Despite German Chancellor Olaf Scholz’s best efforts and the French government’s compromise proposal, Bulgaria refuses to budge on its position in the dispute over EU accession talks with North Macedonia. Scholz and Macron had hoped to find a solution before the EU-Western Balkans summit on Thursday, as Bulgaria has been blocking the start of talks for some time. Political turmoil in Sofia further complicates the situation. It “will probably take at least a couple of more weeks” before parliament can decide on the French compromise proposal, Till Hoppe was told by Deputy Head of Government and Finance Minister Assen Vasilev.
Germany wants to become less dependent on Russian gas, and as quickly as possible. The industry wants to fire up coal-fired power plants again and convert its own plants. Federal Economic Affairs Minister Robert Habeck is also planning an auction model to compensate plants for not using natural gas. And then there’s an idea that has received little attention so far: The EU should make it easier to import industrial goods that require a lot of gas to produce – that’s what economists are proposing, including Habeck’s advisor Achim Wambach. Manuel Berkel took a closer look at the proposal.
The list of amendments is long: The Internal Market and Legal Affairs Committees alone, which are the lead committees, have tabled more than 3,300 amendments to the AI Regulation. Now the Industry Committee has adopted its recommendations for amendments to the Commission proposal by a large majority. The committee places a focus on exemptions from regulation, but in some places, the proposal is to be tightened up. Falk Steiner provides an overview.
The Bulgarian government does not see a quick solution to the dispute over EU accession talks with North Macedonia, despite intensive mediation efforts by Germany and France. “The Bulgarian position hasn’t changed,” Deputy Head of Government and Finance Minister Assen Vassilev told Europe.Table. He does not see an agreement by the EU-Western Balkans summit on Thursday, Vassilev said.
The government in Sofia has been blocking the start of EU accession talks with North Macedonia for some time. Among other things, it is demanding that the rights of the Bulgarian minority in the neighboring country be enshrined in the constitution and better protection against hate speech. Scholz recently traveled to Sofia and Skopje specifically to mediate in the dispute. France also intervened: In its capacity as acting EU Council presidency, the government in Paris sent a compromise proposal to the Bulgarian parliament at the end of last week.
Scholz and French President Emmanuel Macron had hoped to resolve the dispute by Thursday. Then the EU heads of state and government will first meet their colleagues from the six Western Balkan states. Then, at the regular EU summit, they will discuss the EU Commission’s recommendation to declare Ukraine and Moldova official candidates for membership and Georgia a potential candidate. Summit host Charles Michel stressed last week that the swift start of accession negotiations with North Macedonia and Albania was a “top priority”.
Scholz had repeatedly reminded that despite the war in Ukraine, he should not forget those countries, some of which have been waiting for many years for progress on their way into the EU. “It is a question of European credibility that we finally fulfill our promises to the states of the Western Balkans, which have already been on this path for years; now and concretely,” he said during the visit to Kyiv last Thursday.
Prime Minister Kyrill Petkov’s government had in the meantime shown itself open to a compromise. Now, however, political turbulence in Sofia is making the situation even more difficult. The government must face a vote of no confidence this week.
Therefore, it will “probably take at least a couple of more weeks“ before the parliament can decide on the French compromise proposal, Vassilev said on the sidelines of an event of the European Council on Foreign Affairs in Berlin. The minister rejected conflating the issue of North Macedonia with Ukraine’s candidate status: “Every country should be looked at its own merits.“
Vassilev, who like Petkov belongs to the “We Continue the Change” platform, warned of far-reaching consequences for the EU’s and the West’s unity vis-à-vis Russia if the government were to be toppled. The government of the traditionally Moscow-friendly country had taken a hard line toward Russia since the beginning of the invasion of Ukraine and also refused to pay for Russian natural gas supplies in rubles. As a result, Gazprom halted supplies in April.
Vassilev expects that new elections will probably be held in early fall if the vote of no confidence is successful. In the meantime, he said, President Rumen Radev will appoint a transitional government. Radev, however, is “much more reluctant to support Ukraine,” he said. “There will probably be some repercussions on the European and, I think, on the global level.”
Over the weekend, Robert Habeck attempted the liberation blow. Restarting decommissioned coal-fired power plants should help reduce gas consumption in the electricity sector. For industry, the federal economic affairs minister wants to introduce an auction model to compensate companies for not using natural gas. Their representatives cheered the Green politician’s proposals.
The gas auction model is a market-based instrument, said VCI CEO Wolfgang Große Entrup, praising the plans. BDI President Siegfried Russwurm agreed that coal-fired power plants should be taken out of reserve immediately. Companies, for their part, would have to switch to oil, for example, where possible. “But a number of industrial processes only work with gas. A gas shortage threatens to bring production to a standstill,” said the industry president. But that could be part of the solution.
So far, the narrative of German industry has gone like this: If energy-intensive basic materials could no longer be produced in this country, there would be cascading effects with the collapse of entire value chains. Without plastics, there would be no car seats; without metal production, no chassis. Well-known economists questioned some of this narrative months ago, but have since been ignored by politicians and the public.
In April, Habeck’s advisor Achim Wambach and other economists wrote a guest article for the “FAZ” on how to reduce dependence on Russian gas. One of the proposals is an indirect substitution of natural gas. Instead of replacing gas with coal or oil only when it is burned, the EU should also make it easier to import industrial goods that require a lot of gas for their production.
