Joe Biden’s European friends may be miffed about his climate law.
But the U.S. president’s America-first, subsidy-heavy approach has actually gained some grudging — and for a Democrat unlikely — admirers on the Continent: Europe’s conservatives.
Within the center-right European People’s Party, the largest alliance of parties in the European Parliament, officials are smarting over why their own politicians aren’t taking a page from the Biden playbook.
Their frustration is homing in on European Commission President Ursula von der Leyen — a putative conservative the EPP itself helped install. Officials fear they have let von der Leyen lead the party away from its pro-industry, regulation-slashing ideals, according to interviews with leading party figures.
Biden’s law has now brought their grumbling to the surface.
On Thursday, a wing of EPP lawmakers defected during a Parliament vote over whether to back von der Leyen’s planned response to Biden’s marquee green spending bill, the Inflation Reduction Act (IRA). Their concern: it doesn’t go far enough in championing European industries.
Essentially, they want it to feel more like Biden’s plan.
The IRA was an “embarrassment” for Europe, said Thanasis Bakolas, the EPP’s power broker and secretary general. The EU “had all these well-funded policies available. And then comes Biden with his IRA. And he introduces policies that are more efficient, more effective, more accessible to businesses and consumers.”
A bitter inspiration
European leaders were blindsided last summer when Biden signed the IRA into law.
Since then, they have complained loudly that the U.S. subsidies for homegrown clean tech are a threat to their own industries. But for the EPP, ostensibly on the opposite side to Biden’s Democrats, the law is also serving as bitter inspiration.
“It’s a little bit like in the fairy tale, that someone in the crowd — and this time it wasn’t the boy, it was the Americans — pretty much pointing the finger to the [European] Commission, and saying, ‘Oh, the king is naked?’” said Christian Ehler, a German European Parliament member from the EPP.
Viewed from bureaucratic, free-trading Brussels, Biden’s climate policy looks more sleek, geopolitically muscular — and, notably for the EPP, more appealing to voters on the right than anything actually coming out of the EPP-led Commission | Oliver Contreras/Getty Images
Under the EU’s centerpiece climate policy, the European Green Deal, the European Commission, the EU’s policy-making executive arm, has doggedly introduced law after law aimed at squeezing polluters from every angle using tighter regulations or carbon pricing. The goal is to zero out the bloc’s net greenhouse gas emissions by 2050.
Biden’s IRA approaches the same goal by different means. It is laden with voter- and industry-friendly tax breaks and made-in-America requirements. Viewed from bureaucratic, free-trading Brussels, Biden’s climate policy looks more sleek, geopolitically muscular — and, notably for the EPP, more appealing to voters on the right than anything actually coming out of the EPP-led Commission.
For some, the sense of betrayal isn’t directed at Washington, but inward.
“We learned that we lost track for the last two years on the deal part of the Green Deal,” said Ehler, who is using his seat on Parliament’s powerful Committee on Industry, Research and Energy to push forfewer climate burdens on industry. “We are in the midst of the super regulation.”
The irony is that Biden and the Democrats probably wouldn’t have chosen this path were it not for Republicans’ decades-long refusal to move any form of climate regulation through Congress.
The IRA was a product of political necessity, shaped to suit independent-minded Democratic senators such as Joe Manchin of coal-heavy West Virginia.If Biden and his party had their druthers, Biden’s climate policy might have looked far more like the Brussels model.
Let’s get political
As party boss, Bakolas is preparing the platform on which the EPP — a pan-European umbrella group of 81 center-right parties — will campaign for the 2024 EU elections.
He is also flirting with an alliance with the far right, meaning the center-right and center-left consensus that has dominated climate policy in Brussels could break up. Bakolas advocates “a more political approach.”
“We need to do the same [as the U.S.], with the same tenacity and determination,” he said.
One big problem: It’s hard for the European Union, which doesn’t control tax policy, to match the political eye-candy of offering cashback for electric Hummers (something Americans can now claim on their taxes).
“Can Europe, this institutional arrangement in Brussels … act as effortlessly and seamlessly as the American administration? No, because it’s a difficult exercise for Europe to reach a decision … but it’s an exercise we need to do,” said Bakolas.
Within the center-right European People’s Party, the largest alliance of parties in the European Parliament, officials are smarting over why their own politicians aren’t taking a page from the Biden playbook | Kenzo Tribouillard/AFP via Getty Images
In other words, the EPP is looking to emulate Biden’s law — at least in spirit, if not in legalese.
The conservative thinking is beginning to coalesce into a few main themes: slowing down green regulation they feel burden industry; using sector-specific programs to help companies reinvest their profits into cleaning up their businesses; and slashing red tape they say slows already clean industries from getting on with the job.
EPP lawmaker Peter Liese said he had been “desperately calling” for these red-tape-slashing measures. He was glad to see some in von der Leyen’s contested IRA response plan. But Liese and the EPP want more.
“We can have an answer of the two crises, the two challenges, that we have: the climate crisis and challenge for our economy, including the IRA,” said Liese.
Green groups and left-wing lawmakers argue the EPP is simply using the IRA and Europe’s broader economic woes as a smokescreen to cover a broad retreat from the Green Deal. In recent months the party has blocked, or threatened to block, a host of green regulations proposed by the Commission.
“This is like trying to put on the ballroom shoes of your grandfather and trying to do a 100-meter sprint,” Green MEP Anna Cavazzini told Parliament on Wednesday.
Bakolas rejected that.
He said the party had finally woken up to the need to set a climate agenda that better reflected its own, center-right, free-market ideals.
“What the IRA did,” he said, “is to ring an alarm bell.”
MUNICH — China is trying to drive a fresh wedge between Europe and the United States as Russia’s invasion of Ukraine trudges past its one-year mark.
Such was the motif of China’s newly promoted foreign policy chief Wang Yi when he broke the news at the Munich Security Conference on Saturday that President Xi Jinping would soon present a “peace proposal” to resolve what Beijing calls a conflict — not a war — between Moscow and Kyiv. And he pointedly urged his European audience to get on board and shun the Americans.
In a major speech, Wang appealed specifically to the European leaders gathered in the room.
“We need to think calmly, especially our friends in Europe, about what efforts should be made to stop the warfare; what framework should there be to bring lasting peace to Europe; what role should Europe play to manifest its strategic autonomy,” said Wang, who will continue his Europe tour with a stop in Moscow.
In contrast, Wang launched a vociferous attack on “weak” Washington’s “near-hysterical” reaction to Chinese balloons over U.S. airspace, portraying the country as warmongering.
“Some forces might not want to see peace talks to materialize,” he said, widely interpreted as a reference to the U.S. “They don’t care about the life and death of Ukrainians, [nor] the harms on Europe. They might have strategic goals larger than Ukraine itself. This warfare must not continue.”
Yet at the conference, Europe showed no signs of distancing itself from the U.S. nor pulling back on military support for Ukraine. The once-hesitant German Chancellor Olaf Scholz urged Europe to give Ukraine even more modern tanks. And French President Emmanuel Macron shot down the idea of immediate peace talks with the Kremlin.
And, predictably, there was widespread skepticism that China’s idea of “peace” will match that of Europe.
“China has not been able to condemn the invasion,” NATO Secretary-General Jens Stoltenberg told a group of reporters. Beijing’s peace plan, he added, “is quite vague.” Peace, the NATO chief emphasized, is only possible if Russia respects Ukraine’s sovereignty.
Europe watches with caution
Wang’s overtures illustrate the delicate dance China has been trying to pull off since the war began.
Keen to ensure Russia is not weakened in the long run, Beijing has offered Vladimir Putin much-needed diplomatic support, while steering clear of any direct military assistance that would attract Western sanctions against its economic and trade relations with the world.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich | Johannes Simon/Getty Images
“We will put forward China’s position on the political settlement on the Ukraine crisis, and stay firm on the side of peace and dialogue,” Wang said. “We do not add fuel to the fire, and we are against reaping benefit from this crisis.”
According to Italy’s Foreign Minister Antonio Tajani, who met Wang earlier this week, Xi will make his “peace proposal” on the first anniversary of the war, which is Friday.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich. He said he hoped to have a “frank” conversation with the Beijing envoy.
“We believe that compliance with the principle of territorial integrity is China’s fundamental interest in the international arena,” Kuleba told journalists in Munich. “And that commitment to the observance and protection of this principle is a driving force for China, greater than other arguments offered by Ukraine, the United States, or any other country.”
EU foreign policy chief Josep Borrell met Wang later on Saturday and called on him to “use [China’s] closeness to convince Russia to engage in real peace efforts. Borrell expressed hope that Wang’s visit to Moscow could be used to convince Russia to stop its brutal war,” according to an EU official familiar with the talks, adding the EU chief told Wang Russia conducted “gross violation of the letter and spirit of the U.N. Charter.”
Many in Munich were wary of the upcoming Chinese plan.
German Foreign Minister Annalena Baerbock welcomed China’s effort to use its influence to foster peace but told reporters she had “talked intensively” with Wang during a bilateral meeting on Friday about “what a just peace means: not rewarding the attacker, the aggressor, but standing up for international law and for those who have been attacked.”
“A just peace,” she added, “presupposes that the party that has violated territorial integrity — meaning Russia — withdraws its troops from the occupied country.”
One reason for Europe’s concerns is the Chinese peace plan could undermine an effort at the United Nations to rally support for a resolution condemning Russia’s invasion of Ukraine, which will be on the U.N.’s General Assembly agenda next week, according to three European officials and diplomats.
Taiwan issue stokes up US-China tension
If China was keen to talk about peace in Ukraine, it’s more reluctant to do so in a case closer to home.
When Wolfgang Ischinger, the veteran German diplomat behind the conference, asked Wang if he could reassure the audience Beijing was not planning an imminent military escalation against Taiwan, the Chinese envoy was non-committal.
Nato Secretary-General Jens Stoltenberg said “what is happening in Europe today could happen in east Asia tomorrow” | Johannes Simon/Getty Images
“Let me assure the audience that Taiwan is part of Chinese territory. It has never been a country and it will never be a country in the future,” Wang said.
The worry over Taiwan resonated in a speech from NATO Secretary-General Jens Stoltenberg, who said “what is happening in Europe today could happen in Asia tomorrow.” Reminding the audience of the painful experience of relying on Russia’s energy supply, he said: “We should not make the same mistakes with China and other authoritarian regimes.”
But China’s most forceful attack was reserved for the U.S. Calling its decision to shoot down Chinese and other balloons “absurd” and “near-hysterical,” Wang said: “It does not show the U.S. is strong; on the contrary, it shows it is weak.
Wang also amplified the message in other bilateral meetings, including one with Pakistani Foreign Minister Bilawal Bhutto Zardari. “U.S. bias and ignorance against China has reached a ridiculous level,” he said. “The U.S. … has to stop this kind of absurd nonsense out of domestic political needs.”
It remains unclear if Wang will hold a meeting with U.S. Secretary of State Antony Blinken while in Germany, as has been discussed.
Hans von der Burchard and Lili Bayer reported from Munich, and Stuart Lau reported from Brussels.
This article was updated to include details of the meeting between Wang and Borrell.
CORRECTION: Jens Stoltenberg’s reference to Asia has been updated.
There’s more bad news for Vladimir Putin. Europe is on course to get through winter with its vital gas storage facilities more than half full, according to a new European Commission assessment seen by POLITICO.
That means despite the Russian leader’s efforts to make Europe freeze by cutting its gas supply, EU economies will survive the coldest months without serious harm — and they look set to start next winter in a strong position to do the same.
A few months ago, there were fears of energy shortages this winter caused by disruptions to Russian pipeline supplies.
But a combination of mild weather, increased imports of liquefied natural gas (LNG), and a big drop in gas consumption mean that more than 50 billion cubic meters (bcm) of gas is projected to remain in storage by the end of March, according to the Commission analysis.
A senior European Commission official attributed Europe’s success in securing its gas supply to a combination of planning and luck.
“A good part of the success is due to unusually mild weather conditions and to China being out of the market [due to COVID restrictions],” the official said. “But demand reduction, storage policy and infrastructure work helped significantly.”
Ending the winter heating season with such healthy reserves — above 50 percent of the EU’s roughly 100bcm total storage capacity — removes any lingering fears of a gas shortage in the short term. It also eases concerns about Europe’s energy security going into next winter.
The positive figures underlie the more optimistic outlook presented by EU leaders in recent days, with Energy Commissioner Kadri Simson saying on Tuesday that Europe had “won the first battle” of the “energy war” with Russia.
EU storage facilities — also vital for winter gas supply in the U.K., where storage options are limited — ended last winter only around 20 percent full. Brussels mandated that they be replenished to 80 percent ahead of this winter, requiring a hugely expensive flurry of LNG purchases by European buyers, to replace volumes of gas lost from Russian pipelines.
The wholesale price of gas rose to record levels during storage filling season — peaking at more than €335 per megawatt hour in August — with dire knock-on effects for household bills, businesses’ energy costs and Europe’s industrial competitiveness.
Gas prices have since fallen to just above €50/Mwh amid easing concerns over supplies. The EU has a new target to fill 90 percent of gas storage again by November 2023 — an effort that will now require less buying of LNG on the international market than it might have done had reserves been more seriously depleted.
“The expected high level of storages at above 50 percent [at] the end of this winter season will be a strong starting point for 2023/24 with less than 40 percent to be filled (against the difficult starting point of around 20 percent in storage at the end of winter season in 2022,” the Commission assessment says.
