The CEO of OpenAI, the maker of the artificial intelligence tool ChatGPT, spent last week touring the Continent, stopping in Spain, France, Poland, Germany and the United Kingdom. He was at once talking AI regulation with policymakers — he met national leaders Pedro Sánchez, Emmanuel Macron, Mateusz Morawiecki, Olaf Scholz, and Rishi Sunak — and scouting locations for an OpenAI European office.
“We really need an office in Europe,” Altman told POLITICO at a Paris event Friday. “We also just really want one.” Under the European Union’s upcoming Artificial Intelligence Act, companies with EU-based users would need a presence in the bloc, with national “supervisory authorities” in charge of implementing the regulation. The eventual choice of its HQ location will, therefore, determine which member country will oversee it when it comes to enforcing the AI Act.
Since its launch in November 2022, OpenAI’s ChatGPT — a bot able to create texts such as songs, scripts, articles and software based on written prompts — has caused both optimism and anxiety about what the rise of AI means for the future of humankind. While some have marveled at the tool’s prowess in creating computer code and streamlining office work, others fear that it could be used to generate troves of automated disinformation, manipulative content and biased material — or even put millions of people out of a job.
Nevertheless, politicians appear eager to host the world’s hottest AI lab. Opening the event, French Digital Minister Jean-Noël Barrot read a ChatGPT-generated description of Altman (“innovative, influential, visionary”) before pitching France as a “great AI country” — rattling off a list that included talent, abundant nuclear energy (to power the computers underpinning the AI), and cultural heritage among its assets.
In the U.K., where Altman also briefed national security personnel, a person familiar with his conversation with Sunak, who was granted anonymity to talk of high-level meetings, described the British prime minister as “deferential.”
Altman is still deliberating on where to house the new office. “If you had to pick just based on the most AI research talent, you’d pick France,” he told POLITICO. “But I’ve been super-impressed by the talent and energy everywhere.” OpenAI already has staff working in London, according to LinkedIn, and in September 2022 it created a U.K. subsidiary, according to the country’s business registry.
In Paris, Altman strove to quash reports, from Reuters, that OpenAI might leave the EU if the AI Act proved too onerous. “We plan to comply. We want to offer services in Europe,” Altman told the Parisian audience. “We just want to make sure we’re technically able to. And the conversations have been super-productive this week,” he added.
First floated by the European Commission in 2021, the AI Act would ban some uses of AI uses (such as social scoring and some instances of facial recognition) and impose stricter rules related to safety and oversight when it comes to sensitive AI applications considered “high-risk.” On top of that, according to a version of the AI Act adopted earlier this month by lawmakers in the European Parliament, “generative” models such as ChatGPT — which can create new content, like text or photos — would have to disclose a summary of copyrighted materials used as training data.
The rule — which still needs to be agreed upon by representatives of the Commission and EU member countries — addresses worries from artists and publishers that AI firms might use their intellectual property without their consent or knowledge.
“That sounds like a great thing to ask for,” Altman told POLITICO. “But — due to the way these datasets are collected and the fact people have been copying data in different ways on different websites — to say I have to legally warrant every piece of copyrighted content in there is not as easy as it sounds.”
Altman thinks an easier way for creators to know if their work is being used would be based on whether their names appear in the prompts users give to an AI. “Every time you ask, ‘I want a song in the style of the Beatles,’ that would be clear,” Altman said.
Sam Altman is the CEO of OpenAI, the maker of the artificial intelligence tool ChatGPT | Drew Angerer/Getty Images
All in all, however, Altman struck an optimistic tone about the AI Act and said he’d be happy to meet EU policymakers — despite skipping a planned Brussels stop in his tour. He told POLITICO that OpenAI would join the EU’s first “sandbox,” based in Spain, where AI companies will be able to test their regulatory compliance.
“It’s going to get to a good place,” he said. “Regulatory clarity will be a good thing.”
HIROSHIMA, Japan — China on Saturday faced a strong pushback from the Group of Seven countries over its stances on Russia, Taiwan, trade bullying, economic monopoly and domestic interference, with the G7 leaders’ statement reflecting a broad convergence of the U.S., Europe and Japan on a need to change tack.
Issued around the time of Ukrainian President Volodymyr Zelenskyy’s arrival in Hiroshima, where the summit is taking place, the statement by leaders of the G7 wealthy democracies asked Beijing to do more to stop Russia’s war on Ukraine.
“We call on China to press Russia to stop its military aggression, and immediately, completely and unconditionally withdraw its troops from Ukraine,” the leaders said in the statement. “We encourage China to support a comprehensive, just and lasting peace based on territorial integrity and the principles and purposes of the U.N. Charter, including through its direct dialogue with Ukraine.”
Crucially, the U.S. and Europe — the two main constituents of the G7 — came round to a common set of language on China. For France and Germany, in particular, their focus on a conciliatory attitude to China was reflected in the final statement, which began the China section by stating “We stand prepared to build constructive and stable relations with China.”
The G7’s repeated emphasis of “de-risking, not decoupling” is a nod to the EU approach to China, as European member countries are wary of completely cutting off business ties with Beijing.
The language on Taiwan remained the same compared with recent statements. “We reaffirm the importance of peace and stability across the Taiwan Strait as indispensable to security and prosperity in the international community,” the statement said, adding there’s “no change in the basic positions” in terms of the one China policies.
Domestic interference
Apart from Russia, another new element this year is the mention of domestic interference — which human rights groups say is a reflection of the growing concern about China’s “overseas police stations” in other countries. “We call on China … not to conduct interference activities aimed at undermining the security and safety of our communities, the integrity of our democratic institutions and our economic prosperity,” the leaders said in their statement, citing the Vienna Convention which regulates diplomatic affairs.
On global economics, both sides of the Atlantic and Japan now see the need to fundamentally change the overall dynamic of economic globalization, placing security at the front of policy considerations.
“Our policy approaches are not designed to harm China nor do we seek to thwart China’s economic progress and development. A growing China that plays by international rules would be of global interest,” the G7 leaders said in the statement.
“We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying. We will take steps, individually and collectively, to invest in our own economic vibrancy. We will reduce excessive dependencies in our critical supply chains,” they said.
One central theme is economic coercion, where China has punished a wide range of countries — from Japan and Australia to Lithuania and South Korea — over the decade when political disagreements arose.
The G7 countries launched a new “coordination platform on economic coercion” to “increase our collective assessment, preparedness, deterrence and response to economic coercion,” according to the statement. They also plan to coordinate with other partners to further the work on this.
For France, the focus on a conciliatory attitude to China was reflected in the final statement, which began by stating “We stand prepared to build constructive and stable relations with China” | Pool phot by Stefan Rousseau/Getty Images
The joint call for diverse sources of critical minerals, while stopping short of naming China, is widely seen as targeted against the Asian superpower that controls, for instance, 70 percent of global rare earths output. The G7 countries “support open, fair, transparent, secure, diverse, sustainable, traceable, rules and market-based trade in critical minerals” and “oppose market-distorting practices and monopolistic policies on critical minerals,” according to the statement.
They also vow to deliver the goal of mobilizing up to $600 billion in financing for quality infrastructure through the Partnership for Global Infrastructure Investment, a rival to China’s Belt and Road initiative. “We will mobilize the private sector for accelerated action to this end,” they said.
In a bilateral in Hiroshima, British Prime Minister Rishi Sunak and French President Emmanuel Macron “welcomed the strong unity of purpose at the G7 on … our collective approach to the economic threat posed by China,” a spokesperson for Sunak’s office said.
ATHENS — The biggest crime in Greece? The state of the police force.
That’s according to opposition politicians, who are putting security and law enforcement center-stage ahead of this month’s national election.
Syriza, the leftist main opposition party, accuses the conservative New Democracy, which is hoping for another term in office after the May 21 vote, of allowing the police to become run by organized crime gangs. The conservative government maintains a lead in the polls, although a second round will likely be needed and is penciled in for July 2.
“The Greek police are collaborating with the crime instead of fighting crime,” Syriza leader Alexis Tsipras said, adding that the “Greek mafia is in the police.”
For sure, Greek police have been in the headlines for all the wrong reasons of late, thanks to the alleged involvement of police officials in mafia gangs profiting from illegal brothels and casinos; the murder of a 16-year-old Roma boy during a police chase; an alleged rape in a central Athens police department; and complaints of police brutality.
The Greek police force has a long history of corruption and excessive use of force but since New Democracy was elected in 2019 — at least in part on a law-and-order platform — complaints have soared.
In recent protests following a deadly train crash, police were accused of using unjustified violence during peaceful rallies, with several videos exposing the brutality. In one case, police officers sped toward a group of peaceful protestors on motorcycles and threw firecrackers at their feet. Prosecutors have ordered an investigation after a police tow truck drove at high speed into dumpsters being wheeled into the middle of a street by protesters.
The chief of police, Konstantinos Skoumas, was replaced in March. In an open letter, Skoumas defended his record and blamed politicians for forcing him out, saying he wouldn’t be “anyone’s scapegoat,” and arguing that his actions “caused strong resentment in certain centers of power, which, as a result, led to the violent termination of my term of office.”
The opposition blames both the police and the interior ministry that oversees it. “Impunity, the cultivation of an omertà mentality, the lack of accountability, are unfortunately characteristic of the way the Greek police operates, with the tolerance, if not the complicity, of the ministry,” said Giorgos Kaminis of the socialist Pasok party.
Minister of Civil Protection Takis Theodorikakos hit back, calling Syriza’s accusations “slanderous” and “nationally damaging,” as they could potentially scare away tourists.
“Our daily concern in practice is the safety of citizens, which is why we put an end to the lawlessness and delinquency,” he said on a recent visit to a police station. “This is why in 2022 the Greek police arrested 7,000 illegal migrants in the Attica [region that includes Athens], and now we are placing 600 new special guards at the Attica police stations,” Theodorikakos said, adding that Greece is a safe country.
Government spokesman Akis Skertsos said on Monday that there has been a reduction in all medium and low crime rates during the government’s term. Comparing January to August of 2019 to the same period in 2022 there has been a 15 percent reduction in thefts and 35 percent reduction in robberies.
Complaints on the rise
In 2022, preliminary data from the Greek Ombudsman showed a 50 percent rise in citizens’ complaints against the police compared to 2019, the last pre-pandemic year, and a 14 percent rise in incidents of racially motivated police actions.
“The tone set by the political as well as the natural, operational leadership of the security forces undoubtedly plays a vital role” in these increases, Greek Ombudsman Andreas Pottakis told POLITICO. Pottakis said the government’s attitude toward the police was “overly supportive” and could “be misinterpreted” by officers, making them think they have “carte blanche” to do whatever they want.
One of the government’s first tasks after taking office four years ago was to revive a police motorcycle unit that had been disbanded under the previous Syriza government over human rights violations. Many of the 1,500 recruits were drafted from the ranks of military special forces, bypassing the police academy.
New Democracy’s efforts to establish the first university police force in Europe also failed. Α special unit with 1,000 officers was set up in September but still hasn’t set foot on campuses. The idea is so unpopular that on the rare occasions officers from the unit have ventured near universities, they have been accompanied by riot police. Some 600 officers meant for the uni police have already been transferred to other departments, the police confirmed.