“The German government and the European Union should also reduce incentive distortions through import tariffs,” suggested the economists, including foreign trade expert Gabriel Felbermayr. Currently, the EU imposes tariffs on steel, aluminum, metal products, and chemical substances. “Suspending tariffs on energy-intensive and CO2-intensive goods would make it easier to switch supplier relationships,” the authors wrote further, also referring to possible federal support instruments such as Hermes insurance or even subsidies for imports.
According to the experts, energy-intensive basic materials, in particular, could therefore simply be imported to a certain extent without entire production chains in the EU collapsing. However, the idea does not appear in the proposals made by the Ministry for Economic Affairs over the weekend.
Not surprisingly, industry associations are also having a hard time with this. There is apparently too much concern that once production facilities have been shut down, they will not be restarted. After all, the gas crisis could continue for quite some time. RWE CEO Markus Krebber told the German newspaper Süddeutsche Zeitung that high prices can be expected for another three to five years. Only then can additional energy imports from other countries be expected.
Europe.Table asked the European umbrella organization Business Europe about its position on suspending import duties or even subsidies for the import of energy-intensive basic materials. “These issues are being discussed among our members,” a spokesperson confirmed. At present, however, it is not possible to comment on this issue.
Government adviser Wambach stands by the proposal. “All instruments should be put on the table and examined for their efficiency and effectiveness,” he said in response to a question on Monday. Merely as an alternative to gas tenders, the director of the Center for European Economic Research (ZEW) does not want the increased import to be understood. “It is not a matter of either-or in the current situation.”
“The gas auctions are certainly more effective in the short term,” says also co-author Christian Bayer from the University of Bonn. However, the economist also sees advantages in the increased imports, which is related to the waterbed effect in the auctions. If some companies bought less gas on the spot market thanks to the subsidies, prices would fall. This could lead to other companies demanding more gas and partially cancel out the savings effect.
“So the auction is more of a crisis instrument that can be used to absorb peak loads in the very short term. If you were to use it now for an annual period, I would be more skeptical,” Beyer says. “If instead you start with the products of the gas-consuming companies and reduce the demand for them by adding competition from outside the EU, then this effect is probably less the case.”
It is difficult to estimate how much gas the increased imports could save. However, according to data from AG Energiebilanzen, basic chemicals, metal production and foundries in Germany alone account for almost 15 percent of gas consumption. “It would be an economically efficient margin that should have been used,” Bayer complains. A lot of time has already been wasted, he says. In any case, further waiting until the crisis worsens would delay relief for gas storage facilities more and more. “Import tariff reductions or even subsidies certainly don’t take effect until six months after they are introduced,” says Bayer.
Meanwhile, Klaus Müller, president of the German Federal Network Agency, warns of an insufficient supply of gas. “We are now at over 57 percent in terms of filling,” he said Monday at an energy conference in Essen, referring to gas storage facilities in Germany. There has been some catching up but the heating season is already starting in twelve weeks. Gas flows are important, but not guaranteed, he said.
“We are doing everything we can to avoid a gas shortage,” Müller said. He again called on both households and industry to make savings. Müller did not comment on whether the second of three warning levels of the gas emergency plan would be declared soon. The early warning stage has already been in effect since the end of March. In the event of a gas shortage, the third stage would be due. Then the authority can intervene in the market and decide who still receives how much gas. With dpa and rtr
Parliament’s amendments to the Artificial Intelligence Act (AI Act) are extensive. The Internal Market and Legal Affairs Committees alone, which are the lead committees, have tabled more than 3,300 amendments to the Commission’s draft bill. The deadline for submitting amendments to the complex dossier was extended to June 1. The subsequent deliberations are expected to continue throughout the summer.
With the ITRE Industry Committee, a second European Parliament committee adopted its recommendations for amendments to the Commission’s proposal for the Regulation on the Regulation of the Use of Artificial Intelligence with a large majority on Tuesday. In some areas, the industrial policymakers want more exemptions from the regulation – at the same time, other areas are to be tightened up.
In the ITRE report, for which Eva Maydell is responsible, the Industry Committee places a special focus on exemptions from regulation. First, the MEPs propose that a generous exemption be created in Article 2 for research purposes. At least as long as the systems are not placed on the market or put into operation or fundamental rights are not affected by their use. AI-like systems and their results that are used exclusively for scientific research purposes that would be in the interest of the EU are to be fully exempted.
The ITRE members are also calling for a far-reaching exception for so-called regulatory sandboxes: test environments that the member states can enable in accordance with the Commission’s proposal and in which regulations of the AI Regulation are to apply less strictly. Here, the Commission is to ensure that innovative AI systems are also tested by small players. According to the ITRE proposal for Article 53, this should be possible up to the municipal level. At the same time, risks to health, safety, and fundamental rights are to be specifically examined together with the competent authorities. The Industry Committee also proposes a separate annex (IXa) to the AI Regulation for regulatory sandboxes.
Industry policymakers also want to regulate the area of data use in a more specific way. AI systems that are self-learning without further monitoring by humans are to be trained only with data that meets certain quality criteria of the regulation. At the same time, the training, validation, and test data sets are to be subject to somewhat less stringent specifications: They are to be designed in accordance with the intended purpose to the best of one’s knowledge and belief (best effort).
The ITRE wants to weaken the requirements for operators of high-risk AI applications: They should be allowed to rely on assurances from third parties that their data sets meet the quality criteria of the regulation. However, since it is not further specified under which conditions this should be permitted, there could be potential for dispute with other committees here.
In their report, the industrial policymakers also place particular emphasis on standardization: Here, the EU Commission is to provide funding to ensure that small and medium-sized enterprises can also participate in the relevant standardization bodies and standard development processes.