Analysts at the Independent Commodity Intelligence Services think tank said this week that refilling storages this year could still be “as tough a challenge as last year” but predicted that the EU now had “more than enough import capacity to meet the challenge.”
Across the EU, five new floating LNG terminals have been set up — in the Netherlands, Greece, Finland and two in Germany — providing an extra 30bcm of gas import capacity, with more due to come online this year and next.
However, the EU’s ability to refill storages to the new 90 percent target ahead of next winter will likely depend on continued reduction in gas consumption.
Brussels set member states a voluntary target of cutting gas demand by 15 percent from August last year. Gas demand actually fell by more than 20 percent between August and December, according to the latest Commission data, partly thanks to efficiency measures but also the consequence of consumers responding to much higher prices by using less energy.
The 15 percent target may need to be extended beyond its expiry date of March 31 to avoid gas demand rebounding as prices fall. EU energy ministers are set to discuss the issue at two forthcoming meetings in February and March.
When Ukrainian President Volodymyr Zelenskyy traveled to Western Europe last week to drum up support for his country’s fight against Russia, he made a last-minute stopover in Paris.
French President Emmanuel Macron was lucky to get the nod.
Macron’s attitude toward Ukraine’s war effort has frequently proved inscrutable to allies who wonder why France seemed to be hedging its bets by pursuing dialogue with Russian President Vladimir Putin and touting the need for “security guarantees” for Moscow.
While German Chancellor Olaf Scholz has suffered bruising criticism over the slow pace of his decision to send Leopard 2 tanks to Ukraine, Paris’ contribution to the overall war effort has been substantially smaller, both in absolute terms and as a percentage of gross domestic product, than Berlin’s, according to a ranking from the Kiel Institute for World Economy updated at the end of last year.
Even accounting for Macron’s more recent pledge to deliver Caesar howitzers and, jointly with Italy, a MAMBA air defense system, France’s overall support effort is likely to remain well below that of the biggest helpers in 2023. As of November, Poland had pledged more than €3 billion in aid, while the United Kingdom has offered more than €7 billion. France, by contrast, offered €1.4 billion — placing the country well below Western allies in terms of a percentage of GDP.
When Zelenskyy left Ukraine to visit Western leaders last week, Paris didn’t issue a formal invitation — and the meeting with Macron nearly didn’t happen. The French president had originally planned to spend the evening at the theater with his wife. It was only when aides saw footage of Zelenskyy’s solemn address at Westminster Hall in London that they rushed out an invitation and arranged for the late-evening visit in Paris, according to an Elysée official.
No wonder Zelenskyy nearly missed Paris.
When asked why France has sometimes pursued a divergent path on Ukraine compared with other Western allies, French officials defend Macron. In an interview with POLITICO, former French President François Hollande said it made sense to speak to Putin before the invasion to “deprive him of any arguments or pretexts.” A French diplomat added: “It was either that or do nothing. He [Macron] decided to try diplomacy — I don’t think we can blame him for that.”
As for France’s tepid contribution to the war effort, officials argue that, as continental Europe’s premier military power, Paris has other security responsibilities, namely defending Europe’s southern flank, and must retain some capacity. Sending France’s Leclerc tanks, they say, doesn’t make sense because they are no longer in production and couldn’t easily be replaced.
But when asked if France is leading on Ukraine, the same officials tend to shrug.
For François Heisbourg, senior adviser to the International Institute for Strategic Studies, Macron’s zig-zagging approach to the Ukraine war effort represents a missed opportunity not just in terms of hard power — but in terms of Macron’s larger ambition, spelled out in his 2017 Sorbonne speech, to position himself as a European leader in the lineage of former President François Mitterrand, former Prime Minister Michel Rocard or former German Chancellor Helmut Kohl.
“2022 was a year of missed chances,” said Heisbourg. Macron “spent 15 days going around telling everyone who would listen that Russia required security guarantees, as if Russia wasn’t grown-up enough to request them itself.”
In an interview with POLITICO, former French President François Hollande said it made sense to speak to Putin before the invasion | Pool photo by Gonzalo Fuentes/AFP via Getty Images
Macron “can still make up the lost time, but the precondition for that is to be extremely clear on Ukraine, and from there to recover legitimacy among the central European states.”
France’s ‘open road’
The irony is that in geopolitical terms, Paris has rarely had a better chance to lead Europe.
Britain has left the European Union, removing a major liberal counterweight to France’s statism. Germany’s Olaf Scholz has been tied down by coalition politics and the impact of Berlin’s failed bet on Russian energy. France, by contrast, enjoyed stable government and the benefits of relative energy independence thanks to its early embrace of nuclear power. As far as Paris’ position in Europe was concerned, “the road was open,” said Heisbourg.
In some ways, Macron has exploited this opportunity. Paris has been by far the most vocal advocate for a robust EU response to U.S. President Joe Biden’s Inflation Reduction Act, a bumper package of subsidies for green business. When he traveled to Washington in November, the French president very much looked like a European leader delivering grievances to a trade rival — and bringing home results for all of the EU.
Yet France’s attempts at economic leadership within the EU haven’t translated into a wider bid to become Europe’s security guarantor and consensus builder. “No one has replaced Angela Merkel at the Council table,” argued one Eastern European diplomat when asked who was currently “leading” the EU. Hollande and several diplomats lamented the deterioration of Franco-German ties under Macron, saying that it undermined the bloc’s coherence and any hope of a more integrated approach to defense.
As the war in Ukraine nears its first anniversary, Macron has pivoted toward much more full-throated support for Kyiv. In his New Year’s address to the French, he promised Ukrainians to “help you until victory” — making the rhetorical switch from “Russia can’t win the war.” He’s left a door open to training Ukrainian pilots on Western fighter jets and made a significant contribution to the MAMBA missile defense system. “Toward victory, toward peace, toward Europe,” he tweeted during Zelenskyy’s visit to Paris.
Yet France also remains one of the most skeptical countries in the EU when it comes to accepting Ukraine into the bloc, and its overall contribution still pales in comparison to other countries.
Macron still has three years in office, plenty of time to double down on his newfound interest in Ukrainian “victory.”
But with street protests over planned pension reforms now dogging his presidency at home, the golden opportunity is fading.
BRUSSELS — With Ukraine’s partners racing to send more weapons to Kyiv amid an emerging Russian offensive, fulfilling Ukrainian requests is becoming trickier.
Ukraine is still waiting for promised deliveries of modern tanks. Combat jets, though much discussed, are mired in the throes of government hesitation.
On top of that, Kyiv is using thousands of rounds of ammunition per day — and Western production simply can’t keep up.
As members of the U.S.-led Ukraine Defense Contact Group gather in Brussels on Tuesday to coordinate arms assistance to Ukraine, they face pressure to expedite delivery and provide even more advanced capabilities to Ukrainian forces.
“We have received good signals,” Ukraine’s President Volodymyr Zelenskyy said in a video address following visits to London, Paris and Brussels.
“This applies both to long-range missiles and tanks, and to the next level of our cooperation — combat aircraft,” he said, however adding, “We still need to work on this.”
And while most of Ukraine’s partners are committed to responding to Zelenskyy’s stump tour with expanded support as the conflict threatens to escalate, Western governments will have to overcome political and practical hurdles.
“It is clear that we are in a race of logistics,” NATO Secretary-General Jens Stoltenberg told reporters on Monday. “Key capabilities like ammunition, fuel, and spare parts must reach Ukraine before Russia can seize the initiative on the battlefield.”
Existing and future supply of weapons to Ukraine will both be on the table when the defense group — made up of about 50 countries and popularly known at the Ramstein format — meets at NATO headquarters.
NATO allies will also hold a meeting of defense ministers directly afterward to hear the latest assessment from Ukrainian counterparts and discuss the alliance’s future defense challenges.
Ukrainian officials will use the session, which would typically be held at the U.S. base in Ramstein, Germany, to share their latest needs with Western officials — from air defense to ground logistics — while it will also be a venue for Kyiv’s supporters to check in on implementation of earlier pledges and availabilities in the near future.
The aim of the session, said a senior European diplomat, is “to step up military support as much as needed — not only commitments, but actual speedy deliverables is of particular significance.”
“Tanks are needed not on paper but in the battlefield,” said the diplomat, who spoke on condition of anonymity due to the sensitivity of discussions.
Ammo, ammo, ammo
One of the most pressing issues on the table in Brussels this week is how to keep the weapons already sent to Ukraine firing.
“Of course it is important to discuss new systems, but the most urgent need is to ensure that all the systems which are already there, or have been pledged, are delivered and work as they should,” Stoltenberg said.
During meetings with EU heads on Thursday, Zelenskyy and his team provided each leader with an individualized list requesting weapons and equipment based on the country’s known stocks and capabilities.
But there was one common theme.
“The first thing on the list was, everywhere, the ammunition,” Estonian Prime Minister Kaja Kallas said.
“If you have the equipment and you don’t have the ammunition, then it’s no use,” the Estonian leader told reporters on Friday.
And while Ukraine is in dire need of vast amounts of ammo to keep fighting, Western countries’ own stocks are running low.
“It’s a very real concern,” said Ben Hodges, a former commander of U.S. Army Europe. “None of us, including the United States, is producing enough ammunition right now,” he said in a phone interview on Sunday.
Munitions will also be top of mind at the session of NATO defense ministers on Wednesday, who will discuss boosting production of weapons, ammunition and equipment, along with future defense spending targets for alliance members.
Boosting stockpiles and production, Stoltenberg emphasized on Monday, “requires more defense expenditure by NATO allies.”
Estonia’s Prime Minister Kaja Kallas | Kenzo Tribouillard/AFP via Getty images
And while the NATO chief said some progress has been made on work with industry on plans to boost stockpile targets, some current and former officials have expressed frustration about the pace of work.
Kallas last week raised the idea of joint EU purchases to help spur production and hasten deliveries of weapons and ammunition to Ukraine, although it’s not clear whether this plan would enjoy sufficient support within the bloc — and how fast it could have an impact.
Hodges thinks companies need a clearer demand signal from governments. “We need industry to do more,” he said.
But he noted, “These are not charities … they are commercial businesses, and so you have to have an order with money before they start making it.”
Jets fight fails to take off (for now)
Fighter jets are a priority ask for Ukrainian officials, although Western governments seem not yet ready to make concrete commitments.
Numerous countries have expressed openness to eventually providing Ukraine with jets, indicating that the matter is no longer a red line. Regardless, hesitation remains.
NATO Secretary-General Jens Stoltenberg | Valeria Mongelli/AFP via Getty Images
The U.K. has gone the furthest so far, announcing that it will train Ukrainian pilots on fighter jets. But when it comes to actually providing aircraft, British Defense Secretary Ben Wallace cautioned that “this is not a simple case of towing an aircraft to the border.”
Polish President Andrzej Duda, meanwhile, said sending F-16 aircraft would be a “very serious decision” which is “not easy to take,” arguing that his country does not have enough jets itself.
For some potential donors, the jets debate revolves around both timing and utility.
“The essential question is: What do they want to do with planes? It’s not clear,” said one French diplomat, who was unauthorized to speak publicly. “Do they think that with 50 or 100 fighter jets, they can retake the Donbas?” the diplomat said.
The diplomat said there is no point in training Ukrainians on Western jets now. “It’ll take over six months to train them, so it doesn’t respond to their immediate imperatives.”
But, the diplomat added, “maybe some countries should give them MiGs, planes that they can actually fly.”
Slovakia is in fact moving closer to sending MiG-29 jets to Ukraine.
“We want to do it,” said a Slovak official who was not at liberty to disclose their identity. “But we must work out the details on how,” the official said, adding that a domestic process and talks with Ukraine still need to take place.
No big jet announcements are expected at the Tuesday meeting, though the issue is likely to be discussed.
Where are the tanks?
And while Western governments have already — with great fanfare — struck a deal to provide Ukraine with modern tanks, questions over actual deliveries will also likely come up at Tuesday’s meeting.
Germany’s leadership in particular has stressed it’s time for countries that supported the idea of sending tanks to live up to their rhetoric.
“Germany is making a very central contribution to ensuring that we provide rapid support, as we have done in the past,” German Chancellor Olaf Scholz said last week.
German Chancellor Olaf Scholz is shown an anti-aircraft gun tank Gepard | Morris MacMatzen/Getty Images
“We are striving to ensure that many others who have come forward in the past now follow up on this finger-pointing with practical action,” he went on. Germany’s goal is for Ukraine to receive tanks by the end of March, and training has already begun.
Along with tanks, another pending request that Ukrainian officials will likely bring up this week is long-range missiles.
Hodges, who has been advocating for the West to give Ukraine the weapons it would need to retake Crimea, said he believes long-range precision weapons are the key. “That’s how you defeat mass with precision.”
Any such weapon, he argued, “has got to be at the top of the list.”
Clea Caulcutt contributed reporting from Paris and Hans von der Buchard contributed from Berlin.
Disney has pulled an episode of “The Simpsons” that includes a line about “forced labor camps” in China from its streaming platform in Hong Kong.
The episode — first shown in October last year and titled “One Angry Lisa” — features a scene in which Marge Simpson takes a virtual exercise bike class with an instructor in front of a virtual background of the Great Wall of China. The instructor says: “Behold the wonders of China. Bitcoin mines, forced labor camps where children make smartphones, and romance.”