Last month, an officer fired his gun into the air outside Athens University of Economics and Business in the center of the capital during clashes with hooded, masked youths.
Theodorikakos, the interior minister, said such incidents happened because, in the pre-election period, some people want to “blow up the political climate.” He added that some people “even want him dead,” a comment that was heavily criticized by the opposition.
“Let’s stop playing games at the expense of the seriousness of the issues, as [Prime Minister Kyriakos] Mitsotakis did with the university police,” said Pasok leader Nikos Androulakis. “He made a body which was paid for by the Greek taxpayers, did nothing of substance, and instead of apologizing he continues doing the same.”
Abuses of power
Police have also been accused of resorting to violence and intimidation to hamper journalists covering demonstrations and the refugee crisis on the country’s islands.
“We have cases of police officers arresting and even stripping lawyers and journalists off their clothes or humiliating them even though their professional identity is made known,” Pottakis, the ombudsman, said. “Young people are mainly targeted. The age element seems to act as an encouragement.”
Last December a 16-year-old Roma boy died after being shot in the head by police chasing him after he fled a petrol station allegedly without paying for €20 of fuel.
A 19-year-old girl reported she had been raped in a station by two policemen who filmed their actions in the main central police department last year. The officers involved said the sex was consensual. They have been suspended pending an investigation.
“We are heading from one fiasco to another,” said Syriza MP Christos Spirtzis. “Where are the internal investigations that have been conducted? There is no information, no one has been punished.”
Such investigations have, however, been launched. In January, Supreme Court prosecutor Isidoros Dogiakos and Interior Minister Theodorikakos ordered an investigation into the relationship between senior police officials and members of the mafia, after leaked conversations showed gang leaders negotiating with officers about continuing their activities undisturbed.
Posters of the communist party in Thessaloniki | Sakis Mitrolodis/AFP via Getty Images
This was not the first report linking the police with organized crime.
Active and retired police officers stand accused, together with mafia members, of widespread corruption, with the criminal organization alleged to be running a protection racket involving 900 businesses — from clubs to brothels and casinos — with a turnover of at least €1 million per month.
Investigative website Reporters United revealed that one official implicated in the racket was promoted to director of the Attica Security Department, one of the most important positions in the fight against organized crime. Police later said they weren’t aware of the allegations against the officer.
“Citizens’ trust relationship with the police is broken when those who break their oath are not punished,” the ombudsman said.
LONDON — He hopes to win the hearts and minds of devoted Donald Trump supporters ahead of next year’s U.S. election.
But Republican presidential hopeful Ron DeSantis failed to impress British business chiefs at a high-profile London event Friday, in a tired performance described variously as “horrendous,” “low-wattage” and “like the end of an overseas trip.”
The Florida governor, expected to launch his bid next month to challenge Trump as the Republican nominee for the 2024 presidential race, met with more than 50 representatives of major U.K. firms and business lobbying groups as a part of a four-country “trade mission” ending in London Friday.
His trip was officially billed as an attempt to build Florida’s economic relationships with the U.K., Israel, South Korea and Japan, but it has been widely seen in Washington as a chance for DeSantis to present himself as a statesman on the world stage.
For several of those present, however, the statesmanship was lacking.
One U.K. business figure said DeSantis “looked bored” and “stared at his feet” as he met with titans of British industry in an event co-hosted by Lloyd’s of London — the world’s largest insurance marketplace.
“He had been to five different countries in five days and he definitely looked spent, but his message wasn’t presidential,” they told POLITICO. “He was horrendous.”
A second business figure who was in the room said it was a “low-wattage” performance and that “nobody in the room was left thinking, ‘this man’s going places’.”
They said: “It felt really a bit like we were watching a state-level politician. I wouldn’t be surprised if [people in attendance] came out thinking ‘that’s not the guy’.”
“There wasn’t any stardust.”
A third person present at the event agreed “it felt like the end of an overseas trip — which it was,” but insisted DeSantis “came across well.” The best a fourth could muster was that DeSantis was “fine.”
DeSantis also met with U.K. Foreign Secretary James Cleverly and Business and Trade Secretary Kemi Badenoch during a whistlestop tour of London, though Prime Minister Rishi Sunak avoided a bilateral with the right-wing governor.
Sunak was at a Scottish Conservative Party conference Friday, which a No. 10 official said had been in his diary for a “long time.”
DeSantis is trailing Trump in polling among Republican primary voters, but has attracted support among a number of establishment Republicans who see him as a less chaotic figure than the ex-president.
The governor won a landslide re-election last year in what is traditionally a swing state, and has attracted praise from many Republicans for his “anti-woke” agenda and his commitment to tax cuts.
A government official said Badenoch, a rising star in the Conservative Party, and DeSantis had a “fruitful” conversation and that the pair “got on well.”
However, the pair did not discuss the prospect of a state-level economic Memorandum of Understanding between the U.K. and Florida, despite Britain’s efforts to sign similar arrangements with other U.S. states.
A second official said Badenoch’s team “wanted to avoid talking about a Florida MoU” as others are being prioritized, and because of the difficult optics for a British government also dealing with Joe Biden’s White House on several trade-related issues.
A Foreign Office spokesperson said Cleverly and DeSantis discussed “the close and important relationship between the U.K. and Florida.”
“The meeting was an opportunity to strengthen ties with the … U.S. state, and support bilateral economic co-operation that is already worth more than £5 billion a year,” they said.
Activision has said it will “work aggressively” with Microsoft to overturn the U.K. competition regulator’s decision to block Microsoft’s proposed takeover of the game developer.
Microsoft and Activision were confident of approval after agreeing remedies to address concerns raised by the Competition and Markets Authority (CMA). But the CMA said on Wednesday that the proposed solution “failed to effectively address the concerns in the cloud gaming sector.”
It said: “The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft.”
A spokesperson for Activision said the CMA’s report “contradicts the ambitions of the U.K. to become an attractive country to build technology businesses… The report’s conclusions are a disservice to U.K. citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the U.K.
“Global innovators large and small will take note that — despite all its rhetoric — the U.K. is clearly closed for business.”
Microsoft submitted proposals earlier this year to address some of these concerns but the CMA said they contained “a number of significant shortcomings” as they only applied to a defined set of Activision games.
Martin Coleman, chair of the independent panel of experts conducting the investigation, said: “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.”
Brad Smith, vice chair and president of Microsoft said the company would appeal and remained “fully committed” to the deal.
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.” He said the decision showed a “flawed understanding” of the market.
Microsoft agreed to buy Activision in a $69 billion deal in January 2022, prompting investigations in the U.K., EU and U.S.
LONDON — Nigel Farage’s new right-wing party Reform UK is making overtures to Donald Trump’s potential presidential rival Ron DeSantis as the Florida governor flies into Britain for high-level talks.
DeSantis, who is expected to announce his bid for the 2024 Republican presidential candidacy in the coming weeks, will hold meetings with senior British ministers in London on Friday as a part of a four-country “trade mission” to promote Florida on the world stage.
But also chasing a meet-up will be key allies of Farage, who is honorary president of Reform UK and who first met DeSantis at last year’s Conservative Political Action Conference (CPAC) in Florida.
The pair have spokenabout U.S. and European politics, despite Farage’s previous long-standing alliance with DeSantis’ arch-rival Donald Trump, who remains the frontrunner for the 2024 Republican nomination.
Reform UK leader Richard Tice confirmed to POLITICO he was “working on” cultivating links with the Florida governor, who has become a popular figure among some British conservatives as a seemingly less chaotic right-wing alternative to Trump.
“He’s shown himself to be a courageous, bold leader and that’s very interesting. For me, I think he is actually the one that the Democrats fear,” Tice said.
“DeSantis doesn’t muck about — he just gets stuff done and tells it as it is, which is very contrary to what the Washington elite want him to say.”
‘Big supporter of Brexit’
DeSantis will meet with British Foreign Secretary James Cleverly and Business and Trade Secretary Kemi Badenoch for talks in London on Friday.
The 44-year-old is currently running second to Trump in polling among Republican primary voters, who will make their decision on a presidential candidate early next year.
DeSantis attracted praise from high-profile Republicans for winning a landslide re-election victory last year in what is traditionally a swing state, with many talking him up as the future — or DeFuture as Rupert Murdoch’s New York Post wrote — of the Republican Party.
Trump has already begun a vicious campaign to discredit the controversial governor — who has stirred anger among America’s liberals for his “anti-woke” and anti-COVID lockdown policies — by calling him “Ron DeSanctimonious” and accusing him of being a part of a “globalist” elite.
The governor said in an interview with The Times last month that he was a “big supporter of Brexit,” but that Britain’s ruling Conservative Party “hasn’t been as aggressive at fulfilling that vision as they should have been.”
Ron DeSantis will hold meetings with senior British ministers in London | Anna Moneymaker/Getty Images
Farage in turn showered praise on the governor via his GB News show, saying “it seems to me that Ron DeSantis very much has his finger on the pulse of U.K. politics.”
An ally of Farage told POLITICO that the Brexiteer highly rates DeSantis, but that he “could damage himself in a brutal fight against Trump.”
“Nigel thinks that he will be American president at some point and that he’s done a great job in Florida,” the ally said. Farage himself declined to comment for this article.
British TV presenter Piers Morgan, another former friend of Trump,interviewed DeSantis for TalkTV last month. He too has been quick to talk up the governor as the best possible candidate for the Republicans, despite his past alliance with Trump.
Morgan told a Fox News programme that the Republican Party has a “straightforward choice.” He said: “Do you want more drama and chaos and baggage, or do you want someone who is fresh, young, nearly half Trump’s age, who doesn’t have the baggage and believes in doing government a different way?”
A London-based lobbyist with ties to the DeSantis camp said many British political figures will be trying to cozy up to the Florida governor in the lead up to his likely presidential run.
“It’s peak season for grifters,” they said. “A lot of people connected to the Republican Party will try to ride both horses.”
They also said that DeSantis would “be smart” to try to raise money from British expats living in America — a path that was followed by Trump in 2016 and by former presidential candidate Mitt Romney in 2012.
Make America … Florida?
The U.K. will be the final stop on DeSantis’ four-country trade mission, following visits to Japan, South Korea and Israel.
A DeSantis spokesperson said the trip would “build on economic relationships Florida has with each country,” but it is being seen by media pundits as a way for the governor to look presidential on the global stage.
He is set to meet with Badenoch and then Cleverly tomorrow in separate bilateral meetings.
DeSantis will also attend a business roundtable with Badenoch, a rising star in her own party and the bookmakers’ favorite to become next Conservative leader, being organized by the BritishAmericanBusiness lobby group.
Farage had a long-standing alliance with DeSantis’ arch-rival Donald Trump, who remains the frontrunner for the 2024 Republican nomination | Jonathan Bachman/Getty Images
British ministers will be eager to know the governor’s views on international trade, given U.S. President Joe Biden — who officially launched his own re-election campaign this week — refused to continue the post-Brexit U.K.-U.S. trade talks that began under the Trump administration.
Leslie Vinjamuri, U.S. expert at the Chatham House think tank in London, said DeSantis will want the trip to show economic competence to a wider American audience.
