The political cost of Meloni snubbing von der Leyen

Good morning. Last night EU leaders struck a deal to approve Ursula von der Leyen for a second five-year term as president of the European Commission. But Italian Prime Minister Giorgia Meloni made a high-profile decision to withhold her support. I unpack what that means in real terms.

And our competition sleuth has details of a push to challenge Hungary’s price regulations on retailers.

Have a great weekend.

Et tu, Giorgia?

She came, she saw, she abstained.

Giorgia Meloni arrived in Brussels yesterday seeking to make her clout felt. Europe’s hard-right kingpin left having reminded Ursula von der Leyen that a second term at the helm of the European Commission will not be plain sailing.

Context: Twenty-five of the EU’s 27 leaders backed von der Leyen’s re-election last night. Meloni abstained; Hungary’s Viktor Orbán voted against. She will now need to win a majority of the European parliament’s 720 votes to be granted a second term.

Meloni’s snub is the most significant challenge to von der Leyen’s leadership. Not only is Italy the third-largest member state and one of its six founding members, but Meloni also heads the parliament’s third-largest political bloc. Serial oppositionist Orbán can be waved away; Meloni matters.

It is to parliament where von der Leyen’s full attention now turns. She needs 361 votes to remain in office for another five years. Her centrist coalition (the one that decided it would rather exclude Meloni from the job negotiations than reach out to her) has 399 members.

But many members are expected to vote against her in the secret ballot scheduled for the week of July 15; indeed some have already said they will.

Before yesterday, most observers had speculated that von der Leyen’s buffer lay in an informal deal with either the Greens and their 54 seats, or the 24 seats held by Meloni’s Brothers of Italy.

Indeed, for the past 18 months von der Leyen has gone out of her way to build bridges with Meloni, despite their divergent political views. She saw collaboration as more productive than conflict, and understood the value of the Italian’s political weight. But something snapped this month.

Asked last night about Meloni’s stance, the typically calm and confident von der Leyen appeared slightly off-balance.

“Look, I will work with the whole parliament,” she said when asked about her on-paper majority. “For those that are critical or have questions, my duty is to go to them and answer the questions.”

“I will also work intensively with the national delegations,” von der Leyen added. “I have to convince a majority.”

Some EU officials last night speculated that Meloni’s anger was part of a carefully choreographed piece of political theatre. That, having made her point, she’ll slowly creep back into the von der Leyen tent.

If that’s the case, she’s a pretty convincing actress.

“When I agree I say it, when I don’t agree, I also say it,” Meloni said on her way home. “I’m not two-faced.”

Chart du jour: Party poopers

It’s going to be a busy summer as visitors flock to the Euros football tournament, a bunch of Taylor Swift concerts and the Olympics. But guess who’s not exactly thrilled? Central bankers worried about sticky inflation.

Sparring partner

The chief executive of Spar is meeting the EU’s competition chief today to petition for her to intervene on behalf of the Austrian supermarket chain in Hungary, write Javier Espinoza and Marton Dunai.

Context: Spar and other foreign retailers have slammed special measures introduced by Prime Minister Viktor Orbán’s government in 2022 to counter skyrocketing food prices. The companies argue that a special tax on revenues hits foreign retailers especially hard.

Lobbying against the Hungarian measures is already starting to work, and by the end of the month the government will get rid of mandatory price cuts, which were also introduced two years ago.

But Hans K Reisch believes this is not enough. He is expected to ask competition chief Margrethe Vestager to challenge the tax of up to 4.5 per cent of revenues, as it has contributed to unusual losses at the company’s Hungarian arm.

“The tax forces all foreign owned retailers to incur dramatic losses in an otherwise profitable business,” Reisch told the Financial Times ahead of his visit.

Hungarian retail chains with their lower revenue tend to fall into a smaller tax bracket than their larger foreign competitors.

Reisch said the treatment of Spar in Hungary demonstrated that “the Hungarian measures are inconsistent with EU law”, and called Brussels’ reaction to them “delayed and inadequate”.

“We trust in the European Commission’s authority under the EU treaties to prompt Hungary to eliminate the retail tax, through legal proceedings, and cease further discriminatory measures,” Reisch said.

What to watch today

1. Second day of EU leaders’ summit.

2. German foreign minister Annalena Baerbock hosts her Moroccan counterpart Nasser Bourita.

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