China’s use of forced labor and mass internment camps to control the Muslim Uyghur minority in the Xinjiang region culminated in a U.N. assessment that concluded Beijing’s actions may constitute crimes against humanity, although China rejects any claims of human rights violations in Xinjiang.
The “Simpsons” episode is no longer available on the Disney+ platform in Hong Kong, the Financial Times reported Monday, citing experts on censorship that claim Disney might have removed the episode out of concern for its business in mainland China.
This is the second time the platform has been accused of self-censorship in Hong Kong. In 2021, it reportedly dropped an episode of “The Simpsons” that made reference to Tiananmen Square, the scene of a brutal massacre of pro-democracy protesters in Beijing in 1989.
In response to a request for comment, the Hong Kong government told the FT a film censorship system introduced in 2021, which forbids films from endangering national security, “does not apply to streaming services.” A spokesperson for the government did not comment on whether it had asked Disney to remove the episode.
In recent years, Beijing has cracked down on Hong Kong’s freedoms, sparking mass protests and international criticism.
LONDON — As nations around the world scramble to secure crucial semiconductor supply chains over fears about relations with China, the U.K. is falling behind.
The COVID-19 pandemic exposed the world’s heavy reliance on Taiwan and China for the most advanced chips, which power everything from iPhones to advanced weapons. For the past two years, and amid mounting fears China could kick off a new global security crisis by invading Taiwan, Britain’s government has been readying a plan to diversify supply chains for key components and boost domestic production.
Yet according to people close to the strategy, the U.K.’s still-unseen plan — which missed its publication deadline last fall — has suffered from internal disconnect and government disarray, setting the country behind its global allies in a crucial race to become more self-reliant.
A lack of experience and joined-up policy-making in Whitehall, a period of intense political upheaval in Downing Street, and new U.S. controls on the export of advanced chips to China, have collectively stymied the U.K.’s efforts to develop its own coherent plan.
The way the strategy has been developed so far “is a mistake,” said a former senior Downing Street official.
Falling behind
During the pandemic, demand for semiconductors outstripped supply as consumers flocked to sort their home working setups. That led to major chip shortages — soon compounded by China’s tough “zero-COVID” policy.
Since a semiconductor fabrication plant is so technologically complex — a single laser in a chip lithography system of German firm Trumpf has 457,000 component parts — concentrating manufacturing in a few companies helped the industry innovate in the past.
But everything changed when COVID-19 struck.
“Governments suddenly woke up to the fact that — ‘hang on a second, these semiconductor things are quite important, and they all seem to be concentrated in a small number of places,’” said a senior British semiconductor industry executive.
Beijing’s launch of a hypersonic missile in 2021 also sent shivers through the Pentagon over China’s increasing ability to develop advanced AI-powered weapons. And Russia’s invasion of Ukraine added to geopolitical uncertainty, upping the pressure on governments to onshore manufacturers and reduce reliance on potential conflict hotspots like Taiwan.
Against this backdrop, many of the U.K.’s allies are investing billions in domestic manufacturing.
The Biden administration’s CHIPS Act, passed last summer, offers $52 billion in subsidies for semiconductor manufacturing in the U.S. The EU has its own €43 billion plan to subsidize production — although its own stance is not without critics. Emerging producers like India, Vietnam, Singapore and Japan are also making headway in their own multi-billion-dollar efforts to foster domestic manufacturing.
US President Joe Biden | Samuel Corum/Getty Images
Now the U.K. government is under mounting pressure to show its own hand. In a letter to Prime Minister Rishi Sunak first reported by the Times and also obtained by POLITICO, Britain’s semiconductor sector said its “confidence in the government’s ability to address the vital importance of the industry is steadily declining with each month of inaction.”
That followed the leak of an early copy of the U.K.’s semiconductor strategy, reported on by Bloomberg, warning that Britain’s over-dependence on Taiwan for its semiconductor foundries makes it vulnerable to any invasion of the island nation by China.
Taiwan, which Beijing considers part of its territory, makes more than 90 percent of the world’s advanced chips, with its Taiwan Semiconductor Manufacturing Company (TSMC) vital to the manufacture of British-designed semiconductors.
U.S. and EU action has already tempted TSMC to begin building new plants and foundries in Arizona and Germany.
“We critically depend on companies like TSMC,” said the industry executive quoted above. “It would be catastrophic for Western economies if they couldn’t get access to the leading-edge semiconductors any more.”
Whitehall at war
Yet there are concerns both inside and outside the British government that key Whitehall departments whose input on the strategy could be crucial are being left out in the cold.
The Department for Digital, Culture, Media and Sport (DCMS) is preparing the U.K.’s plan and, according to observers, has fiercely maintained ownership of the project. DCMS is one of the smallest departments in Whitehall, and is nicknamed the ‘Ministry of Fun’ due to its oversight of sports and leisure, as well as issues related to tech.
“In other countries, semiconductor policies are the product of multiple players,” said Paul Triolo, a senior vice president at U.S.-based strategy firm ASG. This includes “legislative support for funding major subsidies packages, commercial and trade departments, R&D agencies, and high-level strategic policy bodies tasked with things like improving supply chain resilience,” he said.
“You need all elements of the U.K.’s capabilities. You need the diplomatic services, the security services. You need everyone working together on this,” said the former Downing Street official quoted above. “There are huge national security aspects to this.”
The same person said that relying on “a few [lower] grade officials in DCMS — officials that don’t see the wider picture, or who don’t have either capability or knowledge,” is a mistake.
For its part, DCMS rejected the suggestion it is too closely guarding the plan, with a spokesperson saying the ministry is “working closely with industry experts and other government departments … so we can protect and grow our domestic sector and ensure greater supply chain resilience.”
The spokesperson said the strategy “will be published as soon as possible.”
But businesses keen for sight of the plan remain unconvinced the U.K. has the right team in place for the job.
Key Whitehall personnel who had been involved in project have now changed, the executive cited earlier said, and few of those writing the strategy “have much of a background in the industry, or much first-hand experience.”
Progress was also sidetracked last year by lengthy deliberations over whether the U.K. should block the sale of Newport Wafer Fab, Britain’s biggest semiconductor plant, to Chinese-owned Nexperia on national security grounds, according to two people directly involved in the strategy. The government eventually announced it would block the sale in November.
And while a draft of the plan existed last year, it never progressed to the all-important ministerial “write-around” process — which gives departments across Whitehall the chance to scrutinize and comment upon proposals.
Waiting for budget day
Two people familiar with current discussions about the strategy said ministers are now aiming to make their plan public in the run-up to, or around, Chancellor Jeremy Hunt’s March 15 budget statement, although they stressed that timing could still change.
Leaked details of the strategy indicate the government will set aside £1 billion to support chip makers. Further leaks indicate this will be used as seed money for startups, and for boosting existing firms and delivering new incentives for investors.
U.K. Chancellor Jeremy Hunt | Leon Neal/Getty Images
There is wrangling with the Treasury and other departments over the size of these subsidies. Experts also say it is unlikely to be ‘new’ money but diverted from other departments’ budgets.
“We’ll just have to wait for something more substantial,” said a spokesperson from one semiconductor firm commenting on the pre-strategy leaks.
But as the U.K. procrastinates, key British-linked firms are already being hit by the United States’ own fast-evolving semiconductor strategy. U.S. rules brought in last October — and beefed up in recent days by an agreement with the Netherlands — are preventing some firms from selling the most advanced chip designs and manufacturing equipment to China.
British-headquartered, Japanese-owned firm ARM — the crown jewel of Britain’s semiconductor industry, which sells some designs to smartphone manufacturers in China — is already seeing limits on what it can export. Other British firms like Graphcore, which develops chips for AI and machine learning, are feeling the pinch too.
“The U.K. needs to — at pace — understand what it wants its role to be in the industries that will define the future economy,” said Andy Burwell, director for international trade at business lobbying group the CBI.
Where do we go from here?
There are serious doubts both inside and outside government about whether Britain’s long-awaited plan can really get to the heart of what is a complex global challenge — and opinion is divided on whether aping the U.S. and EU’s subsidy packages is either possible or even desirable for the U.K.
A former senior government figure who worked on semiconductor policy said that while the U.K. definitely needs a “more coherent worked-out plan,” publishing a formal strategy may actually just reveal how “complicated, messy and beyond our control” the issue really is.
“It’s not that it is problematic that we don’t have a strategy,” they said. “It’s problematic that whatever strategy we have is not going to be revolutionary.” They described the idea of a “boosterish” multi-billion-pound investment in Britain’s own fabricator industry as “pie in the sky.”
The former Downing Street official said Britain should instead be seeking to work “in collaboration” with EU and U.S. partners, and must be “careful to avoid” a subsidy war with allies.
The opposition Labour Party, hot favorites to form the next government after an expected 2024 election, takes a similar view. “It’s not the case that the U.K. can do this on its own,” Shadow Foreign Secretary David Lammy said recently, urging ministers to team up with the EU to secure its supply of semiconductors.
One area where some experts believe the U.K. may be able to carve out a competitive advantage, however, is in the design of advanced semiconductors.
“The U.K. would probably be best placed to pursue support for start-up semiconductor design firms such as Graphcore,” said ASG’s Triolo, “and provide support for expansion of capacity at the existing small number of companies manufacturing at more mature nodes” such as Nexperia’s Newport Wafer Fab.
Ministers launched a research project in December aimed at tapping into the U.K. semiconductor sector’s existing strength in design. The government has so far poured £800 million into compound semiconductor research through universities, according to a recent report by the House of Commons business committee.
But the same group of MPs wants more action to support advanced chip design. Burwell at the CBI business group said the U.K. government must start “working alongside industry, rather than the government basically developing a strategy and then coming to industry afterwards.”
Right now the government is “out there a bit struggling to see what levers they have to pull,” said the senior semiconductor executive quoted earlier.
Under World Trade Organization rules, governments are allowed to subsidize their semiconductor manufacturing capabilities, the executive pointed out. “The U.S. is doing it. Europe’s doing it. Taiwan does it. We should do it too.”
This story has been updated. Cristina Gallardo contributed reporting.
A group of U.S. lawmakers wants the Biden administration to ask the United Arab Emirates to remove the oil company chief the country chose to lead the next U.N. climate talks — or at a minimum “seek assurances” that the UAE will promote an ambitious COP28 summit.
In a letter to Special Presidential Climate Envoy John Kerry, 27 members of the House and Senate called for him to “urge” the UAE to withdraw the appointment of UAE Minister of Industry and Advanced Technology Sultan Ahmed Al Jaber, who is also the CEO of the Abu Dhabi National Oil Company, to lead the COP28 discussions, which start November 30 in Dubai. The company is one of the world’s largest oil producers.
“The appointment of an oil company executive to head COP 28 poses a risk to the negotiation process as well as the whole conference itself,” said the note, which was shared exclusively with POLITICO.
“To help ensure that COP 28 is a serious and productive climate summit, we believe the United States should urge the United Arab Emirates to name a different lead for COP 28 or, at a minimum, seek assurances that it will promote an ambitious COP 28 aligned with the 1.5 degrees Celsius limit,” the lawmakers added.
Kerry — along with other climate diplomats, including the EU’s Frans Timmermans — has repeatedly defended Al Jaber’s appointment in recent weeks, calling him a “terrific choice” in an interview with the Associated Press. Kerry also said ADNOC understood the need to shift its business away from fossil fuels. Kerry’s office was not immediately available to comment on the letter.
A COP28 spokesperson, who had not seen the letter, defended Al Jaber’s record “as a diplomat, minister, and business leader across the energy and renewables industry.” They highlighted his role as founder of renewables company Masdar, calling it “one of the world’s largest renewable energy company with clean energy investments in over 40 countries.”
“His experience uniquely positions him to be able to convene both the public and private sector to bring about pragmatic solutions to achieve the goals and aspirations of the Paris Climate Agreement,” the spokesperson said.
But the U.S. lawmakers noted the long history of fossil fuel industry interference in climate talks.
“Having a fossil fuel champion in charge of the world’s most important climate negotiations would be like having the CEO of a cigarette conglomerate in charge of global tobacco policy. It risks undermining the very essence of what is trying to be accomplished,” they wrote.
PARIS — France is bracing for a day of severe disruptions and strikes on Thursday as trade unions and opposition parties vow to force the government to abandon French President Emmanuel Macron’s flagship pensions reform.
Schools, universities andpublic administrations are expected to close, public transport will be severely affected and demonstrations are planned in major cities across the country.
“It’s going to be a [day] of hassles… It’ll be a Thursday of great disruption of public services,” warned Transport Minister Clément Beaune.
Workers are protesting the government’s decision to raise the legal retirement age to 64 from 62. As part of the proposed overhaul, the number of years of contributions needed for a full pension will also rise faster than previously planned and will be set at 43 years from 2027.
This is one of the biggest tests for Macron since losing outright majority in parliament in June. Macron was reelected last year on promises he would reform France’s public pension system and bring it in line with European neighbors such as Spain and Germany where the legal age of retirement is 65 to 67 years old. According to projections from France’s Council of Pensions Planning, the finances of the pensions system are balanced in the short term but will go into deficit in the long term.
