Direct reference to the need for exploitation of “endogenous” energy sources is probably the most significant benefit that our country obtained from the Summit of May 22 in Brussels. Moreover, on a second level, Greece anticipates benefits from the combat against tax-evasion, which seems to be gaining new dynamics Europe-wide; it is estimated that substantial funds of Greek citizens are to be found in countries of the Eurozone, although these countries did not check their country of origin or whether they had been taxed. In particular, two issues were on the agenda of the Summit: a) energy security and, b) taxation.
Energy
“The Commission intends to assess a more systematic recourse to on-shore and off-shore indigenous sources of energy with a view to their safe, sustainable and cost-effective exploitation while respecting Member-States’ choices of energy mix,” according to paragraph 6(b) of the Summit Conclusions. Although this report does not mean, of course, that German Eurofighters are going to protect the Greek continental shelf, the Greek government appears particularly satisfied, given that the demand for exploitation of hydrocarbon deposits, both in the Greek and Cypriot E.E.Z., is now being readdressed under a “European mantle,” in the context of diversification of Europe’s energy supply. The comment of Greek Prime Minister, Antonis Samaras, after the Summit session, is illustrative: “For the first time, an explicit reference to the exploitation of domestic energy sources is made, which is of great interest to Greece and to Cyprus, as there is strong evidence for the existence of substantial energy deposits within the Greek continental shelf, just like the continental shelf of Cyprus, where such deposits were found and are already being exploited”.
In the same spirit, Athens deems as positive the reaffirmation of European leaders’ commitment to “completing the internal energy market by 2013 and developing interconnections so as to put an end to any isolation of Member-States from European gas and electricity networks by 2015”. Greece expects additional funding for the interconnection of islands, within the energy policy framework for the integration of the electricity supply network. After all, it is estimated that production of electricity on islands by fuel oil plants (e.g. Cyclades, Crete) is costing Greek taxpayers €700 million annually.
In his speech before his counterparts, Mr. Samaras made a special reference to the Trans Adriatic Pipeline (TAP), which could carry gas to Europe from Azerbaijan through our country. The main arguments of the Greek side focus on the fact that TAP is cheaper than its alternative option (Nabucco), while it does not require state funding and is bound to put an end to the energy isolation of Western Balkans. The final decisions, which will determine our country’s inclusion in the energy map of the pipelines, are expected by late June.
In any case, it is a fact that the energy challenge facing the EU today has not been dealt with in its entirety. The global energy map is radically changing due to the massive exploitation of shale gas by the U.S., while the new climate is not beneficial for the European companies, which have to pay much higher costs for energy than their competitors (Russia, China, U.S.). It becomes evident that the lack of competitiveness of the European economy is further aggravated by energy prices, whereas the limited (compared to the U.S.) potential for shale gas exploitation, combined with the high cost of harnessing renewable energy, are making the landscape even more “nebulous”. The needs of investing in “smart networks,” in order to close the gap in competitiveness through energy saving, are estimated at €1 trillion by 2020, according to Mr. Herman van Rompuy, President of the European Council. Where this money will come from, however, remains unknown.
Taxation
Unlike energy, where most “fronts” remain open, the fight against tax-evasion seems to have progressed. Popular pressure on European leaders is growing, in light of revelations about large companies making use of “windows” in national legislations so as to avoid taxation of their profits, revelations taking on larger dimensions in a period of fiscal adjustment. Therefore, in the midst of unbearable pressure, Austria and Luxemburg appear to be making concessions on the issues of protecting privacy in the banking system and consenting to the automatic exchange of information with other Member-States of the EU for any income of physical or legal entities. The exact content of the new European legislation on the exchange of information will be made public later this year.
More specifically, the European Council reached the following decisions on fighting tax-evasion:
– Priority will be given to efforts to expand the automatic exchange of information at the EU and global level. At the EU level, the Commission intends to propose an amendment of the Directive on administrative cooperation in June, in order for the automatic exchange of information to apply to all sources of income.
– Following the agreement reached on May 14, with regard to the mandate for improving the agreements between the EU and Switzerland, Liechtenstein, Monaco, Andorra and San Marino, negotiations are bound to start as soon as possible, in order to ensure that these countries will continue to apply measures equivalent to those of the EU In view of the above, and reiterating its consensus on the scope of the revised Directive on taxation of savings income, the European Council called for the adoption of the particular act before the end of the year.
– Member-States will also give priority to specific measures that will further the action plan to strengthen the fight against tax-fraud and tax-evasion, so as to combat VAT fraud. The European Council expects the Council of Ministers to issue Directives concerning the quick reaction mechanism and the reverse charge mechanism, no later than the end of June.
– Work will continue with regard to the recommendations of the Commission on aggressive tax planning and profit shifting. The Commission is planning to present, before the end of the year, a proposal for the revision of the “parent/subsidiary” Directive, while it is currently reviewing the anti-abuse provisions in relevant EU legislation.
– The revision of the third Directive on money-laundering must be approved by the end of the year.
– The proposal amending the Directives on disclosure of non-financial information and information on diversity by specific large companies and groups will be examined, notably with a view to ensuring country-by-country reporting by these companies and groups.
Future Steps
The Council will present a progress report on all these issues by December 2013. Finally, we have to note that the next Summit will be held on June 27, and it will address the issues of economy and unemployment, especially among the youth, whereas a special meeting of European Labour Ministers on unemployment will be held in Berlin, on July 3. Within the summer period, an agreement on the conditions for direct recapitalization of banks by the European Stability Mechanism is expected to be made, without this capital burdening the debt of the states concerned. Greece hopes -although this is not the most likely scenario- that it will be able to take advantage of this option, so as to erase €50 billion from its public debt, borrowed from the European mechanisms to recapitalize its banks.