The EU heads of government have been meeting in Brussels since yesterday. While they initially discussed international crises, today they are discussing one of their own: the European economy is being left behind. The USA is racing ahead thanks to its uncomplicated industrial policy and Chinese overproduction is forcing European products off the world markets.
But there are ideas on how to solve the problems of the single market. Enrico Letta has quite a few of them, and today he will present them to the EU heads of government. But are the EU member states ready for the necessary reforms?
The discussion between the heads of government on the Capital Markets Union, which is also taking place today, could provide an initial indication of this. France, Italy and the Netherlands want to make rapid progress on this topic, which has made little progress in ten years. Chancellor Scholz has also taken up the cause. In the interests of rapid progress, he is also willing to compromise on the sensitive issue of centralized market supervision – much to the displeasure of the Federal Minister of Finance.
But many states are skeptical. Luxembourg, Ireland and Belgium are resisting centralization due to tangible economic interests, while others are resisting the transfer of national competences more out of a reflex. The draft conclusions are relatively ambitious, but in view of the resistance, it is unclear whether the ambition will survive the discussion. However, ambitious goals are needed if the restructuring of the internal market is to succeed in the coming years.
The way could soon be clear for Iran’s Revolutionary Guard to be listed as a terrorist organization. On his arrival at the EU summit, Federal Chancellor Olaf Scholz referred to a German court ruling that could serve as the starting point for a listing. The EU Commission’s legal service is currently examining the matter. Specifically, it is likely to be a ruling by the Düsseldorf Higher Regional Court regarding an attempted arson attack on a synagogue in Bochum, in which a German-Iranian was convicted in December.
The listing of the powerful Revolutionary Guard as a terrorist organization is a possible sanction on Iran’s major attack on Israel, which was discussed at the EU summit. Germany, together with France, has so far been one of the countries to put the brakes on this. This was based on the legal argument that it would require investigations or a conviction for terrorist activities in an EU country. It is clear from Olaf Scholz’s hints that the ruling in Düsseldorf could now provide the necessary legal basis.
In the background, fears that the listing would jeopardize the last channels of communication with the regime in Tehran have also played a role. Olaf Scholz signaled movement here. There are already punitive measures against the Revolutionary Guard: “The question now is whether we can take a further step“, said the Chancellor. Israel, as well as EU members such as the Netherlands, Sweden and the Czech Republic, have been pushing for listing for some time.
In the summit conclusions, the heads of state and government condemn Iran’s attack in the strongest possible terms and reaffirm their solidarity with Israel. It is also announced that the sanctions regime against Iran’s drone production will be tightened and extended to include missiles. EU Foreign Affairs Representative Josep Borrell is to submit a concrete proposal by next Monday’s Foreign Affairs Council on how Iran’s drone deliveries to Tehran-sponsored proxies in Lebanon, Syria and Iraq can also be sanctioned.
However, the summit also called on Israel to refrain from retaliation to avoid further escalation. “It is important for us that Israel uses the situation to strengthen its own position in the region and does not respond with a massive attack of its own”, emphasized the Federal Chancellor. Finnish Prime Minister Petteri Orpo, among others, expressed a similar view: It was important to ask Israel “not to attack, because we need to de-escalate this difficult situation”.
The summit began in the late afternoon with a discussion on the dramatic situation in Ukraine and relations with Turkey as a strategic partner. In a video link, President Volodymyr Zelenskiy appealed to Western allies to supply Ukraine with additional air defense systems. And given the massive attacks by Russian forces on cities and infrastructure, he drew parallels with the Middle East: “Here in Ukraine, in our part of Europe, we unfortunately do not have the level of defense that we all saw in the Middle East a few days ago”, said Zelenskiy. However, the skies above Ukraine deserve the same protection.
The President of Ukraine thanked Chancellor Scholz for the fact that Germany will quickly deliver another Patriot air defense system. But his country needs much more, said Zelenskiy. On his arrival, Scholz had also urged the allies to supply more weapons to Ukraine. Russia was continuing its war of aggression with great brutality. Everyone knew that more had to be done to support Ukraine. In addition to ammunition and artillery, the Ukrainian armed forces needed more air defense in particular.
