BRUSSELS — One of Europe’s most senior politicians recounted how former U.S. President Donald Trump privately warned that America would not come to the EU’s aid if it was attacked militarily.
“You need to understand that if Europe is under attack we will never come to help you and to support you,” Trump told European Commission President Ursula von der Leyen in 2020, according to French European Commissioner Thierry Breton, who was also present at a meeting at the World Economic Forum in Davos.
“By the way, NATO is dead, and we will leave, we will quit NATO,” Trump also said, according to Breton. “And he added, ‘and by the way, you owe me $400 billion, because you didn’t pay, you Germans, what you had to pay for defense,’” Breton said about the tense meeting, where the EU’s then-trade chief Phil Hogan was also present.
Breton told the anecdote at an event in the European Parliament in Brussels on Tuesday, just days before the Republican Party holds its January 15 caucus in Iowa, the opening contest in Trump’s bid to win the Republican nomination for a run at returning to the White House. Party members will cast their votes for candidates including Trump, Florida Governor Ron DeSantis and former South Carolina Governor Nikki Haley, who both trail way behind the ex-president in opinion polls.
Brussels is rife with fear about the possibility Trump will return to the U.S. presidency.
As the commissioner in charge of the EU’s industrial policy and defense agenda, Breton has pushed for the EU to boost its own self-defense capabilities amid Russia’s war in Ukraine, and on Tuesday floated a €100 billion fund to ramp up arms production in the bloc.
“That was a big wake-up call and he may come back,” Breton said about Trump. “So now more than ever, we know that we are on our own, of course. We are a member of NATO, almost all of us, of course we have allies, but we have no other options but to increase drastically this pillar in order to be ready [for] whatever happens.”
BRUSSELS — The Netherlands on Friday started enforcing new export controls restrictions on advanced microchips production machines to China, siding with Washington in the geopolitical tussle over who controls the critical technology.
The Dutch rules come in support of a U.S.-led strategy to choke off China from critical parts of the supply chain needed to manufacture high-end microchips used in consumer electronics, computing and other domains — including military applications. “It’s necessary to check in advance who’s the end user and what the end use is of the production equipment,” the Dutch advocate in the regulation.
But the measures also put a target on the back of Dutch semiconductor champion ASML — Europe’s highest-valued tech company with a market value of around €240 billion — and have caused critics in Europe to accuse the Dutch government of bowing to U.S. pressure too easily.
ASML already faced restrictions on the export of its most advanced machines, which use extreme ultraviolet light (EUV). The new rules require the company to apply for a permit for at least three types of its machines that use less advanced deep ultraviolet (DUV). The government expects about 20 annual applications in total for a permit because of the additional DUV restrictions.
Decoupling will be ‘extremely expensive’
The Dutch decision to align export controls policy with Washington and Tokyo has sidelined other European Union member countries and Europe’s own chips industry in past months.
The rules don’t seem to bite in the short term: ASML didn’t change its financial outlook for this year, nor its “longer-term scenarios.” Part of the explanation there is that ASML was still granted the necessary licenses it needed until the end of the year, an ASML spokesperson said Thursday, allowing the company to “fulfill contractual obligations.” The company added though that it was “unlikely” to receive export licences for Chinese customers from January onward.
But the company is fully aware that restrictions to the Chinese market out of security concerns could become a slippery slope, threatening its unique position in a global — and highly efficient — supply chain.
Decoupling between the West and China will be “extremely difficult and extremely expensive,” Christophe Fouquet, the company’s executive vice president, said in June. Earlier, ASML CEO Peter Wennink said that putting “locks” on the global chips ecosystem would have “far-reaching consequences.”
It could also incite China to accelerate its own production ecosystem for advanced chips — something that has not been sufficiently taken into consideration, according to critics of the export restrictions.
ASML CEO Peter Wennink said that putting “locks” on the global chips ecosystem would have “far-reaching consequences” | Bas Czerwinski/EFE via EPA
“We’re giving a clear signal to the world: The export of our products can stop if a country bothers the U.S., because the Netherlands immediately succumbs under the pressure,” Laurens Dassen, a Dutch lawmaker for the pan-European Volt party, said in a statement.
“You already see that China is starting to produce these chips itself instead of buying them from us,” Dassen said.
Seeking security
The Dutch decision has prompted the rest of the European Union to speed up their work to coordinate export controls and manage risks emanating from trading with China.
