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Latvia joins ranks of leaders opposing Macron vision for EU
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Latvia joins ranks of leaders opposing Macron vision for EU

3 min. 09.10.2017 From our online archive
Latvian Prime Minister Maris Kucinskis aligns with leaders who have reacted coolly to French president's proposals to overhaul world's largest trading bloc

(Bloomberg) French President Emmanuel Macron's push for a streamlined European Union (EU) hit another obstacle, as Latvia objected to his ideas of measures from harmonising the corporate tax rate to punishing members for democratic backsliding.

Latvian Prime Minister Maris Kucinskis joined the ranks of leaders who have reacted coolly to the French president's proposals to overhaul the world's largest trading bloc.

Rather than start new projects, the premier said the EU should stick to its existing agenda, which focuses on shoring up external borders, tightening immigration standards and tackling economic challenges – such as youth unemployment – that are rankling the region's almost half billion citizens.

To attract investment, we need to have our own tools. They can't be the same ones that old Europe uses.

"Let's start with the words that most of the member states expressed on the matter," Kucinskis said in an interview in Riga, the capital of the Baltic country of 2 million.

"It's good that there are some initiatives, that there are offers we can discuss. But, at the same time, we have what's been decided in Bratislava, what's been decided in Malta, which shows us how we're to go forward."

His statements underscore the complicated and often diverging stances among the EU's 27 members that will remain after Britain exits the bloc as they struggle to decide on a common future without one of their largest economies.

While Macron's vision, laid out in a September 26 speech, has some support for ideas that include a common euro-area budget and a finance minister to oversee it all, some of his counterparts were less than enthusiastic when they met at the end of the month at a summit in Tallinn, Estonia.

He told the summit Latvia was ready to back initiatives that seek to strengthen the bloc.

Tax harmonisation

One such issue is tax harmonisation. Macron called for harmonised corporate taxes by 2020, with a penalty of reduced development aid for those who do not cooperate.

While some countries see a unified tax policy as the best way to prevent a race to the bottom in which members lure investment by offering lower rates, others, such as Ireland, are staunchly opposed.

For Latvia, which is trying to raise living standards closer to the EU average, from about two-thirds, that would also be a non-starter, the premier reiterated.

"That's not really possible, taking into account that our people's support for the EU is connected with hopes for an increase in living standards, economic growth," Kucinskis said.

"To attract investment, we need to have our own tools. They can't be the same ones that old Europe uses."

Rule of law

Kucinskis also questioned another idea raised by Macron and other EU leaders: tying development aid to democratic standards.

Poland is at the centre of the debate, with the European Commission having launched its first-ever probe into whether a member is undermining the rule of law.

Commission Vice-President Frans Timmermans has warned Warsaw its voting rights may be suspended.

Hungary has also drawn similar criticism.

The EU's enemies – who are not minor – they would be happy.

"To me," Kucinskis said, "the most important thing is that all these relationships are put in order through talks and with dialogue between the European Commission and a member state.

"That's why I don't think that, in these instances, which undoubtedly can be discussed for the mentioned Poland and Hungary, that the solution is sanctions."

Kucinskis did not specify whether he would go as far as Hungary, where Prime Minister Viktor Orban has vowed to actively bloc punishment against Poland.

"I don't think that all the options have been exhausted," he said, adding that penalising members would harm the unity that the bloc is trying to bolster.

"The EU's enemies – who are not minor – they would be happy."