EU foreign policy chief Josep Borrell recently spoke of 100 Patriot systems being available in Western countries. Ukrainian Foreign Minister Dmytro Kuleba, on the other hand, said that his country needs at least seven Patriot systems to protect its most important cities and economic centers from Russian cruise missiles, rockets and drones. The Patriot air defense system from Germany will be “immediately useful” for Ukraine, said Scholz in Brussels.
In Brussels, the German Chancellor wanted to encourage the other heads of state and government to “do the same”. Everyone had to go home and see what else they could deliver. Action must now be taken quickly. NATO Secretary General Jens Stoltenberg has called a virtual crisis meeting of defense ministers for this Friday. President Volodymyr Zelenskiy is also expected to attend. The crisis meeting will also discuss support for Ukraine’s air defense.
“The single market was born in a smaller world.” Enrico Letta begins his single market report with this sentence. The world has changed fundamentally since the single market was conceived by Jacques Delors in 1985. Europe’s relative weight in the world has diminished and wars and trade conflicts are undermining the so-called “rules-based international system” on which the EU’s success is built.
In a speech in Brussels on Tuesday, Mario Draghi spoke for the first time about the broad lines of his report on EU competitiveness, which will be published in June. The EU had been caught off guard in its reliance on these international rules: “Most importantly, other regions are no longer playing by the rules and are actively developing policies to improve their competitive position”, said Draghi. “At best, these measures aim to channel investment into their own economies at the expense of ours; at worst, they aim to make us permanently dependent on them.”
According to Draghi, the EU lacks a strategy to deal with this change in an international context. Europe is inhibited “because our organization, decision-making and financing are designed for the ‘world of yesterday’”. He will therefore propose “radical change” in his report.
However, Draghi does not blame all of the EU’s problems on the changed world situation. The EU has harmed itself with a misguided understanding of competitiveness. In particular, it reacted completely wrongly to the sovereign debt crisis in the early 2010s.
“We have deliberately tried to lower wage costs in comparison to each other – and in combination with a pro-cyclical fiscal policy, the net result has only been to weaken our own domestic demand and undermine our social model”, said Draghi. This is remarkable, among other things, because he is also criticizing himself. As ECB President from November 2011, Draghi was jointly responsible for the EU’s economic policy, which he now considers to be misguided.
Instead of undercutting each other, the EU countries should focus on international competition. For Draghi and Letta, this means greater fiscal integration and deeper market integration.
Draghi argues that the EU should use common debt to finance European public goods. Letta is more cautious about directly calling for new EU debt. But his proposals cannot be implemented without additional EU funding.
In his report, for example, Letta proposes a Europeanization of state aid. The relaxation of state aid rules in recent years has led to dissatisfaction among the smaller member states, who are annoyed by the market distortions caused by subsidies from the larger states.
Letta proposes that member states pay a share of the state aid they pay out nationally into an EU pot, from which European aid is then paid out. In this way, the EU could counteract the structural overreaching of the financially strong member states. Letta also hopes that this will make the idea of new EU funds more popular with some states that are actually skeptical about them. In the long term, this should lay the foundations for a more efficient European industrial policy.
While Letta does not directly call for more EU debt, he emphasizes its positive side effect on the goal of promoting the Capital Markets Union. Standardized and sufficient EU debt instruments could establish themselves as European safe assets in the financial market, similar to US Treasury bonds, which play an important role in the US financial market.
Letta and Draghi both support the Capital Markets Union project, which they consider essential for Europe’s investment needs. In his speech, Draghi called for the capital requirements of banks to be reformed so that they can make riskier investments. Letta is calling for the same for the insurance industry. Since the financial crisis, the trend has been in the opposite direction out of consideration for financial stability.
In order to mobilize more funds for European investments, Letta is calling for a European pension product. In addition, the supervision of the capital markets should be gradually Europeanized, at least for the largest players, so that the European rules are also applied uniformly.