“It makes complete sense as a governor and a presidential hopeful that he would demonstrate his economic credentials. America is about the land of the free and the opportunity to succeed — and getting rich,” she said.
“Having that very strong relationship and connectivity to the U.K. plays extremely well in the U.S. — it certainly plays well in Florida.”
DeSantis’ view of the Russo-Ukraine war will also be scrutinized if and when he announces his presidential run, after he recently called the conflict a mere “territorial dispute.”
LONDON — Joe Biden is not someone known for his subtlety.
His gaffe-prone nature — which saw him last week confuse the New Zealand rugby team with British forces from the Irish War of Independence — leaves little in the way of nuance.
But he is also a sentimental man from a long gone era of Washington, who specializes in a type of homespun, aw-shucks affability that would be seen as naff in a younger president.
His lack of subtlety was on show in Belfast last week as he issued a thinly veiled ultimatum to the Democratic Unionist Party (DUP) — return to Northern Ireland’s power-sharing arrangements or risk losing billions of dollars in U.S. business investment.
The DUP — a unionist party that does not take kindly to lectures from American presidents — is refusing to sit in Stormont, the Northern Ireland Assembly, due to its anger with the post-Brexit Northern Ireland protocol, which has created trade friction between the region and the rest of the U.K.
The DUP is also refusing to support the U.K.-EU Windsor Framework, which aims to fix the economic problems created by the protocol, despite hopes it would see the party reconvene the Northern Irish Assembly.
The president on Wednesday urged Northern Irish leaders to “unleash this incredible economic opportunity, which is just beginning.”
However, American business groups paint a far more complex and nuanced view of future foreign investment into Northern Ireland than offered up by Biden.
Biden told a Belfast crowd on Wednesday there were “scores of major American corporations wanting to come here” to invest, but that a suspended Stormont was acting as a block on that activity.
One U.S. business figure, who spoke on condition of anonymity, said Biden’s flighty rhetoric was “exaggerated” and that many businesses would be looking beyond the state of the regional assembly to make their investment decisions.
The president spoke as if Ulster would be rewarded with floods of American greenbacks if the DUP reverses its intransigence, predicting that Northern Ireland’s gross domestic product (GDP) would soon be triple its 1998 level. Its GDP is currently around double the size of when the Good Friday Agreement was struck in 1998.
Emanuel Adam, executive director of BritishAmerican Business, said this sounded like a “magic figure” unless Biden “knows something we don’t know about.”
DUP MP Ian Paisley Jr. told POLITICO that U.S. politicians for “too long” have “promised some economic El Dorado or bonanza if you only do what we say politically … but that bonanza has never arrived and people are not naive enough here to believe it ever will.”
“A presidential visit is always welcome, but the glitter on top is not an economic driver,” he said.
Joe Biden addresses a crowd of thousands on April 14, 2023 in Ballina, Ireland | Charles McQuillan/Getty Images
Facing both ways
The British government is hoping the Windsor Framework will ease economic tensions in Northern Ireland and create politically stable conditions for inward foreign direct investment.
The framework removes many checks on goods going from Great Britain to Northern Ireland and has begun to slowly create a more collaborative relationship between London and Brussels on a number of fronts — two elements which have been warmly welcomed across the Atlantic.
Prime Minister Rishi Sunak has said Northern Ireland is in a “special” position of having access to the EU’s single market, to avoid a hard border with the Republic of Ireland, and the U.K.’s internal market.
“That’s like the world’s most exciting economic zone,” Sunak said in February.
Jake Colvin, head of Washington’s National Foreign Trade Council business group, said U.S. firms wanted to see “confidence that the frictions over the protocol have indeed been resolved.”
“Businesses will look to mechanisms like the Windsor Framework to provide stability,” he said.
Marjorie Chorlins, senior vice president for Europe at the U.S. Chamber of Commerce, said the Windsor Framework was “very important” for U.S. businesses and that “certainty about the relationship between the U.K. and the EU is critical.”
She said a reconvened Stormont would mean more legislative stability on issues like skills and health care, but added that there were a whole range of other broader U.K. wide economic factors that will play a major part in investment decisions.
This is particularly salient in a week where official figures showed the U.K.’s GDP flatlining and predictions that Britain will be the worst economic performer in the G20 this year.
“We want to see a return to robust growth and prosperity for the U.K. broadly and are eager to work with government at all levels,” Chorlins said.
“Political and economic instability in the U.K. has been a challenge for businesses of all sizes.”
Prime Minister Rishi Sunak has said Northern Ireland is in a “special” position of having access to the EU’s single market | Pool photo by Paul Faith/Getty Images
Her words underline just how much global reputational damage last year’s carousel of prime ministers caused for the U.K., with Bank of England Governor Andrew Bailey recently warning of a “hangover effect” from Liz Truss’ premiership and the broader Westminster psychodrama of 2022.
America’s Northern Ireland envoy Joe Kennedy, grandson of Robert Kennedy, accompanied the president last week and has been charged with drumming up U.S. corporate interest in Northern Ireland.
Kennedy said Northern Ireland is already “the No. 1 foreign investment location for proximity and market access.”
Northern Ireland has been home to £1.5 billion of American investment in the past decade and had the second-most FDI projects per capita out of all U.K. regions in 2021.
Claire Hanna, Westminster MP for the nationalist SDLP, believes reconvening Stormont would “signal a seriousness that there isn’t going to be anymore mucking around.”
“It’s also about the signal that the restoration of Stormont sends — that these are the accepted trading arrangements,” she said.
Hanna says the DUP’s willingness to “demonize the two biggest trading blocs in the world — the U.S. and EU” — was damaging to the country’s future economic prospects.
‘The money goes south’
At a more practical level, Biden’s ultimatum appears to carry zero weight with DUP representatives.
DUP leader Jeffrey Donaldson made it clear last week that he was unmoved by Biden’s economic proclamations and gave no guarantee his party would sit in the regional assembly in the foreseeable future.
“President Biden is offering the hope of further American investment, which we always welcome,” Donaldson told POLITICO.
“But fundamental to the success of our economy is our ability to trade within our biggest market, which is of course the United Kingdom.”
A DUP official said U.S. governments had been promising extra American billions in exchange “for selling out to Sinn Féin and Dublin” since the 1990s and “when America talks about corporate investment, we get the crumbs and that investment really all ends up in the Republic [of Ireland].”
“President Biden is offering the hope of further American investment, which we always welcome,” Donaldson said | Behal/Irish Government via Getty Images
“The Americans talk big, but the money goes south,” the DUP official said.
This underscores the stark reality that challenges Northern Ireland any time it pitches for U.S. investment — the competing proposition offered by its southern neighbor with its internationally low 12.5 percent rate on corporate profits.
Emanuel Adam with BritishAmerican Business said there was a noticeable feeling in Washington that firms want to do business in Dublin.
“When [Irish Prime Minister] Leo Varadkar and his team were here recently, I could tell how confident the Irish are these days,” he said. “There are not as many questions for them as there are around the U.K.”
Biden’s economic ultimatum looks toothless from the DUP’s perspective and its resonance may be as short-lived as his trip to Belfast itself.
This story has been updatedto correct a historical reference.
ABOARD COTAM UNITÉ (FRANCE’S AIR FORCE ONE) — Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China.
Speaking with POLITICO and two French journalists after spending around six hours with Chinese President Xi Jinping during his trip, Macron emphasized his pet theory of “strategic autonomy” for Europe, presumably led by France, to become a “third superpower.”
He said “the great risk” Europe faces is that it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy,” while flying from Beijing to Guangzhou, in southern China, aboard COTAM Unité, France’s Air Force One.
Xi Jinping and the Chinese Communist Party have enthusiastically endorsed Macron’s concept of strategic autonomy and Chinese officials constantly refer to it in their dealings with European countries. Party leaders and theorists in Beijing are convinced the West is in decline and China is on the ascendant and that weakening the transatlantic relationship will help accelerate this trend.
“The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron said in the interview. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction,” he said.
Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend.
Those exercises were a response to Taiwanese President Tsai Ing-Wen’s 10-day diplomatic tour of Central American countries that included a meeting with Republican U.S. House Speaker Kevin McCarthy while she transited in California. People familiar with Macron’s thinking said he was happy Beijing had at least waited until he was out of Chinese airspace before launching the simulated “Taiwan encirclement” exercise.
Beijing has repeatedly threatened to invade in recent years and has a policy of isolating the democratic island by forcing other countries to recognize it as part of “one China.”
Taiwan talks
Macron and Xi discussed Taiwan “intensely,” according to French officials accompanying the president, who appears to have taken a more conciliatory approach than the U.S. or even the European Union.
“Stability in the Taiwan Strait is of paramount importance,” European Commission President Ursula von der Leyen, who accompanied Macron for part of his visit, said she told Xi during their meeting in Beijing last Thursday. “The threat [of] the use of force to change the status quo is unacceptable.”
Chinese President Xi Jinping and French President Emmanuel Macron in Guangdong on April 7, 2023 | Pool Photo by Jacques Witt / AFP via Getty Images
Xi responded by saying anyone who thought they could influence Beijing on Taiwan was deluded.
Macron appears to agree with that assessment.
“Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said.
“Europe is more willing to accept a world in which China becomes a regional hegemon,” said Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics. “Some of its leaders even believe such a world order may be more advantageous to Europe.”
In his trilateral meeting with Macron and von der Leyen last Thursday in Beijing, Xi Jinping went off script on only two topics — Ukraine and Taiwan — according to someone who was present in the room.
“Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow,” this person said. “He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans.”
In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.
‘Vassals’ warning
Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries.
He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing.
Macron has long been a proponent of strategic autonomy for Europe | Ludovic Marin/AFP via Getty Images
“If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals,” he said.
Russia, China, Iran and other countries have been hit by U.S. sanctions in recent years that are based on denying access to the dominant dollar-denominated global financial system. Some in Europe have complained about “weaponization” of the dollar by Washington, which forces European companies to give up business and cut ties with third countries or face crippling secondary sanctions.
While sitting in the stateroom of his A330 aircraft in a hoodie with the words “French Tech” emblazoned on the chest, Macron claimed to have already “won the ideological battle on strategic autonomy” for Europe.
He did not address the question of ongoing U.S. security guarantees for the Continent, which relies heavily on American defense assistance amid the first major land war in Europe since World War II.
As one of the five permanent members of the U.N. Security Council and the only nuclear power in the EU, France is in a unique position militarily. However, the country has contributed far less to the defense of Ukraine against Russia’s invasion than many other countries.
As is common in France and many other European countries, the French President’s office, known as the Elysée Palace, insisted on checking and “proofreading” all the president’s quotes to be published in this article as a condition of granting the interview. This violates POLITICO’s editorial standards and policy, but we agreed to the terms in order to speak directly with the French president. POLITICO insisted that it cannot deceive its readers and would not publish anything the president did not say. The quotes in this article were all actually said by the president, but some parts of the interview in which the president spoke even more frankly about Taiwan and Europe’s strategic autonomy were cut out by the Elysée.
Chinese leader Xi Jinping had one overriding message for his visiting French counterpart Emmanuel Macron this week: Don’t let Europe get sucked into playing America’s game.
Beijing is eager to avoid the EU falling further under U.S. influence, at a time when the White House is pursuing a more assertive policy to counter China’s geopolitical and military strength.