Before the summer, the European Commission presented its economic security package — including a promise to review the bloc’s export control regime. The Commission has said that it wants to come up with a “list of technologies which are critical to economic security” as part of the package.
Behind the scenes, diplomats and officials are squabbling over how to balance Europe’s need for trade defenses for security purposes with its strategy to promote free trade and keep its industries competitive with other regions.
It’s something that Dutch politicians welcome, if only to avoid being the only ones in Europe pioneering ways to regulate sensitive tech.
“In the previous decades, technology has become determinate for geopolitical relations. If that’s the case, you will need a policy in the area of technology,” Bart Groothuis, a liberal lawmaker who co-negotiated the bloc’s Chips Act, said. The Chips Act already has some provisions that allow for more European cooperation on export controls.
The Netherlands and Europe shouldn’t follow the U.S. “blindly” in that area, Volt’s Dassen added: “It’s about time that Europe determines its own fate. We have to make our own strategic choices and not be dependent” — on China, nor on the U.S.
At NATO summit after NATO summit, European leaders get a clear public message from Washington — increase spending on defense.
In private, there’s another message that’s just as clear — make sure a lot of that extra spending goes on U.S. weapons.
European leaders are resisting.
“We must develop a genuinely European defense technological and industrial base in all interested countries, and deploy fully sovereign equipment at European level,” French President Emmanuel Macron said at the GLOBSEC conference in Bratislava last month.
The decades of cajoling from Washington are paying off. Although most EU countries aren’t yet meeting NATO’s target of spending 2 percent of GDP on defense, the alliance has seen eight years of steady spending increases. In 2022, spending by European countries was up by 13 percent to $345 billion — almost a third higher than a decade ago — much of it a reaction to Russia’s full-scale invasion of Ukraine.
Now the question is how that money will be spent.
The U.S. wants to ensure that European countries — which already spend about half of their defense purchasing on American kit — don’t make a radical switch to spending more of that money at home.
Some European leaders are hoping that’s exactly what happens, but it’s an open question whether the Continent’s defense industry can make that happen.
“Traditionally, there was a suspicion about a change in Europe’s defense capabilities which dates back more than 25 years,” said Max Bergmann, director of the Europe, Russia, Eurasia Program at the Washington-based Center for Strategic and International Studies. “What direction would the EU go, would it mean the EU would decouple from NATO, what would the impact be on U.S. defense industrial policy?”
Buying at home
The current tensions in Brussels are over whether new EU-wide defense policy should be limited to EU companies — a position driven by Macron and Internal Market Commissioner Thierry Breton, a Frenchman. That confirms suspicions stateside about European protectionism when it comes to allowing U.S. companies to compete for EU contracts.
“Our plan is to directly support, with EU money, the effort to ramp up our defense industry, and this for Ukraine and for our own security,” Breton said last month.
Internal Market Commissioner Thierry Breton wants new EU-wide defense policy to be limited to EU companies | Olivier Hoslet/AFP via Getty Images
But there’s an uncomfortable fact for the backers of European strategic autonomy: When it comes to arms, Europe still depends on the U.S.
While European companies have deep expertise in defense — building everything from France’s Rafale fighter to Germany’s Leopard tank and Poland’s man-portable Piorun air-defense system — the scale of the U.S. arms industry, as well as its technological innovation, makes it attractive for European weapons buyers.
The most common big-ticket item is Lockheed Martin’s F-35 Joint Strike Fighter, at a cost of $80 million a pop. There is also an immediate surge in demand for off-the-shelf items like shoulder-fired missiles and artillery shells.
“Following Russia’s invasion of Ukraine, European states want to import more arms, faster,” said a report by the Stockholm International Peace Research Institute (SIPRI).
Buying abroad
The war in Ukraine has underscored the dominance of the U.S. defense industry.
A host of European countries are buying Javelin anti-tank missiles produced by Raytheon and Lockheed Martin; Poland this year signed a $1.4 billion deal to buy 116 M1A1 Abrams tanks, as well as another $10 billion agreement to buy High Mobility Artillery Rocket Systems produced by Lockheed Martin; Slovakia is buying F-16 fighters, while Romania is in talks to buy F-35s.
Those deals are raising fears in Europe over whether they can wean themselves off of U.S. defense suppliers. In one example, France and Germany worry about Spain’s intentions as it kicks the tires on F-35s while also being a partner in developing the European Future Combat Air System jet fighter.