In general, the two Italian ex-prime ministers want the EU to finally be able to use its size. Market integration and harmonization should lead to economies of scale that are not yet possible today due to fragmentation.
One harmonization proposal that both support is a European company law. As the harmonization of the 27 European company laws would be too complicated, a 28th system is to be introduced, which can be used by start-ups, for example. This Europe-wide uniform system should also attract more investors.
CDU MEP Andreas Schwab welcomes this proposal: “The idea of a European Company Code would be a good opportunity to remove unnecessary regulations, create coherence and thus make Europe an interesting place for business development again”, he told Table.Briefings.
The Italian experts also want economies of scale in the energy and telecommunications markets. Both markets are to be more closely integrated. Draghi and Letta are calling for more consolidation in the latter in particular.
At a press conference on Wednesday, Letta assured that he did not want a situation like that in the USA, where the telecommunications market has an oligopolistic structure. However, the call for larger European companies that can also hold their own on the international stage is likely to raise competition-related questions. Especially if, as Draghi and Letta propose, European industry is also to be better protected from foreign competition.
Public procurement is likely to play an important role here. In his speech, Draghi argued that the EU member states should buy much more together, for example for defense equipment, and that they should buy more from Europe in order to reduce dependencies.
Taken as a whole, the changes proposed by Draghi and Letta are indeed “radical”. They want to restructure almost every aspect of the single market so that it can withstand the tougher international environment and the EU can maintain its position in the world.
Whether this will succeed remains uncertain in view of the many sensitive issues. Many internal market reports have already been written, only to disappear somewhere in Brussels offices. “The drawer is my biggest enemy”, says Enrico Letta. Nevertheless, he believes that the situation is so dramatic that the EU member states will move this time.
What was the concept for Chancellor Scholz’s visit to China? What was his approach?
It was business as usual. The purpose of the visit was to promote German interests. But we are confronted with a new China. And although the tone in Europe is changing, we are undergoing a paradigm shift and China is becoming a security threat, a challenge to European prosperity and competitiveness, the German Chancellor is traveling to China with a large business delegation and three ministers to push German interests while ignoring the European reality.
How important was this visit for the EU?
Every time a European head of government travels to China, it is also very important for the EU. Relations between the EU and China have deteriorated so rapidly that every national exchange is also important for Europe in some way. Germany plays a special role in EU-China relations as it is one of the few countries that does not have a trade deficit. 70 percent of German direct investment goes to China. The Chinese leadership sees the EU as a collection of 27 different interests. For them, the EU itself is a very opaque international organization. Beijing considers France and Germany to be important in the EU. France for political reasons and Germany for economic reasons. At the top of the Chinese leadership, however, Germany is seen as the driving factor behind the European approach to China.
Can Scholz exert influence on Beijing? Or is Beijing just trying to make Germany and the EU believe it?
Beijing attaches great importance to Germany and the German voice in Europe. Against the backdrop of deteriorating bilateral relations and increasing geopolitical tensions, the European dimension of the Scholz visit was even more important than a few years ago or than the visits by representatives of other member states. This is because the Chinese leadership sees Germany as the decisive shaper and driver of the European approach.
Is Brussels satisfied with Scholz’s approach?
In Brussels, it is assumed that there should be a European dimension in the way the member states organize their exchanges with China. There may be differences of opinion. But there is a degree of necessary unity and coherence in terms of the messages that are sent. Europe had little presence in Scholz’s press conference. He didn’t say much about the fact that Chinese overcapacity and unfair trade practices must have consequences. Or that Germany stands by the European Union’s decision to launch investigations into electric vehicles and wind turbines and to exert pressure on the issue of public procurement.
And what about Russia?
There were also only very weak calls for China to play a constructive role when it came to Russia, especially concerning nuclear safety. Brussels is also demanding and acting more concretely in terms of the real impact of China’s support for Russia: sanctions. That is the line from Brussels, and we have not seen much support for that. A great deal of consensus and strong support for Brussels’ position on all these issues was unfortunately lacking.
