Dear reader,
Three Chinese car manufacturers are not prepared to put up with the EU’s countervailing duties: SAIC, Geely and BYD filed a complaint with the European Court of Justice this week. Chinese customs data shows that EU imports of electric vehicles from China rose sharply again in December. However, they are not prepared to accept a margin-eating countervailing duty of between 17 percent (BYD) and 35.3 percent (SAIC).
A Commission spokesman reacted relaxed: “We are a rules-based club here in the EU. If people want to take us to court, they can take us to court,” he said.
The Commission hopes to win the case thanks to its adherence to the rules. Elsewhere, however, it could fail. Today, the Commission must decide whether or not to continue its WTO complaint against China over Chinese coercive measures against Lithuanian companies. According to Bloomberg, the authority fears losing the case due to a lack of evidence.
After Taiwan was allowed to open a liaison office in Vilnius in 2021, China began to hinder Lithuanian companies’ trade with China. The Chinese government never admitted this and referred to technical problems. For fear of reprisals, hardly any European companies dare to testify against Beijing. There is not much point in being a rules-based club if the most important business partners play by different rules.
CDU chancellor candidate Friedrich Merz explicitly warns companies: “This is not a constitutional state by our standards”. German companies are taking a big risk when they invest in China, he said yesterday at the Körber Foundation. If they then had to write off their investments, they should not ask the state for help, said Merz.
Have a nice, depreciation-free day!
Feature
Informal defense summit: Report reveals disagreement among EU member states
At the extraordinary EU summit on Feb. 3 at the Château de Limont near Liège, there is a threat of a dispute over defense policy. There are differences of opinion among the heads of state and government on the financing of possible future armaments projects – but also on the question of what capacities the EU wants to develop together and what form governance should take. This emerges from a diplomatic wire report that Table.Briefings was able to view.
The differences have existed for some time. German Chancellor Olaf Scholz has repeatedly emphasized that the member states alone are responsible for defense. The EU could help with research and development, but was not there to finance armaments, he said at the EU summit last June.
Scholz is apparently not alone in this stance. According to the report from the Permanent Representatives Committee in Brussels, financing will be “the most difficult issue” at the meeting of the heads of state and government at the beginning of February.
Accordingly, Italy in particular is in favor of joint financing of new armaments projects, as envisaged by the EU Commission. A larger group including Germany, France, the Netherlands, Sweden, Denmark and Finland, on the other hand, emphasizes the importance of national financing and the role of private investment. However, the Frugal camp has recently shown cracks. In December, Danish Prime Minister Mette Frederiksen hinted at a change of course and no longer wanted to rule out joint debt. She did not see how the necessary investments could be financed with traditional instruments.
A larger role for the EIB
In order to promote private investment, the role of the European Investment Bank (EIB), for example, should be expanded. EIB boss Nadia Calviño announced at the Ecofin meeting in Brussels on Tuesday that the financing of defense projects would be expanded. Last year, the development bank invested a record sum of one billion euros in security and defense, said Calviño. In the new year, it expects to double this amount. However, the EIB only supports dual-use products that can be used for both civilian and military purposes.
According to the report, only individual countries such as the Czech Republic and Romania are in favor of new, innovative sources of funding. Latvia and Finland warned to think “out of the box” in order to quickly tap into new sources of finance. This apparently refers to the issuing of new European debt (Eurobonds) to finance joint armaments projects, as discussed by EU Defense Commissioner Andrius Kubilius. Possible options under discussion include no longer discriminating against private investment in the arms industry in the taxonomy or using idle funds from the ESM euro rescue fund. Funds could also be reallocated in the next MFF.
Merz against joint debt
However, Germany has so far rejected the option of new debt and is also critical of the use of the ESM, partly in view of the critical budget situation in France and Italy. CDU chancellor candidate Friedrich Merz also emphasized on Thursday that the structural deficits in the procurement of defence equipment in Europe must be tackled first. “And before we devote ourselves to simplification, standardization and scaling, I do not believe that new membership-financed funds or even joint debt are expedient.”
Berlin also has reservations about the idea of having the acquisition of military capacities planned and implemented at EU level. According to the wire report, France also sees no European added value here. At best, it would be conceivable to upgrade the European Defense Agency (EDA). It could begin to think about joint capacities and coordination instruments.
Tusk sees no alternative
Scholz met with French President Emmanuel Macron in Paris on Wednesday. They also coordinated their position for the special summit at the beginning of February. No decisions are expected at the informal meeting. The most important question is not which method will be used to finance European defense projects, said Polish Prime Minister Donald Tusk in the EU Parliament this week. What is more important is that there is no alternative, no choice: “We must be able to defend ourselves, which means that European money must be spent on this”.
Council President António Costa wants to discuss which armaments projects the Europeans should tackle together and how these could be financed. According to diplomats, no decisions are expected on the question of financing, also in view of the German parliamentary elections. Costa intends to present his conclusions at the end of the meeting in Brussels. With Stephan, Israel, Wilhelmine Preußen
- European Defense
- Verteidigungspolitik
Why Austria’s industry favors a coalition between FPÖ and ÖVP
The first hurdle has been cleared, now they are negotiating the details: On Thursday, negotiators from the right-wing populist FPÖ met with those from the conservative ÖVP in the tax and finance subgroup. With their austerity plan, the two parties were able to avert an EU deficit procedure, but they have tied Austria into a tight corset: EUR 6.4 billion must be saved in the current year. Over the next seven years, a total of EUR 18 billion is to be saved in order to comply with EU fiscal rules. Without raising taxes, as both parties had promised their voters.
The right-wing populists and conservatives envisage the biggest savings of around 20% in environmental subsidies. The removal of the climate bonus – similar to the climate money in Germany to offset the CO2 tax – will also affect households: Individuals will lose up to EUR 300 a year. As a result, Austrian households would lose two billion euros in disposable income, calculates climate economist Sigrid Stagl in an interview with the business magazine trend. She criticizes the zigzag course, which also means that subsidies for replacing heating systems and expanding solar systems are no longer available, as “fatal for the economy”.