To increase cybersecurity in the use of AI systems, ITRE policymakers want, among other things, to increase requirements and involve the European Union Agency for Cybersecurity (ENISA) in the development of corresponding specifications.
The Environment Committee (ENVI) had already voted on its amendments at the end of April. In accordance with their responsibilities, the parliamentarians in the committee focused primarily on environmental aspects. In particular, they proposed requirements for the environmental compatibility of the use of algorithmic systems, for example, through the introduction of a European Code of Conduct for AI systems, which is to be harmonized with a code for energy efficiency in data centers. The MEPs want the Commission to define standards for this.
The ENVI Committee is also responsible for health issues, and here the deputies had also proposed some changes. These are largely complementary to the ideas of the ITRE report. Among other things, the ENVI MEPs called for the use of AI-like systems in the healthcare sector to be classified as high-risk applications within the meaning of the AI Regulation, unless they are already covered by the Medical Devices Regulation.
The MEPs attach particular importance to a clear liability regime: Who is liable for damages under which circumstances? This must also be clearly regulated for the so-called regulatory sandboxes, demanded the ENVI MEPs – a position now also supported by the ITRE MEPs. However, in a direct comparison of the two positions in the industry committee opinion, the category of environmental damage explicitly demanded by ENVI is missing from liability regulations.
Originally, all the opinions of the advisory committees were to be available by July 11 so that they could be discussed after the summer break. However, in view of the delays that have already occurred, this seems an overly ambitious goal.
Chip manufacturer Intel is suing the EU Commission for more than half a billion euros. The case is about compensation for a competition fine that the EU court said was wrongly imposed, according to an entry in the EU’s Official Journal published on Monday. In January, the EU court had annulled a 2009 fine of €1.06 billion imposed on Intel (Case T-286/09). The company had provisionally paid the fine and received it back in February of this year. It is now claiming default interest on the amount.
The company had been accused by the EU Commission of trying to force competitors out of the market illegally. Intel’s lawsuit for damages was filed as early as the end of April, according to the documents. dpa
The day after France’s President Emmanuel Macron suffered a heavy defeat in the parliamentary election, there was no sign of a viable majority. The only traditional party that could support Macron’s Ensemble alliance after losing its absolute majority would be the conservatives Les Republicains. However, their leader Christian Jacob said on Monday afternoon that “almost uniformly” within the party’s ranks, a coalition or cooperation agreement was rejected.
Another scenario was to try to seek majorities on a bill-by-bill basis. “It will be complicated,” admitted government spokeswoman Olivia Grégoire. “We will have to be creative,” she told France Inter.
Macron himself did not comment publicly on the outcome of the election until the evening, but sources close to the presidential office said Macron would invite the major political parties to talks on Tuesday and Wednesday.
Ensemble won 245 seats in the second round of the parliamentary elections on Sunday. According to the official final results, the left-wing Nupes alliance around Jean-Luc Mélenchon has 131 seats, the extreme right around Marine Le Pen 89, and the conservatives 61. The constellation with coalition governments, which is common in Germany, has not existed in France for decades. The result could lead to a political stalemate or even new elections.
A government bill to cushion the higher cost of living is likely to be a first test in just over a week’s time when the new parliament convenes for the first time. The fight against inflation has become a priority for many voters. However, the positions of the major parties diverge on many important issues.
Macron has so far described his style of government himself as “Jupiterian” with a strong presidential leadership role. Without the backing of parliament, a different approach is likely to be needed. The reform agenda in France is now likely to slow down, said Philippe Gudin of Barclays. “This is likely to weaken France’s position in Europe and jeopardize the country’s already weak fiscal situation.” rtr
The EU has promised to review guidelines on sanctions following Russian criticism of restrictions on rail transit between the Baltic Sea exclave of Kaliningrad, which belongs to Russia, and the Russian heartland. As a precautionary measure, the legal aspects of the guidelines on import and export restrictions for certain products will be reviewed once again, EU foreign affairs representative Josep Borrell announced on Monday evening after a meeting of EU foreign ministers in Luxembourg.
The Kremlin had earlier criticized restrictions on rail transit between Kaliningrad and Russia’s heartland as “illegal” emanating from Lithuania. “This decision is truly unprecedented and represents a violation of everything,” Kremlin spokesman Dmitry Peskov said on Monday, according to the Interfax agency.
Borrell stressed in the evening that Lithuania had not adopted any unilateral measures but was acting based on EU Commission guidelines on the implementation of sanctions. Accusations against the country were “false” and “pure propaganda”. Borrell also stressed that the transit of people and non-sanctioned goods was continuing.
The exclave Kaliningrad around the former Königsberg is located between Lithuania and Poland. It is only about 500 kilometers from Berlin but more than 1000 kilometers from Moscow.
Since Saturday, Lithuania has banned the rail transit of goods through its territory to Kaliningrad that are on Western sanctions lists. According to the head of the regional administration in Kaliningrad, Anton Alichanov, this affects 40 to 50 percent of all transit goods, such as construction materials and metals. dpa
Fifteen European Union governments called on Monday for the bloc to accelerate the conclusion of free trade agreements to ensure its long-term economic growth and geopolitical standing in the world.
In a letter to EU Trade Commissioner Valdis Dombrovskis seen by Reuters, 15 economy, foreign and trade ministers said the Ukraine war and the COVID-19 pandemic underscored the need for resilient supply chains, strategic partnerships and open trade.
With different powers vying for leadership and new alliances, the EU needed to accelerate its own trade push. One in seven EU jobs depend on trade, the ministers said.
The Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade agreement including China, Japan and Australia entered into force at the start of 2022, just over a year after it was signed. “This should be a wake-up call for Europe,” the ministers said, adding the European Union was taking too long.