Russia’s yearlong war against Ukraine has strengthened the alliance between Europe and the U.S., shaken up global trade, reinvigorated NATO and forced governments to look at what else could suddenly go wrong in world affairs. That’s not welcome in Beijing, which still views Washington as its strategic nemesis.
This week, China’s counter-offensive stepped up a gear, turning on the charm. Xi welcomed Macron into the grandest of settings at the Great Hall of the People in Beijing, along with European Commission chief Ursula von der Leyen. This was in sharp contrast to China’s current efforts to keep senior American officials at arm’s length, especially since U.S. Secretary of State Antony Blinken called off a trip to Beijing during the spy balloon drama earlier this year.
Both American and Chinese officials know Europe’s policy toward Beijing is far from settled. That’s an opportunity, and a risk for both sides. In recent months, U.S. officials have warned of China’s willingness to send weapons to Russia and talked up the dangers of allowing Chinese tech companies unfettered access to European markets, with some success.
TikTok, which is ultimately Chinese owned, has been banned from government and administrative phones in a number of locations in Europe, including in the EU institutions in Brussels. American pressure also led the Dutch to put new export controls on sales of advanced semiconductor equipment to China.
Yet even the hawkish von der Leyen, a former German defense minister, has dismissed the notion of decoupling Europe from China’s economy altogether. From Beijing’s perspective, this is yet another significant difference from the hostile commercial environment being promoted by the U.S.
Just this week, 36 Chinese and French businesses signed new deals in front of Macron and Xi, in what Chinese state media said was a sign of “the not declining confidence in the Chinese market of European businesses.” While hardly a statement brimming with confidence, it could have been worse.
For the last couple of years European leaders have grown more skeptical of China’s trajectory, voicing dismay at Beijing’s way of handling the coronavirus pandemic, the treatment of protesters in Hong Kong and Xinjiang’s Uyghur Muslims, as well as China’s sanctions on European politicians and military threats against Taiwan.
Then, Xi and Vladimir Putin hailed a “no limits” partnership just days before Russia invaded Ukraine. While the West rolled out tough sanctions on Moscow, China became the last major economy still interested in maintaining — and expanding — trade ties with Russia. That shocked many Western officials and provoked a fierce debate in Europe over how to punish Beijing and how far to pull out of Chinese commerce.
Beijing saw Macron as the natural partner to help avoid a nosedive in EU-China relations, especially since Angela Merkel — its previous favorite — was no longer German chancellor.
Macron’s willingness to engage with anyone — including his much-criticized contacts with Putin ahead of his war on Ukraine — made him especially appealing as Beijing sought to drive a wedge between European and American strategies on China.
Xi Jinping sees Macron as the natural to Angela Merkel, his previous partner in the West who helped avoid a nosedive in EU-China relations | Ludovic Marin/AFP via Getty Images
Not taking sides
“I’m very glad we share many identical or similar views on Sino-French, Sino-EU, international and regional issues,” Xi told Macron over tea on Friday, in the southern metropolis of Guangzhou, according to Chinese state media Xinhua.
Strategic autonomy, a French foreign policy focus, is a favorite for China, which sees the notion as proof of Europe’s distance from the U.S. For his part, Macron told Xi a day earlier that France promotes “European strategic autonomy,” doesn’t like “bloc confrontation” and believes in doing its own thing. “France does not pick sides,” he said.
The French position is challenged by some in Europe who see it as an urgent task to take a tougher approach toward Beijing.
“Macron could have easily avoided the dismal picture of European and transatlantic disunity,” said Thorsten Benner, director of the Berlin-based Global Public Policy Institute. “Nobody forced Macron to show up with a huge business delegation, repeating disproven illusions of reciprocity and deluding himself about working his personal magic on Xi to get the Chinese leader to turn against Putin.”
Holger Hestermeyer, a professor of EU law at King’s College London, said Beijing will struggle to split the transatlantic alliance.
“If China wants to succeed with building a new world order, separating the EU from the U.S. — even a little bit — would be a prized goal — and mind you, probably an elusive one,” Hestermeyer said. “Right now the EU is strengthening its defenses specifically because China tried to play divide and conquer with the EU in the past.”
Xi’s focus on America was unmistakable when he veered into a topic that was a long way from Europe’s top priority, during his three-way meeting with Macron and von der Leyen. A week earlier the Biden administration had held its second Summit for Democracy, in which Russia and China were portrayed as the main threats.
“Spreading the so-called ‘democracy versus authoritarianism’ [narrative],” Xi told his European guests on Thursday, “would only bring division and confrontation to the world.”
BEIJING — Chinese President Xi Jinping showed no sign of changing his position over Russia’s war on Ukraine after talks Thursday with French counterpart Emmanuel Macron.
On the second day of Macron’s state visit to China, Xi took his long-standing line on Russia’s full-scale invasion of Ukraine — saying that “all sides” have “reasonable security concerns” — and gave no hint he would use his influence to help end the conflict.
“China is willing to jointly appeal with France to the international community to remain rational and calm,” was as far as the Chinese leader would go during a press conference at the Great Hall of the People in Beijing.
“Peace talks should be resumed as soon as possible, taking into account the reasonable security concerns of all sides with reference to the U.N. Charter … seeking political resolution and constructing a balanced, effective and sustainable European security framework,” he added, sitting next to Macron.
The French president arrived in China on Wednesday in the hope of pushing China to use its leverage with Russia to end the conflict, and to get Beijing to speak out against the Kremlin’s threat to host nuclear missiles in Belarus.
During his private meeting with Xi, Macron raised Western concerns that Beijing will deliver weapons to Russia, according to a French diplomat with knowledge of the talks. But the French leader didn’t seem to get far.
“The president urged Xi not to make deliveries to Russia that would help its war against Ukraine. Xi said this war is not his,” the diplomat said, speaking anonymously to describe the private session.
The talks — which an Elysée Palace official nonetheless described as “frank and constructive” — ultimately lasted an hour and a half.
Afterward, the action moved to a signing ceremony, where officials and business leaders inked several deals, including the sale of 160 Airbus aircraft. According to the Elysée, the Chinese government approved the purchase of 150 A320 Neo planes and 10 A350s — a delivery that was part of a €36-billion deal Airbus announced last year. The information contradicted previous information from an Elysée official, who said a new sale was being negotiated.
During the deal-signing ceremony, every Chinese minister and business executive bowed deeply to Xi before signing the contracts with their French counterparts.
Xi and Macron then stepped in for their joint appearance, billed as a “press conference with Communist characteristics” — essentially meaning no press questions allowed.
The two leaders’ contrasting styles were immediately apparent. Xi read his carefully scripted remarks while staring straight ahead before ceding to Macron. The French leader then proceeded to speak for roughly twice as long as his host — a protocol faux pas that members of Xi’s Chinese entourage noticed.
Xi himself at times looked impatient and annoyed as Macron continued speaking. The Chinese leader heaved several deep sighs and appeared uncomfortable as Macron addressed him directly while apparently ad-libbing on the Ukraine war and their joint responsibility to uphold peace.
Macron also appealed to Xi to explicitly condemn Russia’s aggression against Ukraine.
“Speaking about peace and stability means talking about the war waged by Russia against Ukraine. You’ve made some important comments,” the French leader said. “This is a war that involves all of us because a member of the Security Council has decided to violate the U.N. charter. We cannot accept that.”
Macron and Xi spent one and a half hours in bilateral talks that were described as “frank and constructive” by an Elysée Palace official | POOL photo by Ng Han Guan/AFP via Getty Images
French lawmaker Anne Genetet, who also held talks Thursday with Chinese officials, admitted there were “no surprises” in the Chinese position on Ukraine, but argued it was still useful to lay some groundwork on the issue.
“It’s the beginning,” Genetet said. “There will be more talks and some private moments [between Xi and Macron]. Maybe we’ll get some other messages.”
Xi and Macron will head to the Chinese city of Guangzhou on Friday, where they will hold more talks and a private dinner.
However, in what will be read as a concession to the French, Xi did talk about the need for the warring parties to “protect victims including women and children,” which comes after the International Criminal Court issued an arrest warrant against Putin over his role in illegally transferring Ukrainian children to Russia.
Xi didn’t explicitly mention Russia in his remarks, though. And in a move likely to irk U.S. officials, Xi also said that China and France should “resume exchanges between the legislative bodies and militaries.” He then included France in a common refrain that Chinese officials use to criticize the U.S.
“China and France shall continue to … oppose Cold War mentality and bloc confrontation, joining hands in addressing all types of global challenges,” Xi said.
On Thursday, Xi also held talks with Macron and with European Commission President Ursula von der Leyen, who was invited by Macron to showcase European unity but who will not take part in many of the events between the Chinese and French leaders.
Indeed, von der Leyen held her own solo press conference as night fell on Thursday in Beijing. Unencumbered by the formalities of a state visit, the EU leader took questions from reporters and sent several pointed messages to Beijing.
She warned it against aiding Moscow’s war effort in Ukraine: “Arming the aggressor is a clear violation of international law — he should never be armed,” she said. “This would indeed significantly harm the relationship between the European Union and China.”
And she touched a diplomatic third rail: Taiwan.
“Nobody should unilaterally change the status quo by force in this region,” she said, alluding to China’s threats toward the self-governing island. “The threat of the use of force to change the status quo is unacceptable.”
Von der Leyen did echo Macron’s message, however, that China could play an important role in Ukraine, calling Beijing’s stance “crucial.”
She added: “We expect China will play its role and promote a just peace, one that respects Ukraine’s territorial sovereignty.”
Clea Caulcutt and Jamil Anderlini reported from Beijing. Stuart Lau reported from Brussels.
LONDON — As the U.K. prepares to overhaul its competition regime, a fierce lobbying battle has broken out between the world’s largest tech companies and their challengers.
Ministers are gearing up to publish new competition legislation in late-April, giving regulators more power to stop a handful of companies dominating digital markets.
But concern over the U.S. tech giants’ influence in Westminster has prompted ministers close to the bill to warn that the new legislation could be watered down.
Two ministers have expressed concerns that Big Tech firms are seeking to weaken the process for appealing decisions made by the country’s beefed-up competition regulator, according to multiple people who were either present at those discussions or whose organizations were represented there. They requested anonymity to discuss private meetings.
One MP said a minister had also approached them to raise concerns, while at an industry roundtable, two ministers spoke of worry about Big Tech firms trying to influence the appeal mechanism.
An industry representative said: “There has been a sh*t load of lobbying from Big Tech, but I don’t know if they’ll succeed.”
Appealing to who?
The Digital Markets, Competition and Consumer Bill will give new powers to a branch of the Competition and Markets Authority called the Digital Markets Unit (DMU). Under the plan, the DMU will be able fine a company 10 percent of their annual turnover for breaching a code of conduct.
The code, which has not yet been published, would be designed to ensure that a company with ‘strategic market status’ cannot “unfairly use its market power and strategic position to distort or undermine competition between users of the … firm’s services,” the government has said.
Jonathan Jones, senior consultant in public law at Linklaters and formerly the head of the U.K. government’s legal department, wrote that the plan would have “very significant consequences” for Big Tech firms and could force them to “significantly alter” their business models.