Nevertheless, industry and some entrepreneurs favor an FPÖ-ÖVP coalition over a Social Democratic Vice-Chancellor Andreas Babler. Several media reported that the break-off of the negotiations was mainly driven by the industry and business wing of the ÖVP. They had “vehemently opposed the SPÖ’s demands for an increase in corporation tax and a bank levy”, reported ORF. Instead, industry is now getting a lean state, tax privileges and openness to technology, coupled with sharp-tongued criticism of the EU.
Kickl now rules out EU exit
Austria’s next Chancellor Herbert Kickl ruled out leaving the EU at the FPÖ’s New Year’s meeting. However, the constant attacks on Brussels are unsettling some economic players. EU membership is essential for Austria, warned Georg Knill, President of the Federation of Austrian Industries. According to the Austrian Institute of Economic Research (WIFO), a sudden Öxit would reduce GDP by EUR 24 to 47 billion. Although Austria is a net contributor, due to the “multiplier effects of EU spending”, the country benefits significantly from the single market according to the National Bank, and is actually a net recipient.
In view of this, the Secretary General of the European Movement Germany, Bernd Hüttemann, is surprised at the hesitant reactions from the business community to an anti-EU Chancellor Kickl: “German SMEs know pretty well what they want from the EU single market,” says Hüttemann. “That doesn’t seem to me to be sufficiently internalized in Austria.”
While even German chambers of commerce warn against the AfD because it could endanger the business location, many top representatives in the Austrian Chamber of Commerce “would have preferred the FPÖ and ÖVP to another coalition”. The ÖVP and the business community are gradually remembering that trade only works in a free and democratic Europe. Now concrete action must follow, demands Hüttemann.
Reduced environmental subsidies harm industry
Parts of the economy will feel the effects of the cutbacks in environmental funding. The billion-euro transformation fund for industry is affected, for example. Austria’s largest steel producer Voestalpine AG, which is responsible for 16 percent of national CO2 emissions, will receive EUR 90 million from the fund to promote green steel. The company does not wish to comment on the current government negotiations. However, when asked, it stated that the payment would be made “only after a certified CO2 reduction and therefore not before 2029”. Accordingly, planning security is needed, which is also emphasized by the Federation of Austrian Industries. It sees the transformation fund as an “essential instrument” for this.
Details on the continuation of the fund are not yet known. “The coalition partners would harm themselves if they withdrew the funding,” warns Katharina Rogenhofer, Director of the Kontext Institute for Climate Issues. “Large companies and trade associations are behind this. Jobs would otherwise be lost, and prosperity and competitiveness would be weakened.”
Discontent in the car industry
According to Rogenhofer, energy issues are now decisive for the location. “Renewables are the only way to produce it safely locally,” she says. The “stop-and-go policy” on wind power, photovoltaics and heating replacement is correspondingly destructive. In the federal state of Carinthia, for example, the FPÖ initiated a referendum in which a narrow majority voted in favor of a ban on wind power. The result was influenced by a suggestive question and false claims.
Displeasure is also spreading in the automotive industry. In the future, electric vehicles will no longer be exempt from motor-related insurance tax and the non-cash benefit scheme could be abolished. “Any restriction of subsidies is counterproductive,” warns Christian Pesau, Managing Director of the Association of Automotive Importers in the Federation of Austrian Industries. This has also been pointed out to the negotiators. Due to the EU-wide fleet limits, it is “essential for the automotive industry that e-vehicles are put on the road.” The Austrian Federal Association for Electric Mobility has a similar view: “If incentives are first decided on and then withdrawn, the short-term savings effect for the budget is only small, but the overall economic damage is all the greater,” criticizes the association’s chairman Andreas Reinhardt.
- EU-Binnenmarkt
- Europapolitik
- Flottengrenzwerte
News
SPD car paper: Sticking to the 2035 ban on combustion engines
The SPD group in the European Parliament wants to stick to the 2035 ban on combustion engines for new cars, but the fines for failing to meet the 2025 climate targets are to be deferred or extended. This is stated in the car paper of the German SPD MEPs, coordinated by Tiemo Wölken. Provided that the reduction target is achieved, changes to the CO2 fleet legislation are possible. However, this must be done in a competition-neutral manner. The SPD proposes several measures to boost sales of EVs:
- Social leasing programs: EU-wide, households with low and medium incomes are to be enabled to lease EVs.
- Tax incentives: Some of the purchase costs should be tax-deductible.
- Binding targets for the electrification of company car fleets.
- Priority for e-vehicles in public procurement. mgr
- Flottengrenzwerte
- Umweltpolitik
Ribera: Commission plans EU-wide support for the purchase of EVs
According to Commission Vice-President Teresa Ribera, the Brussels authority is working on an EU-wide incentive program for EVs. It makes sense to think about an EU-wide solution instead of using national subsidies, the Spaniard told the Financial Times. She warned against “a race in which one national model stands against the other”. Chancellor Olaf Scholz had called for an EU-wide approach in a letter to the Commission. The Commission had announced that a working group in the Strategic Dialogue on the Future of the Automotive Industry would also discuss the harmonization of purchase incentives. Purchase incentives are the responsibility of the member states.
As the Commissioner responsible for the green industrial strategy, Ribera said that a possible EU-wide incentive scheme was one of several measures to support the automotive industry. European car manufacturers need “a comprehensive overview of how they can update their capacities and catch up with what is already in demand worldwide”.