The EU struck an accord struck with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay in 2019, but put it on hold due to concerns about Amazon deforestation. A new agreement with Mexico, from 2018, has yet to be submitted for EU approval. It also is in trade talks with Australia, New Zealand and Indonesia and now India.
EU diplomats say France, which holds the six-month rotating presidency of the EU, has halted moves to clear trade deals so as not to disturb presidential and legislative elections. France is sensitive to increased beef imports such deals could bring, but has denied it is holding up agreements.
The Czech Republic takes over the EU presidency on July 1, followed by Sweden and Spain, all signatories to the letter. The others are Croatia, Denmark, Estonia, Finland, Germany, Italy, Latvia, Lithuania, Malta, the Netherlands, Portugal and Slovenia.
Anna Hallberg, the trade minister of letter initiator Sweden, said following through negotiated agreements, with environmental safeguards, would be a central priority of the Swedish EU presidency. rtr
The German Bundesbank has spoken out against a further suspension of European debt rules in the coming year. Uncertainty about future developments is high, the central bank wrote in its latest monthly report published on Monday. But the EU Commission, like other institutions, assumes that the economy in the European Union will recover. “Therefore, not convinced that the general exception of the European fiscal rules was extended until 2023,” the monthly report said.
The Bundesbank criticized the extension as creating scope for additional debt-financed fiscal programs “which do not appear appropriate from today’s perspective”. The fiscal situation in some member states is fragile. In this environment, credible fiscal rules are more important than ever.
Recently, capital market interest rates in southern European countries have risen particularly sharply. This means that it is becoming more expensive for countries like Italy to obtain fresh money on the market because they have to offer investors higher interest rates again. This could become a problem for these countries in view of their huge mountains of debt.
The EU Commission has proposed that the Stability and Growth Pact not be fully reinstated until 2024, citing uncertainty over the war in Ukraine, energy prices and supply chain bottlenecks. The debt and deficit rules had been suspended during the COVID crisis and were supposed to be back in force from 2023. dpa
European Central Bank (ECB) President Christine Lagarde has again held out the prospect of interest rate hikes in the near future. “We intend to raise the key ECB interest rates by 25 basis points at our monetary policy meeting in July,” Lagarde told the European Parliament’s Economic and Monetary Affairs Committee on Monday. Another rate hike should then come in September. Monetary policy is likely to be gradually normalized after that.
In this way, the central bank aims to curb the recent very high inflation. In May, the annual inflation rate rose to 8.1 percent. The central bank is aiming for 2 percent in the medium term.
Lagarde also sought to allay concerns that the announced anti-crisis instrument could hinder the fight against inflation. “The decision to accelerate work on an anti-fragmentation instrument underpins the commitment to stabilize inflation at 2 percent over the medium term,” she said. If fragmentation is too severe, the ECB’s monetary policy can no longer deliver its effects. So this fight is part of the ECB’s mandate, she said. Yields on Southern European bonds had risen more sharply than German bunds in recent weeks.
The ECB had decided at an extraordinary meeting on Wednesday to speed up work on a new anti-crisis instrument.
Lagarde does not expect a recession: “The conditions for further growth are in place.” A recession is not part of the ECB’s baseline scenario. Wage growth has picked up, but it remains moderate. However, it will pick up as the year progresses and remain above average thereafter. The interest rate hike is also intended to counteract a wage-price spiral. dpa
“2022 is a repeat of 2017,” says Ronja Kempin about the presidential elections in France. The irrelevance of the major parties has become entrenched, the extremes are strong, and reforms of the political system are difficult. Kempin is familiar with the developments in Paris. She researches Franco-German relations in security and defense policy for the German Institute for International and Security Affairs (SWP).
She is also concerned about the domestic politics of her neighboring country. “I often thought, this can’t be happening,” says Kempin, describing her initial disbelief at the rise of Marine Le Pen. “Why do people vote for such a person?” So she also researches populism in France and the role of the Rassemblement National. During the presidential and parliamentary elections, her expertise was and is particularly in demand.
Where does her affinity for French politics come from? That, she says, is a story full of coincidences. Kempin was born in the German city of Homberg (Efze) in Hesse. Her parents didn’t study and didn’t speak a foreign language, but politics had always been a topic in her family. The teenage Kempin spontaneously decided between theology and political science when she enrolled – for the latter.
When all her friends went abroad for a year toward the end of her basic political studies in Marburg, she successfully applied for a place to study in Rennes. Once there, she was hooked: “I developed a love for the country and its people that has stayed with me to this day.” Fittingly, the 48-year-old wears a blue-and-white striped top to the Zoom call – classic Brittany. She enthusiastically reports on the hospitality of her fellow students at the time.
She remained loyal to the country, studying European Studies at France’s elite Sciences Po university and earning a doctorate in political science at the Free University of Berlin. Afterwards, she worked in the Scientific Service of the Bundestag and for the SPD party executive. In 2003, she ended up at the SWP, initially as a research assistant. She has been a senior fellow in the 15-member EU/Europe research group for the past eight years. On the working conditions in her job, she says, “I think it’s paradise.”
