at the COP27 climate conference in Egypt next month after Truss advised him it would not be appropriate.

Tired of experts: Our colleague in London Esther Webber has a great read out today on how six years after the Brexit vote, critics see a renewed willingness at the top of the Tory party to ignore the experts at all costs.

DEADLY STAMPEDE: More than 100 people are dead after a stampede at a football stadium in Java, Indonesia on Saturday night.

**Save the date – POLITICO Live’s Spotlight “Plugging holes in the internet: Europe’s government and industry responses to spyware” will take place on October 25 at 2:00 p.m. CEST. Register now!**

AGENDA       

— Coreper II ambassadors meet to discuss Russia sanctions, 9 a.m.

— Meeting of Eurogroup finance ministers in Luxembourg, arrivals from 1:30 p.m.

— EU Crisis Management Commissioner Janez Lenarčič visits a flood-affected region in Pakistan.

— Meeting of the EU-Israel Association Council.

— EU Innovation Commissioner Mariya Gabriel is in Tokyo, then headed to San Francisco.

— EU Commission VP Margaritis Schinas meets North Macedonia’s Prime Minister Dimitar Kovačevski and Deputy Prime Minister For EU Affairs Bojan Marichikj in Skopje.

— European Parliament plenary session in Strasbourg.

BRUSSELS CORNER       

CONGRATS! POLITICO’s own Florian Eder joins the EUI School of Transnational Governance as a new adjunct professor, in addition to his role in our German newsroom.

CRUNCH TIME FOR TOP SPOT AT EU SECURITY THINK TANK: EU foreign policy chief Josep Borrell is narrowing down his short list of candidates for a plum post at the European Union Institute for Security Studies — the bloc’s 20-year-old foreign policy think tank. With an annual budget of €5 million, the Paris-based EUISS is relatively small, but its analyses on strategic planning, European defense and EU-NATO relations carry weight with member countries and in Brussels. The mandate of its current director, Gustav Lindstrom, ends in January, Sarah Wheaton writes in to report.

The shortlist: Capitals were asked over the summer to nominate candidates “with recognised long-standing expertise and experience in foreign relations, security policy and diplomacy, and related research,” as outlined in the EUISS’s regulations. As the EU’s high representative for foreign affairs, Borrell is the chair of a pre-selection panel made up of three representatives from his European External Action Service and three from the “trio” of past, present and future EU Council presidencies, which is supposed to narrow down the choices to a shortlist and rank them in order of preference. 

Now the choice is down to two candidates, according to senior officials: 

— Steven Everts, a veteran of the EU’s foreign policy apparatus, currently serving as Borrell’s senior adviser on strategy and communications.

— Florence Gaub, who served as deputy director at the EUISS before joining the Council’s general secretariat as a foresight adviser in May.

State of play: It’s now up to the EUISS board to make a final decision based on the recommendation.

Gender parity: With both candidates now in full campaign mode, Gaub can certainly brandish her previous think tank experience. But EU lawmakers are also chiming in: “We still have quite some catching up to do” on gender parity, German Green MEP Hannah Neumann, an outspoken advocate for gender parity in the EU’s diplomatic ranks, told Sarah. Neumann said EEAS leaders “reaffirmed several times in Parliament: If two candidates are of equal qualification and one of them is a woman, the woman gets the job — at least until we have parity on all leadership levels … So I expect EEAS to live up to this standard.”

BIRTHDAYS: Spanish Economic Affairs Minister Nadia Calviño; the European Stability Mechanism’s Managing Director Klaus Regling; MEP Pascal Durand; POLITICO’s Leonie Kijewski; Bianca Swalem; Cefic’s Hartwig Wendt. Unity Day in Germany.

THANKS TO: Ilya Gridneff, Leonie Kijewski, Nektaria Stamouli, Sarah Wheaton, Matt Karnitschnig, editor Emma Anderson and producer Fiona Lally.

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