On the anniversary of Putin’s aggression, however, uncertainty and irritation were undisguised in Kyiv. Ukrainians wanted to know why Western sanctions on Russia are not working, and why Moscow keeps getting components for its missiles from Western companies. Why Ukrainians have to keep asking for weapons; and why the U.S. is not pushing through the crucial new aid package for Ukraine.
“We are very grateful for the support of the United States, but unfortunately, when I turn to the Democrats for support, they tell me to go to the Republicans. And the Republicans say to go to the Democrats,” Ukrainian MP Oleksandra Ustinova said at a separate Kyiv conference on Saturday. “We are grateful for the European support, but we cannot win without the USA. We need the supply of anti-aircraft defenses and continued assistance.”
“Why don’t you give us what we ask for? Our priorities are air defense and missiles. We need long-range missiles,” Ustinova added.
U.S. Congressman Jim Costa explained to the conference that Americans, and even members of Congress, still need to be educated on how the war in Ukraine affects them and why a Ukrainian victory is in America’s best interests.
“I believe that we must, and that is why we will decide on an additional aid package for Ukraine. It is difficult and unattractive. But I believe that over the next few weeks, the US response will be a beacon to protect our security and democratic values,” Costa said.
The West is afraid of Russia, Oleksiy Danilov, Ukraine’s security and defense council secretary, told the Saturday conference.
“The West does not know what to do with Russia and therefore it does not allow us to win. Russians constantly blackmail and intimidate the West. However, if you are afraid of a dog, it will bite you,” he said.
“And now you are losing not only to autocratic Russia but also to the rest of the autocracies in the world,” Danilov added.
BERLIN — Germans gave the world schadenfreude for a reason. And southern Europe couldn’t be more pleased.
For countries that spent years on the receiving end of Europe’s German-inspired fiscal Inquisition, there’s no sweeter sight than to see Germany splayed on the high altar of Teutonic parsimony.
The irony is that Germany put itself there on purpose and has no clue how it will find redemption.
A jaw-dropping constitutional court ruling earlier this month effectively rendered the core of the German government’s legislative agenda null and void left the country in a collective shock. In order to circumvent Germany’s self-imposed deficit strictures, which give governments little room to spend more than they collect in taxes, Chancellor Olaf Scholz’s coalition relied on a network of “special funds” outside the main budget. Scholz was convinced the government could tap the money without violating the so-called debt brake.
The court, in no uncertain terms, disagreed. The ruling raises questions about the government’s ability to access a total of €869 billion parked outside the federal budget in 29 “special funds.” The court’s move forced the government to both freeze new spending and put approval of next year’s budget on hold.
Nearly two weeks after the decision, both the magnitude of the ruling and the reality that there’s no easy way out have become increasingly clear. Though Scholz has promised to come up with a new plan “very quickly,” few see a resolution without imposing austerity.
The expectation in the Bundestag is that Scholz will find enough cuts to deal with the immediate €20 billion hole the decision created in next year’s budget, but not much more.
In the meantime, his government is on edge. While Economy Minister Robert Habeck, a Green, has been telling any microphone he can find that Germany’s economic future is hanging in the balance, Finance Minister Christian Lindner has triggered panic and confusion by announcing a series of ill-defined spending freezes.
On Thursday, the government was forced to deny a report that a special fund created to bolster Germany’s armed forces after Russia’s full-scale invasion of Ukraine would be affected by the cuts.
At a press conference with Italian Prime Minister Giorgia Meloni late Wednesday, Scholz endured the humiliation of a reporter asking his guest whether she considered Germany to be a reliable partner given its budget crisis. A magnanimous Meloni, whose country knows a thing or two about creative accounting, gave Scholz a shot in the arm, responding that in her experience he was “very reliable.”
Greek accounting
Between the lines, the justices of Germany’s constitutional court suggested the use of the shadow funds by Scholz’s coalition amounted to a bookkeeping sleight of hand — the same sort of accounting alchemy Berlin upbraided Greece for more than a decade ago. Perhaps unwittingly, the court ruling echoed then-Chancellor Angela Merkel’s unsolicited advice to Athens during Greece’s debt crisis: “Now is the time to do the homework!”
For eurozone countries with a recent history of debt trouble — a group that alongside Greece includes the likes of Spain, Portugal and Italy — Germany’s financial pickle must feel like déjà vu all over again. From 2010 onwards, they found themselves in the unenviable position of trying to explain to Wolfgang Schäuble, Merkel’s taskmaster finance minister, how they planned to return to the path of fiscal rectitude. At Schäuble’s urging, Greece nearly ditched the euro altogether.