One of Big Tech’s concerns is that the bill will only allow companies to appeal decisions made by the DMU on whether or not the right process was followed, known as the judicial review standard, rather than the content or merit of the decision. That puts it in line with other regulators and should mean the process is faster, but it also makes it harder to appeal decisions.
Big Tech firms want to be able to appeal on the “merit”, arguing it is unfair that they can’t challenge whether a DMU decision was correct or not. They also argue it won’t necessarily be slower than the judicial review standard.
One of the biggest fears from medium-sized firms is that the biggest tech companies will use strategies to lengthen the appeals process or even get the entire bill delayed | iStock
Tech Minister Paul Scully, who has responsibility for the bill, told POLITICO: “We want to make sure that the legislation is flexible, proportionate and fair to both big and challenger companies. Any remediation needs to be in place quickly as digital markets move quickly.”
One representative of a mid-sized tech firm said: “This is the fundamental point of contention and it will influence whether the bill works for SMEs and challengers against Big Tech.
“The fear is that big companies with big lawyers understand how to eke things out (during the appeals process) so that they’ll keep their market advantage for years. We’ve heard ministers express these concerns too.”
Consumer group Which? is also urging the government to stay with its proposed appeal system. “For the DMU to work effectively, the government must stick to its guns and ensure that the decisions it reaches are not tied up in an elongated appeals process,” said director of policy, Rocio Concha.
‘Investigator and executioner’
But Jones argued that the bill will make the DMU too powerful.
“The DMU will have power to decide who it is going to regulate, set the rules that apply to them, and then enforce those rules,” he wrote. “This makes the DMU effectively legislator, investigator and executioner.”
On the appeal method, Jones argued that it is an “oversimplification” to think that the government’s proposed standard of appeal would be quicker than one based on merits.
Ben Greenstone, managing director of tech policy consultancy Taso Advisory, said: “I can understand the argument from both sides. The largest tech companies are incentivized to push back against this, but my guess is the government will keep the appeals process as it is, because it keeps it in line with the wider competition regime.”
However, he added the bill would work better if some sort of compromise can be found with the biggest tech companies.
The international playbook
One of the biggest fears from medium-sized firms is that the biggest tech companies will use strategies already tried and tested abroad to lengthen the appeals process or even get the entire bill delayed.
Rick VanMeter, executive director of the Coalition for App Fairness, which is based in the U.S. but has U.K. members, said: “In the U.S. we’ve learned that these mobile app gatekeepers’ will stop at nothing to preserve the status quo and squash their competition.
“To be successful, policymakers around the world must see through these gatekeepers’ efforts for what they are: self-serving attempts to retain their market power.”
Google and Microsoft declined to comment. Apple did not respond.
The outlook for the global economy is likely to remain weak in the medium term amid heightened risks to financial stability, according to International Monetary Fund Managing Director Kristalina Georgieva.
“We expect 2023 to be another challenging year, with global growth slowing to below 3 percent as scarring from the pandemic, the war in Ukraine, and monetary tightening weigh on economic activity,” Georgieva said on Sunday at a conference in China. “Even with a better outlook for 2024, global growth will remain well below its historic average of 3.8 percent,” she said.
“It is also clear that risks to financial stability have increased,” Georgieva said. “At a time of higher debt levels, the rapid transition from a prolonged period of low-interest rates to much higher rates — necessary to fight inflation — inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies.”
Policymakers have acted decisively in response to threats to financial stability, helping ease market stress to some extent, she said. But “uncertainty is high, which underscores the need for vigilance,” she added.
Georgieva also warned about risks of geo-economic fragmentation, which she said “could mean a world split into rival economic blocs — a ‘dangerous division’ that would leave everyone poorer and less secure. Together, these factors mean that the outlook for the global economy over the medium term is likely to remain weak,” she said.
Georgieva spoke during the second day of the China Development Forum in Beijing. The three-day annual event is a social mixer of politics and business, bringing together members of the Chinese Politburo with dozens of CEOs from Western companies like Siemens, Mercedes-Benz and Allianz.
“Fortunately, the news on the world economy is not all bad. We can see some ‘green shoots,’ including in China,” Georgieva said, adding that Beijing is set to account for around a third of the global growth this year.
BERLIN — Germany’s Christian Democrats, the country’s largest opposition group, are planning to shift away from the pragmatic stance toward China that characterized Angela Merkel’s 16 years as chancellor, claiming that maintaining peace through trade has failed.
It’s a remarkable course change for the conservative party that pursued a strategy of rapprochement and economic interdependence toward China and Russia during Merkel’s decade and a half in power. The volte-face has been spurred by Moscow’s invasion of Ukraine and Beijing’s increasingly aggressive stance — both economically and politically — in the Asian region and beyond.
According to a draft position paper seen by POLITICO, the conservatives say the idea of keeping peace through economic cooperation “has failed with regard to Russia, but increasingly also China.” The 22-page paper, which is to be adopted by the center-right Christian Democratic Union/Christian Social Union (CDU/CSU) parliamentary group in the Bundestag around Easter, outlines key points for a new China policy.
In a world order that is changing after Russia’s full-scale invasion of Ukraine, Chancellor Olaf Scholz last year announced a Zeitenwende, or major turning point, in German security policy. Economy Minister Robert Habeck and Foreign Minister Annalena Baerbock, in particular, have stressed the necessity of a comprehensive China strategy, an idea already mentioned in the coalition agreement to form Scholz’s government. Their ministries have elaborated two different drafts, but a comprehensive strategy is not yet in sight.
“We realize at this point in time, with some surprise, which is why we prepared and presented this paper, that the German government is significantly behind schedule on key foreign and security policy documents,” said CDU foreign policy lawmaker Johann Wadephul.
The foreword to the position paper states that “the rise of communist China is the central, epochal challenge of the 21st century for all states seeking to preserve, strengthen, and sustain the rules-based international order.” The CDU/CSU parliamentary group is open to working out a “national consensus” with Scholz’s government. That consensus, the group says, must be embedded in the national security strategy and in a European China strategy.
The relationship with China is described in the same triad fashion that wasformulated by the European Commission in 2019 and is in the coalition agreement of the current German government. Under this strategy,the Asian country is seen as a partner, economic competitor and systemic rival.
But the CDU/CSU group’s paper says policy should move away from a Beijing-friendly, pragmatic stance toward China, especially on trade. “We should not close our eyes to the fact that China has shifted the balance on its own initiative and clearly pushed the core of the relationship toward systemic rivalry,” the text states.
“I say to this also self-critically [that] this means for the CDU/CSU a certain new approach in China policy after a 16-year government period,” Wadephul said.
The paper calls for a “Zeitenwende in China policy,” too, concluding that Germany should respond “with the ability and its own strength to compete” wherever China seeks and forces competition; should build up its resilience and defensive capability and form as well as expand alliances and partnerships with interest and value partners; and demonstrate a willingness to partner where it is openly, transparently and reliably embraced by China.
The CDU/CSU papercalls for a European China strategy and a “European China Council” with EU neighbors for better cooperation. A central point is also strengthening reciprocity and European as well as German sovereignty.
“Decoupling from China is neither realistic nor desirable from a German and European perspective,” according to the text.
To better monitor dependencies, the paper proposes an expert commission in the Bundestag that would present an annual “China check” on dependencies in trade, technology, raw materials and foreign trade, with the overall aim of developing a “de-risking” strategy.
The Hungarian parliament ratified Finland’s NATO membership on Monday, putting Helsinki one step closer to joining the alliance but leaving Sweden waiting in the wings.
Members of Hungary’s parliament voted by a margin of 182 to 6 in favor of Finnish accession.
Helsinki now only needs the Turkish parliament’s approval — expected soon — to become a NATO member.
Hungary’s move comes after repeated delays and political U-turns.
Hungarian officials spent months telling counterparts they had no objections and their parliament was simply busy with other business.
Budapest then changed its narrative last month, with Hungarian Prime Minister Viktor Orbán — who has an iron grip over his ruling Fidesz party — arguing the point that some of his legislators had qualms regarding criticism of the state of Hungarian democracy.
Finland and Sweden have been at the forefront of safeguarding democratic standards in Hungary, speaking out on the matter long before many of their counterparts.
But earlier this month — just as Turkish President Recep Tayyip Erdoğan announced that he will support Finland’s NATO membership — the Fidesz position flipped again, with its parliamentary group chair then announcing support for Helsinki’s bid.
Turkey’s parliament is expected to ratify Finnish membership soon. But it is keeping Sweden in limbo, as Turkish officials say they want to see the country implement new anti-terror policies before giving Ankara’s green light.
Following in Turkey’s footsteps, Hungary is now also delaying a decision on Sweden indefinitely — prompting criticism from Orbán’s critics.
Attila Ara-Kovács, a member of the European Parliament from Hungary’s opposition Democratic Coalition, said that Orbán’s moves are part of a strategy to fuel anti-Western attitudes at home.
The government’s aim is “further inciting anti-Western and anti-NATO sentiment within Hungary, especially among Orbán’s fanatical supporters — and besides, of course, to serve Russian interests,” he said.
“This has its consequences,” Ara-Kovács said, adding that “support for the EU and NATO in the country is significantly and constantly decreasing.”
A recent Eurobarometer poll found that 39 percent of Hungarians view the EU positively. A NATO report, published last week, shows that 77 percent of Hungarians would vote to stay in the alliance — compared to 89 percent in Poland and 84 percent in Romania.
But Hungarian officials are adding the spin that they do support Sweden’s NATO membership.
The Swedish government “constantly questioning the state of Hungarian democracy” is “insulting our voters, MPs and the country as a whole,” said Balázs Orbán, the Hungarian prime minister’s political director (no relation to the prime minister).
It is “up to the Swedes to make sure that Hungarian MPs’ concerns are addressed,” he tweeted on Sunday. “Our goal,” he added, “is to support Sweden’s NATO accession with a parliamentary majority as broad as possible.”
European Commission President Ursula von der Leyen has declared Europe’s dependence on Russian oil and gas “history.”
But others, from senior Ukrainian officials to MEPs and industry insiders, say that chapter of history is still being written.
Significant quantities of Russian hydrocarbons, particularly oil, are still flowing around sanctions and into the European market, they say, earning payments that fund Vladimir Putin’s war machine.
“I had a friend in New York in the 1990s who complained cockroaches would get into his apartment through any available hole — that’s what Russia is doing with its energy,” Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskyy, told POLITICO. “We have to fix these holes to stop Russia receiving this blood money they are using to finance the military machine that is destroying our country and killing our people.”
Crude oil is notoriously difficult to track on global markets. It can easily be mixed or blended with other shipments in transit countries, effectively creating a larger batch of oil whose origins can’t be determined. The refining process, necessary for any practical application, also removes all traces of the feedstock’s origin.
A complex network of shipping companies, carrying the flags of inscrutable offshore jurisdictions, adds a further layer of mystery; some have been accused of helping Russia to hide the origin of its crude exports using a variety of different means.
“Unlike pipeline gas, the oil market is global. Swap and netting systems, and mixing varieties are common practice,” said Mikhail Khodorkovsky, a prominent exiled critic of Putin and the former CEO of oil and gas giant Yukos.