“Whatever pension projection you look at, the system will be go into the red within 15 years… it is difficult to deny the funding issues … The level of expenditure has stabilized but it’s simply higher than the revenues,” said Antoine Bozio, director of the Institute of Public Policy in Paris.
French polls suggest that the French are opposed to the reform but are aware of the need to overhaul state pensions. There is, however, deep disagreement on how to achieve that. Both the far-right National Rally party and the leftwing NUPES coalition staunchly oppose pushing back the age of retirement to 64 and argue that it will unfairly hit French working classes. Both groups vow to fight the government and stall debates as the pensions bill goes through parliament.
“The Macron-Borne reform is a serious step back for French welfare,” tweeted Jean-Luc Mélenchon, leader of the far-left France unbowed party — which is planning a second day of protests on Sunday.
Macron is hoping to get the votes of the conservative Les Républicains to get the reforms passed in parliament, where he does not have absolute majority.
In the battle to win over public opinion, French Prime Minister Elisabeth Borne, who unveiled the reform last week, has repeatedly maintained that the changes include several measures that benefit the poorest. The government plans to increase the minimum monthly pension by close to 10 percent to €1,200 for low-income earners, and vows to improve access to early retirement schemes for employees who work in difficult professions.
According to Bozio, while the government’s aim is primarily to balance the books amid increased funding needs for health, education and support for businesses, there are legitimate questions over the fairness of the reform.
“Pushing back the retirement age will not hit the poorest in France, so in that sense the reform is fair,” said Bozio referring to precarious workers who have checkered careers and often leave the workforce later at 67 years old.
In the battle to win over public opinion, French Prime Minister Elisabeth Borne has repeatedly maintained that the changes include several measures that benefit the poorest | Pool photo by bertrand Guay/AFP via Getty Images
However, lower-income groups, who start work early, will be disadvantaged compared to higher-income groups who have later careers.
“Those hit by the reform will be qualified factory workers, less qualified office workers … Senior managers, the intellectual classes who have done long studies, will be less affected,” he said.
There were other options on the table. In 2020, Macron’s government worked on a more balanced reform, which had the backing of one of France’s main trade unions the CFDT, but was forced to shelve it following months of strikes along with the COVID-19 pandemic which brought the country to a halt.
France has a long history of showdowns between government-led pension reforms and the public backlash on the street in the form of mass protests and walking off the job. In his second term, Macron has settled for a less aggressive, more topical reform focused on raising the legal age of retirement in the hope that it would be easier to pass through parliament. The breadth of Thursday’s protests will be a first test of that choice.
BERLIN — News this month that the number of German soldiers declaring themselves conscientious objectors rose fivefold in the wake of Russia’s full-scale invasion of Ukraine created little more than a ripple in Germany.
For many Germans it’s perfectly natural for members of the Bundeswehr, the army, to renege on the pledge they made to defend their country; if Germans themselves don’t want to fight, why should their troops?
Indeed, in Germany, a soldier isn’t a soldier but a “citizen in uniform.” It’s an apposite euphemism for a populace that has lived comfortably under the U.S. security umbrella for more than seven decades and goes a long way toward explaining how Germany became NATO’s problem child since the war in Ukraine began, delaying and frustrating the Western effort to get Ukraine the weaponry it needs to defend itself against an unprovoked Russian onslaught.
The latest installment in this saga (it began just hours after the February invasion when Germany’s finance minister told Ukraine’s ambassador there was no point in sending aid because his country would only survive for a few hours anyway) concerns the question of delivering main battle tanks to Ukraine. Germany, one of the largest producers of such tanks alongside the U.S., has steadfastly refused to do so for months, arguing that providing Ukraine with Western tanks could trigger a broader war.
Chancellor Olaf Scholz has also tried to hide behind the U.S., noting that Washington has also not sent any tanks. (Scholz has conveniently ignored the detail that the U.S. has provided Ukraine with $25 billion in military aid so far, more than 10 times what Germany has.)
Germany’s allies, including Washington, often ascribe German recalcitrance to a knee-jerk pacifism born of the lessons learned from its “dark past.”
In other words, the German strategy — do nothing, blame the Nazis — is working.
Of course, Germany’s conscience doesn’t really drive its foreign policy, its corporations do. While it hangs back from supporting Ukraine in a fight to defend its democracy from invasion by a tyrant, it has no qualms about selling to authoritarian regimes, like those in the Middle East, where it does brisk business selling weapons to countries such as Egypt and Qatar.
Despite everything that’s happened over the past year, Berlin is still holding out hope that Ukraine can somehow patch things up with Russia so that Germany can resume business as usual and switch the gas back on. Even if Germany ends up sending tanks to Ukraine — as many now anticipate — it will deliver as few as it can get away with and only after exhausting every possible option to delay.
Much attention in recent years has focused on Nord Stream 2, the ill-fated Russo-German natural gas project. Yet tensions between the U.S. and Germany over the latter’s entanglement with Russian energy interests date back to the late 1950s, when it first began supplying the Soviet Union with large-diameter piping.
Throughout the Cold War, Germany’s involvement with NATO was driven by a strategy to take advantage of the protection the alliance afforded, delivering no more than the absolute minimum, while also expanding commercial relations with the Soviets.
In 1955, the weekly Die Zeit described what it called the “fireside fantasy of West German industry” to normalize trade relations with the Soviet Union. Within years, that dream became a reality, driven in large measure by Chancellor Willy Brandt’s détente policies, known as Ostpolitik.
Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German | Thomas Lohnes/Getty Images
That’s one reason the Germans so feared U.S. President Ronald Reagan and his hard line against the Soviets. Far from welcoming his “Mr. Gorbachev, tear down this wall” demand, both the German public and industry were terrified by it, worried that Reagan would upset the apple cart and destroy their business in the east.
By the time the Berlin Wall fell a couple of years later, West German exports to the Soviet Union had reached nearly 12 billion deutsche mark, a record.
That’s why Germany’s handling of Ukraine isn’t a departure from the norm; it is the norm.
Germany’s dithering over aid to Ukraine is a logical extension of a strategy that has served its economy well from the Cold War to the decision to block Ukraine’s NATO accession in 2008 to Nord Stream.
Just last week, as the Russians were raining terror on Dnipro, the minister president of Saxony, Michael Kretschmer, called for the repair of the Nord Stream 1 pipeline, which was blown up by unknown saboteurs last year, so that Germany “keeps the option” to purchase Russian gas after war ends.
One can’t blame him for trying. If one accepts that German policy is driven by economic logic rather than moral imperative, the fickleness of its political leaders makes complete sense — all the more so considering how well it has worked.
The money Germany has saved on defense has enabled it to finance one of the world’s most generous welfare states. When Germany was under pressure from allies a few years ago to finally meet NATO’s 2 percent of GDP spending target, then-Vice Chancellor Sigmar Gabriel called the goal “absurd.” And from a German perspective, he was right; why buy the cow when you can get the milk for free?
Of course, the Germans have had a lot of help milking, especially from the U.S.
American presidents have been chastising Germany over its lackluster contribution to the Western alliance going as far back as Dwight D. Eisenhower, only to do nothing about it.
The exception that proves the rule is Donald Trump, whose plan to withdraw most U.S. troops from Germany was thwarted by his election loss.
Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German.
Biden’s decision to court the Germans instead of castigating them for failing to meet their commitments taught Berlin that it merely needs to wait out crises in the transatlantic relationship and the problems will fix themselves. Under pressure from Trump to buy American liquefied natural gas, then-Chancellor Angela Merkel agreed in 2018 to support the construction of the necessary infrastructure. After Trump, those plans were put on ice, only to revive them amid the current energy crisis.
By virtue of its size and geographical position at the center of Europe, Germany will always be important for the U.S., if not as a true ally, at least as an erstwhile partner and staging ground for the American military.
Who cares that the Bundeswehr has become a punchline or that Germany remains years away from meeting its NATO spending targets?
In Washington’s view, Germany might be a bad ally, but at least it’s America’s bad ally.
And no one understands the benefits of that status better than the Germans themselves.
Thierry Breton is winning the war of ideas in Brussels.
The ex-CEO is a political whirlwind with a gigantic portfolio as internal market chief, the backing of French President Emmanuel Macron and lots of proposals. He’s been touring European Union capitals to win support for plans to shield Europe’s industry from crippling energy prices, American subsidies and “naive” EU free traders.
France’s decades-long push for more state intervention is finally findingsome echo in Berlin and the 13th floor of the Berlaymont building, occupied by European Commission President Ursula von der Leyen, who largely owes her job to Macron.
Omnipresent and ebullient, Breton is playing a key role in marshaling industry and political support for sweeping but so far vague plans to boost clean tech, secure key raw materials and overhaul EU checks on government support that he blasts as too slow to help companies.
“Of course there is resistance; my job is precisely to manage and align everyone,” he told French TV this week of his January meetings with Spanish, Polish and Belgian leaders to flog a forthcoming industrial policy push that could be a turning point in how far European governments will finance companies.
Time is short. Von der Leyen wants to line up proposals for a February summit. European industry is complaining that it can’t swallow far higher energy prices and tighter regulation for much longer, with at least one announcing a European shutdown and an Asian expansion.
Breton said governments don’t need convincing on the need for rapid action. But he’s running up against one of Europe’s sacred cows — EU state aid rules run by Executive Vice President Margrethe Vestager that curb government support with lengthy checks to make sure companies don’t get unfair help. She’s also under intense pressure to preserve a “level playing field” as smaller countries worry about German and French financial firepower.
The French internal market commissioner’s bullish style often sees him act as if he’s got a role in subsidies. In the fall, he sent a letter to EU countries asking them to send views on emergency state aid rules to the internal market department, which is under his supervision, two EU officials recalled.
In a meeting with European diplomats, a Commission representative had to correct it, the EU officials said, asking capitals to make sure the input goes instead to the competition department overseen by Vestager.
Europe First
While Breton doesn’t like to be called a protectionist, his latest mission has been to protect Europe from its transatlantic friend.
As early as September, one Commission official said, the Frenchman was mandated by Europe’s industry to speak out against U.S. President Joe Biden’s Inflation Reduction Act, which provides tax credits for U.S.-made electric cars and support to American battery supply chains.
U.S President Joe Biden gives remarks during an event celebrating the passage of the Inflation Reduction Act on September 13, 2022 | Anna Moneymaker/Getty Images
His Paris-backed campaign charged ahead while EU officials and diplomats tiptoed around the subject. Some within the Commission headquarters found his bad cop routine helpful in keeping pressure on the U.S.
“He’s been constructive, though clearly disruptive,” said Tyson Barker, head of the technology and global affairs program at the German Council of Foreign Relations.
The Frenchmanhas even pitched himself as the bloc’s “sheriff” against Silicon Valleygiants, warning billionaire Elon Musk that an overhaul of the Twitter social network can only go so far since “in Europe, the bird will fly by our rules.”
“Big Tech companies only understand balances of power,” said Cédric O, a former French digital minister who worked with Breton during the French EU Council presidency. “When [Breton and Musk] see each other, it necessarily remains cordial, but Breton shows his teeth and rightly so. It’s his job.”
Breton can even surprise his own services, according to two EU officials. In May, the Commission’s department responsible for digital policy — DG CONNECT — was caught off guard when Breton announced in the press that he would unveil plans by year-end to make sure that technology giants forked out for telecoms networks.
In so doing, Breton — who was CEO of France Télécom in the early 2000s — resurrected a long-dormant and fractious policy debate that had been put to rest almost a decade ago, when erstwhile Digital Commissioner Neelie Kroes ordered Europe’s telecoms operators to “adapt or die” rather than seek money from content providers.
After Breton’s commitments, the Commission’s services were soon scrambling to develop some sort of a coherent policy program to deliver on the Frenchman’s comments. A consultation is scheduled for early this year.
Carte blanche
Breton is a rare creature in the halls of the Berlaymont, where policy is hatched slowly after extensive consultation. To a former CEO with a broad remit — his portfolio runs from the expanse of space to the tiniest of microchips — rapid reaction matters more than treading on toes or singing from the hymn sheet. This often sees him floating ideas and then pulling back.
Last year he alarmed environmentalists by raising the prospect of a U-turn on the EU’s polluting car ban. He wagged his finger at German Chancellor Olaf Scholz for a solo trip to China. He called for nuclear energy to be considered green. He has pushed out grand projects — such as industrial alliances on batteries and cloud, or a cyber shield — that he doesn’t always follow up on.
He’s even pushed forward a multibillion-euro EU communication satellite program dubbed Iris², a favorite of French aerospace companies, that will see the bloc build a rival to Musk’s space-based Starlink broadband constellation.
“It’s clear that he’s been given more free rein than others,” said one EU official. “He has von der Leyen’s ear,” the official added, noting that Breton enjoys “privileged access” to the Commission president — who may be mindful that she’ll need French support for a second term.
According to an official, Breton “has von der Leyen’s ear” and enjoys “privileged access” to the Commission president | Valeria Mongeli/AFP via Getty Images
Indeed, Breton’s massive role was partly designed as a counterweight to a German president.
“There is a criticism of von der Leyen for being too German,” explained Sébastien Maillard, director of the Jacques Delors Institute think tank. “There may inevitably be a division of roles between them — [where Breton is] a counterbalance.”
He’s been called an “unguided missile,” but more often than not, the Frenchman has Paris’ backing when going off script. His October op-ed with Italian colleague Paolo Gentiloni, which called for greater European financial solidarity, was part of France’s agenda, according to one high-ranking Commission official.