Purchase is not subsidized in all EU countries
According to the European Manufacturers’ Association ACEA, there is currently no premium for the purchase of EVs in eight out of 27 member states:
- Germany
- Austria
- Belgium
- Bulgaria
- Finland
- Denmark
- Latvia
- Slovakia
In principle, there are different models of state support: Tax incentives for the purchase and ownership of EVs such as the elimination of VAT, elimination of vehicle tax, for company cars or for private individuals. And there are purchase incentives, such as the subsidy of up to EUR 6000 for purchases by consumers in Germany, which was abolished at the end of 2023. This led to a slump in EV sales. mgr
Davos: Von der Leyen launches Global Energy Transition Forum
We need good news in these times, explained EU Commission President Ursula von der Leyen at the beginning of her speech at the World Economic Forum in Davos on Thursday. She then announced the launch of the Global Energy Transition Forum. The aim of the initiative is to talk to governments around the world about ways to accelerate the energy transition.
Von der Leyen highlighted the global successes in the transformation of the energy industry. According to her, global spending on clean energy has reached a record of two trillion US dollars. “For every dollar invested in fossil fuels, two dollars have been invested in renewable energy,” said the Commission President. In the energy sector, investment in clean energy outstrips investment in fossil fuels by a ratio of ten to one.
However, only two percent of global investment in renewables currently goes to the African continent, reported von der Leyen. Not everyone is part of the global energy transition and this is “not only unacceptable but also unfair”. The Commission President also emphasized that the pace was still not sufficient. Investments in energy grids and storage are needed.
The Global Energy Transition Forum serves to achieve the COP28 target in Dubai of tripling renewables and doubling efficiency, to take this into account in the national climate targets (NDCs), and thus leverage investments. According to von der Leyen, Brazil, Canada, the Democratic Republic of the Congo, Kenya, Peru, South Africa, the United Kingdom, the United Arab Emirates “and many others” are participating in the initiative. luk
Trump accuses EU of ‘unfair’ treatment
US President Donald Trump has once again lashed out at the European Union at the World Economic Forum in Davos. “From America’s point of view, the EU treats us very, very unfairly and very badly,” said the Republican via video link. He accused the European Union of not buying agricultural products and cars from the USA. At the same time, millions of cars were being sent from Europe to the USA. “I’m trying to be constructive because I love Europe,” said the 78-year-old. But it is very difficult.
In 2023, the number of US vehicle imports into the EU rose by 5.3% compared to the previous year, according to the European Automobile Manufacturers Association (ACEA). However, the EU actually exports more than twice as many cars to the US as it imports.
Trump had recently repeatedly threatened the EU with tariffs and justified this with the trade deficit. There had already been a fierce trade dispute between the US and the EU during Trump’s first term in office. Back then, he introduced special tariffs on steel and aluminum imports in 2018. The EU responded with special tariffs on US products such as bourbon whiskey, Harley-Davidson motorcycles and jeans. dpa
Global minimum tax: Why the EU should negotiate quickly now
Now that US President Donald Trump has issued a decree on his first day in office to review the global minimum tax agreement, the ball is in the European Union’s court. The US Treasury Department was given a 60-day deadline by Trump to review whether other countries discriminate against US companies in terms of taxation and, if necessary, to make proposals for countermeasures.
“If the EU doesn’t want to put up with this, then it needs to find a common strategy,” political economist Lukas Hakelberg told Table.Briefings. “I believe that it would then also be in a position not to allow itself to be ripped off.” According to the researcher at Leuphana University Lüneburg, it would make sense to talk to the US Treasury Department about possible compromises now.
Otherwise, the EU member states would soon have to
- implement procedures in accordance with EU Directive 2022/2523,
- establish “non-compliance” of the USA with the global minimum taxation,
- and send corresponding supplementary tax assessment notices to US companies.
In this case, a tax and customs war with the USA would be likely, in which trade and financial issues would be mixed, according to Hakelberg.
In Hakelberg’s view, the background to Trump’s decree is the preparation of a tax reform by the new US government. The global tax agreement would potentially prevent the Trump administration from granting US companies new tax breaks on foreign profits. This tax burden is currently 10.5 percent, but is set to rise to around 13 percent under current US law.
OECD agreement was also driven by Germany
The global minimum tax for companies with an annual turnover of at least EUR 750 million was agreed by more than 130 countries within the OECD in October 2021. The agreement stipulates that group profits are taxed at a rate of at least 15 percent. If this does not take place at the group’s headquarters, other countries may levy additional taxes.
The agreement is intended to make it more difficult for corporations to shift profits to tax havens and at the same time end the competition between countries for the lowest tax rates. The OECD expects higher global government revenues of up to USD 150 billion, which would also be necessary for a global socio-ecological transformation.
The USA has not yet implemented the agreement. With the decree, however, the country is now taking a frontal stance against the multilateral agreement, which was also significantly promoted by Germany. av
France calls for simplification of CSRD and CSDDD
France’s Minister of Economy and Finance Éric Lombard is calling for corrections to the adopted directives on sustainability reporting (CSRD) and due diligence in corporate supply chains (CSDDD). The CSRD directive must be “greatly simplified for SMEs“, he demanded in Paris. However, the minister rejects an exemption for large companies, which will be subject to the legislation from this year.
Lombard also called for the CSDDD to be suspended as long as it is not simplified. This was the consensus among the finance ministers of the EU countries at their meeting at the beginning of the week, he said. The EU Commission is currently working on proposals for a so-called omnibus regulation, which should facilitate the implementation of CSRD, CSDDD, and taxonomy for affected companies. According to Economic Affairs Commissioner Valdis Dombrovskis, other laws could also be included in the package, which is scheduled for Feb. 26.
Lombard emphasized that “strong announcements” are expected in the first 100 days of Commission President Ursula von der Leyen’s second term of office. The former head of the Caisse des Dépôts, the French equivalent of KfW, believes that the EU is losing “ten percent of its growth potential due to the complexity of the regulations”. However, he warned that simplification should not be synonymous with a step backwards in the EU’s sustainability agenda. cst
Aid dispute over Agri-PV: BMWK demands approval as quickly as possible
In the dispute over the state aid approval for the promotion of photovoltaic systems on agricultural land (“Agri-PV”), the Federal Ministry for Economic Affairs and Energy (BMWK) emphasizes that it regrets the delay. A ministry spokesperson told Table.Briefings that the Solar Package 1, which aims to “significantly expand” Agri-PV systems, is a key legislative project of the BMWK.