She says it is a privilege to be able to deal with precisely those topics that interest her from the bottom of her heart. And she appreciates the proximity to political decision-makers. The SWP is funded by the German Chancellor’s Office, and Kempin and her colleagues advise the Bundestag and the German government. For the coming months, she hopes that Chancellor Scholz will move quickly toward Macron on EU reforms: “The window is very favorable, and from there, my impatience is also growing.” Paul Meerkamp
Despite German Chancellor Olaf Scholz’s best efforts and the French government’s compromise proposal, Bulgaria refuses to budge on its position in the dispute over EU accession talks with North Macedonia. Scholz and Macron had hoped to find a solution before the EU-Western Balkans summit on Thursday, as Bulgaria has been blocking the start of talks for some time. Political turmoil in Sofia further complicates the situation. It “will probably take at least a couple of more weeks” before parliament can decide on the French compromise proposal, Till Hoppe was told by Deputy Head of Government and Finance Minister Assen Vasilev.
Germany wants to become less dependent on Russian gas, and as quickly as possible. The industry wants to fire up coal-fired power plants again and convert its own plants. Federal Economic Affairs Minister Robert Habeck is also planning an auction model to compensate plants for not using natural gas. And then there’s an idea that has received little attention so far: The EU should make it easier to import industrial goods that require a lot of gas to produce – that’s what economists are proposing, including Habeck’s advisor Achim Wambach. Manuel Berkel took a closer look at the proposal.
The list of amendments is long: The Internal Market and Legal Affairs Committees alone, which are the lead committees, have tabled more than 3,300 amendments to the AI Regulation. Now the Industry Committee has adopted its recommendations for amendments to the Commission proposal by a large majority. The committee places a focus on exemptions from regulation, but in some places, the proposal is to be tightened up. Falk Steiner provides an overview.
The Bulgarian government does not see a quick solution to the dispute over EU accession talks with North Macedonia, despite intensive mediation efforts by Germany and France. “The Bulgarian position hasn’t changed,” Deputy Head of Government and Finance Minister Assen Vassilev told Europe.Table. He does not see an agreement by the EU-Western Balkans summit on Thursday, Vassilev said.
The government in Sofia has been blocking the start of EU accession talks with North Macedonia for some time. Among other things, it is demanding that the rights of the Bulgarian minority in the neighboring country be enshrined in the constitution and better protection against hate speech. Scholz recently traveled to Sofia and Skopje specifically to mediate in the dispute. France also intervened: In its capacity as acting EU Council presidency, the government in Paris sent a compromise proposal to the Bulgarian parliament at the end of last week.
Scholz and French President Emmanuel Macron had hoped to resolve the dispute by Thursday. Then the EU heads of state and government will first meet their colleagues from the six Western Balkan states. Then, at the regular EU summit, they will discuss the EU Commission’s recommendation to declare Ukraine and Moldova official candidates for membership and Georgia a potential candidate. Summit host Charles Michel stressed last week that the swift start of accession negotiations with North Macedonia and Albania was a “top priority”.
Scholz had repeatedly reminded that despite the war in Ukraine, he should not forget those countries, some of which have been waiting for many years for progress on their way into the EU. “It is a question of European credibility that we finally fulfill our promises to the states of the Western Balkans, which have already been on this path for years; now and concretely,” he said during the visit to Kyiv last Thursday.
Prime Minister Kyrill Petkov’s government had in the meantime shown itself open to a compromise. Now, however, political turbulence in Sofia is making the situation even more difficult. The government must face a vote of no confidence this week.
Therefore, it will “probably take at least a couple of more weeks“ before the parliament can decide on the French compromise proposal, Vassilev said on the sidelines of an event of the European Council on Foreign Affairs in Berlin. The minister rejected conflating the issue of North Macedonia with Ukraine’s candidate status: “Every country should be looked at its own merits.“
Vassilev, who like Petkov belongs to the “We Continue the Change” platform, warned of far-reaching consequences for the EU’s and the West’s unity vis-à-vis Russia if the government were to be toppled. The government of the traditionally Moscow-friendly country had taken a hard line toward Russia since the beginning of the invasion of Ukraine and also refused to pay for Russian natural gas supplies in rubles. As a result, Gazprom halted supplies in April.
Vassilev expects that new elections will probably be held in early fall if the vote of no confidence is successful. In the meantime, he said, President Rumen Radev will appoint a transitional government. Radev, however, is “much more reluctant to support Ukraine,” he said. “There will probably be some repercussions on the European and, I think, on the global level.”
Over the weekend, Robert Habeck attempted the liberation blow. Restarting decommissioned coal-fired power plants should help reduce gas consumption in the electricity sector. For industry, the federal economic affairs minister wants to introduce an auction model to compensate companies for not using natural gas. Their representatives cheered the Green politician’s proposals.
The gas auction model is a market-based instrument, said VCI CEO Wolfgang Große Entrup, praising the plans. BDI President Siegfried Russwurm agreed that coal-fired power plants should be taken out of reserve immediately. Companies, for their part, would have to switch to oil, for example, where possible. “But a number of industrial processes only work with gas. A gas shortage threatens to bring production to a standstill,” said the industry president. But that could be part of the solution.
So far, the narrative of German industry has gone like this: If energy-intensive basic materials could no longer be produced in this country, there would be cascading effects with the collapse of entire value chains. Without plastics, there would be no car seats; without metal production, no chassis. Well-known economists questioned some of this narrative months ago, but have since been ignored by politicians and the public.
In April, Habeck’s advisor Achim Wambach and other economists wrote a guest article for the “FAZ” on how to reduce dependence on Russian gas. One of the proposals is an indirect substitution of natural gas. Instead of replacing gas with coal or oil only when it is burned, the EU should also make it easier to import industrial goods that require a lot of gas for their production.