The expectation in the Bundestag is that Scholz will find enough cuts to deal with the immediate €20 billion hole the decision created in next year’s budget, but not much more | Odd Andersen/AFP via Getty Images
In recent months, Germany has once again assumed the role of the fiscal scold in Brussels, where officials have been negotiating a new framework for the eurozone’s rulebook on government spending, known as the Stability and Growth Pact. The pact, which dates to 1997, has been suspended since the pandemic hit, but it is set to take effect again next year. Many countries want to loosen the rules given the huge budget pressures that have followed multiple crises in recent years. Berlin is open to reform but skeptical of granting its fellow euro countries too much leeway on spending.
The latest budget mess certainly won’t help the Germans make their case.
Simple hubris
The allure of the strategy the court has now deemed illegal was that the government thought it could spend money it salted away in the special funds without violating Germany’s constitutional debt brake, which restricts the federal deficit to 0.35 percent of GDP, except in times of emergency.
Put simply, Scholz’s coalition wanted to have its cake and eat it too, creating a veneer of fiscal discipline while spending freely to finance an ambitious agenda.
Despite ample warning from legal experts that the government’s plan to repurpose a huge chunk of emergency pandemic-related funds might not withstand a court challenge, Scholz and his partners went ahead anyway. What’s more, they staked their entire political agenda on the assumption that the strategy would go off without a hitch.
Last week’s court decision is the national equivalent of a rich kid being cut off from his trust fund: Daddy’s money is still there, but junior can’t touch it and has to exchange his Porsche for an Opel.
What many in Berlin cite as the main reason for what they are calling derSchlamassel (fiasco), however, is simple hubris.
Scholz’s mild-mannered public persona belies a know-it-all approach to governing. A lawyer by training who has served for decades in the top ranks of German government, Scholz, at least in his own mind, is generally the smartest person in the room.
During coalition negotiations in 2021, Scholz sold the budget trick idea to his future partners — the conservative liberal Free Democrats (FDP) and the Greens — as a way to square the circle between the welfare agenda of his own Social Democrats (SPD), the Greens’ expensive climate agenda, and the FDP’s demands for fiscal rigor (or at least the appearance thereof).
Indeed, it’s doubtful the coalition would have ever been formed in the first place without the plan. The Greens and FDP happily went along; after all Scholz, Germany’s finance minister from 2018-2021, knew what he was doing. Or so they thought.
Finance minister or ‘fuck-up’?
Scholz’s role notwithstanding, his successor as finance minister, FDP leader Christian Lindner, shares a lot of the responsibility for the snafu, for the simple reason that it was his ministry that oversaw the strategy.
During the coalition talks in 2021, Lindner was torn between a desire to govern and the fiscal strictures long championed by his party. Scholz offered him what appeared to be an elegant way to do both.
Scholz’s role notwithstanding, his successor as finance minister, FDP leader Christian Lindner, shares a lot of the responsibility for the snafu | Sean Gallup/Getty Images
When Lindner, who had never served in an executive government role before, was poised to secure the finance ministry, some critics questioned his qualifications to lead the financial affairs of Europe’s largest economy.
Many Germans have no doubt made their determinations in recent weeks.
Green machine
In contrast to the FDP, the Greens, had no qualms about endorsing Scholz’s bookkeeping tricks.
When it comes to realizing the Greens’ environmental goals, the ends have long justified the means.
In the early 2000s, for example, party leaders sold Germans on the idea of switching off the country’s nuclear plants and transitioning to renewables. They won the argument by promising that the subsidies consumers would be forced to finance to pay for the rollout of solar and wind power wouldn’t cost more every month than a “scoop of ice cream.”
In the end, the collective annual bill for German households was €25 billion, enough to have cornered the global ice cream market many times over.
The Greens’ ice cream strategy — secure difficult-to-reverse legislative commitments and worry about the financial details later — also informed their approach to what they call the “social, ecological transformation,” a plan to make Germany’s economy carbon neutral.
That’s why the shock of the court decision has hit the Greens hardest. After more than 15 years in opposition, the Greens saw the alliance with Scholz and Lindner as the culmination of their effort to convince Germans to embrace their ecological vision for the future. Just as the hoped-for revolution was within reach, it has slipped from their grasp.
Habeck, the face of the Green transformation, has looked like a man at his wits’ end in recent days, making dire predictions about the coming economic Armageddon.
“This marks a turning point for both the German economy and the job market,” Habeck told German public television this week, predicting that it would become much more difficult for the country to maintain the level of prosperity it has enjoyed for decades.
Road to perdition
For all his candor, Habeck failed to address the elephant in the room: It’s a fake debt crisis.