MEPs from the CDU/CSU had accused both the EU Commission and Minister Robert Habeck of delaying the approval and jeopardizing the “security and prospects of investments in innovative plants” such as Agri-PV. The CDU/CSU has said that the approval is being delayed because the necessary documents from the BMWK “were only submitted late or incompletely”. It accuses the Federal Government of blocking the process.
Habeck’s ministry rejects these accusations. “In the past, the BMWK has always promptly provided the Commission with all the necessary documents and also contacted it at an early stage,” said the ministry spokesperson. In the course of the parliamentary procedure, however, new elements requiring approval were introduced into the solar package, which made further checks by the Commission necessary. However, the objectives of the solar package are being adhered to and “we are working hard at all levels to ensure that the aid is approved quickly“, the ministry spokesperson added. luk
- Aid
- Beihilfen
- BMWK
- Renewable energies
- Solar
DSA: Round table before federal election
As part of its work as Digital Services Coordinator, the Federal Network Agency is hosting a round table this Friday ahead of the Bundestag elections. Representatives of the EU Commission, civil organizations and major platforms such as Facebook, Instagram, YouTube and X have been invited. According to the Commission, all major social networks have confirmed their attendance. “My hope with regard to the Bundestag election campaign and the election process in Germany is that, as a result of the round table, we can continue to build on constructive cooperation with the key platforms,” said a Commission official.
The integrity of elections and the protection of civil discourse is a priority in the implementation of the Digital Services Act (DSA), especially during election campaigns, the Commission official continued. A good year ago, the Commission had already established guidelines for the platforms with regard to the European elections. In addition to the DSA, these guidelines should provide additional information on how the platforms can best prepare for elections.
The Rapid Response System is activated
At the same time, the Code of Practice against Disinformation was activated and with it the Rapid Response System, which enables much faster and more agile cooperation, especially during election campaigns. This structure “worked quite well” during the European elections, said the Commission official.
However, this did not work out for the election in Romania. This election was something of a turning point, said the official. It showed how important it is for everyone to be prepared. There had been no round table in Romania before the election. In contrast, “cooperation with the Federal Network Agency has been really excellent over the last few months”, said the official. A tabletop exercise is also planned in Germany, in which the participants play through possible attack scenarios. vis
NGO contracts: Green MEP Freund accuses Hohlmeier of conflict of interest
In the plenary debate on the Commission’s contracts with environmental NGOs under the LIFE program, Daniel Freund (Greens) accused CSU MEP Monika Hohlmeier of a conflict of interest. LIFE is the EU’s funding program for environmental issues. Following a whistleblower’s tip-off, the former head of the Committee on Budgetary Control had inspected NGO contracts of the executive agency CINEA, objected to several contracts, and requested a debate on them in plenary.
Hohlmeier also sits on the supervisory board of the agricultural company Baywa, which has also received funds from the LIFE program. Green MEP Freund, once a representative of Transparency International in Brussels, therefore accused her of a conflict of interest in Strasbourg.
Hohlmeier sees no conflict of interest
Hohlmeier rejected the accusation: “I have always made my work for Baywa transparent.” As a Member of Parliament, she had not been involved in the creation of the LIFE program, nor did she know that Baywa had applied for a grant. “Until today, I didn’t even know that Baywa had received subsidies from the program,” she said during the debate, which was also attended by the responsible Budget Commissioner Piotr Serafin.
As a member of the Supervisory Board, she is in no way involved in the day-to-day business of the Group, said Hohlmeier. “And in 15 years in the European Parliament, I have not had a single contact with a Baywa lobbyist.” Freund’s accusations were an attempt to divert the debate away from the actual topic, namely the misuse of EU funds. mgr
MGCS: Pistorius and Lecornu announce foundation of project company
The companies working on the Franco-German Main Ground Combat System (MGCS) tank project have taken a further step in the project. At a meeting with his French counterpart Sébastien Lecornu in Paris on Thursday evening, Defense Minister Boris Pistorius said that the companies involved (KNDS Germany, KNDS France, Rheinmetall Landsysteme and Thales Six) had agreed to establish a joint project company.
The new project company is to be the point of contact for the ministries of defense. This is “an important milestone in this major project”, said Pistorius. It had actually been planned to be ready earlier. Now the contracts with the industry can be finalized.
Franco-German brigade to be a model for more
For Pistorius, the visit to Paris was the end of a two-day tour through Lithuania, Poland and France. It was also intended to send a signal of unity. “You can see that the Franco-German engine is not sputtering, it’s running,” said the Defense Minister in Paris that evening. He was able to convey this more credibly than Federal Chancellor Olaf Scholz, who had also met French President Emmanuel Macron in Paris on Wednesday.
Pistorius and Lecornu have made the Franco-German brigade available to NATO, as Pistorius said. This means that the brigade is available for training and NATO exercises. Parts of the brigade will then also take part in an exercise of the multinational North-East Corps, which is stationed in Szczecin. This represents “a very important, major qualitative step towards the operational capability of this very, very special brigade, which can also be a model for more,” said Pistorius. Lecornu and Pistorius also signed a technical agreement for the Franco-German air transport squadron in Evreux, France, which included further details on infrastructure and finances – the ministers did not go into further detail. bub
Executive Moves
NATO chief spokesperson Farah Dakhlallah is moving to the WHO after less than a year. The British-Lebanese communications expert originally came from AstraZeneca and was hired under the then NATO Secretary-General Jens Stoltenberg. As an outsider, Farah Dakhlallah is said to have struggled with the customs at the Alliance’s headquarters, according to NATO circles. The chemistry between the spokesperson and the new NATO Secretary General Mark Rutte was also said to be off. Until a successor is found, the current deputy Allison Hart will speak for NATO on an interim basis.