“The German government and the European Union should also reduce incentive distortions through import tariffs,” suggested the economists, including foreign trade expert Gabriel Felbermayr. Currently, the EU imposes tariffs on steel, aluminum, metal products, and chemical substances. “Suspending tariffs on energy-intensive and CO2-intensive goods would make it easier to switch supplier relationships,” the authors wrote further, also referring to possible federal support instruments such as Hermes insurance or even subsidies for imports.
According to the experts, energy-intensive basic materials, in particular, could therefore simply be imported to a certain extent without entire production chains in the EU collapsing. However, the idea does not appear in the proposals made by the Ministry for Economic Affairs over the weekend.
Not surprisingly, industry associations are also having a hard time with this. There is apparently too much concern that once production facilities have been shut down, they will not be restarted. After all, the gas crisis could continue for quite some time. RWE CEO Markus Krebber told the German newspaper Süddeutsche Zeitung that high prices can be expected for another three to five years. Only then can additional energy imports from other countries be expected.
Europe.Table asked the European umbrella organization Business Europe about its position on suspending import duties or even subsidies for the import of energy-intensive basic materials. “These issues are being discussed among our members,” a spokesperson confirmed. At present, however, it is not possible to comment on this issue.
Government adviser Wambach stands by the proposal. “All instruments should be put on the table and examined for their efficiency and effectiveness,” he said in response to a question on Monday. Merely as an alternative to gas tenders, the director of the Center for European Economic Research (ZEW) does not want the increased import to be understood. “It is not a matter of either-or in the current situation.”
“The gas auctions are certainly more effective in the short term,” says also co-author Christian Bayer from the University of Bonn. However, the economist also sees advantages in the increased imports, which is related to the waterbed effect in the auctions. If some companies bought less gas on the spot market thanks to the subsidies, prices would fall. This could lead to other companies demanding more gas and partially cancel out the savings effect.
“So the auction is more of a crisis instrument that can be used to absorb peak loads in the very short term. If you were to use it now for an annual period, I would be more skeptical,” Beyer says. “If instead you start with the products of the gas-consuming companies and reduce the demand for them by adding competition from outside the EU, then this effect is probably less the case.”
It is difficult to estimate how much gas the increased imports could save. However, according to data from AG Energiebilanzen, basic chemicals, metal production and foundries in Germany alone account for almost 15 percent of gas consumption. “It would be an economically efficient margin that should have been used,” Bayer complains. A lot of time has already been wasted, he says. In any case, further waiting until the crisis worsens would delay relief for gas storage facilities more and more. “Import tariff reductions or even subsidies certainly don’t take effect until six months after they are introduced,” says Bayer.
Meanwhile, Klaus Müller, president of the German Federal Network Agency, warns of an insufficient supply of gas. “We are now at over 57 percent in terms of filling,” he said Monday at an energy conference in Essen, referring to gas storage facilities in Germany. There has been some catching up but the heating season is already starting in twelve weeks. Gas flows are important, but not guaranteed, he said.
“We are doing everything we can to avoid a gas shortage,” Müller said. He again called on both households and industry to make savings. Müller did not comment on whether the second of three warning levels of the gas emergency plan would be declared soon. The early warning stage has already been in effect since the end of March. In the event of a gas shortage, the third stage would be due. Then the authority can intervene in the market and decide who still receives how much gas. With dpa and rtr
Parliament’s amendments to the Artificial Intelligence Act (AI Act) are extensive. The Internal Market and Legal Affairs Committees alone, which are the lead committees, have tabled more than 3,300 amendments to the Commission’s draft bill. The deadline for submitting amendments to the complex dossier was extended to June 1. The subsequent deliberations are expected to continue throughout the summer.
With the ITRE Industry Committee, a second European Parliament committee adopted its recommendations for amendments to the Commission’s proposal for the Regulation on the Regulation of the Use of Artificial Intelligence with a large majority on Tuesday. In some areas, the industrial policymakers want more exemptions from the regulation – at the same time, other areas are to be tightened up.
In the ITRE report, for which Eva Maydell is responsible, the Industry Committee places a special focus on exemptions from regulation. First, the MEPs propose that a generous exemption be created in Article 2 for research purposes. At least as long as the systems are not placed on the market or put into operation or fundamental rights are not affected by their use. AI-like systems and their results that are used exclusively for scientific research purposes that would be in the interest of the EU are to be fully exempted.
The ITRE members are also calling for a far-reaching exception for so-called regulatory sandboxes: test environments that the member states can enable in accordance with the Commission’s proposal and in which regulations of the AI Regulation are to apply less strictly. Here, the Commission is to ensure that innovative AI systems are also tested by small players. According to the ITRE proposal for Article 53, this should be possible up to the municipal level. At the same time, risks to health, safety, and fundamental rights are to be specifically examined together with the competent authorities. The Industry Committee also proposes a separate annex (IXa) to the AI Regulation for regulatory sandboxes.
Industry policymakers also want to regulate the area of data use in a more specific way. AI systems that are self-learning without further monitoring by humans are to be trained only with data that meets certain quality criteria of the regulation. At the same time, the training, validation, and test data sets are to be subject to somewhat less stringent specifications: They are to be designed in accordance with the intended purpose to the best of one’s knowledge and belief (best effort).
The ITRE wants to weaken the requirements for operators of high-risk AI applications: They should be allowed to rely on assurances from third parties that their data sets meet the quality criteria of the regulation. However, since it is not further specified under which conditions this should be permitted, there could be potential for dispute with other committees here.
In their report, the industrial policymakers also place particular emphasis on standardization: Here, the EU Commission is to provide funding to ensure that small and medium-sized enterprises can also participate in the relevant standardization bodies and standard development processes.