There is no objective reason for Germany to be in this dilemma. A best-of-class credit rating means Berlin can borrow money on better terms than almost any country on the planet. With a budget deficit of 2.6 percent of GDP last year and a total debt load amounting to 66 percent of GDP, Germany is also well above average compared to its eurozone peers in terms of fiscal discipline — even counting the debt raised for the special funds.
The only reason Germany can’t spend the money in the special funds is not because it can’t afford to, but rather because it remains beholden to an almost religious fiscal orthodoxy that views deficit debt as the road to perdition.
That conviction prompted Germany to anchor the so-called debt brake in its constitution in 2009, thereby allowing the government to run only a minor deficit, barring a natural disaster or other emergency, such as a war.
For eurozone countries with a recent history of debt trouble — a group that alongside Greece includes the likes of Spain, Portugal and Italy — Germany’s financial pickle must feel like déjà vu all over again | Aris Messinis/AFP via Getty Images
The constitutional amendment passed by a comfortable margin with broad support from both the Christian Democrats (CDU) and the SPD, which shared power in a grand coalition led by Merkel. At the time, Germany was still recovering from the shock triggered by the 2008 collapse of investment bank Lehman Brothers and had to commit billions to shore up its banking sector.
The country’s federal government and states had begun planning a reform of fiscal rules even before the crisis. The emergency gave them additional impetus to pursue a debt brake enshrined in the constitution as a way to restore public trust.
In that respect, it worked as planned. As countries such as Greece and Spain struggled with their public finances in the years that followed, Germany’s debt brake looked prescient.
Even as southern Europe struggled, the German economy went into high gear powered by strong demand for its wares from Asia and North America, allowing the government to not just balance its budget but to run a string of surpluses, peaking in 2018 with a €58 billion windfall.
Goodbye to all that
The good times ended with the pandemic. Germany, along with the rest of the world, was forced to dig deep. It had the fiscal capacity to do so, however, as the pandemic justified lifting the debt brake in both 2020 and 2021.
The fallout from Russia’s attack on Ukraine forced the government to do so again in 2022.
By drawing from special funds, Scholz and Lindner believed they could avoid a repeat in 2023. But the court’s ruling dashed that plan.
Long before the current crisis, it had become clear to most in government — both conservative and left-leaning — that the debt brake was a hampering investment in public infrastructure (Merkel’s coalition emphasized paying down debt instead of investing the surpluses) and, by extension, Germany’s economic competitiveness. Hence the liberal use of the now-closed special fund loophole.
Trouble is, even as many politicians have woken up to the perils of the debt brake, the public remains strongly in favor of it. Nearly two-thirds of Germans continue to support the measure, according to a poll published this week by Der Spiegel.
Repealing or even reforming the brake would require Germany’s political class not just to convince them otherwise, but also to muster a super majority in parliament, which at the moment is unlikely.
Late Thursday, the finance minister signaled that the debt brake would have to fall for 2023 as well. That means the government will have to retroactively declare an emergency — likely in connection with the war in Ukraine — and then hope that the constitutional court buys it.
BERLIN — German Chancellor Olaf Scholz said Wednesday his ruling coalition would seek to present new budget plans “very quickly” to Parliament, after a constitutional court ruling last week plunged his government and its finances into disarray.
The chancellor is facing mounting criticism that he still hasn’t managed to offer a proposal on how to make up Germany’s yawning budgetary shortfall one week after the bombshell court ruling blew a €60 billion hole in the books.
It’s an accounting mess that now throws into doubt future payments for energy, the green transition of industry and microchip manufacturing.
Crucially, last week’s ruling means not only a delay to next year’s budget — which became evident on Wednesday when a parliament committee postponed a preliminary adoption of spending plans for 2024 — but may also require a supplementary “emergency” budget for this year to deal with the fallout of the court decision.
Speaking at a press conference with Italian Prime Minister Giorgia Meloni in Berlin, Scholz evaded specifics on what happens next, arguing the consequences of the ruling must still “be examined very carefully,” which should now be done “very swiftly and promptly.”
The Social Democratic chancellor argued his three-party coalition, which also includes the Greens and the liberal Free Democratic Party (FDP), was determined to “very quickly” move forward with new budget plans, and “ensure that what we have set out to do — for good cohesion in Germany, for the further development of our welfare state, for the modernization of our economy — can actually be pursued further.”
Still, he did not say where he could make the spending cuts that appear to be needed to make this possible.
Scholz had already sounded upbeat on Tuesday that, despite budget cuts, Germany could still pay subsidies to chipmakers Intel and TSMC for building new plants in eastern Germany.
A key consequence of last week’s ruling is that it will probably limit the ability of German leaders, both at the federal and state level, to use money from a variety of special funds that have been established to circumvent the debt brake. This mechanism restricts the federal deficit to 0.35 percent of GDP, except in times of emergency.