Were there other issues where Scholz took a rather passive stance?
Human rights were not mentioned during the press conference. This underlines the fact that these were very low on the Chancellor’s agenda. But if we do not push these points more strongly, we are acknowledging that we have moved to an interest-based relationship and that we have abandoned a European, value-based foreign policy.
Perhaps being too passive on certain issues is one thing. But Berlin has also agreed with Beijing to cooperate more on e-vehicles and data exchange between cars. This is something that Brussels is specifically trying to avoid. Is Berlin also actively shooting against EU approaches?
For me, the question is rather: Where is Europe in Germany’s dealings with China? Here in Berlin, the debate is fragmented between different poles of power and Scholz is failing to implement the European component of the China strategy and the statements on China in the coalition agreement. This is due to internal pressure, not only from the political parties that form his coalition but also from companies and business interests, which carry particular weight in the way Germany defines its policy towards China.
I am not sure whether we can say that this is deliberately contrary to European interests. But we can say with certainty that the European approach, which according to the coalition agreement and the China strategy should be the driver of Germany’s China policy, is not there. In my opinion, this is the main problem. If Germany does not adapt its policy to have the same thrust as the EU, how can we expect other member states that have trade deficits or are facing economic constraint scenarios to do so?
The situation in Ukraine is on the agenda of the EU Council. After the meeting with Scholz, German media quoted Xi in this context: “All countries must have a seat at the table. No country should be left off the menu.” Who is he referring to?
China’s position on the war in Ukraine has always been consistent. There have been minimal changes, but only marginally. Xi has repeatedly said that Russia must be taken into account if peace is to be achieved. When the special envoy Li came to Europe a few months ago, he already said that the precondition for China’s participation in the peace conference in Switzerland was that Russia would sit at the table and the Russian peace plan would be discussed. That is the condition for China. In Europe, we want the war to end quickly. The Chinese have a slower timetable and say that the war, which has already lasted more than two years, could last even longer because the conditions for negotiations are not right at the moment. They don’t have a clear picture of what the final phase will look like. But in Beijing’s view, Russian interests should definitely not be forgotten. It is quite clear that we are in deep disagreement about the timetable and, more importantly, about China’s position as an economic and political lifeline for Moscow.
Xi is traveling to France, Serbia, and Hungary in May. Is there a risk that he will play Emmanuel Macron and Olaf Scholz off against each other?
I think that Xi playing Macron and Scholz off against each other is not just a possibility, but has long been a reality. The danger is rather that the lack of an EU perspective during Scholz’s trip will mean that Xi’s visit to Europe will also not focus enough on the pan-European approach. Paris must consider the possibility of Europeanizing the visit and clearly support the European approach towards China. One of the challenges for France now is to draw some conclusions: Why have we failed to push forward a common European agenda, which China will take advantage of? France has enormous political capital in China. Xi is traveling to France to celebrate the 60th anniversary of the establishment of diplomatic relations. This political capital should be used, on two counts: First, the issue of China’s support for Russia’s war effort should be placed at the center of the agenda. The only way China can be persuaded to change its position is if the cost of supporting Russia increases.
The second point is the trade imbalance and the issue of overcapacity and unfair trade practices related to China’s aggressive industrial policy. Beijing must be aware that this will also have consequences, both in terms of de-risking for European governments and companies and in terms of the use of European trade instruments such as anti-subsidy investigations.
Abigaël Vasselier heads the Foreign Relations team at the German-China think tank Merics. The Frenchwoman was previously Deputy Head of Department for China, Hong Kong, Macao, Taiwan, and Mongolia at the European External Action Service (EEAS) and established the Asia program at the European Council on Foreign Relations (ECFR).
Should the name of a drug lord be a protected trademark in the EU? The name of a man who is responsible for countless mafia murders and who has exported endless suffering, particularly by smuggling cocaine in breathtaking quantities? The European Union Intellectual Property Office (EUIPO) was against it. And rejected the applicants who wanted to register the name of Pablo Escobar, the head of the Medellín cartel who died in 1993.