To increase cybersecurity in the use of AI systems, ITRE policymakers want, among other things, to increase requirements and involve the European Union Agency for Cybersecurity (ENISA) in the development of corresponding specifications.
The Environment Committee (ENVI) had already voted on its amendments at the end of April. In accordance with their responsibilities, the parliamentarians in the committee focused primarily on environmental aspects. In particular, they proposed requirements for the environmental compatibility of the use of algorithmic systems, for example, through the introduction of a European Code of Conduct for AI systems, which is to be harmonized with a code for energy efficiency in data centers. The MEPs want the Commission to define standards for this.
The ENVI Committee is also responsible for health issues, and here the deputies had also proposed some changes. These are largely complementary to the ideas of the ITRE report. Among other things, the ENVI MEPs called for the use of AI-like systems in the healthcare sector to be classified as high-risk applications within the meaning of the AI Regulation, unless they are already covered by the Medical Devices Regulation.
The MEPs attach particular importance to a clear liability regime: Who is liable for damages under which circumstances? This must also be clearly regulated for the so-called regulatory sandboxes, demanded the ENVI MEPs – a position now also supported by the ITRE MEPs. However, in a direct comparison of the two positions in the industry committee opinion, the category of environmental damage explicitly demanded by ENVI is missing from liability regulations.
Originally, all the opinions of the advisory committees were to be available by July 11 so that they could be discussed after the summer break. However, in view of the delays that have already occurred, this seems an overly ambitious goal.
Chip manufacturer Intel is suing the EU Commission for more than half a billion euros. The case is about compensation for a competition fine that the EU court said was wrongly imposed, according to an entry in the EU’s Official Journal published on Monday. In January, the EU court had annulled a 2009 fine of €1.06 billion imposed on Intel (Case T-286/09). The company had provisionally paid the fine and received it back in February of this year. It is now claiming default interest on the amount.
The company had been accused by the EU Commission of trying to force competitors out of the market illegally. Intel’s lawsuit for damages was filed as early as the end of April, according to the documents. dpa
The day after France’s President Emmanuel Macron suffered a heavy defeat in the parliamentary election, there was no sign of a viable majority. The only traditional party that could support Macron’s Ensemble alliance after losing its absolute majority would be the conservatives Les Republicains. However, their leader Christian Jacob said on Monday afternoon that “almost uniformly” within the party’s ranks, a coalition or cooperation agreement was rejected.
Another scenario was to try to seek majorities on a bill-by-bill basis. “It will be complicated,” admitted government spokeswoman Olivia Grégoire. “We will have to be creative,” she told France Inter.
Macron himself did not comment publicly on the outcome of the election until the evening, but sources close to the presidential office said Macron would invite the major political parties to talks on Tuesday and Wednesday.
Ensemble won 245 seats in the second round of the parliamentary elections on Sunday. According to the official final results, the left-wing Nupes alliance around Jean-Luc Mélenchon has 131 seats, the extreme right around Marine Le Pen 89, and the conservatives 61. The constellation with coalition governments, which is common in Germany, has not existed in France for decades. The result could lead to a political stalemate or even new elections.
A government bill to cushion the higher cost of living is likely to be a first test in just over a week’s time when the new parliament convenes for the first time. The fight against inflation has become a priority for many voters. However, the positions of the major parties diverge on many important issues.
Macron has so far described his style of government himself as “Jupiterian” with a strong presidential leadership role. Without the backing of parliament, a different approach is likely to be needed. The reform agenda in France is now likely to slow down, said Philippe Gudin of Barclays. “This is likely to weaken France’s position in Europe and jeopardize the country’s already weak fiscal situation.” rtr
The EU has promised to review guidelines on sanctions following Russian criticism of restrictions on rail transit between the Baltic Sea exclave of Kaliningrad, which belongs to Russia, and the Russian heartland. As a precautionary measure, the legal aspects of the guidelines on import and export restrictions for certain products will be reviewed once again, EU foreign affairs representative Josep Borrell announced on Monday evening after a meeting of EU foreign ministers in Luxembourg.
The Kremlin had earlier criticized restrictions on rail transit between Kaliningrad and Russia’s heartland as “illegal” emanating from Lithuania. “This decision is truly unprecedented and represents a violation of everything,” Kremlin spokesman Dmitry Peskov said on Monday, according to the Interfax agency.
Borrell stressed in the evening that Lithuania had not adopted any unilateral measures but was acting based on EU Commission guidelines on the implementation of sanctions. Accusations against the country were “false” and “pure propaganda”. Borrell also stressed that the transit of people and non-sanctioned goods was continuing.
The exclave Kaliningrad around the former Königsberg is located between Lithuania and Poland. It is only about 500 kilometers from Berlin but more than 1000 kilometers from Moscow.
Since Saturday, Lithuania has banned the rail transit of goods through its territory to Kaliningrad that are on Western sanctions lists. According to the head of the regional administration in Kaliningrad, Anton Alichanov, this affects 40 to 50 percent of all transit goods, such as construction materials and metals. dpa
Fifteen European Union governments called on Monday for the bloc to accelerate the conclusion of free trade agreements to ensure its long-term economic growth and geopolitical standing in the world.
In a letter to EU Trade Commissioner Valdis Dombrovskis seen by Reuters, 15 economy, foreign and trade ministers said the Ukraine war and the COVID-19 pandemic underscored the need for resilient supply chains, strategic partnerships and open trade.
With different powers vying for leadership and new alliances, the EU needed to accelerate its own trade push. One in seven EU jobs depend on trade, the ministers said.
The Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade agreement including China, Japan and Australia entered into force at the start of 2022, just over a year after it was signed. “This should be a wake-up call for Europe,” the ministers said, adding the European Union was taking too long.