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Europe.Table Editorial Team
EUROPE.TABLE EDITORIAL OFFICE
Dear reader,
Three Chinese car manufacturers are not prepared to put up with the EU’s countervailing duties: SAIC, Geely and BYD filed a complaint with the European Court of Justice this week. Chinese customs data shows that EU imports of electric vehicles from China rose sharply again in December. However, they are not prepared to accept a margin-eating countervailing duty of between 17 percent (BYD) and 35.3 percent (SAIC).
A Commission spokesman reacted relaxed: “We are a rules-based club here in the EU. If people want to take us to court, they can take us to court,” he said.
The Commission hopes to win the case thanks to its adherence to the rules. Elsewhere, however, it could fail. Today, the Commission must decide whether or not to continue its WTO complaint against China over Chinese coercive measures against Lithuanian companies. According to Bloomberg, the authority fears losing the case due to a lack of evidence.
After Taiwan was allowed to open a liaison office in Vilnius in 2021, China began to hinder Lithuanian companies’ trade with China. The Chinese government never admitted this and referred to technical problems. For fear of reprisals, hardly any European companies dare to testify against Beijing. There is not much point in being a rules-based club if the most important business partners play by different rules.
CDU chancellor candidate Friedrich Merz explicitly warns companies: “This is not a constitutional state by our standards”. German companies are taking a big risk when they invest in China, he said yesterday at the Körber Foundation. If they then had to write off their investments, they should not ask the state for help, said Merz.
Have a nice, depreciation-free day!
Feature
Informal defense summit: Report reveals disagreement among EU member states
At the extraordinary EU summit on Feb. 3 at the Château de Limont near Liège, there is a threat of a dispute over defense policy. There are differences of opinion among the heads of state and government on the financing of possible future armaments projects – but also on the question of what capacities the EU wants to develop together and what form governance should take. This emerges from a diplomatic wire report that Table.Briefings was able to view.
The differences have existed for some time. German Chancellor Olaf Scholz has repeatedly emphasized that the member states alone are responsible for defense. The EU could help with research and development, but was not there to finance armaments, he said at the EU summit last June.
Scholz is apparently not alone in this stance. According to the report from the Permanent Representatives Committee in Brussels, financing will be “the most difficult issue” at the meeting of the heads of state and government at the beginning of February.
Accordingly, Italy in particular is in favor of joint financing of new armaments projects, as envisaged by the EU Commission. A larger group including Germany, France, the Netherlands, Sweden, Denmark and Finland, on the other hand, emphasizes the importance of national financing and the role of private investment. However, the Frugal camp has recently shown cracks. In December, Danish Prime Minister Mette Frederiksen hinted at a change of course and no longer wanted to rule out joint debt. She did not see how the necessary investments could be financed with traditional instruments.
A larger role for the EIB
In order to promote private investment, the role of the European Investment Bank (EIB), for example, should be expanded. EIB boss Nadia Calviño announced at the Ecofin meeting in Brussels on Tuesday that the financing of defense projects would be expanded. Last year, the development bank invested a record sum of one billion euros in security and defense, said Calviño. In the new year, it expects to double this amount. However, the EIB only supports dual-use products that can be used for both civilian and military purposes.
According to the report, only individual countries such as the Czech Republic and Romania are in favor of new, innovative sources of funding. Latvia and Finland warned to think “out of the box” in order to quickly tap into new sources of finance. This apparently refers to the issuing of new European debt (Eurobonds) to finance joint armaments projects, as discussed by EU Defense Commissioner Andrius Kubilius. Possible options under discussion include no longer discriminating against private investment in the arms industry in the taxonomy or using idle funds from the ESM euro rescue fund. Funds could also be reallocated in the next MFF.
Merz against joint debt
However, Germany has so far rejected the option of new debt and is also critical of the use of the ESM, partly in view of the critical budget situation in France and Italy. CDU chancellor candidate Friedrich Merz also emphasized on Thursday that the structural deficits in the procurement of defence equipment in Europe must be tackled first. “And before we devote ourselves to simplification, standardization and scaling, I do not believe that new membership-financed funds or even joint debt are expedient.”
Berlin also has reservations about the idea of having the acquisition of military capacities planned and implemented at EU level. According to the wire report, France also sees no European added value here. At best, it would be conceivable to upgrade the European Defense Agency (EDA). It could begin to think about joint capacities and coordination instruments.
Tusk sees no alternative
Scholz met with French President Emmanuel Macron in Paris on Wednesday. They also coordinated their position for the special summit at the beginning of February. No decisions are expected at the informal meeting. The most important question is not which method will be used to finance European defense projects, said Polish Prime Minister Donald Tusk in the EU Parliament this week. What is more important is that there is no alternative, no choice: “We must be able to defend ourselves, which means that European money must be spent on this”.
Council President António Costa wants to discuss which armaments projects the Europeans should tackle together and how these could be financed. According to diplomats, no decisions are expected on the question of financing, also in view of the German parliamentary elections. Costa intends to present his conclusions at the end of the meeting in Brussels. With Stephan, Israel, Wilhelmine Preußen
- European Defense
- Verteidigungspolitik
Why Austria’s industry favors a coalition between FPÖ and ÖVP
The first hurdle has been cleared, now they are negotiating the details: On Thursday, negotiators from the right-wing populist FPÖ met with those from the conservative ÖVP in the tax and finance subgroup. With their austerity plan, the two parties were able to avert an EU deficit procedure, but they have tied Austria into a tight corset: EUR 6.4 billion must be saved in the current year. Over the next seven years, a total of EUR 18 billion is to be saved in order to comply with EU fiscal rules. Without raising taxes, as both parties had promised their voters.
The right-wing populists and conservatives envisage the biggest savings of around 20% in environmental subsidies. The removal of the climate bonus – similar to the climate money in Germany to offset the CO2 tax – will also affect households: Individuals will lose up to EUR 300 a year. As a result, Austrian households would lose two billion euros in disposable income, calculates climate economist Sigrid Stagl in an interview with the business magazine trend. She criticizes the zigzag course, which also means that subsidies for replacing heating systems and expanding solar systems are no longer available, as “fatal for the economy”.