During a budgetary committee hearing on Tuesday, several legal experts argued Scholz’s government would have to present a supplementary “emergency” budget for this year to account for more than €30 billion of expenses for energy subsidies. These subsidies had been financed via a special fund outside the regular budget — a practice that is likely to be unlawful in the light of last week’s ruling.
Controversially, such a decision would probably require the suspension of the debt brake for this year.
Questioned by POLITICO during an event in Berlin on Tuesday evening, German Finance Minister Christian Lindner, who has expressed great pride about upholding the debt brake in the past, evaded making a clear reply on potentially relaxing debt rules for this year.
Lindner also argued the 2024 budget would be “a little less moderate and a little more restrictive.”
LONDON — A year is a long time in politics — but the reverberations of the surreal fall of 2022 are still being felt across the U.K.
Wednesday marks the first anniversary of Liz Truss’ ill-fated appointment as prime minister — a year on from that rainy day in September when she stood outside No. 10 Downing Street and vowed to “transform Britain” with free market shock therapy.
Truss’ £45 billion package of unfunded tax cuts — with the promise of more to come — instead sunk the pound, sent interest rates soaring, caused chaos on the bond markets and forced the Bank of England to prop up failing pension funds.
Humiliated, Truss had little choice but to junk her entire economic program and less than four weeks later she was gone — the U.K.’s shortest-ever serving prime minister, famously outlasted by a supermarket lettuce.
The legacy of the period still is fiercely debated among Britain’s left and right-wing commentariat. In Westminster, some Tory factions still push for Truss’ successor Rishi Sunak to embrace her brand of free market economics.
But the period sticks in the memory of most ordinary Brits as one of high farce and incompetence and significantly, it’s a view shared in boardrooms across London and beyond.
“It was such a short, sharp, weird time. It had such a febrile sense of impending doom,” said one partner at a Big Four accounting firm who was granted anonymity — like other figures quoted below — to speak candidly about Truss for this article.
The money men
Senior employees of major financial and professional services firms say Truss’ brief period in office still taints Britain’s reputation around the globe.
Annual Foreign Direct Investment (FDI) into the U.K., already down significantly since the 2016 Brexit referendum, fell further — behind France — last year, according to an EY survey.
Britain has also been the second-worst performing G7 economy post-COVID, despite an upgrade in GDP growth figures by the Office for National Statistics last week.
The U.K.’s stuttering economic growth since the pandemic always was going to put a dent into Britain’s prospects for international investment. Experts give a myriad of reasons for Britain’s decreasing international competitiveness.
But a director at one U.S. investment bank said: “The No. 1 issue I hear from clients is that the U.K. is still un-investable because of what happened last year in Westminster, particularly with what happened during Liz Truss’ time in office.”
Senior employees of major financial and professional services firms say Truss’ brief period in office still taints Britain’s reputation around the globe | Leon Neal/Getty Images
A managing director at another investment bank agreed. “This stuff matters for clients who are looking at the U.K., seeing three different prime ministers and four different chancellors in a matter of a few months, and saying ‘why on earth would we choose that place to build our new factory?’ The results of that will still be felt today.”
Such views are confirmed in a recent survey by transatlantic lobby group BritishAmericanBusiness and management consulting firm Bain and Co.
The survey found U.S. business confidence in Britain has sunk for the third straight year, with political instability cited as a key factor.
BritishAmericanBusiness’ chief trade and policy officer Emanuel Adam said: “The instability in No. 10 last autumn, coupled with ongoing concerns over Brexit, growth prospects and taxation have led to a drop of confidence in the U.K. for a third year in a row.
“The message from U.S. investors is clear. They are calling for a stable political environment and business friendly policies from the U.K. government.”
But if foreign direct investors have been put off, the pound’s stronger-than-expected performance since Truss left office suggests they may have compensated with other forms of inward flows.
The Big Four partner quoted at the top of the article says Truss’ disastrous premiership was one of several factors making the British economy less competitive on the world stage.
“Trussonomics plus Brexit plus political uncertainty plus a misplaced sense of British exceptionalism are all contributing to making Britain a less attractive place than we ought to be,” they said.
“I’m aware of real-life examples of decisions being made to invest elsewhere, because they couldn’t be confident about the stability of their return on investment.”
Gloom in Westminster
But even more than the U.K. economy, it is Truss’ Conservative Party which is haunted most by the specter of her brief tenure.
Polling from Ipsos shows the British public’s trust in the Conservatives to manage the economy fell off a cliff during Truss’ time as prime minister, and has never recovered.
With an election looming next year, their Labour opponents — now 18 points ahead in the polls — cannot believe their good fortune.
