June 27, 2018 / 4:24 PM / 18 days ago

Five things to expect from the EU summit on June 28-29

BRUSSELS, June 27 (Reuters) - European Union leaders meet this week to deal with some of the most difficult issues they confront, with migration topping the list.

German Chancellor Angela Merkel’s political survival may depend on Italy’s new anti-establishment government, whose interests clash with Germany’s on immigration.

MIGRATION

Merkel’s coalition partner, Bavaria’s Christian Social Union (CSU), wants to migrants trying to get into Germany to be sent back to the countries where they entered the EU. Merkel opposes that. The row could cause her government to collapse .

Italy, the entry country for most migrants crossing the Mediterranean, is furious. If the CSU has its way, it not only will have to handle the arrivals alone - it will have to take back migrants Germany turns away. It wants a revision of EU rules that now make it responsible for the migrants who land on its shores.

Draft summit conclusions show EU leaders will not revise those rules yet. They will agree on ways to prevent migrants from reaching the EU in the first place by helping to beef up both the coast guards in North African countries and the EU’s border protection agency, Frontex.

They will also back the idea of creating migrant camps outside the EU, where migrants may apply for EU asylum.

TRADE

The EU leaders will back retaliatory steps against the United States for steel and aluminium tariffs it imposed. They will also back a lawsuit against the United States in the World Trade Organization.

In a conciliatory gesture, the EU is ready to reform the WTO to better address the trade practices of China that worry the United States.

BREXIT

The summit was to be a milestone in talks on Britain’s exit from the EU in March 2019, but that process has bogged down amid differences within the British government on what it wants. A deal is now postponed to October.

Alarmed by the lack of progress, EU leaders warn those concerned should prepare “for all outcomes” — code for Britain crashing out of the EU with no agreement, a disaster for business.

DEEPER EURO ZONE INTEGRATION

The summit was to be the decision time for ambitious plans to overhaul of the euro zone to make it better able to surmount future financial crises. Little of that ambition remains.

The leaders will agree that the European Stability Mechanism, the euro zone’s bailout fund, should play a bigger role in the future. But details of its new powers won’t be decided until December.

An EU banking union with a European Deposit Insurance Scheme is on hold until euro zone banks significantly reduce their ratio of bad loans.

Issues like a euro zone budget, easier sovereign debt restructuring and limits on how many bonds of a single nation banks should hold to avoid excessive risk will be discussed, but with no deadline.

DEFENCE

Under pressure from the United States, the EU leaders will promise to step up spending on defence. The pledge comes before a NATO summit in July in Brussels. (Reporting By Jan Strupczewski; additional reporting by Gabriela Baczynska, Phil Blenkinsop, Robin Emmott and Steve Scherer in Rome; editing by Larry King)

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