Nevertheless, industry and some entrepreneurs favor an FPÖ-ÖVP coalition over a Social Democratic Vice-Chancellor Andreas Babler. Several media reported that the break-off of the negotiations was mainly driven by the industry and business wing of the ÖVP. They had “vehemently opposed the SPÖ’s demands for an increase in corporation tax and a bank levy”, reported ORF. Instead, industry is now getting a lean state, tax privileges and openness to technology, coupled with sharp-tongued criticism of the EU.
Kickl now rules out EU exit
Austria’s next Chancellor Herbert Kickl ruled out leaving the EU at the FPÖ’s New Year’s meeting. However, the constant attacks on Brussels are unsettling some economic players. EU membership is essential for Austria, warned Georg Knill, President of the Federation of Austrian Industries. According to the Austrian Institute of Economic Research (WIFO), a sudden Öxit would reduce GDP by EUR 24 to 47 billion. Although Austria is a net contributor, due to the “multiplier effects of EU spending”, the country benefits significantly from the single market according to the National Bank, and is actually a net recipient.
In view of this, the Secretary General of the European Movement Germany, Bernd Hüttemann, is surprised at the hesitant reactions from the business community to an anti-EU Chancellor Kickl: “German SMEs know pretty well what they want from the EU single market,” says Hüttemann. “That doesn’t seem to me to be sufficiently internalized in Austria.”
While even German chambers of commerce warn against the AfD because it could endanger the business location, many top representatives in the Austrian Chamber of Commerce “would have preferred the FPÖ and ÖVP to another coalition”. The ÖVP and the business community are gradually remembering that trade only works in a free and democratic Europe. Now concrete action must follow, demands Hüttemann.
Reduced environmental subsidies harm industry
Parts of the economy will feel the effects of the cutbacks in environmental funding. The billion-euro transformation fund for industry is affected, for example. Austria’s largest steel producer Voestalpine AG, which is responsible for 16 percent of national CO2 emissions, will receive EUR 90 million from the fund to promote green steel. The company does not wish to comment on the current government negotiations. However, when asked, it stated that the payment would be made “only after a certified CO2 reduction and therefore not before 2029”. Accordingly, planning security is needed, which is also emphasized by the Federation of Austrian Industries. It sees the transformation fund as an “essential instrument” for this.
Details on the continuation of the fund are not yet known. “The coalition partners would harm themselves if they withdrew the funding,” warns Katharina Rogenhofer, Director of the Kontext Institute for Climate Issues. “Large companies and trade associations are behind this. Jobs would otherwise be lost, and prosperity and competitiveness would be weakened.”
Discontent in the car industry
According to Rogenhofer, energy issues are now decisive for the location. “Renewables are the only way to produce it safely locally,” she says. The “stop-and-go policy” on wind power, photovoltaics and heating replacement is correspondingly destructive. In the federal state of Carinthia, for example, the FPÖ initiated a referendum in which a narrow majority voted in favor of a ban on wind power. The result was influenced by a suggestive question and false claims.
Displeasure is also spreading in the automotive industry. In the future, electric vehicles will no longer be exempt from motor-related insurance tax and the non-cash benefit scheme could be abolished. “Any restriction of subsidies is counterproductive,” warns Christian Pesau, Managing Director of the Association of Automotive Importers in the Federation of Austrian Industries. This has also been pointed out to the negotiators. Due to the EU-wide fleet limits, it is “essential for the automotive industry that e-vehicles are put on the road.” The Austrian Federal Association for Electric Mobility has a similar view: “If incentives are first decided on and then withdrawn, the short-term savings effect for the budget is only small, but the overall economic damage is all the greater,” criticizes the association’s chairman Andreas Reinhardt.
- EU-Binnenmarkt
- Europapolitik
- Flottengrenzwerte
News
SPD car paper: Sticking to the 2035 ban on combustion engines
The SPD group in the European Parliament wants to stick to the 2035 ban on combustion engines for new cars, but the fines for failing to meet the 2025 climate targets are to be deferred or extended. This is stated in the car paper of the German SPD MEPs, coordinated by Tiemo Wölken. Provided that the reduction target is achieved, changes to the CO2 fleet legislation are possible. However, this must be done in a competition-neutral manner. The SPD proposes several measures to boost sales of EVs:
- Social leasing programs: EU-wide, households with low and medium incomes are to be enabled to lease EVs.
- Tax incentives: Some of the purchase costs should be tax-deductible.
- Binding targets for the electrification of company car fleets.
- Priority for e-vehicles in public procurement. mgr
- Flottengrenzwerte
- Umweltpolitik
Ribera: Commission plans EU-wide support for the purchase of EVs
According to Commission Vice-President Teresa Ribera, the Brussels authority is working on an EU-wide incentive program for EVs. It makes sense to think about an EU-wide solution instead of using national subsidies, the Spaniard told the Financial Times. She warned against “a race in which one national model stands against the other”. Chancellor Olaf Scholz had called for an EU-wide approach in a letter to the Commission. The Commission had announced that a working group in the Strategic Dialogue on the Future of the Automotive Industry would also discuss the harmonization of purchase incentives. Purchase incentives are the responsibility of the member states.
As the Commissioner responsible for the green industrial strategy, Ribera said that a possible EU-wide incentive scheme was one of several measures to support the automotive industry. European car manufacturers need “a comprehensive overview of how they can update their capacities and catch up with what is already in demand worldwide”.