The EU struck an accord struck with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay in 2019, but put it on hold due to concerns about Amazon deforestation. A new agreement with Mexico, from 2018, has yet to be submitted for EU approval. It also is in trade talks with Australia, New Zealand and Indonesia and now India.
EU diplomats say France, which holds the six-month rotating presidency of the EU, has halted moves to clear trade deals so as not to disturb presidential and legislative elections. France is sensitive to increased beef imports such deals could bring, but has denied it is holding up agreements.
The Czech Republic takes over the EU presidency on July 1, followed by Sweden and Spain, all signatories to the letter. The others are Croatia, Denmark, Estonia, Finland, Germany, Italy, Latvia, Lithuania, Malta, the Netherlands, Portugal and Slovenia.
Anna Hallberg, the trade minister of letter initiator Sweden, said following through negotiated agreements, with environmental safeguards, would be a central priority of the Swedish EU presidency. rtr
The German Bundesbank has spoken out against a further suspension of European debt rules in the coming year. Uncertainty about future developments is high, the central bank wrote in its latest monthly report published on Monday. But the EU Commission, like other institutions, assumes that the economy in the European Union will recover. “Therefore, not convinced that the general exception of the European fiscal rules was extended until 2023,” the monthly report said.
The Bundesbank criticized the extension as creating scope for additional debt-financed fiscal programs “which do not appear appropriate from today’s perspective”. The fiscal situation in some member states is fragile. In this environment, credible fiscal rules are more important than ever.
Recently, capital market interest rates in southern European countries have risen particularly sharply. This means that it is becoming more expensive for countries like Italy to obtain fresh money on the market because they have to offer investors higher interest rates again. This could become a problem for these countries in view of their huge mountains of debt.
The EU Commission has proposed that the Stability and Growth Pact not be fully reinstated until 2024, citing uncertainty over the war in Ukraine, energy prices and supply chain bottlenecks. The debt and deficit rules had been suspended during the COVID crisis and were supposed to be back in force from 2023. dpa
European Central Bank (ECB) President Christine Lagarde has again held out the prospect of interest rate hikes in the near future. “We intend to raise the key ECB interest rates by 25 basis points at our monetary policy meeting in July,” Lagarde told the European Parliament’s Economic and Monetary Affairs Committee on Monday. Another rate hike should then come in September. Monetary policy is likely to be gradually normalized after that.
In this way, the central bank aims to curb the recent very high inflation. In May, the annual inflation rate rose to 8.1 percent. The central bank is aiming for 2 percent in the medium term.
Lagarde also sought to allay concerns that the announced anti-crisis instrument could hinder the fight against inflation. “The decision to accelerate work on an anti-fragmentation instrument underpins the commitment to stabilize inflation at 2 percent over the medium term,” she said. If fragmentation is too severe, the ECB’s monetary policy can no longer deliver its effects. So this fight is part of the ECB’s mandate, she said. Yields on Southern European bonds had risen more sharply than German bunds in recent weeks.
The ECB had decided at an extraordinary meeting on Wednesday to speed up work on a new anti-crisis instrument.
Lagarde does not expect a recession: “The conditions for further growth are in place.” A recession is not part of the ECB’s baseline scenario. Wage growth has picked up, but it remains moderate. However, it will pick up as the year progresses and remain above average thereafter. The interest rate hike is also intended to counteract a wage-price spiral. dpa
“2022 is a repeat of 2017,” says Ronja Kempin about the presidential elections in France. The irrelevance of the major parties has become entrenched, the extremes are strong, and reforms of the political system are difficult. Kempin is familiar with the developments in Paris. She researches Franco-German relations in security and defense policy for the German Institute for International and Security Affairs (SWP).
She is also concerned about the domestic politics of her neighboring country. “I often thought, this can’t be happening,” says Kempin, describing her initial disbelief at the rise of Marine Le Pen. “Why do people vote for such a person?” So she also researches populism in France and the role of the Rassemblement National. During the presidential and parliamentary elections, her expertise was and is particularly in demand.
Where does her affinity for French politics come from? That, she says, is a story full of coincidences. Kempin was born in the German city of Homberg (Efze) in Hesse. Her parents didn’t study and didn’t speak a foreign language, but politics had always been a topic in her family. The teenage Kempin spontaneously decided between theology and political science when she enrolled – for the latter.
When all her friends went abroad for a year toward the end of her basic political studies in Marburg, she successfully applied for a place to study in Rennes. Once there, she was hooked: “I developed a love for the country and its people that has stayed with me to this day.” Fittingly, the 48-year-old wears a blue-and-white striped top to the Zoom call – classic Brittany. She enthusiastically reports on the hospitality of her fellow students at the time.
She remained loyal to the country, studying European Studies at France’s elite Sciences Po university and earning a doctorate in political science at the Free University of Berlin. Afterwards, she worked in the Scientific Service of the Bundestag and for the SPD party executive. In 2003, she ended up at the SWP, initially as a research assistant. She has been a senior fellow in the 15-member EU/Europe research group for the past eight years. On the working conditions in her job, she says, “I think it’s paradise.”
She says it is a privilege to be able to deal with precisely those topics that interest her from the bottom of her heart. And she appreciates the proximity to political decision-makers. The SWP is funded by the German Chancellor’s Office, and Kempin and her colleagues advise the Bundestag and the German government. For the coming months, she hopes that Chancellor Scholz will move quickly toward Macron on EU reforms: “The window is very favorable, and from there, my impatience is also growing.” Paul Meerkamp