But the need to restock weapons depots and continue shipping materiel to Ukraine is urgent, and after decades of contraction, the Continent’s defense industry is having a difficult time adjusting.
“Our European allies and partners, they’ve never experienced anything like this,” said a senior U.S. Defense Department official, referring to the spasm of spending brought on by Russia’s invasion. The official was granted anonymity to discuss the situation. “They don’t yet have the defense production authorities they need [to move quickly] and they’ve really been looking to us to try to get a handle on how they can increase production, and I think they’re learning a lot from us.”
To help Europe get there, the United States has expanded the number of bilateral security supply arrangements it has with foreign partners since the Russian invasion, signing new agreements with Latvia, Denmark, Japan and Israel since October. These allow countries to more quickly and easily sell and trade defense-related goods and services.
The Biden administration also signed an administrative arrangement with the European Union in late April to establish working groups on supply-chain issues, while giving both sides a seat at the table in internal meetings at the European Defence Agency and the Pentagon.
But there are limits to how far and how fast both sides are able and willing to go.
In the near term, capacity issues and political will means the rhetorical sea change in EU military spending is unlikely to make a huge dent in U.S. military industrial policy.
While the past 18 months have seen a huge spike in defense budgets — Germany announced a special debt-financed fund worth €100 billion after the Russian invasion of Ukraine; Poland’s defense expenditure is set to reach 4 percent of GDP this year — EU-wide projects are facing significant headwinds. European companies say they need longer lead times and long-term contracts to make needed investments.
“You need that visibility and certainty to make those investments. We’re in a chicken game between governments and industry — who are the first ones that are putting the money on the table,” said Lucie Béraud-Sudreau, director of the military expenditure and arms production program at SIPRI.
Ultimately, the global defense boom means that there should be plenty of military spending to go around, at least in the short term as countries rush to prove their worth to their NATO and EU allies and the Russian threat remains acute.
Paul McLeary reported from Washington and Suzanne Lynch from Brussels.
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Twitter has abandoned the EU’s code of practice on disinformation, Thierry Breton said late Friday, but Europe’s internal markets commissioner insisted that “obligations remain” for the social networking giant.
“You can run but you can’t hide,” Breton said in a tweet, after confirming that the platform owned by Elon Musk had left the bloc’s disinformation code, which other major social media platforms have pledged to support.
“Beyond voluntary commitments, fighting disinformation will be a legal obligation under DSA as of August 25,” Breton said, referring to the Digital Services Act — new social media rules that include fines of up to 6 percent of a company’s annual revenue.
“Our teams will be ready for enforcement,” the commissioner said.
The code of practice on disinformation is a voluntary rulebook that includes obligations for platforms to track political advertising, stop the monetization of disinformation, and provide greater access to outsiders. Participation in the code is designed to help offset some of these companies’ obligations within the separate and mandatory DSA.
Twitter is one of eight social media platforms that fall under the scope of the DSA. The others are Facebook, TikTok, YouTube, Instagram, LinkedIn, Pinterest and Snapchat.
Breton has publicly vowed that he would personally hold Musk to account for complying with the EU’s content rules.
As Russia’s war in Ukraine puts a heavy strain on EU arms, there’s infighting in Brussels over how best to reload.
The latest skirmish is focused around a procurement fund intended to ramp up production of arms in Europe.
POLITICO has learned that key committees in the European Parliament — namely, the committees for industry, the internal market, and the subcommittee on security and defense — have clashed over the fund, formally known as European Defense Industry Reinforcement Through Common Procurement Act (EDIRPA). It holds €500 million for now, with the possibility to grow.
A French-led group in the Parliament is vying to keep the joint defense purchase pot within the borders of the European Union — which opponents are deriding as a power grab for France.
Currently, a compromise text seen by POLITICO leaves the door open to spending outside the EU. It says non-EU companies may be involved “provided that this does not contravene … the security and defense interests of the union and its member states.”
A faction across therelevant committees — consisting mainly of Polish, Estonian, Portuguese, German and Luxembourgish parliamentarians — has also amended the text to include “associated third countries.” They want to keep open the option to tap non-EU countries, like South Korea or the United States, to fill any gaps in weapon production.