Purchase is not subsidized in all EU countries
According to the European Manufacturers’ Association ACEA, there is currently no premium for the purchase of EVs in eight out of 27 member states:
- Germany
- Austria
- Belgium
- Bulgaria
- Finland
- Denmark
- Latvia
- Slovakia
In principle, there are different models of state support: Tax incentives for the purchase and ownership of EVs such as the elimination of VAT, elimination of vehicle tax, for company cars or for private individuals. And there are purchase incentives, such as the subsidy of up to EUR 6000 for purchases by consumers in Germany, which was abolished at the end of 2023. This led to a slump in EV sales. mgr
Davos: Von der Leyen launches Global Energy Transition Forum
We need good news in these times, explained EU Commission President Ursula von der Leyen at the beginning of her speech at the World Economic Forum in Davos on Thursday. She then announced the launch of the Global Energy Transition Forum. The aim of the initiative is to talk to governments around the world about ways to accelerate the energy transition.
Von der Leyen highlighted the global successes in the transformation of the energy industry. According to her, global spending on clean energy has reached a record of two trillion US dollars. “For every dollar invested in fossil fuels, two dollars have been invested in renewable energy,” said the Commission President. In the energy sector, investment in clean energy outstrips investment in fossil fuels by a ratio of ten to one.
However, only two percent of global investment in renewables currently goes to the African continent, reported von der Leyen. Not everyone is part of the global energy transition and this is “not only unacceptable but also unfair”. The Commission President also emphasized that the pace was still not sufficient. Investments in energy grids and storage are needed.
The Global Energy Transition Forum serves to achieve the COP28 target in Dubai of tripling renewables and doubling efficiency, to take this into account in the national climate targets (NDCs), and thus leverage investments. According to von der Leyen, Brazil, Canada, the Democratic Republic of the Congo, Kenya, Peru, South Africa, the United Kingdom, the United Arab Emirates “and many others” are participating in the initiative. luk
Trump accuses EU of ‘unfair’ treatment
US President Donald Trump has once again lashed out at the European Union at the World Economic Forum in Davos. “From America’s point of view, the EU treats us very, very unfairly and very badly,” said the Republican via video link. He accused the European Union of not buying agricultural products and cars from the USA. At the same time, millions of cars were being sent from Europe to the USA. “I’m trying to be constructive because I love Europe,” said the 78-year-old. But it is very difficult.
In 2023, the number of US vehicle imports into the EU rose by 5.3% compared to the previous year, according to the European Automobile Manufacturers Association (ACEA). However, the EU actually exports more than twice as many cars to the US as it imports.
Trump had recently repeatedly threatened the EU with tariffs and justified this with the trade deficit. There had already been a fierce trade dispute between the US and the EU during Trump’s first term in office. Back then, he introduced special tariffs on steel and aluminum imports in 2018. The EU responded with special tariffs on US products such as bourbon whiskey, Harley-Davidson motorcycles and jeans. dpa
Global minimum tax: Why the EU should negotiate quickly now
Now that US President Donald Trump has issued a decree on his first day in office to review the global minimum tax agreement, the ball is in the European Union’s court. The US Treasury Department was given a 60-day deadline by Trump to review whether other countries discriminate against US companies in terms of taxation and, if necessary, to make proposals for countermeasures.
“If the EU doesn’t want to put up with this, then it needs to find a common strategy,” political economist Lukas Hakelberg told Table.Briefings. “I believe that it would then also be in a position not to allow itself to be ripped off.” According to the researcher at Leuphana University Lüneburg, it would make sense to talk to the US Treasury Department about possible compromises now.
Otherwise, the EU member states would soon have to
- implement procedures in accordance with EU Directive 2022/2523,
- establish “non-compliance” of the USA with the global minimum taxation,
- and send corresponding supplementary tax assessment notices to US companies.
In this case, a tax and customs war with the USA would be likely, in which trade and financial issues would be mixed, according to Hakelberg.
In Hakelberg’s view, the background to Trump’s decree is the preparation of a tax reform by the new US government. The global tax agreement would potentially prevent the Trump administration from granting US companies new tax breaks on foreign profits. This tax burden is currently 10.5 percent, but is set to rise to around 13 percent under current US law.
OECD agreement was also driven by Germany
The global minimum tax for companies with an annual turnover of at least EUR 750 million was agreed by more than 130 countries within the OECD in October 2021. The agreement stipulates that group profits are taxed at a rate of at least 15 percent. If this does not take place at the group’s headquarters, other countries may levy additional taxes.
The agreement is intended to make it more difficult for corporations to shift profits to tax havens and at the same time end the competition between countries for the lowest tax rates. The OECD expects higher global government revenues of up to USD 150 billion, which would also be necessary for a global socio-ecological transformation.
The USA has not yet implemented the agreement. With the decree, however, the country is now taking a frontal stance against the multilateral agreement, which was also significantly promoted by Germany. av
France calls for simplification of CSRD and CSDDD
France’s Minister of Economy and Finance Éric Lombard is calling for corrections to the adopted directives on sustainability reporting (CSRD) and due diligence in corporate supply chains (CSDDD). The CSRD directive must be “greatly simplified for SMEs“, he demanded in Paris. However, the minister rejects an exemption for large companies, which will be subject to the legislation from this year.
Lombard also called for the CSDDD to be suspended as long as it is not simplified. This was the consensus among the finance ministers of the EU countries at their meeting at the beginning of the week, he said. The EU Commission is currently working on proposals for a so-called omnibus regulation, which should facilitate the implementation of CSRD, CSDDD, and taxonomy for affected companies. According to Economic Affairs Commissioner Valdis Dombrovskis, other laws could also be included in the package, which is scheduled for Feb. 26.
Lombard emphasized that “strong announcements” are expected in the first 100 days of Commission President Ursula von der Leyen’s second term of office. The former head of the Caisse des Dépôts, the French equivalent of KfW, believes that the EU is losing “ten percent of its growth potential due to the complexity of the regulations”. However, he warned that simplification should not be synonymous with a step backwards in the EU’s sustainability agenda. cst
Aid dispute over Agri-PV: BMWK demands approval as quickly as possible
In the dispute over the state aid approval for the promotion of photovoltaic systems on agricultural land (“Agri-PV”), the Federal Ministry for Economic Affairs and Energy (BMWK) emphasizes that it regrets the delay. A ministry spokesperson told Table.Briefings that the Solar Package 1, which aims to “significantly expand” Agri-PV systems, is a key legislative project of the BMWK.