“The result of the embargo is a significant increase in Russian transportation costs, a significant redistribution of income in favor of intermediaries, and some additional discount due to the narrowing of the buyers’ market.”
Crude workarounds?
The EU has largely banned Russian fossil fuels since the invasion of Ukraine in February 2022, with exceptions for limited quantities of pipeline crude oil, pipeline gas, liquefied natural gas (LNG), and oil products.
But large volumes of Russian crude oil — a bigger source of revenue than gas — are still being shipped onto global markets, leading some experts to suspect they are finding their way to Europe’s market through the back door.
“Since the introduction of sanctions, the volumes of crude oil Russia is exporting have remained more or less steady,” said Saad Rahim, chief economist at global commodities trading firm Trafigura. “It’s possible that Russian oil is still being sold on to the EU and Western nations via middlemen.”
Crude oil is notoriously difficult to track on global markets | Image via iStock
One potential route into Europe is through Azerbaijan, which borders Russia and is the starting point of the Baku-Tbilisi-Ceyhan (BTC) pipeline, operated by BP. The port of Ceyhan, in Turkey, is a major supply hub from which crude oil is shipped to Europe; it also receives large quantities from Iraq through the Kirkuk-Ceyhan pipeline.
François Bellamy, a French MEP and member of the European Parliament’s Committee on Industry, Research and Energy, aired suspicions about this route in a recent question to the Commission. Data show that Azerbaijan exported 242,000 barrels a day more than it produced between April and July last year, he said — a large margin over domestic production, which stood at 648,000 barrels a day last month and is in long-term decline, according to ministry figures.
“How can a country diminish its production and increase its exports at the same time? There is something completely inconsistent in the figures and this inconsistency creates suspicions that sanctions are being circumvented,” Bellamy said.
A spokesperson for the Commission said it is working to crack down on loopholes in sanctions regimes and has appointed the EU’s former ambassador to the U.S., David O’Sullivan, as a special envoy tasked with tackling circumvention. The official also pointed out that data cited by Bellamy on Azerbaijani oil transactions, the most recent publicly available, “happened before the sanctions entered into force so there is no question of evasion of sanctions there.”
“Azerbaijan does not export Russian oil to the EU via the BTC pipeline,” said Aykhan Hajizada, spokesperson for the country’s foreign ministry, adding that while “Azerbaijan continues to use all non-sanctioned oil regardless of source,” it “remains committed to conducting its supply and trading operations with the utmost care and diligence, in line with relevant laws and regulations.”
BP has previously been forced to deny that the BTC pipeline carries Russian oil, and data seen by POLITICO for crude shipments from Ceyhan shows a recent dip in the volume of exports to the EU, from around 3 million tons per month (about 700,000 barrels per day) in early 2022 to around 2 million tons a month this year.
Slick operations
At the same time, though, Turkey doubled its direct imports of Russian oil last year and has refused to impose sanctions on Russian crude despite simultaneously offering military and humanitarian support to Ukraine.
Finland’s Centre for Research on Energy and Clean Air (CREA) warned late last year that “a new route for Russian oil to the EU is emerging through Turkey, a growing destination for Russian crude oil,” where it is refined into oil products that are not subject to sanctions and sold on.
“We have enough evidence that some international companies are buying refinery products made from Russian oil and selling them on to Europe,” said Ustenko, the Zelenskyy adviser. “It’s completely legal, but completely immoral. Just because it’s allowed doesn’t mean we don’t need to do anything about it.”
On Monday, British NGO Global Witness released a report that found Russian oil has consistently been sold at prices far exceeding the $60 cap imposed by G7 countries in December last year.
“The fact Russian oil continues to flow round the world is a feature, not a bug, of Western sanctions,” said Mai Rosner, a campaigner who worked on the report. “Governments offered the fossil fuel industry a wide-open back door, and commodity traders and big oil companies are exploiting these loopholes to continue business as usual.”
Doubts are growing about the wisdom of holding the shattered frontline city of Bakhmut against relentless Russian assaults, but Ukrainian President Volodymyr Zelenskyy is digging in and insists his top commanders are united in keeping up an attritional defense that has dragged on for months.
Fighting around Bakhmut in the eastern region of Donbas dramatically escalated late last year, with Zelenskyy slamming the Russians for hurling men — many of them convicts recruited by the Wagner mercenary group — forward to almost certain death in “meat waves.” Now the bloodiest battle of the war, Bakhmut offers a vision of conflict close to World War I, with flooded trenches and landscapes blasted by artillery fire.
In the past weeks, as Ukrainian forces have been almost encircled in a salient, lacking shells and facing spiking casualties, there has been increased speculation both in Ukraine and abroad that the time has come to pull back to another defensive line — a retrenchment that would not be widely seen as a massive military setback, although Russia would claim a symbolic victory.
In an address on Wednesday night, however, Zelenskyy explained he remained in favor of slogging it out in Bakhmut.
“There was a clear position of the entire general staff: Reinforce this sector and inflict maximum possible damage upon the occupier,” Zelenskyy said in a video address after meeting with Ukraine’s Commander-in-Chief Valeriy Zaluzhnyy and other senior generals to discuss a battle that’s prompting mounting anxiety among Ukraine’s allies and is drawing criticism from some Western military analysts.
“All members expressed a common position regarding the further holding and defense of the city,” Zelenskyy said.
This is the second time in as many weeks that Ukraine’s president has cited the backing of his top commanders. Ten days ago, Zelenskyy’s office issued a statement also emphasizing that Zaluzhnyy and Oleksandr Syrskyi, commander of Ukraine’s ground forces, agreed with his decision to hold fast at Bakhmut.
The long-running logic of the Ukrainian armed forces has been that Russia has suffered disproportionately high casualties, allowing Kyiv’s forces to grind down the invaders, ahead of a Ukrainian counter-offensive expected shortly, in the spring.
City of glass, brick and debris
Criticism has been growing among some in the Ukrainian ranks — and among Western allies — about continuing with the almost nine-month-long battle. The disquiet was muted at first and expressed behind the scenes, but is now spilling into the open.
On social media some Ukrainian soldiers have been expressing bitterness at their plight, although they say they will do their duty and hold on as ordered. “Bakhmut is a city of glass, bricks and debris, which crackle underfoot like the fates of people who fought here,” tweeted one.
A lieutenant on Facebook noted: “There is a catastrophic shortage of shells.” He said the Russians were well dug in and it was taking five to seven rounds to hit an enemy position. He complained of equipment challenges, saying “Improvements — improvements have already been promised, because everyone who has a mouth makes promises.” But he cautioned his remarks shouldn’t be taken as a plea for a retreat. “WE WILL FULFILL OUR DUTY UNTIL THE END, WHATEVER IT IS!” he concluded ruefully.
Iryna Rybakova, a press officer with Ukraine’s 93rd brigade, also gave a flavor of the risks medics are facing in the town. “Those people who go back and forth to Bakhmut on business are taking an incredible risk. Everything is difficult,” she tweeted.
A Ukrainian serviceman gives food and water to a local elderly woman in the town of Bakhmut | Anatolii Stepanov/AFP via Getty Images
The key strategic question is whether Zelenskyy is being obdurate and whether the fight has become more a test of wills than a tactically necessary engagement that will bleed out Russian forces before Ukraine’s big counter-strike.
“Traveling around the front you hear a lot of grumblings where folks aren’t sure whether the reason they’re holding Bakhmut is because it’s politically important” as opposed to tactically significant, according to Michael Kofman, an American military analyst and director of the Russia Studies Program at the Center for Naval Analyses.
Kofman, who traveled to Bakhmut to observe the ferocious battle first-hand, said in the War on the Rocks podcast that while the battle paid dividends for the Ukrainians a few months ago, allowing it to maintain a high kill ratio, there are now diminishing returns from continuing to engage.
“Happening in the fight now is that the attrition exchange rate is favorable to Ukraine but it’s not nearly as favorable as it was before. The casualties on the Ukrainian side are rather significant and require a substantial amount of replacements on a regular basis,” he said.
The Ukrainians have acknowledged they have also been suffering significant casualties at Bakhmut, which Russia is coming ever closer to encircling. They claim, though, the Russians are losing seven soldiers for each Ukrainian life lost, while NATO military officials put the kill ratio at more like five to one. But Kofman and other military analysts are skeptical, saying both sides are now suffering roughly the same rate of casualties.
“I hope the Ukrainian command really, really, really knows what it’s doing in Bakhmut,” tweeted Illia Ponomarenko, the Kyiv Independent’s defense reporter.
Shifting position
Last week, Zelenskyy received support for his decision to remain engaged at Bakhmut from retired U.S. generals David Petraeus and Mark Hertling on the grounds that the battle was causing a much higher Russian casualty rate. “I think at this moment using Bakhmut to allow the Russians to impale themselves on it is the right course of action, given the extraordinary casualties that the Russians are taking,” retired general and former CIA director Petraeus told POLITICO.
But in the last couple of weeks the situation has shifted, said Rob Lee, a former U.S. Marine officer and now at the Foreign Policy Research Institute, and the kill ratio is no longer a valid reason to remain engaged. “Bakhmut is no longer a good place to attrit Russian forces,” he tweeted. Lee says Ukrainian casualties have risen since Russian forces, comprising Wagner mercenaries as well as crack Russian airborne troops, pushed into the north of the town at the end of February.
The Russians have been determined to record a victory at Bakhmut, which is just six miles southwest of the salt-mining town of Soledar, which was overrun two months ago after the Wagner Group sacrificed thousands of its untrained fighters there too.
U.S. Defense Secretary Lloyd Austin has hinted several times that he sees no tactical military reason to defend Bakhmut, saying the eastern Ukrainian town was of more symbolic than operational importance, and its fall wouldn’t mean Moscow had regained the initiative in the war.
Ukrainian generals have pushed back at such remarks, saying there’s a tactical reason to defend the town. Zaluzhnyy said on his Telegram channel: “It is key in the stability of the defense of the entire front.”
Volodymyr Zelensky and Sanna Marin attend a memorial service for Dmytro Kotsiubailo, a Ukrainian serviceman killed in Bakhmut | Sergei Supinsky/AFP via Getty Images
Midweek, the Washington Post reported that U.S. officials have been urging the Ukrainians since the end of January to withdraw from Bakhmut, fearing the depletion of their own troops could impact Kyiv’s planned spring offensive. Ukrainian officials say there’s no risk of an impact on the offensive as the troops scheduled to be deployed are not fighting at Bakhmut.
That’s prompted some Ukrainian troops to complain that Kyiv is sacrificing ill-trained reservists at Bakhmut, using them as expendable in much the same way the Russians have been doing with Wagner conscripts. A commander of the 46th brigade — with the call sign Kupol — told the newspaper that inexperienced draftees are being used to plug the losses. He has now been removed from his post, infuriating his soldiers, who have praised him.
Kofman worries that the Ukrainians are not playing to their military strengths at Bakhmut. Located in a punch bowl, the town is not easy to defend, he noted. “Ukraine is a dynamic military” and is good when it is able “to conduct a mobile defense.” He added: “Fixed entrenches, trying to concentrate units there, putting people one after another into positions that have been hit by artillery before doesn’t really play to a lot of Ukraine’s advantages.”