In light of grinding ground battles on Ukrainian territory, concerns have been growing over the EU’s capacity to ramp up production of ammunition and weapons.
Yet French MEPs who dominate the Renew Europe group have been pushing back, seeking to make the fund a European-only affair.
Nathalie Loiseau, chair of the parliamentary defense subcommittee, denied that the push to limit funding to European countries would benefit only France. “France is not the only country producing weapons in Europe,” the Renew MEP told POLITICO, pointing also to Germany, Italy and Poland.
Loiseau said the entire remit of EDIRPA is intended to strengthen European industrial policy. “We need our industries to be able to produce [arms] more quickly, and we need to find a way to encourage this, so we need a solid EDIRPA.”
Ivars Ījabs, a Latvian MEP in the Renew Europe group who is leading work on the file in the internal market committee, described how he and his colleagues are “aware of the immediate challenges to European defense forces.”
As one of the MEPs most opposed to the French position, he explained: “My French colleagues are very much in support of the European Commission’s original proposal, with an emphasis on strengthening the defense industrial base in the medium term.”
Loiseau added that while she is open to non-European companies producing the weapons, “they must be produced in Europe,” arguing that spending EU money on weapons produced outside the bloc would be illegal under EU treaties, risking collapse of the entire procurement program.
Striking a balance
The increasingly acrimonious row in Parliament over the defense plan hits on a question raised since Europe began discussing beefing up its defense capabilities: Who will be able to get their hands on the extra billions of euros the EU intends to invest?
Thierry Breton, the internal market commissioner who announced the plan last year and has been championing it, is also French. Unveiling the initiative, he said, “These investments, funded by the European taxpayers … should benefit first and foremost European industry wherever that is possible.”
French industry accounts for more than 25 percent of European military capabilities. But many other countries, from Italy to Sweden, also have strong defense sectors (and many key companies based there often have strong corporate ties with countries outside the EU, such as the U.K. and the U.S.).
German center-right MEP Andreas Schwab said a balance needs to be struck to get the process moving.
“This instrument needs to find a middle ground, a middle way: sufficiently flexible for foreign components, but also a boost to EU industry — and especially, a boost to make ministries of defense start working together on bigger joint procurement projects,” he told POLITICO.
Thierry Breton announced the procurement plan last year, arguing it should benefit first and foremost European industry | Pool photo by Kenzo Tribouillard/AFP via Getty Images
All major players agree on one thing: The fund should be bigger.
While the Commission’s plan earmarked an initial €500 million, the draft European Parliament proposal by the internal market and defense committees increased that to €1.5 billion.
But even €1.5 billion is “peanuts” when it comes to military hardware, said Dragoş Tudorache, Renew’s lead on EDIRPA in the defense subcommittee.
Tudorache explained that Parliament could theoretically wrap it up within two to three weeks once there’s agreement among the three committees.
As to which of the two camps will win out: “Right now I would not call it either way,” the MEP said.
A vote of the full Parliament — possibly in June — may be the most likely outcome.
EDIRPA is separate to the European Peace Facility, an off-budget intergovernmental EU fund that is now being used to backfill member countries’ supplies once they’ve sent arms to Ukraine. This mechanism is at the center of current plans to provide ammunition quickly to Ukraine, as first reported by POLITICO.
In contrast, EDIRPA is a medium-term project, originally meant to be for 2022 to 2024, to carry forward the joint procurement of arms and ammunition.
Based on EDIRPA, the Commission is meant to present an even larger program for joint procurement, called the European defence investment programme, which was originally expected for last year but is now tapped to arrive later this year.
Diplomats point out that is unclear where the Commission could find the money for a more ambitious joint procurement program.
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.
PARIS — When French President Emmanuel Macron’s party lost its absolute majority in parliament six months ago, many wondered what the setback would mean for an ambitious, here-to-disrupt-the-status-quo leader whose first term was defined by a top-down style of management.
It turns out Macron 2.0 is a man about globe, pitching “strategic intimacy” to world leaders, as he leaves domestic politics to his chief lieutenant and concentrates on his preferred sphere: international diplomacy.
The Frenchman’s past “intimate” moves have been well-documented: affectionate hugging with Angela Merkel, knuckle-crunching handshakes with Donald Trump, and serial bromancing with the likes ofJustin Trudeau and Rishi Sunak. Now in his second term, the French president appears to be making a move on — quite literally — the world.