“When he went out in the press with Gentiloni against Scholz’s €200 billion, he was clearly doing the job for Macron,” the official said.
His November call for a rethink on the 2035 car engine ban came just after a week after critical green legislation had been finalized by Commission Executive Vice President Frans Timmermans and jarred with the EU’s own position at the COP 27 climate summit in Indonesia. But it aped the position of French auto industry captains, such as Stellantis CEO Carlos Tavares and Renault’s Luca de Meo, who wanted Brussels to slam the brakes on the climate drive.
Breton had not coordinated his car comments with colleagues in advance, according to two Commission officials.
Less than 10 days later, French Prime Minister Elisabeth Borne echoed caution about the “extremely ambitious” engine ban and warned that pivoting to electric car manufacturing was daunting.
Going A-list
Breton acknowledged himself that he wasn’t Macron’s first choice for the critical EU post, telling POLITICO at a live event that he was a “plan B commissioner.”
Asked if he was targeting an A-list job for the new Commission mandate in 2024, he said he “may be able to consider a new plan B assignment — if it is a plan B.”
“He is thinking about the future,” said one EU official. “Look at his LinkedIn posts. He is thinking past the next European elections. He definitely wants to convince Macron to get an expanded portfolio.”
Grabbing the Commission’s top job may be tricky, relying on how EU leaders will line up, according to multiple EU and French officials.
There are other jobs, including overturning the unwritten law that no French or German candidate can hold the economically powerful competition portfolio. Another option could be becoming Europe’s official digital czar, combining the enforcement powers of the Digital Services Act and the Digital Markets Act into a supranational digital enforcement agency, one EU official said.
Breton has shrugged off speculation on his long-term plans.
“All my life, I have been informed of my next potential job 15 minutes before,” he said last month.
Jakob Hanke Vela, Stuart Lau, Barbara Moens, Camille Gijs and Mark Scott contributed reporting.
DAVOS, Switzerland — The World Economic Forum’s annual conclave in the Swiss Alps is the greatest intersection of wealth and political power on the global calendar, but this year the balance is shifting.
Each January, forum organizers became used to announcing another record-setting list of national leaders, global officials and royalty making their way to the exclusive gathering.
WEF would attract even globalization’s strongest skeptics: from U.S. President Donald Trump to former Brazilian President Jair Bolsonaro and climate campaigner Greta Thunberg.
While there are 52 heads of state of government heading to Davos this year, top-tier leaders are missing. U.S. President Joe Biden and his Chinese and Russian counterparts Xi Jinping and Vladimir Putin are all giving it a miss.
French President Emmanuel Macron, who promised to Make the Planet Great Again, is also skipping the talkfest, along with new British Prime Minister Rishi Sunak and re-elected Brazilian President Luiz Inácio Lula da Silva.
Instead, it’s a European-heavy guest list: German Chancellor Olaf Scholz is the only leader from a G7 country, sharing top billing with European Commission President Ursula von der Leyen, another German.
Even within European royal ranks, the forum this year is attracting the likes of Queen Maxima of the Netherlands — a U.N. financial inclusion envoy — rather than environmental campaigners such as King Charles and Prince William.
Some of the most prominent tech companies are dialing back their participation amid rounds of heavy layoffs.
And the biggest party hosts in town — Russian oligarchs — remain forced out by sanctions levied since Putin’s invasion of Ukraine in February 2022.
Ukrainian President Volodymyr Zelenskyy has unrivaled star wattage among the Davos crowd — but even a video appearance from him this year will be treated as below par, given how many of them he now does.
It’s the C-Suite, stupid!
With the global political elite mostly absent, WEF is this year choosing to focus on rising CEO numbers.
Among 2,700 participants in official WEF sessions, “we’re likely to surpass the old record from 2020 with 600 global CEOs — including 1,500 C-suite level overall,” said WEF’s head of digital and marketing George Schmitt, who added that 80 of the CEOs are first-timers in Davos.
Those who claim Davos is dead are yet to be proven right, but WEF’s critics now spread beyond the activist world who have long disparaged the juxtaposition of private jet opulence with hand-wringing panels about global poverty.
WEF would attract even globalization’s strongest skeptics: from U.S. President Donald Trump to former Brazilian President Jair Bolsonaro and climate campaigner Greta Thunberg | Jim Watson/AFP via Getty Images
The U.S. delegation includes cabinet members such as climate envoy John Kerry, who will camp out in Davos for most of the week, but others such as Treasury Secretary Janet Yellen are skipping.
Nobel Peace Prize winner Beatrice Fihn, who campaigns to eliminate nuclear weapons, said she “genuinely had forgotten that Davos is still happening.”
“The format seems slightly dated now. The private jets and oligarch parties are no longer in step with modern biz [business] life,” said Scott Colvin, a Davos veteran who is now public affairs director at Aviva. “The events around COP [the U.N.’s annual climate summit] now feel a bigger deal, given their focus on a specific global policy objective,” he added.
WEF is a victim of its own success and stuck in a demographic bind.
The forum’s operating model requires it to provide a place for the world’s most powerful and influential people to talk.
WEF’s efforts to bring the uber-elite together is a stark annual reminder that they don’t look like the rest of us.
The best ratio of female participants in WEF’s 52-year history of in-person gatherings was 24 percent, in 2020.
Despite years of exhortations and incentives for members to bring more female colleagues, the number often hovers in the range of 18 percent to 20 percent. A WEF spokesperson said that 42 percent of speakers this year will be women.
WEF aims for global reach — but often lands in the middle of the Atlantic instead.
This year Europe is supplying the most political leaders, while the U.S. corporate delegation will once again massively outweigh the others. The 700 Americans participating this year outnumber the Chinese delegation roughly 20 to 1.
In the United States, TikTok is a favorite punching ball for lawmakers who’ve compared the Chinese-owned app to “digital fentanyl” and say it should be banned.
Now that hostility is spreading to Europe, where fears about children’s safety and reports that TikTok spied on journalists using their IP locations are fueling a backlash against the video-sharing app used by more than 250 million Europeans.
As TikTok Chief Executive Shou Zi Chew heads to Brussels on Tuesday to meet with top digital policymaker Margrethe Vestager amid a wider reappraisal of EU ties with China, his company faces a slew of legal, regulatory and security challenges in the bloc — as well as a rising din of public criticism.
One of the loudest critics is French President Emmanuel Macron, who has called TikTok “deceptively innocent” and a cause of “real addiction” among users, as well as a source of Russian disinformation. Such comments have gone hand-in-hand with aggressive media coverage in France, including Le Parisien daily’s December 29 front page calling TikTok “A real danger for the brains of our children.”
New restrictions may be in order. During a trip to the United States in November, Macron told a group of American investors and French tech CEOs that he wanted to regulate TikTok, according to two people in the room. TikTok denies it is harmful and says it has measures to protect kids on the app.
While it wasn’t clear what rules Macron was referring to — his office declined to comment — the remarks added to a darkening tableau for TikTok. In addition to two EU-wide privacy probes that are set to wrap up in coming months, TikTok has to contend with extensive new requirements on content moderation under the bloc’s new digital rulebook, the DSA, from mid-2023 — as well as the possibility of being caught up in the bloc’s new digital competition rulebook, the Digital Markets Act.
In answers to emailed questions, France’s digital minister Jean-Noel Barrot said that France would rely on the DSA and DMA to regulate TikTok at an EU level, though he “remained vigilant on these ever-evolving models” of ad-supported social media. Barrot added that he “never failed to maintain a level of pressure appropriate to the stakes of the DSA” in meetings with TikTok executives.
Ahead of Chew’s visit to Brussels, Thierry Breton, the bloc’s internal market commissioner, warned him about the need to “respect the integrality of our rules,” according to comments the commissioner made in Spain, reported by Reuters. A spokesperson for Vestager said she aimed to “review how the company was preparing for complying with its (possible) obligations under our regulation.”
That said, the probes TikTok is facing deal with suspected violations that have already taken place. If Ireland’s data regulator, which leads investigations on behalf of other EU states, finds that TikTok has broken the bloc’s privacy rulebook, the General Data Protection Regulation, fines could amount to up to 4 percent of the firm’s global turnover. Penalties can be even higher under the DSA, which starts applying to big platforms in mid-2023.
Spying fears
And yet, having to fork over a few million euros could be the least of TikTok’s troubles in Europe, as some lawmakers here are following their U.S. peers to call for much tougher restrictions on the app amid fears that data from TikTok will be used for spying.
TikTok is under investigation for sending data on EU users to China — one of two probes being led by Ireland. Reports that TikTok employees in China used TikTok data to track the movements of two Western journalists only intensified spying fears, especially in privacy-conscious Germany. (TikTok acknowledged the incident and fired four employees over what they said was unauthorized access to user data.)
One of the loudest critics is French President Emmanuel Macron, who has called TikTok “deceptively innocent” and a cause of “real addiction” among users | Pool photo by Ludovic Marin/AFP via Getty Images
Citing a “lack of data security and data protection” as well as data transfers to China, the digital policy spokesman for Germany’s Social Democratic Party group in the Bundestag said that the U.S. ban on TikTok for federal employees’ phones was “understandable.”
“I think it makes sense to also critically examine applications such as TikTok and, if necessary, to take measures. I would therefore advise civil servants, but also every citizen, not to install untrustworthy services and apps on their smartphones,” Jens Zimmermann added.
Maximilian Funke-Kaiser, digital policy spokesman for the liberal FDP group in German parliament, went even further raising the prospect of a full ban on use of TikTok on government phones. “In view of the privacy and security risks posed by the app and the app’s far-reaching access rights, I consider the ban on TikTok on the work phones of U.S. government officials to be appropriate. Corresponding steps should also be examined in Germany.”
For Moritz Körner, a centrist lawmaker in European Parliament, the potential risks linked to TikTok are far greater than with Twitter due to the former’s larger user base — at least five times as many users as Twitter in Europe — and the fact that up to a third of its users are aged 13-19.
“The China-app TikTok should be under the special surveillance of the European authorities,” he wrote in an email. “The fight between autocratic and democratic systems will also be fought via digital platforms. Europe has to wake up.”
In Switzerland, lawmakers called earlier this month for a ban on officials’ phones.
Call for a ban
So far, though, no European government or public body has followed the U.S. in banning TikTok usage on officials’ phones. In response to questions from POLITICO, a spokesperson for the European Commission — which previously advised its employees against using Meta’s WhatsApp — wrote that any restriction on TikTok usage for EU civil servants would “require a political decision and will be based on the careful assessment of data protection cybersecurity concerns, and others.”
The spokesperson also pointed out that “there are no official Commission accounts” on TikTok.
A spokesperson for the European Parliament said its services “continuously monitor” for cybersecurity issues, but that “due to the nature of security matters, we don’t comment further on specific platforms.”
POLITICO reached out to cybersecurity agencies for the EU, the U.K. and Germany to ask if they had or were planning any restrictions or recommendations having to do with TikTok. None flagged any specific restrictions, which doesn’t mean there aren’t any. In Germany, for example, officials who use iPhones can’t use or download TikTok in the section of their phone where confidential data can be accessed.
The European Commission has previously advised its employees against using Meta’s WhatsApp | Kirill Kudryavtsev/AFP via Getty Images
For Hamburg’s data protection agency, one of 16 in Germany’s federal system, restricting TikTok on official phones would be a good idea.
“Based on what we know from the available sources, we share, among other things,the concerns of the U.S. government that you mentioned and would therefore welcome it appropriate for government agencies in the EU to refrain from using TikTok,” a spokesperson said.
This suggests that the most immediate public threat for TikTok in Europe is privacy-related. Of the two probes being conducted by Ireland’s privacy regulator, the one looking into child safety on the app is the closest to wrapping up, according to a spokesperson for the Irish Data Protection Commission.
Depending on the outcome of discussions between EU privacy regulators — the child safety probe is likely to trigger a dispute resolution mechanism — TikTok could face new requirements to verify age in the EU. The other probe, looking into TikTok’s transfers of data to China, is likely to wrap up around mid-year or toward the end of 2023 if a dispute is triggered, the spokesperson said.
Antoaneta Roussi contributed reporting.
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Nicholas Vinocur, Clothilde Goujard, Océane Herrero and Louis Westendarp
LONDON — Elon Musk’s controversial Twitter firing spree is sending workers into the arms of organized labor, according to the new head of Britain’s Trades Union Congress.
“Elon Musk is a perfect recruitment tool for the trade union movement,” Paul Nowak told POLITICO. Since the Tesla billionaire took over the social media platform in October, Prospect, one of the trade union federation’s 48 affiliates, “has seen its membership in Twitter go up tenfold,” he said.
The influx is “precisely in response” to Musk, argued Nowak, who “thinks he can issue a directive from San Francisco that somehow just happens all around the world with no regard to employment law.”
Musk has fired roughly 3,700 employees — nearly half of Twitter’s workforce — in a round of mass layoffs since buying the company.
U.K. Twitter employees earmarked for an exit received an email saying their job would be “potentially” impacted or “at risk,” because, under British law, firms are required to consult with staff over mass redundancies.
In November, Musk meanwhile gave staff an email ultimatum to either go “extremely hardcore” by “working long hours at high intensity” or quit the company.
Musk’s behavior is, Nowak said, “a great recruiting tool for us.”