“The two most important things for an opposition are to be able to show people that they can be trusted to protect the economy, and trusted with the defence of the realm,” said one Labour shadow Cabinet minister. “Liz Truss did a lot of the heavy lifting in allowing us to get a hearing on the economy from the public.”
One moderate Tory MP, and Sunak supporter, said “the damage done by the 49 days of Truss could still be the thing that loses us the next general election.”
“At least part of the party’s problem at the moment is that although the economy is starting to improve, no one is going to give us the credit for that because of the seismic events of last year,” they said.
Julian Jessop, an independent economist who acted as an informal adviser to Truss during her leadership campaign, agreed that the public became infuriated once mortgage rates began to surge during last September’s financial meltdown, but said “it is a bit much” to continue to blame the Tories’ poor polling on the former PM.
“If that were the big problem, then confidence should have recovered,” he said. “We have a new prime minister in place.”
A different view
Indeed some economists — and Truss defenders — see the past 12 months in a very different light.
Even more than the U.K. economy, it is Truss’ Conservative Party which is haunted most by the specter of her brief tenure | Ian Forsyth/Getty Images
They point to bond yields which recently have hit similar levels to the worst moments of the Truss era, thanks to successive Bank of England rate rises.
Truss’ prediction that inflation would help the U.K. eat through some of its debt pile — used as justification for funding her tax cuts through borrowing — has also been borne out in reality. And tax receipts have come in higher than expected this year, thanks to larger than expected growth and inflationary pressures.
Truss’ former Chancellor Kwasi Kwarteng, speaking on a forthcoming episode of POLITICO’s Westminster Insider podcast, insisted that while he and Truss admittedly pushed it “too much, too far,” their overall policy direction was sound.
“I think there’s a big lesson in life,” he said. “It’s all very well thinking you’ve got the right answer, but you’ve also go to have a staged, methodical approach to getting to the answer.”
Russell Napier, author of The Solid Ground investment report, added the unexpectedly strong performance of sterling against the U.S. dollar and other major currencies this year indicates capital inflows into Britain must be stronger than expected.
“Is there something that’s unique and dangerous about the U.K.? No there isn’t,” Napier added. “Our bond yields are at a dangerously high level, but so is the bond yield of Sweden and France, and Canada and South Korea and Australia.
Some of Truss’ closest supporters on the Tory backbenches have now set up pressure groups to fight for the type of low-tax policies advocated in her time in office.
Truss, for her part, is writing a book which aides suggest will be “more manifesto than autobiography.” She is also giving a keynote speech on the economy this month — just five days after the anniversary of her ill-fated “mini-budget.”
But for many Tory MPs still feeling the political repercussions of her tenure and fearing a brutal defeat at next year’s election, a period of silence would be welcome.
“It could be worse,” notes one Tory MP, a minister under Sunak. “It could have been a lot worse if she’d stayed.”
U.S. Republican Senator Ted Cruz called for details on the Federal Trade Commission’s (FTC) work with its European counterparts in a letter to FTC Chairwoman Lina Khan on Tuesday.
The conservative Texas lawmaker criticized Khan and other FTC staff for meeting with European Commission officials to discuss incoming EU rules designed to rein in Big Tech companies, which are largely U.S.-based.
“It is one thing for the EU to target U.S. businesses,” the letter said, but “it is altogether unthinkable that an agency of the U.S. government would actively help the EU” on its digital platform regulation.
The FTC’s “collusion with foreign governments not only undermines U.S. sovereignty and Congress’s constitutional lawmaking authority,” Cruz’s letter said, “but also damages the competitiveness of U.S. firms and could negatively affect the savings of millions of Americans who hold stock in those companies” through pension plans.
The letter comes just as tech giants like Meta, X (formerly Twitter) and TikTok are set to have to comply with the Commission’s Digital Services Act (DSA); they face steep fines if they don’t follow the DSA’s content-moderation rules, adopted in 2022.
The Commission also plans to label companies with core digital services — such as Apple’s App Store and Google Search — as “gatekeepers” under the Digital Market Act (DMA), which is designed to make it harder for them to abuse their market dominance. Seven companies — including the U.S.-headquartered Apple, Meta, Alphabet, Amazon and Microsoft — notified their own platform services to the Commission as potential gatekeepers in July.
The senator said that the DMA and DSA “objectively discriminate against U.S. companies” through mandatory compliance costs. In the letter, Cruz asks for detailed information on the number of FTC officials who have been “sent to Europe since June 2021,” as well as their titles and monthly expenses.
Cruz also asked for details on the Commission’s office in San Francisco, which opened last September, and the FTC officials who have met with their EU counterparts there.