“They’ve mounted a tenacious defense. I don’t think the battle is nearly as favorable as it’s somewhat publicly portrayed but more importantly, I think they somewhat run the risk of encirclement there,” he added.
BRUSSELS — The EU is finalizing a €2 billion deal to jointly restock Ukraine’s dwindling ammunition supplies while refilling countries’ stocks, according to documents obtained by POLITICO.
The plan has two major elements.
First, the EU will spend €1 billion to partially reimburse countries that can immediately donate ammunition from their own stockpiles. Secondly, countries will work together to jointly purchase €1 billion in new ammunition — the idea being that together they can negotiate bigger contracts at a lower price-per-shell.
EU ambassadors will discuss the proposal — prepared by the EU’s diplomatic wing, the European External Action Service — during a meeting on Wednesday.
The scheme — which POLITICO first reported on earlier this month — has come together rapidly in recent weeks in response to Ukraine’s pleas for more ammunition, specifically the 155-millimeter artillery shells it desperately needs to both hold territory and launch a spring counteroffensive.
And the figures, one of the documents notes, respond “to a specific request made by the Ukrainian minister of defense.”
The numbers are stark.
Estonia, which helped start the conversation in February about how the EU could jointly help fill a looming munitions shortage, has estimated that Russia is burning through 20,000-60,000 shells per day while Ukraine is trying to judiciously only use between 2,000 and 7,000.
Covering that figure will not come easy — or cheap.
Thus far, EU countries have only provided Ukraine with 350,000 155-millimeter shells in total, with the EU spending €450 million on partial reimbursements, said one EU official, speaking on the condition of anonymity to discuss the sensitive topic. But the official pegged the cost for each new shell at €4,000, meaning costs are growing.
To cover both the losses of countries dipping into their stockpiles and funding new ammunition buys, the EU is tapping the so-called European Peace Facility. The little-known fund sits outside of the EU’s normal budget, giving officials the flexibility to use it to cover weapons purchases — once a verboten concept within the EU, a self-proclaimed peace project.
Thus far, the facility has been used solely to partially reimburse countries for their weapons donations to Ukraine. Now, documents show countries are willing to funnel an additional €2 billion into the facility — €1 billion to cover some ammunition donations and €1 billion to support joint purchases of replacement shells.
Ukrainian artillerymen in the vicinity of Bakhmut, Donetsk | Ihor Tkachov/AFP via Getty Images
The documents foresee the European Defense Agency, an EU agency meant to better coordinate members’ security efforts, possibly playing a role in coordinating the joint procurement efforts. But individual countries could also help spearhead these negotiations, as long as the country is working with at least two other EU members and not creating competing bids for the shells that drive up prices.
The joint procurement plan covers not just EU countries but Norway as well — as POLITICO first reported — potentially opening the door to some of the money going to non-EU-based companies. Norway, however, which produces ammunition, is already relatively integrated into the EU market.
EU officials are now aiming to get a consensus agreement on the plan during a meeting on Monday of foreign and defense ministers, before getting final sign-off from the 27 EU leaders at a summit in Brussels a few days later.
LONDON — Britain was rebuffed by the Biden administration after multiple requests to develop an advanced trade and technology dialogue similar to structures the U.S. set up with the European Union.
On visits to Washington as a Cabinet minister over the past two years, Liz Truss urged U.S. Commerce Secretary Gina Raimondo and senior Biden administration officials to intensify talks with the U.K. to build clean technology supply chains and boost collaboration on artificial intelligence (AI) and semiconductors.
After Truss became prime minister in fall 2022, the idea was floated again when Raimondo visited London last October, people familiar with the conversations told POLITICO. But fear of angering the U.S.’s European partners and the U.K.’s diminished status outside the EU post-Brexit have posed barriers to influencing Washington.
Businesses, lawmakers and experts worry the U.K. is being left on the sidelines.
“We tried many times,” said a former senior Downing Street official, of the British government’s efforts to set up a U.K. equivalent to the U.S.-E.U. Trade and Technology Council (TTC), noting Truss’ overtures began as trade chief in July 2021. They requested anonymity to speak on sensitive issues.
“We did speak to Gina Raimondo about that, saying ‘we think it would be a good opportunity,’” said the former official — not necessarily to join the EU-U.S. talks directly, “but to increase trilateral cooperation.”
Set up in June 2021, the TTC forum co-chaired by Raimondo, Secretary of State Antony Blinken and U.S. trade chief Katherine Tai gives their EU counterparts, Margrethe Vestager and Valdis Dombrovskis, a direct line to shape tech and trade policy.
The U.S. is pushing forward with export controls on advanced semiconductors to China; forging new secure tech supply chains away from Beijing; and spurring innovation through subsidies for cutting-edge green technology and microprocessors.
The TTC’s 10 working groups with the EU, Raimondo said in an interview late last year, “set the standards,” though Brussels has rebuffed Washington’s efforts to use the transatlantic body to go directly after Beijing.
But the U.K. “is missing the boat on not being completely engaged in that dialogue,” said a U.S.-based representative of a major business group. “There has been some discussion about the U.K. perhaps joining the TTC,” they confirmed, and “it was kind of mooted, at least in private” with Raimondo by the Truss administration on her visit to London last October.
The response from the U.S. had been ‘’let’s work with what we’ve got at the moment,’” said the former Downing Street official.
Even if the U.S. does want to talk, “they don’t want to irritate the Europeans,” the same former official added. Right now the U.K.’s conversations with the U.S. on these issues are “ad hoc” under the new Atlantic Charter Boris Johnson and Joe Biden signed around the G7 summit in 2021, they said, and “nothing institutional.”
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up | Pool photo by Olivier Matthys/AFP via Getty Images
Securing British access to the U.S.-EU tech forum or an equivalent was also discussed when CBI chief Tony Danker was in Washington last July, said people familiar with conversations during his visit.
The U.K.’s science and tech secretary, Michelle Donelan, confirmed the British government had discussed establishing a more regular channel for tech and trade discussions with the U.S., both last October and more recently. “My officials have just been out [to the U.S.],” she told POLITICO. “They’ve had very productive conversations.”
A U.K. government spokesperson said: “The U.K. remains committed to working closely with the U.S. and EU to further our shared trade and technology objectives, through the EU-UK Trade and Cooperation Agreement, the U.S.-U.K. Future of Atlantic Trade dialogues, and the U.K.-U.S. technology partnership.
“We will continue to advance U.K. interests in trade and technology and explore further areas of cooperation with partners where it is mutually beneficial.”
Britain the rule-taker?
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up. Senior officials hoped to get a deal securing the free flow of data between the U.S. and U.K. across the line and addressed similar issues as the TTC.
They couldn’t secure the data deal. The U.K. is expected to join a U.S.-led effort to expand data transfer rules baked into the Asia-Pacific Economic Cooperation trading agreement as soon as this year, according to a former and a current British official, who spoke on the condition of anonymity to discuss internal deliberations. The next formal meeting between the U.K. and U.S. is penciled in for January 2024.
Ongoing dialogue “is vital to secure an overarching agreement on U.K.-U.S. data flows, without which modern day business cannot function,” said William Bain, head of trade policy at the British Chambers of Commerce (BCC). “It would also provide an opportunity to set the ground rules around a host of other technological developments.”
In contrast, the U.S. and EU are always at work, with TTC officials in constant contact with the operation — though questions have been raised about how long-term the transatlantic cooperation is likely to prove, ahead of next year’s U.S. presidential election.
“Unless you have a structured system or set up, often overseen by ministers, you don’t really get the drive to actually get things done,” said the former Downing Street official.
Right now cooperation with the U.S. on tech issues is not as intense or structured as desired, the same former official said, and is “not really brought together” in one central forum.
Britain has yet to publish a formal semiconductor strategy | Thomas Coex/AFP via Getty Images
“This initiative [the TTC] between the world’s two regulatory powerhouses risks sidelining the U.K.,” warned lawmakers on the UK Parliament’s Foreign Affairs Committee in a report last October. Britain may become “a rule-taker rather than a rule-maker,” MPs noted, citing the government’s “ambiguous” position on technology standards. Britain has yet to publish a formal semiconductor strategy, and others on critical minerals — like those used in EV batteries — or AI are also missing.
Over the last two years, U.S. trade chief Tai has “spoken regularly to her three successive U.K. counterparts to identify and tackle shared economic and trade priorities,” said a spokesperson for the U.S. Trade Representative, adding “we intend to continue strengthening this partnership in the years to come.”
All eyes on Europe
For its part, the EU has to date shown little interest in closer cooperation with the U.K.
Three European Commission officials disregarded the likelihood of Britain joining the club, though one of those officials said that London may be asked to join — alongside other like-minded countries — for specific discussions related to ongoing export bans against Russia.
Even with last week’s breakthrough over the Northern Ireland protocol calming friction between London and Brussels, the U.K. was not a priority country for involvement in the TTC, added another of the EU officials.
“The U.K. was extremely keen to be part of a dialogue of some sort of equivalent of TTC,” said a senior business representative in London, who requested anonymity to speak about sensitive issues.
U.K. firms see “the Holy Grail” as Britain, the U.S. and EU working together on this, they said. “We’re very keen to see a triangular dialogue at some point.”
The U.K.’s haggling with the EU over the details of the Northern Ireland protocol governing trade in the region has posed “a political obstacle” to realizing that vision, they suggested.
Yet with a solution to the dispute announced in late February, the same business figure said, “there will be a more prominent push to work together with the U.K.”
TTC+
Some trade experts think the UK would increase its chances of accession to the TTC if it submitted a joint request with other nations.
But prior to that happening, “I think the EU-U.S. TTC will need to first deliver bilaterally,” said Sabina Ciofu, an international tech policy expert at the trade body techUK.
Representatives speak to the media following the Trade and Technology Council Meeting in Maryland | Saul Loeb/AFP via Getty Images
When there is momentum, Ciofu said, the U.K. should join forces with Japan, South Korea and other advanced economies to ask for a TTC+ that could include the G7 or other partners. At the last TTC meeting in December, U.S. and EU officials said they were open to such an expansion around specific topics that had global significance.
But not all trade experts think this is essential. Andy Burwell, director of international trade at the CBI, said he doesn’t “think it necessarily matters” whether the U.K. has a structured conversation with the U.S. like the TTC forum.
Off the back of a soon-to-be-published refresh of the Integrated Review — the U.K.’s national security and foreign policy strategy — Prime Minister Rishi Sunak should instead seize the opportunity, Burwell said, to pinpoint where Britain is “going to own, collaborate and have access to various aspects of the supply chains.”
The G7, Burwell said, “could be the right platform for having some of those conversations.”
Yet the “danger with the ad hoc approach with lots of different people is incoherence,” said the former Downing Street official quoted above.
Too many countries involved in setting the standards can, the former official said, “create difficulty in leveraging what you want — which is all of the countries agreeing together on a certain way forward … especially when you’re dealing with issues that relate to, for example, China.”
Additional reporting by Mark Scott, Annabelle Dickson and Tom Bristow
The Baltic states and Poland want to make it easier to sanction the family members and entourage of Russia’s richest men and women but are facing resistance from Hungary, several EU diplomats told POLITICO.
