News Updates for 12 April

European Commission Criticised for Awarding Sensitive Data Contract to British Firm

The European Commission is preparing to award a 1.2 billion euro ($1.31 billion) contract to British Telecom (BT,) drawing criticism that a highly sensitive data service will be operated to a company with a record of mass surveillance and violating privacy rights.

Politico reported that the tender for the management of the Trans-European Services for Telematics between Administrations (TESTA) is to be awarded to BT through a Belgian subsidiary for a period of eight years, though this has not yet been officially announced.

The TESTA service is intended to provide a fully private “backbone” service, ensuring confidential and secure information transfer between European public institutions. Autonomy for EU data was brought into sharp focus after Edward Snowden’s revelations about mass surveillance, which primarily exposed the activities of the US and its close intelligence partners, one of which is the UK.

“The Commission can’t fulfill its ambitions for strategic autonomy when bureaucratic loopholes allow for non-EU countries with a history of abusing privacy to benefit from multibillion contracts,” said a source cited by Politico.

“This company will be managing the transmission of very sensitive data being sent between public bodies that are paid for by EU citizens. Risking the wider exposure of this information is perilous.”

As the former state-owned telecoms company, British Telecom has a particularly close relationship to the UK government. The European Court of Human Rights (ECHR) in 2018 ruled British authorities unlawfully shared data with global partners.

EU Moves to Suspend Payments to Hungary After Orban's Re-Election

The re-election of Hungary's hardline Prime Minister Viktor Orban, who has thumbed his nose at EU complaints about violations of the rule of law and state dominance of the country’s media, has led the European Commission to begin proceedings to suspend subsidies to his government.

Orban, a supporter of Russian President Vladimir Putin, struck a defiant tone after has re-election:

“This victory is one to remember, maybe even for the rest of our lives, because we had the biggest [range of opponents to] overpower. The left at home, the international left, the bureaucrats in Brussels, the money of the Soros empire, the international media and even the Ukrainian president in the end.”

Shortly afterwards, European Commission President Ursula von der Leyen said the Hungary would be the first subject of a new EU conditionality mechanism allowing the EU to take measures to protect its budget.

Hungary is a major recipient of EU funds and had to comply with stringent rules in order to join the Union in 2004. Since then, EU officials and other member states have become increasingly concerned about Hungary’s backsliding on Union standards on the rule of law, media freedom and LGBT+ rights. The application of conditionality to countries within the Union has been hugely controversial. Hungary and Poland’s challenge to a new Rule of Law Conditionality Mechanism was rejected by the European Court of Justice in March 2022. Now it is being brought into action for the first time.

Hungary's insistence it had sovereign rights even as a member fo the EU came up short with von der Leyen who said that, “Our conclusion is that we have to move on to the next step.” She said that a formal letter of notification to the Hungarian authorities would be sent shortly.

EU Lawmakers Pass Crypto Tracing Law Ahead of Trilogues

Shortly before behind-closed-doors trilogue negotiations begin over the EU’s long-discussed cryptocurrency regulation instrument MiCA (the Regulation of Markets in Cryptocurrency), the European Parliament has signaled its desire to see greater traceability rules for crypto transactions.

They supported draft legislation that would require crypto exchanges and other firms facilitating transactions to collect and share data on transactions and those conducting them. MEPs proposing the law said it would simplify the process of identifying and reporting suspicious transactions and discourage risky transactions from taking place within the EU

MEPs from the ECON and LIBE committees supported traceability rules for transfers of Bitcoin and other cryptocurrencies although the industry said it would erode users privacy and expose them to a higher risk of theft.

Cryptocurrency is now $2.1 billion sector worldwide but has proven a challenge for regulators. Concerns have grown that it facilitates crime, such as ransomware attacks, and may be used to launder the proceeds of crime. There has also been speculation that cryptocurrencies are being used to evade sanctions on Russia.

Controversially, the legislation would also crack down on "unhosted" wallets held by individuals, requiring them to keep records of crypto transactions and notify authorities of transactions of 1000 euros ($1087) or more. Critics said that these repositories of information would create honeypots and expose crypto users to online theft.