Since his reelection, Macron has been hopping from one official visit to another: in Algeria one day to restore relations with a former colony, in Bangkok another to woo Asian nations, and in Washington most recently to shore up the relationship with Washington. The globetrotting head of state has drawn criticism in the French press that he is deserting the home front.
“He is everywhere, follows everything, but he’s mostly elsewhere,” quipped a French minister speaking anonymously.
“[But] he’s been on the job for five years now, does he really need to follow the minutiae of every project? And the international pressure is very strong. Nothing is going well in the world,” the minister added.
Before COVID-19 struck, Macron’s first term was marked by a brisk schedule of reforms, including a liberalization of the job market aimed at making France more competitive. The French president was hoping to continue in the same pragmatic vein during his second term, focusing on industrial policy and reforming France’s pensions system. While he hasn’t abandoned these goals, the failure to win a parliamentary majority in June has forced him to slow down on the domestic agenda.
Foreign policy in France has always been the guarded remit of the president, but Macron is trying to flip political necessity into opportunity, delegating the tedium and messiness of French parliamentary politics to his Prime Minister Elisabeth Borne.
There are few areas of global diplomacy where the president hasn’t pitched a French initiative in recent months — whether it’s food security in Africa, multilateralism in Asia or boosting civilian resilience in Ukraine. Despite some foreign policy missteps in his first term including the backing of strongman Khalifa Haftar in the Libyan civil war, Macron is now a veteran statesman, eagerly taking advantage of Europe’s leaderless landscape to hog the international stage.
The French president’s full pivot to global diplomacy in his weakened second term at home is reminiscent of past leaders confronting turmoil on the domestic front.
“The Jupiterian period is over. He’s got no majority,” said Cyrille Bret, researcher for the Jacques Delors Institute. “So now he is suffering from the Clinton-second-mandate-syndrome, who after the impeachment attempts over the Lewinsky [inquiry], turned to the international scene, trying to resolve issues in the Balkans, the Middle East and in China.”
But even as Macron embraces the wide world, the pitfalls ahead are numerous. Photo ops with world leaders haven’t done much to slow the erosion of his approval ratings at home. With a recession looming in Europe and discontent over inflation and energy woes, Macron’s margins of maneuver are limited, and trouble at home might ultimately need his attention.
Man about globe
The French president first used the words “strategic intimacy” in October, when he told European leaders gathered in Prague they needed to work on “a strategic conversation” to overcome divisions and start new projects.
If the thought of 44 European leaders cozying up wasn’t bewildering enough, Macron double-downed this month and called for “more strategic intimacy” with the U.S.
It’s not entirely clear what kind of transatlantic liaison he was gunning for, but it certainly included a good dose of tough love. Arriving in Washington, Macron called an American multi-billion package of green subsidies “super aggressive.” (He nonetheless received red carpet treatment at the White House, with Joe Biden calling him “his friend” and even “his closer” — the man who helps him bring deals over the finish line — even if he didn’t actually obtain any concessions from the U.S. president.)
Some of Macron’s success in taking center stage is, of course, due to France’s historical assets: a permanent seat on theU.N. Security Council, a nuclear capacity, a history of military interventions and global diplomacy.
But for the Americans, Macron is also the last dancing partner left in a fast-emptying ballroom across the pond. The U.K. is still embroiled in its own internal affairs and has lost some influence after Brexit, while German Chancellor Olaf Scholz hasn’t filled the space left by Merkel’s departure.
While Macron’s abstract and at times convoluted speeches may not be to everyone’s liking, at least he has got something to say.
“[The Americans] are looking for someone to engage with and there’s a lack of alternatives,” said Sophia Besch, European affairs expert at Carnegie Endowment for International Peace in Washington. “Macron is the last one standing. There’s his enthusiasm, and at the same time he is disruptive for a leader and not always an easy partner.”
“He can count on some reluctant admirers in Washington for his energy,” she said.
The French touch
In his diplomatic endeavors, Macron likes a good surprise.
“Emmanuel Macron doesn’t like working bottom-up, where the political link is lost,” said one French diplomat. “He enjoys surprising people and marking political coups.”
“The [French bureaucracy] doesn’t really like that,” the diplomat added. “We prefer things that are all neat and tidy.”