“If I was a young worker in tech, I’d be thinking that being a union member might be a good investment at the moment,” he said. “If it can happen at Twitter, it can happen anywhere.”
Unions have in recent years ramped up their activity in another part of the tech world: the gig economy. Uber and food delivery service Deliveroo recently signed agreements with unions, while some Apple stores have voted for union recognition. Last year also saw the first-ever industrial action ballots at a U.K. Amazon warehouse.
Organized labor is “beginning to make inroads” in tech, Nowak said — but it still needs “to step up that work.” Twitter had not responded to a request for comment by the time of publication.
Strikes
Nowak takes the helm at the TUC at a time of major industrial unrest in the U.K, as employees in a host of sectors rail against stagnant wages amid soaring inflation.
U.K. Twitter employees earmarked for an exit received an email saying their job would be “potentially” impacted or “at risk” | Justin Sullivan/Getty Images
“It doesn’t matter whether it’s railway workers, postal workers, nurses, paramedics, our members aren’t on strike for the sake of it,” he said.
Since the financial crisis in 2008, the median income in Britain has fallen behind neighboring countries in Europe. An analysis by the TUC shows workers are £20,000 poorer, on average, since 2008 because pay has failed to keep up with inflation. By 2025 the union group expects that gap to increase to £24,000, with even larger gulfs for frontline healthcare staff who are striking.
Britain’s Retail Price Index measure inflation reached 14 percent last year, and economists forecast inflation — in part spurred by the pandemic and Russia’s invasion of Ukraine — will persist longer in the U.K. than among its G7 partners.
“Households can’t afford as much as they have been able to in the past,” said Josie Dent, managing economist at the Centre for Economics and Business Research. “Naturally that creates weaker demand.”
Against that backdrop, Novak said he wants the British government to stimulate domestic demand by putting more pay in workers’ pockets. The government argues boosting public sector pay will further fuel inflation and push its already shaky public finances further into the red.
“What do our members do when our members get paid and get decent pay rises? They go and spend that money in local shops, hotels, restaurants,” said Nowak, and “they don’t squirrel it away in offshore bank accounts, or save it away for a rainy day.”
“You have to create demand internally in the economy as well,” he added. “We’ve had the government sort of turn that common sense on its head.”
LONDON — Three years after leaving the EU to chart its own course, Britain finds itself caught between two economic behemoths in a brewing transatlantic trade war.
In one corner sits the United States, whose Congress in August passed the Biden administration’s much-vaunted $369 billion program of green subsidies, part of the Inflation Reduction Act (IRA).
In the opposing corner is the European Union, which fears Washington’s subsidy splurge will pull investment — particularly in electric vehicles — away from Europe, hitting carmakers hard.
The EU is preparing its own retaliatory package of subsidies; Washington shows little sign of changing course. Fears of a trade war are growing fast.
Now sitting squarely outside the ring, the U.K. can only look on with horror, and quietly ask Washington to soften the blow. But there are few signs the softly-softly approach is bearing fruit. Britain now risks being clobbered by both sides.
“It’s not in the U.K.’s interest for the U.S. and EU to go down this route,” said Sam Lowe, a partner at Flint Global and expert in U.K. and EU trade policy. “Given the U.K.’s current economic position, it can’t really afford to engage in a subsidy war with both.” The British government has just unleashed a round of fiscal belt-tightening after a market rout, following months of political turmoil.
For iconic British motor brands, the row over the Biden administration’s IRA comes with real costs.
The U.S. is the second-largest destination for British-made vehicles after the EU, and the automotive sector is one of Britain’s top goods exporters.
Manufacturers like Jaguar Land Rover have warned publicly about the “very serious challenges” posed by the new U.S. law and its plan for electric vehicle tax credits aimed at boosting American industry.
Kemi on the case
U.K. Trade Secretary Kemi Badenoch has for months been privately urging top U.S. officials to soften the impact of the electric vehicle subsidies on Britain by carving out exemptions, U.K. officials said.
When Commerce Secretary Gina Raimondo visited London in early October, Badenoch pushed her to rethink the strategy. The U.K. trade chief brought that same message to Washington in a series of private meetings earlier this month, including at a sit-down with Deputy Treasury Secretary Wally Adeyemo.
Badenoch has “raised this issue on many levels,” an official from the U.K.’s Department for International Trade said, citing conversations with U.S. Ambassador to Britain Jane Hartley, with Secretary Raimondo, “and with members of the Biden administration and senior representatives of both parties.”
The Cabinet minister has also spoken out in public, telling the pro-free market Cato Institute in Washington earlier this month that “the substantial new tax credits for electric cars not only bar vehicles made in the U.K. from the U.S. market, but also affect vehicles made in the U.S. by U.K. manufacturers.”
U.S. Secretary of Commerce Gina Raimondo | Mandel Ngan/AFP via Getty Images
Badenoch’s comments echo concerns raised by both British automotive lobby group the Society of Motor Manufacturers and Traders (SMMT), and by Jaguar Land Rover, in comments filed with the U.S. Treasury Department.
The SMMT warned that Biden’s green vehicle package has several “elements of concern that risk creating an uneven competitive environment, with U.K.-based manufacturers and suppliers potentially penalised.” The lobby group is taking aim at the credit scheme’s requirement for green vehicles to be built in North America, with significant subsidies available only if critical minerals are sourced from the U.S. or a U.S. ally.
In response to Washington’s plans, the EU is preparing what could amount to billions in subsidies for its own industries hit by the U.S. law, which also offers tax breaks to boost American green businesses such as solar panel manufacturers. Britain faces being squeezed in both markets, while lacking any say in whatever response Brussels decides.
Protectionism that impacts like-minded allies “isn’t the answer to the geopolitical challenges we face,” the British trade department official warned, adding “there is a serious risk” the law disrupts “vital” global supply chains of batteries and electric vehicles.
The conversations Badenoch had this month in Washington were “reassuring,” the official added. “But it’s for them to address and find solutions.”
‘Ton of work to do’
Yet others believe Badenoch will have a hard time getting her colleagues in the U.S. — now cooling on a much-touted bilateral trade deal — to take action. “The U.S. is minimally focused on how any of their policies are going to impact the U.K.,” admitted a U.S.-based representative of a major business group.
While Britain and the U.S. are “very close allies”, they added, those in Washington “just don’t really view the U.K. as an interesting trade partner and market right now.” The U.S. is more focused, they noted, on pushing back against China, meaning Badenoch has “a ton of work to do” getting the administration to soften the IRA.
Nevertheless the U.S. is still working out how its law will actually be implemented, the business figure said, and is assembling a working group on how the IRA impacts trade allies. This has the potential, they added, to “alleviate a lot of the concerns coming out of the U.K.”
Late Tuesday evening, the SMMT called on the British government to provide greater domestic support for the sector as it prepares to ramp up its own electric vehicle production. The group wants an extension past April on domestic support for firms’ energy costs; a boost to government investment in green energy sources; and a speedier national rollout of charging infrastructure and staff training.
In the meantime, Britain’s options appear limited.
Newly manufactured Land Rover and Range Rover vehicles parked and waiting to be loaded for export | Paul Ellis/AFP via Getty Images
The U.K. “could consider legal action” and haul the U.S. before the World Trade Organization or challenge the EU through provisions in the post-Brexit Trade and Cooperation Agreement, said Lowe of consultancy Flint. “But — to be blunt — neither of them care what we have to say.”
Anna Jerzewska, a trade advisor and associate fellow at the UK Trade Policy Observatory, suggested pressing ahead “with your own domestic policy and efforts to support strategic industries is perhaps more important” than complaining about foreign subsidy schemes. But she noted that after a “chaotic” political period, Britain is “likely to take longer to respond to external changes and challenges.”
And in truth, Britain “can’t afford to out-subsidize the U.S. and EU,” said David Henig, a trade expert with the European Centre For International Political Economy think tank.
Outside the EU, Britain could work to rally allies such as Japan and South Korea who are also unhappy with the Biden administration’s protectionist measures, he noted. “But I don’t think we’re in that position,” Henig said, as it would take a concerted diplomatic effort, and the U.K.’s automotive sector would “have to be well positioned” in the first place, not struggling as it is. He predicted London’s lobbying in Washington and Brussels is “not going to get anywhere.”
The EU wants to slash the amount of packaging waste produced across the bloc, banning everything from mini hotel toiletries to throwaway plastic wrapping around some fresh fruit and vegetables.
The proposal is part of the European Commission’s circular economy package, legislation aimed at slashing waste and reducing emissions to help the bloc reach climate neutrality by 2050.
The new rules include mandatory targets for the amount of recycled materials used in plastic packaging and pushes cafés, shops and hotels to switch to reusable, rather than single-use packaging. It calls for all packaging on the EU market to be recyclable by 2030.
Countries will also be told to set up schemes to increase recycling of bottles and cans: Customers would pay a small additional sum on top of their purchase, which is refunded on the bottle’s return.
Packaging is a “key environmental concern,” the Commission said in its preamble to the new rules. The sector is one of the “main users of virgin materials,” hoovering up 40 percent of plastics and 50 percent of paper, and accounting for 36 percent of municipal solid waste.
In 2020, every EU resident generated nearly 180 kilograms of waste, according to new EU data. Paper and cardboard are the main culprit, accounting for 32.7 million tons in 2020, followed by plastic and glass at about 15 million tons each.
“Without action, the EU would see a further 19 percent increase in packaging waste by 2030, and for plastic packaging waste even a 46 percent increase,” according to the Commission.
But its proposal isn’t going down particularly well. Industry groups have pushed back hard against higher reuse targets in recent weeks, while NGOs are accusing the Commission of bowing to those demands and watering down its proposal.
Here are four key points of contention.
End of single-use
One key element of the Commission’s proposal is a ban on some types of single-use packaging in the hospitality sector — such as disposable plates and cups, sugar packets and other condiments, or mini soaps and shampoos.
Businesses won’t let that happen without a fight.
Ever since a first draft of the new rules leaked last month, they’ve been hammering home the argument that the energy and water needed to clean the reusable packaging would outweigh the environmental benefits of moving away from single-use items.
A ban would “require a full cost analysis of businesses in particular energy, water and operational costs,” hospitality lobby HOTREC argued in an emailed statement, adding that the cost of those assessments shouldn’t fall to the businesses.
The rules also set targets for companies to ensure a certain quantity of products are provided in reusable or refillable packaging. For example, 20 percent of takeaway beverage sales made by a café must be served in reusable packaging or using customers’ own containers by 2030, with the target ramping up to 80 percent in 2040. Beer retailers will have to sell 10 percent of their products in refillable bottles by 2030 and 20 percent by 2040.
That’s another sore point for industry.
The Commission should “look at the full life cycle impact of all packaging products,” according to the European Paper Packaging Alliance lobby. It argues that “scientific evidence shows that recyclable, single-use, paper-based packaging has a lower environmental impact than reusable systems, in takeaway settings as well as in quick service restaurants.”
Recycling concerns
Industry groups also complain that the proposal unfairly favors reusable packaging over recyclable single-use packaging, meaning wasted money on investments in recycling facilities — even though the text seeks to boost recycling in the bloc. There’s a minimum amount of recycled content that must be used in the manufacturing of certain plastic packaging, for example.
“There’s a real concern for the industry — we don’t know which horse to back now, because the policy itself has conflicting goals,” said Ian Ellington, senior vice president at Pepsico and president of EU soft drinks lobby UNESDA. “I think the likely outcome of that is we would pause some of those investments while we figure out what the regulatory framework is really going to be.”
Brussels seems to have listened: The rules proposed on Wednesday lay down lower targets on what percentage of packaging must be reusable.
But now environmental groups are sounding the alarm, saying the EU needs to focus on boosting reusable packaging rather than relying on recycling as the solution.
Campaigners have argued that positive messaging around recycling could be promoting additional consumption — and additional waste. They also point out that the average recycling rate is only 64.4 percent.
In rowing back the reuse targets in its current proposal, the EU executive “seems to have fallen into industry’s false promises on investments on recycling,” Larissa Copello, a policy officer for Zero Waste Europe said in an emailed statement.
Death of marketing
The Commission’s proposal would also ban “superfluous” packaging, like double walls or false bottoms aimed at making products appear to contain more than they do.
That essentially means all packaging should be designed for functionality and to minimize the amount of packaging used.
The idea isn’t going down well with businesses that use distinctive packaging to stand out, such as spirits and perfume manufacturers.
In a letter to the Commission, several lobbies argued the new rules will lead to “standardisation of packaging and have negative competitive repercussions for EU consumers, brands and industry.”
“An awful lot of work goes into presenting your products to the market,” said Adeline Farrelly, secretary-general of the association of European manufacturers of glass containers. “The image of your product, the way it looks and feels is a huge part of the value added product.”
Biodegradable packaging in the crosshairs
Compostable and bio-based packaging manufacturers will also have to abide by new rules, as such products can jam up recycling processes and take a long time to fully biodegrade in certain environments.
The Commission has designated a “very small list of products” that should be designed for composting — tea bags, filter coffee pods, sticky labels attached to fruit and vegetables, and lightweight plastic carrier bags — while the rest should go into recycling.
The compostable packaging industry isn’t happy about that, saying it will seriously hamper their business.
The new rules are still “effectively … a ban, or sort of very tight control of what can be composted and what can’t,” said Jack McKeivor, the director of public affairs for compostable packaging company TIPA.