The applicant, a company based in the US state of Puerto Rico, appealed against the decision to the EU Court of Justice in Luxembourg. And lost. The court has now ruled that the EUIPO had decided correctly. The name Pablo Escobar is associated with drug trafficking and drug terrorism, crime and suffering.
This analysis is certainly shared by everyone who witnessed the coverage of the Medellín cartel and Escobar’s atrocities at the time. The more interesting question is: How can anyone in their right mind come up with the idea that advertising with this name would be a good thing? Markus Grabitz
The EU heads of government have been meeting in Brussels since yesterday. While they initially discussed international crises, today they are discussing one of their own: the European economy is being left behind. The USA is racing ahead thanks to its uncomplicated industrial policy and Chinese overproduction is forcing European products off the world markets.
But there are ideas on how to solve the problems of the single market. Enrico Letta has quite a few of them, and today he will present them to the EU heads of government. But are the EU member states ready for the necessary reforms?
The discussion between the heads of government on the Capital Markets Union, which is also taking place today, could provide an initial indication of this. France, Italy and the Netherlands want to make rapid progress on this topic, which has made little progress in ten years. Chancellor Scholz has also taken up the cause. In the interests of rapid progress, he is also willing to compromise on the sensitive issue of centralized market supervision – much to the displeasure of the Federal Minister of Finance.
But many states are skeptical. Luxembourg, Ireland and Belgium are resisting centralization due to tangible economic interests, while others are resisting the transfer of national competences more out of a reflex. The draft conclusions are relatively ambitious, but in view of the resistance, it is unclear whether the ambition will survive the discussion. However, ambitious goals are needed if the restructuring of the internal market is to succeed in the coming years.
The way could soon be clear for Iran’s Revolutionary Guard to be listed as a terrorist organization. On his arrival at the EU summit, Federal Chancellor Olaf Scholz referred to a German court ruling that could serve as the starting point for a listing. The EU Commission’s legal service is currently examining the matter. Specifically, it is likely to be a ruling by the Düsseldorf Higher Regional Court regarding an attempted arson attack on a synagogue in Bochum, in which a German-Iranian was convicted in December.
The listing of the powerful Revolutionary Guard as a terrorist organization is a possible sanction on Iran’s major attack on Israel, which was discussed at the EU summit. Germany, together with France, has so far been one of the countries to put the brakes on this. This was based on the legal argument that it would require investigations or a conviction for terrorist activities in an EU country. It is clear from Olaf Scholz’s hints that the ruling in Düsseldorf could now provide the necessary legal basis.
In the background, fears that the listing would jeopardize the last channels of communication with the regime in Tehran have also played a role. Olaf Scholz signaled movement here. There are already punitive measures against the Revolutionary Guard: “The question now is whether we can take a further step“, said the Chancellor. Israel, as well as EU members such as the Netherlands, Sweden and the Czech Republic, have been pushing for listing for some time.
In the summit conclusions, the heads of state and government condemn Iran’s attack in the strongest possible terms and reaffirm their solidarity with Israel. It is also announced that the sanctions regime against Iran’s drone production will be tightened and extended to include missiles. EU Foreign Affairs Representative Josep Borrell is to submit a concrete proposal by next Monday’s Foreign Affairs Council on how Iran’s drone deliveries to Tehran-sponsored proxies in Lebanon, Syria and Iraq can also be sanctioned.
However, the summit also called on Israel to refrain from retaliation to avoid further escalation. “It is important for us that Israel uses the situation to strengthen its own position in the region and does not respond with a massive attack of its own”, emphasized the Federal Chancellor. Finnish Prime Minister Petteri Orpo, among others, expressed a similar view: It was important to ask Israel “not to attack, because we need to de-escalate this difficult situation”.