Conjuring up new ideas — such as the European Political Community — that haven’t quite filtered through the layers of bureaucracy is one of Macron’s ways of pushing the envelope. The newly christened group’s first summit was ultimately hailed as a success, having marked the return of the U.K. to a European forum and displaying the Continent’s unity in the face of Russia’s aggression against Ukraine.
It’s a technique that forces the hand of other participants but sometimes undermines the credibility of his initiatives, and raises questions about what has really been confirmed. Launching the European Political Community may have been a success; announcing a summit between Russian President Vladimir Putin and the U.S. president a couple of days before the full-scale invasion of Ukraine less so. (The summit, obviously, never took place.)
Macron’s diplomatic frenzy has also raised speculation that he is already gunning for a top international job for when he leaves the Elysée palace. Macron cannot run for a third term, and speculation is already running high in France on what the hyperactive president will do next.
The question at the heart of Macron’s second term is whether his attempts to be everything and everywhere — combined with his stubborn dedication to controversial ideas — is what will ultimately trip him up.
Even as Macron’s U.S. visit was hailed a success, with him saying France and the US were “fully aligned” on Russia, he sparked controversy on his return when he told a French TV channel that Russia should be offered “security guarantees” in the event of negotiations on ending the war in Ukraine.
“That comment fell out of the line in relation to the coordinated message from Macron and Biden, which was that nothing should be done about Ukraine without Ukraine’s [approval],” said Besch.
Macron says he wants France to be an “exemplary” NATO member, but he still wants France to act as a “balancing power” that does not completely close the door on Russia. It’s a stance that may help France build partnerships with more neutral states across the world, but it does nothing to mend the rift with eastern EU member states.
For the man about globe who presents himself as the champion of European interests, that’s an uncomfortable place to be in.
When it comes to “strategic intimacy,” it’s possible to have too many partners.
Elisa Bertholomey and Eddy Wax contributed to reporting.
BERLIN — With only six weeks to avoid a transatlantic trade showdown over green industries, the Germans are frustrated that Washington isn’t offering a peace deal and are increasingly considering a taboo-breaking response: European subsidies.
Europe’s fears hinge on America’s $369 billion package of subsidies and tax breaks to bolster U.S. green businesses, which comes into force on January 1. The bugbear for the Europeans is that Washington’s scheme will encourage companies to shift investments from Europe and incentivize customers to “Buy American” when it comes to purchasing an electric vehicle — something that infuriates the big EU carmaking nations like France and Germany.
The timing of this protectionist measure could hardly be worse as Germany is in open panic that several of its top companies — partly spurred by energy cost spikes after Russia’s invasion of Ukraine — are shuttering domestic operations to invest elsewhere. The last thing Berlin needs is even more encouragement for businesses to quit Europe, and the EU wants the U.S. to cut a deal in which its companies can enjoy the American perks.
A truce seems unlikely, however. If this spat now spirals out of control, it will lead to a trade war, something that terrifies the beleaguered Europeans. While the first step would be a largely symbolic protest at the World Trade Organization (WTO), the clash could easily slide precipitously back toward the tit-for-tat tariff battles of the era of former U.S. President Donald Trump.
This means that momentum is growing in Berlin for a radical Plan B. Instead of open tariff war with America, the increasingly discussed option is to rip up the classic free-trade rulebook and to play Washington at its own game by funneling state funds into European industry to rear homegrown green champions in sectors such as solar panels, batteries and hydrogen.
France has long been the leading advocate of strengthening European industry with state largesse but, up until now, the more economically liberal Germans have not wanted to launch a subsidy race against America. The sands are now shifting, however. Senior officials in Berlin say they are increasingly leaning toward the French thinking, should the talks with the U.S. not lead to an unexpected last-minute solution.
Berlin is the 27-nation bloc’s economic powerhouse, so it will be a decisive moment if Berlin ultimately decides to throw its might behind the state-led subsidy approach to an industrial race with the U.S.
Running out of time
The clock is ticking for a truce with Biden that looks increasingly unlikely.
Recent attempts by a special EU-U.S. task force to address EU concerns have met little enthusiasm on the American side to amend the controversial legislation, the European Commission told EU countries this week.
“There are only a few weeks left,” warned Bernd Lange, the chair of the European Parliament’s trade committee, adding that “once the act is implemented, it will be too late for us to achieve any changes.”
