Wednesday, December 20

THE COLD SHOULDER

EU threatens suspension of Polish voting rights over judicial reforms

The European Commission is expected to begin infringement proceedings against Poland today after the country’s senate approved controversial judicial reforms that would give the right-wing government the ability to choose judges.

Infringement proceedings would seek to suspend Poland’s voting rights in European decision-making bodies for an indefinite period. However, any such decision by the Commission requires unanimous support from all member states and could be blocked by Hungary’s sympathetically right-wing government.

Poland’s authoritarian judicial reforms come amid populist surges in other EU member states, particularly Austria, the Czech Republic and Hungary. Budapest, in particular, has shown a willingness to challenge established EU norms concerning judicial independence and media plurality, testing Brussels’ resolve.

Infringement proceedings brought by the European Commission are likely to further alienate some of the bloc’s eastern members. Facing a challenge to its authority, Brussels is likely to stand firm in demanding Poland preserve judicial independence. However, a protracted standoff could adversely affect other delicate issues, such as Brexit talks, which require EU member-states’ acting in unison.

HOUSE OF IDENTITY CARDS

High profile Indonesian lawmaker faces corruption trial

Indonesian judge in Setya Novanto pre-trial hearing — Photo: Antara/Puspa Perwitasari

Jakarta’s Corruption Court is expected to begin proceedings today against former Parliamentary Speaker Setya Novanto, who stands accused of receiving some $7 million to rig procurement contracts for a national identity card program.

The trial marks a significant victory for Indonesia’s Corruption Eradication Commission and poses a challenge to President Widodo’s governing coalition, of which Novanto’s former Golkar Party is the second largest member.

In a case seen as a test of corruption-fighting in Southeast Asia, the trial’s outcome is likely to have significant ramifications for Indonesia’s political class. Due to Novanto’s seniority as the former chair of the Golkar Party, a guilty verdict would result in upheaval and significant leadership changes for most Indonesian political parties.

With a guilty verdict anticipated, expect short-term political instability for Indonesia’s government ahead of a tough 2018 election season. Further corruption allegations against other members of the ruling coalition could imperil the government’s legislative agenda and could also prove difficult for presidential candidates seeking the top job in 2019.

BRINGING CAPITAL TO HEEL

EU to release recommendations on fighting tax avoidance

EU to release recommendation on limiting tax avoidance — Photo: Getty

Today the European Parliament releases a list of recommendations to crack down on tax evasion.

Following evidence of tax avoidance in both the Panama Papers and the Paradise Papers, the EU has steadily moved to crack down on tax evaders. In December alone, the EU blacklisted 17 countries with lax tax laws, outlawed anonymous bitcoin transactions and launched an investigation against Ikea for setting up a shell company to hide its profits.

Cracking down on tax evaders may be a rare point of agreement in an increasingly fractious European Union; taking the fight to the economic elite fits the political narrative of both the centre-left and the resurgent populist right, with enough buy in from the centre-right to make such moves politically possible.

The European Parliament is expected to announce a range of suggested actions, from increasing sanctions on blacklisted countries to the adoption of EU-wide taxation regulations. Although EU tax havens, like Ireland, will try to water down provisions that are codified into law, expect the EU to make some progress levying tariffs on foreign tax havens and bringing suits against recalcitrant companies.