On a visit to the EU’s California office in June, Internal Market Commissioner Thierry Breton rejected accusations that the bloc’s digital rulebooks target U.S.-based companies, calling the idea an “urban legend” and noting that non-U.S. companies must also comply with the rules.
It follows a similar letter from Republican U.S. Representative James Comer, who’s the chairman of the House Oversight Committee, asking that communications between the FTC and Commission on the DMA be turned over to Congress.
This system, which has faced pushback from digital rights organizations and United Nations experts, will get its spotlight moment at the 2024 Paris Summer Olympics. In July next year, France will deploy large-scale, real-time, algorithm-supportedvideo surveillance cameras — a first in Europe. (Not included in the plan: facial recognition.)
Last month, the French parliament approved a controversial government plan to allow investigators to track suspected criminals in real-time via access to their devices’ geolocation, camera and microphone. Paris also lobbied in Brussels to be allowed to spy on reporters in the name of national security.
Helping France down the path of mass surveillance: a historically strong and centralized state; a powerful law enforcement community; political discourse increasingly focused on law and order; and the terrorist attacks of the 2010s. In the wake of President Emmanuel Macron’s agenda for so-called strategic autonomy, French defense and security giants, as well as innovative tech startups, have also gotten a boost to help them compete globally with American, Israeli and Chinese companies.
“Whenever there’s a security issue, the first reflex is surveillance and repression. There’s no attempt in either words or deeds to address it with a more social angle,” said Alouette, an activist at French digital rights NGO La Quadrature du Net who uses a pseudonym to protect her identity.
As surveillance and security laws have piled up in recent decades, advocates have lined up on opposite sides. Supporters argue law enforcement and intelligence agencies need such powers to fight terrorism and crime. Algorithmic video surveillance would have prevented the 2016 Nice terror attack, claimed Sacha Houlié, a prominent lawmaker from Macron’s Renaissance party.
Opponents point to the laws’ effect on civil liberties and fear France is morphing into a dystopian society. In June, the watchdog in charge of monitoring intelligence services said in a harsh report that French legislation is not compliant with the European Court of Human Rights’ case law, especially when it comes to intelligence-sharing between French and foreign agencies.
“We’re in a polarized debate with good guys and bad guys, where if you oppose mass surveillance, you’re on the bad guys’ side,” said Estelle Massé, Europe legislative manager and global data protection lead at digital rights NGO Access Now.
A history of surveillance
Both the 9/11 and the Paris 2015 terror attacks have accelerated mass surveillance in France, but the country’s tradition of snooping, monitoring and data collection dates way back — to Napoléon Bonaparte in the early 1800s.
“Historically, France has been at the forefront of these issues, in terms of police files and records. During the First Empire, France’s highly centralized government was determined to square the entire territory,” said Olivier Aïm, a lecturer at Sorbonne Université Celsa who authored a book on surveillance theories. Before electronic devices, paper was the main tool of control because identification documents were used to monitor travels, he explained.
The French emperor revived the Paris Police Prefecture — which exists to this day — and tasked law enforcement with new powers to keep political opponents in check.
In the 1880s, Alphonse Bertillon devised a method of identifying suspects and criminals using biometric features | Peter Macdiarmid/Getty Images
In the 1880s, Alphonse Bertillon, who worked for the Paris Police Prefecture, introduced a new way of identifying suspects and criminals using biometric features — the forerunner of facial recognition. The Bertillon method would then be emulated across the world.
Between 1870 and 1940, under the Third Republic, the police kept a massive file — dubbed the National Security’s Central File — with information about 600,000 people, including anarchists and communists, certain foreigners, criminals, and people who requested identification documents.
After World War II ended, a bruised France moved away from hard-line security discourse until the 1970s. And in the early days of the 21st century, the 9/11 attacks in the United States marked a turning point, ushering in a steady stream of controversial surveillance laws — under both left- and right-wing governments. In the name of national security, lawmakers started giving intelligence services and law enforcement unprecedented powers to snoop on citizens, with limited judiciary oversight.
“Surveillance covers a history of security, a history of the police, a history of intelligence,” Aïm said. “Security issues have intensified with the fight against terrorism, the organization of major events and globalization.”
The rise of technology
In the 1970s, before the era of omnipresent smartphones, French public opinion initially pushed back against using technology to monitor citizens.
In 1974, as ministries started using computers, Le Monde revealed a plan to merge all citizens’ files into a single computerized database, a project known as SAFARI.
The project, abandoned amid the resulting scandal, led lawmakers to adopt robust data protection legislation — creating the country’s privacy regulator CNIL. France then became one of the few European countries with rules to protect civil liberties in the computer age.