MEPs from the CDU/CSU had accused both the EU Commission and Minister Robert Habeck of delaying the approval and jeopardizing the “security and prospects of investments in innovative plants” such as Agri-PV. The CDU/CSU has said that the approval is being delayed because the necessary documents from the BMWK “were only submitted late or incompletely”. It accuses the Federal Government of blocking the process.
Habeck’s ministry rejects these accusations. “In the past, the BMWK has always promptly provided the Commission with all the necessary documents and also contacted it at an early stage,” said the ministry spokesperson. In the course of the parliamentary procedure, however, new elements requiring approval were introduced into the solar package, which made further checks by the Commission necessary. However, the objectives of the solar package are being adhered to and “we are working hard at all levels to ensure that the aid is approved quickly“, the ministry spokesperson added. luk
- Aid
- Beihilfen
- BMWK
- Renewable energies
- Solar
DSA: Round table before federal election
As part of its work as Digital Services Coordinator, the Federal Network Agency is hosting a round table this Friday ahead of the Bundestag elections. Representatives of the EU Commission, civil organizations and major platforms such as Facebook, Instagram, YouTube and X have been invited. According to the Commission, all major social networks have confirmed their attendance. “My hope with regard to the Bundestag election campaign and the election process in Germany is that, as a result of the round table, we can continue to build on constructive cooperation with the key platforms,” said a Commission official.
The integrity of elections and the protection of civil discourse is a priority in the implementation of the Digital Services Act (DSA), especially during election campaigns, the Commission official continued. A good year ago, the Commission had already established guidelines for the platforms with regard to the European elections. In addition to the DSA, these guidelines should provide additional information on how the platforms can best prepare for elections.
The Rapid Response System is activated
At the same time, the Code of Practice against Disinformation was activated and with it the Rapid Response System, which enables much faster and more agile cooperation, especially during election campaigns. This structure “worked quite well” during the European elections, said the Commission official.
However, this did not work out for the election in Romania. This election was something of a turning point, said the official. It showed how important it is for everyone to be prepared. There had been no round table in Romania before the election. In contrast, “cooperation with the Federal Network Agency has been really excellent over the last few months”, said the official. A tabletop exercise is also planned in Germany, in which the participants play through possible attack scenarios. vis
NGO contracts: Green MEP Freund accuses Hohlmeier of conflict of interest
In the plenary debate on the Commission’s contracts with environmental NGOs under the LIFE program, Daniel Freund (Greens) accused CSU MEP Monika Hohlmeier of a conflict of interest. LIFE is the EU’s funding program for environmental issues. Following a whistleblower’s tip-off, the former head of the Committee on Budgetary Control had inspected NGO contracts of the executive agency CINEA, objected to several contracts, and requested a debate on them in plenary.
Hohlmeier also sits on the supervisory board of the agricultural company Baywa, which has also received funds from the LIFE program. Green MEP Freund, once a representative of Transparency International in Brussels, therefore accused her of a conflict of interest in Strasbourg.
Hohlmeier sees no conflict of interest
Hohlmeier rejected the accusation: “I have always made my work for Baywa transparent.” As a Member of Parliament, she had not been involved in the creation of the LIFE program, nor did she know that Baywa had applied for a grant. “Until today, I didn’t even know that Baywa had received subsidies from the program,” she said during the debate, which was also attended by the responsible Budget Commissioner Piotr Serafin.
As a member of the Supervisory Board, she is in no way involved in the day-to-day business of the Group, said Hohlmeier. “And in 15 years in the European Parliament, I have not had a single contact with a Baywa lobbyist.” Freund’s accusations were an attempt to divert the debate away from the actual topic, namely the misuse of EU funds. mgr
MGCS: Pistorius and Lecornu announce foundation of project company
The companies working on the Franco-German Main Ground Combat System (MGCS) tank project have taken a further step in the project. At a meeting with his French counterpart Sébastien Lecornu in Paris on Thursday evening, Defense Minister Boris Pistorius said that the companies involved (KNDS Germany, KNDS France, Rheinmetall Landsysteme and Thales Six) had agreed to establish a joint project company.
The new project company is to be the point of contact for the ministries of defense. This is “an important milestone in this major project”, said Pistorius. It had actually been planned to be ready earlier. Now the contracts with the industry can be finalized.
Franco-German brigade to be a model for more
For Pistorius, the visit to Paris was the end of a two-day tour through Lithuania, Poland and France. It was also intended to send a signal of unity. “You can see that the Franco-German engine is not sputtering, it’s running,” said the Defense Minister in Paris that evening. He was able to convey this more credibly than Federal Chancellor Olaf Scholz, who had also met French President Emmanuel Macron in Paris on Wednesday.
Pistorius and Lecornu have made the Franco-German brigade available to NATO, as Pistorius said. This means that the brigade is available for training and NATO exercises. Parts of the brigade will then also take part in an exercise of the multinational North-East Corps, which is stationed in Szczecin. This represents “a very important, major qualitative step towards the operational capability of this very, very special brigade, which can also be a model for more,” said Pistorius. Lecornu and Pistorius also signed a technical agreement for the Franco-German air transport squadron in Evreux, France, which included further details on infrastructure and finances – the ministers did not go into further detail. bub
Executive Moves
NATO chief spokesperson Farah Dakhlallah is moving to the WHO after less than a year. The British-Lebanese communications expert originally came from AstraZeneca and was hired under the then NATO Secretary-General Jens Stoltenberg. As an outsider, Farah Dakhlallah is said to have struggled with the customs at the Alliance’s headquarters, according to NATO circles. The chemistry between the spokesperson and the new NATO Secretary General Mark Rutte was also said to be off. Until a successor is found, the current deputy Allison Hart will speak for NATO on an interim basis.
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Europe.Table Editorial Team
EUROPE.TABLE EDITORIAL OFFICE
