Well Day 1 did not go according to plan. The EU Council has cancelled the press conference at the end of Day 1 of the summit and in a very diplomatic statement, make it clear, it's Italy's fault. The European Council this afternoon had an exchange of views with EP President Tajani and NATO Secretary-General as well as discussions on security and defence, jobs, growth and competitiveness, innovation and digital and other issues such as enlargement, MH-17 and MFF. As one Member reserved their position on the entire conclusions, no conclusions have been agreed at this stage. For this reason, the press conference by the EU institutional representatives has been cancelled and will instead take place tomorrow after the end of the Euro Summit. Can you guess who the "one Member" was? If you guessed Italy, you're right.
# As Bloomberg reports, Italian Prime Minister Giuseppe Conte issued a threat to veto the summit’s conclusions on Thursday during a two-day meeting of EU leaders in Brussels taking place under the cloud of a bloc-wide dispute over migration.
Conte is demanding other EU members share the burden of refugees landing in Italy at a time when German Interior Minister Horst Seehofer has told Merkel to broker a deal that would allow migrants to be sent back to Italy. Conte and Merkel met on the sidelines before the summit began.
Conte told reporters he had received many positive assurances from fellow leaders but “today we want these proposals to become fact.”
He said he doesn’t want to consider the “possibility” of vetoing a final statement, but if Italy doesn’t get what it wants “we surely won’t reach common conclusions.”
Italian officials later reiterated the threat during Thursday evening, while inside the room Conte refused to allow other topics such as trade to be signed off until migration was handled.
# A veto would be a stunning step, one which would nullify not just all aspects of migration policy reached by the 28 leaders, but also their conclusions on matters from security and defense to trade, effectively wrecking the summit.
Most importantly, it would leave Merkel to return home empty-handed, forcing a showdown with the Bavarian party that is threatening to defy her and potentially split the coalition, potentially ending her political career.
As a reminder, Merkel faces a weekend ultimatum set by her Bavarian sister party to tighten borders, or risk the collapse of their three-month-old coalition government. She told reporters the summit would be “above all about protecting the external border" and added that "she was willing to discuss migrant centers in other countries but cautioned that “we have to speak with these countries, we can’t speak over the heads of other countries."
# But it wasn't just Italy standing up against Merkel's migration plans:
“It’s possible to begin a turnaround in migration today,” said Austrian Chancellor Sebastian Kurz, who took power last year in a coalition with a far-right party on an anti-immigration platform. “I think it’s possible to reach an agreement on on-shore centers or platforms.”
He said migrants rescued at sea should be returned to Africa rather than brought ashore in Europe, which triggers certain rights. Rescue at sea should not necessarily “mean a ticket to Europe,” he said.
Meanwhile, Hungarian premier Viktor Orban, who has refused to accept a quota of migrants under the existing rules, offered a reminder of how attitudes to migrants have soured in in many parts of Europe: “We will do what the people really request,” he said. “The invasion should be stopped, and stopping the invasion means having strong border controls.”
# Will anything change on Day 2?
As Bloomberg reports, according to draft conclusions the leaders will promise to “stand by Italy and other front-line” states to stop people smugglers and work on “regional disembarkation platforms” to distinguish between refugees and economic migrants.
The document also includes an appeal to counter the flow of refugees between member states, so-called secondary movements, which are seen as jeopardizing the open-border Schengen area. Work on changing the Dublin asylum rules is postponed.
“Some may think I am too tough in my proposals on migration,” said Tusk, the EU president. “But trust me, if we don’t agree on them, then you will see some really tough proposals from some really tough guys.”
For Italy, Tusk's toughness appears to not be enough.
EURUSD nudged lower on the news....