However, the mass spread of technology — and more specifically video surveillance cameras in the 1990s — allowed politicians and local officials to come up with new, alluring promises: security in exchange for surveillance tech.
In 2020, there were about 90,000 video surveillance cameras powered by the police and the gendarmerie in France. The state helps local officials finance them via a dedicated public fund. After France’s violent riots in early July — which also saw Macron float social media bans during periods of unrest — Interior Minister Gérald Darmanin announced he would swiftly allocate €20 million to repair broken video surveillance devices.
In parallel, the rise of tech giants such as Google, Facebook and Apple in everyday life has led to so-called surveillance capitalism. And for French policymakers, U.S. tech giants’ data collection has over the years become an argument to explain why the state, too, should be allowed to gather people’s personal information.
“We give Californian startups our fingerprints, face identification, or access to our privacy from our living room via connected speakers, and we would refuse to let the state protect us in the public space?” Senator Stéphane Le Rudulier from the conservative Les Républicains said in June to justify the use of facial recognition on the street.
Strong state, strong statesmen
Resistance to mass surveillance does exist in France at the local level — especially against the development of so-called safe cities. Digital rights NGOs can boast a few wins: In the south of France, La Quadrature du Net scored a victory in an administrative court, blocking plans to test facial recognition in high schools.
Some grassroots movements have opposed surveillance schemes at the local level, but the nationwide legislative push has continued | Ludovic Marin/AFP via Getty Images
At the national level, however, security laws are too powerful a force, despite a few ongoing cases before the European Court of Human Rights. For example, France has de facto ignored multiple rulings from the EU top court that deemed mass data retention illegal.
Often at the center of France’s push for more state surveillance: the interior minister. This influential office, whose constituency includes the law enforcement and intelligence community, is described as a “stepping stone” toward the premiership — or even the presidency.
“Interior ministers are often powerful, well-known and hyper-present in the media. Each new minister pushes for new reforms, new powers, leading to the construction of a never-ending security tower,” said Access Now’s Massé.
Under Socialist François Hollande, Manuel Valls and Bernard Cazeneuve both went from interior minister to prime minister in, respectively, 2014 and 2016. Nicolas Sarkozy, Jacques Chirac’s interior minister from 2005 to 2007, was then elected president. All shepherded new surveillance laws under their tenure.
In the past year, Darmanin has been instrumental in pushing for the use of police drones, even going against the CNIL.
For politicians, even at the local level, there is little to gain electorally by arguing against expanded snooping and the monitoring of public space. “Many on the left, especially in complicated cities, feel obliged to go along, fearing accusations of being soft [on crime],” said Noémie Levain, a legal and political analyst at La Quadrature du Net. “The political cost of reversing a security law is too high,” she added.
It’s also the case that there’s often little pushback from the public. In March,on the same day a handful of French MPs voted to allow AI-powered video surveillance cameras at the 2024 Paris Olympics, about 1 million people took to the streets to protest against … Macron’s pension reform.
Sovereign cameras
For politicians, France’s industrial competitiveness is also at stake. The country is home to defense giants that dabble in both the military and civilian sectors, such as Thalès and Safran. Meanwhile, Idemia specializes in biometrics and identification.
“What’s accelerating legislation is also a global industrial and geopolitical context: Surveillance technologies are a Trojan horse for artificial intelligence,” said Caroline Lequesne Rot, an associate professor at the Côte d’Azur University, adding that French policymakers are worried about foreign rivals. “Europe is caught between the stranglehold of China and the U.S. The idea is to give our companies access to markets and allow them to train.”
In 2019, then-Digital Minister Cédric O told Le Monde that experimenting with facial recognition was needed to allow French companies to improve their technology.
France’s surveillance apparatus will be on full display at the 2024 Olympic Games | Patrick Kovarik/AFP via Getty Images
For the video surveillance industry — which made €1.6 billion in France in 2020 — the 2024 Paris Olympics will be a golden opportunity to test their products and services and showcase what they can do in terms of AI-powered surveillance.
XXII — an AI startup with funding from the armed forces ministry and at least some political backing — has already hinted it would be ready to secure the mega sports event.
“If we don’t encourage the development of French and European solutions, we run the risk of later becoming dependent on software developed by foreign powers,” wrote lawmakers Philippe Latombe, from Macron’s allied party Modem, and Philippe Gosselin, from Les Républicains, in a parliamentary report on video surveillance released in April.
“When it comes to artificial intelligence, losing control means undermining our sovereignty,” they added.
Chinese leader Xi Jinping had one overriding message for his visiting French counterpart Emmanuel Macron this week: Don’t let Europe get sucked into playing America’s game.