“Why would investors want to invest in it? Why would customers want to buy this stuff if they can’t use it for its originally designated purpose?” he added.
The move would jeopardize the EU’s “current leadership role in the sector” and “freeze” further research and investments into such products, a coalition of bioplastic companies wrote in a letter.
The Commission’s proposal will now be examined by the European Parliament and EU countries, but faces a rocky road ahead — a number of MEPs have already sent a letter to the Commission echoing industry concerns.
BERLIN — On a balmy September evening last year, an Azeri man carrying a Russian passport crossed the border from northern Cyprus into southern Cyprus. He traveled light: a pistol, a handful of bullets and a silencer.
It was going to be the perfect hit job.
Then, just as the man was about to step into a rental car and carry out his mission — which prosecutors say was to gun down five Jewish businessmen, including an Israeli billionaire — the police surrounded him.
The failed attack was just one of at least a dozen in Europe in recent years, some successful, others not, that have involved what security officials call “soft” targets, involving murder, abduction, or both. The operations were broadly similar in conception, typically relying on local hired guns. The most significant connection, intelligence officials say, is that the attacks were commissioned by the same contractor: the Islamic Republic of Iran.
In Cyprus, authorities believe Iran, which blames Israel for a series of assassinations of nuclear specialists working on the Iranian nuclear program, was trying to signal that it could strike back where Israel least expects it.
“This is a regime that bases its rule on intimidation and violence and espouses violence as a legitimate measure,” David Barnea, the head of Israel’s Mossad intelligence agency, said in rare public remarks in September, describing what he said was a recent uptick in violent plots. “It is not spontaneous. It is planned, systematic, state terrorism — strategic terrorism.”
He left out one important detail: It’s working.
That success has come in large part because Europe — the staging ground for most Iranian operations in recent years — has been afraid to make Tehran pay. Since 2015, Iran has carried out about a dozen operations in Europe, killing at least three people and abducting several others, security officials say.
“The Europeans have not just been soft on the Islamic Republic, they’ve been cooperating with them, working with them, legitimizing the killers,” Masih Alinejad, the Iranian-American author and women’s rights activist said, highlighting the continuing willingness of European heads of state to meet with Iran’s leaders.
Alinejad, one of the most outspoken critics of the regime, understands better than most just how far Iran’s leadership is willing to go after narrowly escaping both a kidnapping and assassination attempt.
“If the Islamic Republic doesn’t receive any punishment, is there any reason for them to stop taking hostages or kidnapping or killing?” she said, and then answered: “No.”
Method of first resort
Assassination has been the sharpest instrument in the policy toolbox ever since Brutus and his co-conspirators stabbed Julius Caesar repeatedly. Over the millennia, it’s also proved risky, often triggering disastrous unintended consequences (see the Roman Empire after Caesar’s killing or Europe after the assassination of Archduke Franz Ferdinand in Sarajevo).
And yet, for both rogue states like Iran, Russia and North Korea, and democracies such as the United States and Israel — the attraction of solving a problem by removing it often proves irresistible.
Even so, there’s a fundamental difference between the two spheres: In the West, assassination remains a last resort (think Osama bin Laden); in authoritarian states, it’s the first (who can forget the 2017 assassination by nerve agent of Kim Jong-nam, the playboy half-brother of North Korean dictator Kim Jong-un, upon his arrival in Kuala Lumpur?). For rogue states, even if the murder plots are thwarted, the regimes still win by instilling fear in their enemies’ hearts and minds.
That helps explain the recent frequency. Over the course of a few months last year, Iran undertook a flurry of attacks from Latin America to Africa. In Colombia, police arrested two men in Bogotá on suspicion they were plotting to assassinate a group of Americans and a former Israeli intelligence officer for $100,000; a similar scene played out in Africa, as authorities in Tanzania, Ghana and Senegal arrested five men on suspicion they were planning attacks on Israeli targets, including tourists on safari; in February of this year, Turkish police disrupted an intricate Iranian plot to kill a 75-year-old Turkish-Israeli who owns a local aerospace company; and in November, authorities in Georgia said they foiled a plan hatched by Iran’s Quds Force to murder a 62-year-old Israeli-Georgian businessman in Tbilisi.
Whether such operations succeed or not, the countries behind them can be sure of one thing: They won’t be made to pay for trying. Over the years, the Russian and Iranian regimes have eliminated countless dissidents, traitors and assorted other enemies (real and perceived) on the streets of Paris, Berlin and even Washington, often in broad daylight. Others have been quietly abducted and sent home, where they faced sham trials and were then hanged for treason.
While there’s no shortage of criticism in the West in the wake of these crimes, there are rarely real consequences. That’s especially true in Europe, where leaders have looked the other way in the face of a variety of abuses in the hopes of reviving a deal to rein in Tehran’s nuclear weapons program and renewing business ties.
Unlike the U.S. and Israel, which have taken a hard line on Iran ever since the mullahs came to power in 1979, Europe has been more open to the regime. Many EU officials make no secret of their ennui with America’s hard-line stance vis-à-vis Iran.
“Iran wants to wipe out Israel, nothing new about that,” the EU foreign policy chief Josep Borrell told POLITICO in 2019 when he was still Spanish foreign minister. “You have to live with it.”
History of assassinations
There’s also nothing new about Iran’s love of assassination.
Indeed, many scholars trace the word “assassin” to Hasan-i Sabbah, a 12th-century Persian missionary who founded the “Order of Assassins,” a brutal force known for quietly eliminating adversaries.
Hasan’s spirit lived on in the Ayatollah Ruhollah Khomeini, the hardline cleric who led Iran’s Islamic revolution and took power in 1979. One of his first victims as supreme leader was Shahriar Shafiq, a former captain in the Iranian navy and the nephew of the country’s exiled shah. He was shot twice in the head in December 1979 by a masked gunman outside his mother’s home on Rue Pergolèse in Paris’ fashionable 16th arrondissement.
In the years that followed, Iranian death squads took out members and supporters of the shah and other opponents across Europe, from France to Sweden, Germany, Switzerland and Austria. In most instances, the culprits were never caught. Not that the authorities really needed to look.
In 1989, for example, Abdul Rahman Ghassemlou, a leader of Iran’s Kurdish minority who supported autonomy for his people, was gunned down along with two associates by Iranian assassins in an apartment in Vienna.
The gunmen took refuge in the Iranian embassy. They were allowed to leave Austria after Iran’s ambassador to Vienna hinted to the government that Austrians in his country might be in danger if the killers were arrested. One of the men alleged to have participated in the Vienna operation would later become one of his country’s most prominent figures: Mahmoud Ahmadinejad, Iran’s president from 2005 until 2013.
Not even the bad publicity surrounding that case tempered the regime’s killing spree. In the years that followed, the body count only increased. Some of the murders were intentionally gruesome in order to send a clear message.
Fereydoun Farrokhzad, for example, a dissident Iranian popstar who found exile in Germany, was killed in his home in Bonn in 1992. The killers cut off his genitals, his tongue and beheaded him.
His slaying was just one of dozens in what came to be known as Iran’s “chain murders,” a decade-long killing spree in which the government targeted artists and dissidents at home and abroad. Public outcry over the murder of a trio of prominent writers in 1998, including a husband and wife, forced the regime hard-liners behind the killings to retreat. But only for a time.
Illustration by Joan Wong for POLITICO
Then, as now, the dictatorship’s rationale for such killings has been to protect itself.
“The highest priority of the Iranian regime is internal stability,” a Western intelligence source said. “The regime views its opponents inside and outside Iran as a significant threat to this stability.”
Much of that paranoia is rooted in the Islamic Republic’s own history. Before returning to Iran in 1979, Khomeini spent nearly 15 years in exile, including in Paris, an experience that etched the power of exile into the Islamic Republic’s mythology. In other words, if Khomeini managed to lead a revolution from abroad, the regime’s enemies could too.
Bargaining chips
Given Europe’s proximity to Iran, the presence of many Iranian exiles there and the often-magnanimous view of some EU governments toward Tehran, Europe is a natural staging ground for the Islamic Republic’s terror.
The regime’s intelligence service, known as MOIS, has built operational networks across the Continent trained to abduct and murder through a variety of means, Western intelligence officials say.
As anti-regime protests have erupted in Iran with increasing regularity since 2009, the pace of foreign operations aimed at eliminating those the regime accuses of stoking the unrest has increased.
While several of the smaller-scale assassinations — such as the 2015 hit in the Netherlands on Iranian exile Mohammad-Reza Kolahi — have succeeded, Tehran’s more ambitious operations have gone awry.
The most prominent example involved a 2018 plot to blow up the annual Paris meeting of the National Council of Resistance of Iran, an alliance of exile groups seeking to oust the regime. Among those attending the gathering, which attracted tens of thousands, was Rudy Giuliani, the former New York mayor and then-U.S. President Donald Trump’s lawyer.
Following a tip from American intelligence, European authorities foiled the plot, arresting six, including a Vienna-based Iranian diplomat who delivered a detonation device and bombmaking equipment to an Iranian couple tasked with carrying out an attack on the rally. Authorities observed the handover at a Pizza Hut in Luxembourg and subsequently arrested the diplomat, Assadollah Assadi, on the German autobahn as he sped back to Vienna, where he enjoyed diplomatic immunity.
Assadi was convicted on terror charges in Belgium last year and sentenced to 20 years is prison. He may not even serve two.
The diplomat’s conviction marked the first time an Iranian operative had been held accountable for his actions by a European court since the Islamic revolution. But Belgium’s courage didn’t last long.
In February, Iran arrested Belgian aid worker Olivier Vandecasteele on trumped-up espionage charges and placed him into solitary confinement at the infamous Evin prison in Tehran. Vandecasteele headed the Iran office of the Norwegian Refugee Council, an aid group.
Following reports that Vandecasteele’s health was deteriorating and tearful public pleas from his family, the Belgian government — ignoring warnings from Washington and other governments that it was inviting further kidnappings — relented and laid the groundwork for an exchange to trade Assadi for Vandecasteele. The swap could happen any day.
“Right now, French, Swedish, German, U.K., U.S., Belgian citizens, all innocents, are in Iranian prisons,” said Alinejad, the Iranian women’s rights campaigner.
“They are being used like bargaining chips,” she said. “It works.”
Amateur hour
Even so, the messiness surrounding the Assadi case might explain why most of Iran’s recent operations have been carried out by small-time criminals who usually have no idea who they’re working for. The crew in last year’s Cyprus attack, for example, included several Pakistani delivery boys. While that gives Iran plausible deniability if the perpetrators get caught, it also increases the likelihood that the operations will fail.
“It’s very amateur, but an amateur can be difficult to trace,” one intelligence official said. “They’re also dispensable. They get caught, no one cares.”
Iranian intelligence has had more success in luring dissidents away from Europe to friendly third countries where they are arrested and then sent back to Iran. That’s what happened to Ruhollah Zam, a journalist critical of the regime who had been living in Paris. The circumstances surrounding his abduction remain murky, but what is known is that someone convinced him to travel to Iraq in 2019, where he was arrested and extradited to Iran. He was convicted for agitating against the regime and hanged in December of 2020.
One could be forgiven for thinking that negotiations between Iran and world powers over renewing its dormant nuclear accord (which offered Tehran sanctions relief in return for supervision of its nuclear program) would have tamed its covert killing program. In fact, the opposite occurred.
In July of 2021, U.S. authorities exposed a plot by Iranian operatives to kidnap Alinejad from her home in Brooklyn as part of an elaborate plan that involved taking her by speedboat to a tanker in New York Harbor before spiriting her off to Venezuela, an Iranian ally, and then on to the Islamic Republic.
A year later, police disrupted what the FBI believed was an attempt to assassinate Alinejad, arresting a man with an assault rifle and more than 60 rounds of ammunition who had knocked on her door.
American authorities also say Tehran planned to avenge the assassination of General Qassem Soleimani, the head of its feared paramilitary Quds Force who was the target of a U.S. drone strike in 2020, by seeking to kill former National Security Adviser John Bolton and Mike Pompeo, the former Secretary of State, among other officials.
Through it all, neither the U.S. nor Europe gave up hope for a nuclear deal.
“From the point of view of the Iranians, this is proof that it is possible to separate and maintain a civilized discourse on the nuclear agreement with a deceptive Western appearance, on the one hand, and on the other hand, to plan terrorist acts against senior American officials and citizens,” Barnea, the Mossad chief said. “This artificial separation will continue for as long as the world allows it to.”
Kremlin’s killings
Some hope the growing outrage in Western societies over Iran’s crackdown on peaceful protestors could be the spark that convinces Europe to get tough on Iran. But Europe’s handling of its other favorite rogue actor — Russia — suggests otherwise.
Long before Russia’s annexation of Crimea, much less its all-out war against Ukraine, Moscow, similar to Iran, undertook an aggressive campaign against its enemies abroad and made little effort to hide it.
Russian police investigators stand near the body of killed Russian opposition leader and former Deputy Prime Minister Boris Nemtsov | Sasha Mordovets/Getty Images
The most prominent victim was Alexander Litvinenko. A former KGB officer like Vladimir Putin, Litvinenko had defected to the U.K., where he joined other exiles opposed to Putin. In 2006, he was poisoned in London by Russian intelligence with polonium-210, a radioactive isotope that investigators concluded was mixed into his tea. The daring operation signaled Moscow’s return to the Soviet-era practice of artful assassination.