Under its current rules, the EU can freeze the assets and impose visa bans on “leading businesspersons operating in Russia.” Lithuania, Latvia, Estonia and Poland now want to expand this definition, according to their proposal seen by POLITICO, to include “their immediate family members, or other natural persons, benefitting from them.”
The EU has sanctioned more than 1,400 people in relation to Russia’s activities in Ukraine, many of who are Russian oligarchs. An additional 96 people could be added to the EU’s next sanctions package, draft documents seen by POLITICO indicate. Including oligarchs’ family members and other associates of oligarchs would make it possible to sanctions thousands more people without having to prove that they are directly involved in the war in Ukraine or acting in the economic interest of the Russian state.
This could, for example, apply to the ex-wife of Russian President Vladimir Putin, Lyudmila Ocheretnaya, whose daughters have been sanctioned but has not been herself, and other members of the oligarchs’ entourage.
While some countries had doubts, legal experts are on board, said one of the diplomats.
Yet, in a meeting on Tuesday, at which EU ambassadors discussed the bloc’s next round of sanctions, Hungary resisted such plans, the diplomats said. Budapest argued that this is not part of the 10th sanctions package, said one of the diplomats. Hungary has long been skeptical of including too many names on the list.
Hungary also pushed to strike four people out the already existing sanctions list, two of the diplomats said.
It was not immediately possible to learn the identity of the four individuals.
That request is igniting tensions, and will be likely subject to another heated debate during a meeting of EU ambassadors on Wednesday. During that meeting, they will not only discuss the new package of sanctions against Russia, but also the so-called rollover of the 1,400-plus names already on the list to keep them sanctioned.
That’s because the regime is subject to a six-month review, which has hitherto been more or less a formality. Now, Hungary is using this extension review as leverage by insisting that four specific people have to be struck from the EU’s existing sanctions list before it will agree to the rollover. If Hungary blocks the rollover and refuses to compromise, all 1,400 people would be de-listed, the two diplomats warned.
One of the diplomats didn’t hide his frustration: “It shows Hungary’s disregard for unity and European values that they are willing to risk this in the week where we commemorate one year since the Russian invasion,” he said.
And those aren’t the only measure that Hungary takes issue with. It also is chiefly against sanctioning personnel working in the nuclear sector.
But a Hungarian official poured water on this last point, saying that “the only open issue for Hungary is with the length of the rollover and not with the listings.”
On the oligarchs issue and the proposal of the Baltics and Poland, the same Hungarian official said that this is not part of the 10th package.
As all EU countries have to agree to the proposal, any country could veto the move even if all other 26 EU countries were in favor. Time is running out, with the EU wanting to adopt the 10th sanctions package before the one-year anniversary of Russia’s invasion of Ukraine on Friday.
LONDON — After four months of intense talks (and plenty of squabbling before that), the EU and U.K. have a deal to resolve their long-running post-Brexit trade row over Northern Ireland.
But as U.K. Prime Minister Rishi Sunak works to sell the so-called “Windsor framework” on the Northern Ireland protocol to Brexiteers and unionists, lawmakers on both sides of the English Channel and of the Irish Sea are getting to grips with the details.
From paperwork to plants, let POLITICO walk you through the new agreement, asking: Who has given ground, and how exactly will the deal thrashed out by EU and U.K. negotiators aim to keep the bloc’s prized single market secure?
Customs paperwork and checks
For businesses taking part in an expanded “trusted trader scheme,” the Windsor framework aims to considerably cut customs paperwork and checks on goods moving from Great Britain but destined to stay in Northern Ireland.
These goods will pass through a “green lane” requiring minimal paperwork and be labeled “Not for EU,” while those heading for the EU single market in the Republic of Ireland will undergo full EU customs checks in Northern Ireland’s ports under a “red lane.”
Traders in the green lane will only need to complete a single, digitized certificate per truck movement, rather than multiple forms per load.
Sunak has already claimed that this means “any sense of a border in the Irish Sea” — deeply controversial among Northern Ireland’s unionist politicians — has now been “removed.”
However, it’s by no means a total end to Irish Sea red tape. An EU official said that although the deal delivers a “dramatic reduction” in the number of physical food safety checks, for example, there will still be some — those seen as “essential” to avoid the risk of goods entering the single market.
These checks will be based on risk assessments and intelligence, and aimed at preventing smuggling and criminality.
U.K. public health and safety standards will meanwhile apply to all retail food and drink within the U.K. internal market. British rules on public health, marketing, organics, labeling, genetic modification, and drinks such as wines, spirits and mineral waters will apply in Northern Ireland. This will remove more than 60 EU food and drink rules in the original protocol, which were detailed in more than 1,000 pages of legislation.
Supermarkets, wholesalers, hospitality and food producers are likely to welcome the new arrangements. Many had stopped supplying to Northern Ireland because the cost of filling out hundreds of certificates for each consignment was deemed too high for a market as small as Northern Ireland.
Export declarations have been removed for the vast majority of goods moving from Northern Ireland to Great Britain.
The EU’s safeguards: While offering to drastically reduce the volume of checks carried out, the EU has toughened its criteria to become a trusted trader under the expanded scheme. The EU will now have access to databases tracking shipments of goods between Great Britain and Northern Ireland in real time. The system was tested through the winter, helping build trust in Brussels, and is being fed with data from traders and U.K. authorities. The European Commission will be able to suspend part or all of these trade easements if the U.K. fails to comply with the new rules.
The timeline: The U.K. government said it will consult with businesses in the “coming months” before implementing the new rules. The green lane will come into force this fall. Labels for meat, meat products and minimally-processed dairy products such as fresh milk will come into force from October 1, 2024. All relevant products will be marked by July 1, 2025. “Shelf-stable” products like bread and pasta will not be labeled.
Governance
A key plank of the deal is the bid to address complaints by Northern Ireland’s Democratic Unionist Party (DUP) — currently boycotting the power-sharing assembly in the region in opposition to the protocol — that lawmakers there did not have a say in the imposition of new EU rules in the region.
Under the terms of the new agreement, the Commission will have to give the U.K. government notice of future EU regulations intended to apply in Northern Ireland. According to Sunak, Stormont will be given a new power to “pull an emergency brake on changes to EU goods rules” based on “cross-community consent.”
Under this mechanism, the U.K. government will be able to suspend the application in Northern Ireland of an incoming piece of EU law at the request of at least 30 members of the assembly — a third of them. But if unionist parties in Northern Ireland want to trigger the new “Stormont brake,” they must first return to the power-sharing institutions which they abandoned last May. The EU and the U.K. could subsequently agree to apply such a rule in a meeting of the Joint Committee, which oversees the protocol.
Commission President Ursula von der Leyen said this new tool remains an emergency mechanism that hopefully will not need to be used. A second EU official said it would be triggered “under the most exceptional circumstances and as a matter of last resort in a well-defined process” set out in a unilateral declaration by the U.K. These include that the rules have a “significant and lasting impact on the everyday lives” of people in the region.
If the EU disagrees with the U.K.’s trigger of the Stormont brake, the two would resolve the issue through independent arbitration, instead of involving the Court of Justice of the EU.
Meanwhile, Northern Ireland’s courts will consider disputes over the application of EU rules in the region, and judges could decide whether to consult the CJEU on how to interpret them. In a key concession, the Commission has agreed not to unilaterally refer a case to the CJEU, although it retains the power to do so.
The EU’s safeguards: The CJEU will remain the “sole and ultimate arbiter of EU law” and will have the “final say” on EU single market disputes, von der Leyen stressed. Whether Brexiteers and the DUP are willing to accept that remains the million-dollar question.
Tax, state aid and EU rules
The U.K. government will now be able to set rules in areas such as VAT and state aid that will also apply in Northern Ireland — two major wins for Sunak that were rejected by the Commission in previous rounds of negotiations with other U.K. prime ministers.
It will, Sunak was at pains to point out Monday, allow Westminster to pass on a cut in alcohol duty that previously passed Northern Ireland by.
But London has had to give up on its idea of establishing a dual-regulatory mechanism that would have allowed Northern Ireland businesses to choose whether they would follow EU or British rules when manufacturing goods, depending on whether they intended to sell them in the EU single market or in the U.K. The whole idea was deemed by Brussels as impossible to police.
The EU’s safeguards: Northern Irish businesses producing goods for the U.K. internal market will only have to follow “less than 3 percent” of EU single market rules, a U.K. official said. But the nature of these regulations remains unclear, and there will be increased market surveillance and enforcement by U.K. authorities to try and reassure the EU.
The timeline: The U.K. government will be able to exercise these powers as soon as the Windsor framework comes into force.
Parcels
The EU and the U.K. have agreed to scrap customs processes for parcels being sent between consumers in Great Britain to Northern Ireland.
The EU’s safeguards: Parcels sent between businesses will now move through the new green lane, as is the case for other goods destined to stay in Northern Ireland. That should allow them to be monitored, but remove the need to undergo international customs procedures. Parcel operators will share commercial data with the U.K.’s tax authority, HMRC, in a bid to reduce risks to the EU single market.
Timeline: These new arrangements will take effect September 2024.
Pets
Residents in Great Britain will be able to take their dogs, cats and ferrets to Northern Ireland without having to fulfill a requirement for a rabies vaccine, tapeworm treatment and other checks.
Pets traveling from Northern Ireland to Great Britain and back will not be required to have any documentation, declarations, checks or health treatments.
The EU’s safeguards: Microchipped pets will be able to travel with a life-long pet travel document issued for free by the U.K.’s Department for Environment, Food and Rural Affairs. Pet owners will tick a box in their travel booking acknowledging they accept the scheme rules and will not move their pet into the EU.
The timeline: The new rules will take effect fall 2023.
Medicines
Drugs approved for use by the U.K.’s medicines regulator, the MHRA, will be automatically available in every pharmacy and hospital in Northern Ireland, “at the same time and under the same conditions” as in the U.K., von der Leyen said.
Businesses will need to secure approval for a U.K.-wide license from the MHRA to supply medicines to Northern Ireland, rather than having to go through the European Medicines Agency. The agreement removes any EU Falsified Medicines Directive packaging, labeling and barcode requirements for medicines. This means manufacturers will be able to produce a single medicines pack design for the whole of the U.K., including Northern Ireland.
Drugs being shipped into Northern Ireland from Great Britain will be freed of customs paperwork, checks and duties, with traders only being required to provide ordinary commercial information.
The EU’s safeguards: Medicines traveling from Great Britain to Northern Ireland will do so via the new green lane, which will have monitoring to protect the single market built in.
The timeline: The U.K. government said it will engage with the medicines industry soon on these changes.
Plants
The deal lifts the protocol’s ban on seed potatoes entering Northern Ireland from Great Britain, and its prohibition on trees and shrubs deemed of “high risk” for the EU single market. This will enable garden centers and other businesses in Northern Ireland to sell 11 native species to Great Britain and some from other regions.
The Windsor framework also removes sanitary and phytosanitary (SPS) checks on all these plants, and ditches red tape on their shipment into Northern Ireland.
The EU’s safeguards: Supplying businesses will have to obtain a Northern Ireland plant health label, which will be the same as the plant passport already required within Great Britain, but with the addition of the words “for use in the U.K. only” and a QR code linking to the rules.
The timeline: The new scheme and the lifting of the bans will all come into force in the fall.