Beijing is eager to avoid the EU falling further under U.S. influence, at a time when the White House is pursuing a more assertive policy to counter China’s geopolitical and military strength.
Russia’s yearlong war against Ukraine has strengthened the alliance between Europe and the U.S., shaken up global trade, reinvigorated NATO and forced governments to look at what else could suddenly go wrong in world affairs. That’s not welcome in Beijing, which still views Washington as its strategic nemesis.
This week, China’s counter-offensive stepped up a gear, turning on the charm. Xi welcomed Macron into the grandest of settings at the Great Hall of the People in Beijing, along with European Commission chief Ursula von der Leyen. This was in sharp contrast to China’s current efforts to keep senior American officials at arm’s length, especially since U.S. Secretary of State Antony Blinken called off a trip to Beijing during the spy balloon drama earlier this year.
Both American and Chinese officials know Europe’s policy toward Beijing is far from settled. That’s an opportunity, and a risk for both sides. In recent months, U.S. officials have warned of China’s willingness to send weapons to Russia and talked up the dangers of allowing Chinese tech companies unfettered access to European markets, with some success.
TikTok, which is ultimately Chinese owned, has been banned from government and administrative phones in a number of locations in Europe, including in the EU institutions in Brussels. American pressure also led the Dutch to put new export controls on sales of advanced semiconductor equipment to China.
Yet even the hawkish von der Leyen, a former German defense minister, has dismissed the notion of decoupling Europe from China’s economy altogether. From Beijing’s perspective, this is yet another significant difference from the hostile commercial environment being promoted by the U.S.
Just this week, 36 Chinese and French businesses signed new deals in front of Macron and Xi, in what Chinese state media said was a sign of “the not declining confidence in the Chinese market of European businesses.” While hardly a statement brimming with confidence, it could have been worse.
For the last couple of years European leaders have grown more skeptical of China’s trajectory, voicing dismay at Beijing’s way of handling the coronavirus pandemic, the treatment of protesters in Hong Kong and Xinjiang’s Uyghur Muslims, as well as China’s sanctions on European politicians and military threats against Taiwan.
Then, Xi and Vladimir Putin hailed a “no limits” partnership just days before Russia invaded Ukraine. While the West rolled out tough sanctions on Moscow, China became the last major economy still interested in maintaining — and expanding — trade ties with Russia. That shocked many Western officials and provoked a fierce debate in Europe over how to punish Beijing and how far to pull out of Chinese commerce.
Beijing saw Macron as the natural partner to help avoid a nosedive in EU-China relations, especially since Angela Merkel — its previous favorite — was no longer German chancellor.
Macron’s willingness to engage with anyone — including his much-criticized contacts with Putin ahead of his war on Ukraine — made him especially appealing as Beijing sought to drive a wedge between European and American strategies on China.
Xi Jinping sees Macron as the natural to Angela Merkel, his previous partner in the West who helped avoid a nosedive in EU-China relations | Ludovic Marin/AFP via Getty Images
Not taking sides
“I’m very glad we share many identical or similar views on Sino-French, Sino-EU, international and regional issues,” Xi told Macron over tea on Friday, in the southern metropolis of Guangzhou, according to Chinese state media Xinhua.
Strategic autonomy, a French foreign policy focus, is a favorite for China, which sees the notion as proof of Europe’s distance from the U.S. For his part, Macron told Xi a day earlier that France promotes “European strategic autonomy,” doesn’t like “bloc confrontation” and believes in doing its own thing. “France does not pick sides,” he said.
The French position is challenged by some in Europe who see it as an urgent task to take a tougher approach toward Beijing.
“Macron could have easily avoided the dismal picture of European and transatlantic disunity,” said Thorsten Benner, director of the Berlin-based Global Public Policy Institute. “Nobody forced Macron to show up with a huge business delegation, repeating disproven illusions of reciprocity and deluding himself about working his personal magic on Xi to get the Chinese leader to turn against Putin.”
Holger Hestermeyer, a professor of EU law at King’s College London, said Beijing will struggle to split the transatlantic alliance.
“If China wants to succeed with building a new world order, separating the EU from the U.S. — even a little bit — would be a prized goal — and mind you, probably an elusive one,” Hestermeyer said. “Right now the EU is strengthening its defenses specifically because China tried to play divide and conquer with the EU in the past.”
Xi’s focus on America was unmistakable when he veered into a topic that was a long way from Europe’s top priority, during his three-way meeting with Macron and von der Leyen. A week earlier the Biden administration had held its second Summit for Democracy, in which Russia and China were portrayed as the main threats.
“Spreading the so-called ‘democracy versus authoritarianism’ [narrative],” Xi told his European guests on Thursday, “would only bring division and confrontation to the world.”