Litvinenko died a painful death within weeks, but not before he blamed Putin for killing him, calling the Russian president “barbaric.”
“You may succeed in silencing me, but that silence comes at a price,” Litvinenko said from his deathbed.
In the end, however, the only one who really paid a price was Litvinenko. Putin continued as before and despite deep tensions in the U.K.’s relationship with Russia over the assassination, it did nothing to halt the transformation of the British capital into what has come to be known as “Londongrad,” a playground and second home for Russia’s Kremlin-backed oligarchs, who critics say use the British financial and legal systems to hide and launder their money.
Litvinenko’s killing was remarkable both for its brutality and audacity. If Putin was willing to take out an enemy on British soil with a radioactive element, what else was he capable of?
It didn’t take long to find out. In the months and years that followed, the bodies started to pile up. Critical journalists, political opponents and irksome oligarchs in the prime of life began dropping like flies.
Europe didn’t blink.
Angela Merkel, then German chancellor, visited Putin in his vacation residence in Sochi just weeks after the murders of Litvinenko and investigative journalist Anna Politkovskaya and said … nothing.
Even after there was no denying Putin’s campaign to eradicate anyone who challenged him, European leaders kept coming in the hope of deepening economic ties.
Neither the assassination of prominent Putin critic Boris Nemtsov just steps away from the Kremlin in 2015, nor the poisoning of a KGB defector and his daughter in the U.K. in 2018 and of opposition leader Alexei Navalny in 2020 with nerve agents disabused European leaders of the notion that Putin was someone they could do business with and, more importantly, control.
‘Anything can happen’
Just how comfortable Russia felt about using Europe as a killing field became clear in the summer of 2019. Around noon on a sunny August day, a Russian assassin approached Zelimkhan Khangoshvili, a Chechen with Georgian nationality, and shot him twice in the head with a 9mm pistol. The murder took place in a park located just a few hundred meters from Germany’s interior ministry and several witnesses saw the killer flee. He was nabbed within minutes as he was changing his clothes and trying to dispose of his weapon and bike in a nearby canal.
It later emerged that Khangoshvili, a Chechen fighter who had sought asylum in Germany, was on a Russian kill list. Russian authorities considered him a terrorist and accused him of participating in a 2010 attack on the Moscow subway that killed nearly 40 people.
In December of 2019, Putin denied involvement in Khangoshvili’s killing. Sort of. Sitting next to French President Emmanuel Macron, Merkel and Ukrainian President Volodymyr Zelenskyy following a round of talks aimed at resolving the conflict in Ukraine, the Russian referred to him as a “very barbaric man with blood on his hands.”
“I don’t know what happened to him,” Putin said. “Those are opaque criminal structures where anything can happen.”
Early on October 19 of last year, Berlin police discovered a dead man on the sidewalk outside the Russian embassy. He was identified as Kirill Zhalo, a junior diplomat at the embassy. He was also the son of General Major Alexey Zhalo, the deputy head of a covert division in Russia’s FSB security service in Moscow that ordered Khangoshvili’s killing. Western intelligence officials believe that Kirill Zhalo, who arrived in Berlin just weeks before the hit on the Chechen, was involved in the operation and was held responsible for its exposure.
The Russian embassy called his death “a tragic accident,” suggesting he had committed suicide by jumping out of a window. Russia refused to allow German authorities to perform an autopsy (such permission is required under diplomatic protocols) and sent his body back to Moscow.
Less than two months later, the Russian hitman who killed Khangoshvili, was convicted of murder and sentenced to life in prison. Russia recently tried to negotiate his release, floating the possibility of exchanging American basketball player Brittney Griner and another U.S. citizen they have in custody. Washington rejected the idea.
The war in Ukraine offers profound lessons about the inherent risks of coddling dictators.
Though Germany, with its thirst for Russian gas, is often criticized in that regard, it was far from alone in Europe. Europe’s insistence on giving Putin the benefit of the doubt over the years in the face of his crimes convinced him that he would face few consequences in the West for his invasion of Ukraine. That’s turned out to be wrong; but who could blame the Russian leader for thinking it?
Iran presents Europe with an opportunity to learn from that history and confront Tehran before it’s too late. But there are few signs it’s prepared to really get tough. EU officials say they are “considering” following Washington’s lead and designating the Islamic Revolutionary Guard Corps, a vast military organization that also controls much of the Iran’s economy, as a terror organization. Last week, German Foreign Minister Annalena Baerbock spearheaded an effort at the United Nations to launch a formal investigation into Iran’s brutal crackdown against the ongoing protests in the country.
Yet even as the regime in Tehran snuffs out enemies and races to fulfil its goal of building both nuclear weapons and missiles that can reach any point on the Continent, some EU leaders appear blind to the wider context as they pursue the elusive renewal of the nuclear accord.
“It is still there,” Borrell said recently of the deal he has taken a leading role in trying to resurrect. “It has nothing to do with other issues, which certainly concern us.”
The detail and possible value of the monetary penalty will remain under wraps until then, but the triplet of fines could add up to over €2 billion, financial statements by Meta indicate — setting a new record for the highest fines under the European Union’s feared General Data Protection Regulation (GDPR) received by a single company in one go.
According to filings in Ireland, Meta has set aside €3 billion for EU privacy fines in 2022 and 2023. Its platform Instagram already got slapped with a €405 million fine in September for violating kids’ privacy, and Facebook so far has accumulated €282 million in penalties for data breaches as well as a €60 million hit from the French. That leaves well over €2 billion earmarked by the firm for regulatory action.
That’s a substantial hit for Meta, which announced last month it was laying off 11,000 employees globally amid lower sales and major costs linked to the firm’s pivot to the metaverse.
Beyond hitting Meta’s pocket, the three fines expected within weeks could also put a bomb under its broader business model. The decisions stem from complaints filed by Austrian activist Max Schrems accusing the company of failing to have proper legal grounds to process millions of Europeans’ data. If the final decisions invalidate Meta’s argument that it’s processing data as part of a contract with users, the company would have to seek another legal basis for its data-fuelled ad targeting model.
The cases have also revealed deep fissures between Europe’s data watchdogs.
Ireland’s data protection commission largely backed Meta’s argument that it could claim it needs data to fulfill a “contract” with its users to provide personalized ads, in its draft decision issued a year ago. But that reasoning has long put Ireland in the minority amongst its colleagues. The Norwegian data protection authority said the Irish interpretation would render European data protection law “pointless,” according to a document obtained by POLITICO last year. The Irish regulator was also alone in voting against EU guidelines that banned companies from using the contract legal basis to use data to target ads.
The three decisions are likely to lay into the Irish regulator’s initial position and, more worryingly for Meta, amp up the pressure for the company to go scrambling for new legal ways to gather and process data on Europeans.
The transatlantic reset between Brussels and Washington is on life support.
After four years of discord and disruption under Donald Trump, hopes were high that Joe Biden’s presidency would usher in a new era of cooperation between Europe and the U.S. after he declared: “America is back.”
But when senior officials from both sides meet in Washington on Monday for a twice-yearly summit on technology and trade, the mood will be gloomier than at any time since Trump left office.
The European Union is up in arms over Biden’s plans for hefty subsidies for made-in-America electric cars, claiming these payments, which partly kick in from January 1, are nothing more than outright trade protectionism.
At the same time, the U.S. is increasingly frustrated the 27-country bloc won’t be more aggressive in pushing back against China, accusing some European governments of caving in to Beijing’s economic might.
Those frictions are expected to overshadow the so-called EU-U.S. Trade and Technology Council (TTC) summit this week. At a time when the Western alliance is seeking to maintain a show of unity and strength in the face of Russian aggression and Chinese authoritarianism, the geopolitical stakes are high.
Biden may have helped matters last Thursday, during a joint press conference with French President Emmanuel Macron, by saying he believed the two sides can still resolve some of the concerns the EU has raised.
“We’re going to continue to create manufacturing jobs in America but not at the expense of Europe,” Biden said. “We can work out some of the differences that exist, I’m confident.”
But, as ever, the details will be crucial.
It is unclear what Biden can do to stop his Buy American subsidies from hurting European car-markers, for example, many of which come from powerful member countries like France and Germany. The TTC summit offers a crucial early opportunity for the two sides to begin to rebuild trust and start to deliver on Biden’s warm rhetoric.
Judging by the TTC’s record so far, those attending, who will include U.S. Secretary of State Antony Blinken, will have their work cut out.
More than 20 officials, policymakers and industry and society groups involved in the summit told POLITICO that the lofty expectations for the TTC have yet to deliver concrete results. Almost all of the individuals spoke on the condition of anonymity to discuss sensitive internal deliberations.
U.S. Secretary of State Antony Blinken will be attending the TTC | Sean Gallup/Getty Images
Some officials privately accused their counterparts of broken promises, particularly on trade. Others are frustrated at a lack of progress in 10 working groups on topics like helping small businesses to digitize and tackling climate change.
“With these kinds of allies, who needs enemies?” said one EU trade diplomat when asked about tensions around upcoming U.S. electric car subsidies. A senior U.S. official working on the summit hit back: “We need the Europeans to play ball on China. So far, we haven’t had much luck.”
Much of the EU-U.S. friction is down to three letters: IRA.
Biden’s Inflation Reduction Act, which provides subsidies to “Buy American” when it comes to purchasing electric vehicles, has infuriated officials in Brussels who see it as undermining the multilateral trading system and a direct threat to the bloc’s rival car industry.
“The expectation the TTC was established to provide a forum for precisely these advanced exchanges with a view to preventing trade frictions before they arise appears to have been severely frustrated,” said David Kleimann, a trade expert at the Bruegel think tank in Brussels.
Biden’s room for flexibility is limited. The context for the subsidies and tax breaks is his desire to make good on his promise to create more manufacturing jobs ahead of an expected re-election run in 2024. The U.S. itself is hovering on the edge of a possible recession.
In addition, the U.S. trade deficit with the EU hit a record $218 billion in 2021, second only to the U.S. trade deficit with China. The U.S. also ran an auto trade deficit of about $22 billion with European countries, with Germany accounting for the largest share of that.
Washington has few, if any, meaningful policy levers at its disposal to calm European anger. During a recent visit to the EU, Katherine Tai, the U.S. trade representative, urged European countries to pass their own subsidies to jumpstart Europe’s electric car production, according to three officials with knowledge of those discussions.
“It risks being the elephant in the room,” said Emily Benson, a senior fellow at the Center for Strategic and International Studies, a Washington-based think tank, when asked about the electric car dispute.
After a push from Brussels, there were increasing signs on Friday that the TTC could still play a role. In the latest version of the TTC’s draft declaration, obtained by POLITICO, both sides commit to addressing the European concerns over Biden’s subsidies, including via the Trade and Tech Council. Again, though, there was no detail on how Washington could resolve the issue.
Politicians across Europe are already drawing up plans to fight back against Biden’s subsidies. That may include taking the matter to the World Trade Organization, hitting the U.S. with retaliatory tariffs or passing a “Buy European Act” that would nudge EU consumers and businesses to buy locally made goods and components.
Officials and business leaders pose for a photo during the TTC in September 2021 | Pool photo by Rebecca Droke/AFP via Getty Images
Privately, Washington has not been in the mood to give ground. Speaking to POLITICO before Biden met Macron, five U.S. policymakers said the IRA was not aimed at alienating allies, stressing that the green subsidies fit the very climate change goals that Europe has long called on America to adopt.
“There’s just a huge amount to be done and more frankly to be done than the market would provide for on its own,” said a senior White House official, who was not authorized to speak on the record. “We think the Inflation Reduction Act is reflective of that type of step, but we also think there is a space here for Europe and others, frankly, to take similar steps.”
China tensions
Senior politicians attending the summit are expected to play down tensions this week when they announce a series of joint EU-U.S. projects.
These include funds for two telecommunications projects in Jamaica and Kenya and the announcement of new rules for how the emerging technology of so-called trustworthy artificial intelligence can develop. There’s also expected to be a plan for more coordination to highlight potential blockages in semiconductor supply chains, according to the draft summit statement obtained by POLITICO.
Yet even on an issue like microchips — where both Washington and Brussels have earmarked tens of billions of euros to subsidize local production — geopolitics intervenes.
For months, U.S. officials have pushed hard for their European counterparts to agree to export controls to stop high-end semiconductor manufacturing equipment being sent to China, according to four officials with knowledge of those discussions.
Washington already passed legislation to stop Chinese companies from using such American-made hardware. The White House had been eager for the European Commission to back similar export controls, particularly as the Dutch firm ASML produced equipment crucial for high-end chipmaking worldwide.
Yet EU officials preparing for the TTC meeting said such requests had never been made formally to Brussels. The draft summit communiqué makes just a passing reference to China and threats from so-called non-market economies.
Unlike the U.S., the EU remains divided on how to approach Beijing as some countries like Germany have long-standing economic ties with Chinese businesses that they are reluctant to give up. Without a consensus among EU governments, Brussels has little to offer Washington to help its anti-China push.
“In theory, the TTC is not about China, but in practice, every discussion with the U.S. is,” said one senior EU official, speaking on the condition of anonymity. “If we talk with Katherine Tai about Burger King, it has an anti-China effect.”
Gavin Bade, Clea Caulcutt, Samuel Stolton and Camille Gijs contributed reporting.