Lange said that the failure to reach a deal would likely trigger a WTO lawsuit by the EU against the U.S., and Brussels could also strike back against what it sees as the discriminatory U.S. subsidies by imposing punitive tariffs. Warnings of a trade war are already overshadowing the runup to a high-level EU-U.S. meeting in Washington on December 5.
MEP Bernd Lange Lange said that the failure to reach a deal would likely trigger a WTO lawsuit by the EU against the U.S. | Philippe Buissin/European Union
It’s precisely the kind of spat that the German government wants to avoid, as Chancellor Olaf Scholz hopes to forge unity among like-minded democracies amid Russia’s war and the the increasing challenges posed by China. Earlier this month, Scholz’s government made an overture to Washington by suggesting that a new EU-U.S. trade deal could be negotiated to resolve differences, but that proposal was quickly rejected.
There are sympathizers for the subsidies approach in Brussels, with officials at the EU’s executive saying powerful Internal Market Commissioner Thierry Breton is a leading proponent. Breton is already advocating for a “European Solidarity Fund” to help “mobilizing the necessary funding” to strengthen European autonomy in key sectors like batteries, semiconductors or hydrogen. Support from Germany could help Breton win the upper hand in internal EU strategy discussions over the more cautious Trade Commissioner Valdis Dombrovskis.
Breton will travel to Berlin on November 29 to discuss the consequences of the Inflation Reduction Act as well as industrial policy and energy measures with Scholz’s government.
The German considerations even echo calls from top officials of the Biden administration, including U.S. Trade Representative Katherine Tai, who are urging the EU to not engage in a transatlantic trade dispute and instead roll out their own industrial subsidies; a strategy that Washington also sees as way to reduce dependence on China.
Plan B
Scholz first indicated late last month that the EU might have to respond to the U.S. law with its own tax cuts and state support if the negotiations with Washington fail to reach a solution, lending support to similar plans articulated by French President Emmanuel Macron, who will meet Biden on December 1 in Washington.
Although Scholz does not endorse Macron’s framing of the initiative as a “Buy European Act” (which sounds too protectionist for the Germans), the chancellor agrees that the EU cannot stand by idly if it faces unfair competition or lost investments, people familiar with his thinking said late last month.
Negative economic news, such as carmaker Tesla putting plans for a new battery factory in Germany on hold and instead investing in the U.S., or steelmaker ArcelorMittal partly closing operations in Germany, have increased calls in Berlin to consider more state support to counter a negative trend caused by both the U.S. scheme and high energy prices.
Although the official government line remains that Berlin is still holding out hope for a negotiated solution with Washington, officials in Berlin say that it could be possible to increase incentives for industries to locate the production of green technologies in Europe.
A spokesperson for the German Economy Ministry said that faced with the challenges stemming from the Inflation Reduction Act, “we will have to come up with our own European response that puts our strengths first … The aim is to competitively relocate green value creation in Europe and strengthen our own production capacities.”
The spokesperson warned, however, that both the U.S. and EU “must be careful that there is no subsidy race that prevents the best ideas from prevailing in the market,” and added: “Green technologies in particular thrive best in fair competition; protectionism cripples innovation.”
One important condition that could help Germany and the EU to safeguard said fair competition and to avoid the global free trade system descending into protectionist tendencies would be to ensure that any EU state subsidies remain in line with WTO rules. That means, in contrast to the U.S. law, that those subsidies would not discriminate between local and foreign producers.
German Chancellor Olaf Scholz first indicated late last month that the EU might have to respond to the U.S. law with its own tax cuts and state support | Sean Gallup/Getty Images
Crucially, support is also coming from German industry.
“In the area of industrial policy and subsidies, we could look at measures that are compatible with WTO rules — as the EU is already doing in the chip sector,” said Volker Treier, the head of foreign trade at the German Chamber of Commerce.
Treier also stressed that “there must be no discrimination” against foreign investors, but added: “This explicitly does not rule out the possibility of settlement bonuses, which in turn should be available to investors from all countries who would be interested in such investment commitments in Europe.”
In Brussels, the Commission’s competition department has also made clear that it’s looking with an open mind at upcoming proposals.
“There are no instruments excluded a priori” when it comes to the EU’s response to the U.S. subsidies, the department’s state aid Deputy Director General Ben Smulders said Thursday.
Barbara Moens, Suzanne Lynch and Pietro Lombardi in Brussels and Laura Kayali and Clea Caulcutt in Paris contributed reporting.