The summit began in the late afternoon with a discussion on the dramatic situation in Ukraine and relations with Turkey as a strategic partner. In a video link, President Volodymyr Zelenskiy appealed to Western allies to supply Ukraine with additional air defense systems. And given the massive attacks by Russian forces on cities and infrastructure, he drew parallels with the Middle East: “Here in Ukraine, in our part of Europe, we unfortunately do not have the level of defense that we all saw in the Middle East a few days ago”, said Zelenskiy. However, the skies above Ukraine deserve the same protection.
The President of Ukraine thanked Chancellor Scholz for the fact that Germany will quickly deliver another Patriot air defense system. But his country needs much more, said Zelenskiy. On his arrival, Scholz had also urged the allies to supply more weapons to Ukraine. Russia was continuing its war of aggression with great brutality. Everyone knew that more had to be done to support Ukraine. In addition to ammunition and artillery, the Ukrainian armed forces needed more air defense in particular.
EU foreign policy chief Josep Borrell recently spoke of 100 Patriot systems being available in Western countries. Ukrainian Foreign Minister Dmytro Kuleba, on the other hand, said that his country needs at least seven Patriot systems to protect its most important cities and economic centers from Russian cruise missiles, rockets and drones. The Patriot air defense system from Germany will be “immediately useful” for Ukraine, said Scholz in Brussels.
In Brussels, the German Chancellor wanted to encourage the other heads of state and government to “do the same”. Everyone had to go home and see what else they could deliver. Action must now be taken quickly. NATO Secretary General Jens Stoltenberg has called a virtual crisis meeting of defense ministers for this Friday. President Volodymyr Zelenskiy is also expected to attend. The crisis meeting will also discuss support for Ukraine’s air defense.
“The single market was born in a smaller world.” Enrico Letta begins his single market report with this sentence. The world has changed fundamentally since the single market was conceived by Jacques Delors in 1985. Europe’s relative weight in the world has diminished and wars and trade conflicts are undermining the so-called “rules-based international system” on which the EU’s success is built.
In a speech in Brussels on Tuesday, Mario Draghi spoke for the first time about the broad lines of his report on EU competitiveness, which will be published in June. The EU had been caught off guard in its reliance on these international rules: “Most importantly, other regions are no longer playing by the rules and are actively developing policies to improve their competitive position”, said Draghi. “At best, these measures aim to channel investment into their own economies at the expense of ours; at worst, they aim to make us permanently dependent on them.”
According to Draghi, the EU lacks a strategy to deal with this change in an international context. Europe is inhibited “because our organization, decision-making and financing are designed for the ‘world of yesterday’”. He will therefore propose “radical change” in his report.
However, Draghi does not blame all of the EU’s problems on the changed world situation. The EU has harmed itself with a misguided understanding of competitiveness. In particular, it reacted completely wrongly to the sovereign debt crisis in the early 2010s.
“We have deliberately tried to lower wage costs in comparison to each other – and in combination with a pro-cyclical fiscal policy, the net result has only been to weaken our own domestic demand and undermine our social model”, said Draghi. This is remarkable, among other things, because he is also criticizing himself. As ECB President from November 2011, Draghi was jointly responsible for the EU’s economic policy, which he now considers to be misguided.
Instead of undercutting each other, the EU countries should focus on international competition. For Draghi and Letta, this means greater fiscal integration and deeper market integration.
Draghi argues that the EU should use common debt to finance European public goods. Letta is more cautious about directly calling for new EU debt. But his proposals cannot be implemented without additional EU funding.
In his report, for example, Letta proposes a Europeanization of state aid. The relaxation of state aid rules in recent years has led to dissatisfaction among the smaller member states, who are annoyed by the market distortions caused by subsidies from the larger states.
Letta proposes that member states pay a share of the state aid they pay out nationally into an EU pot, from which European aid is then paid out. In this way, the EU could counteract the structural overreaching of the financially strong member states. Letta also hopes that this will make the idea of new EU funds more popular with some states that are actually skeptical about them. In the long term, this should lay the foundations for a more efficient European industrial policy.
While Letta does not directly call for more EU debt, he emphasizes its positive side effect on the goal of promoting the Capital Markets Union. Standardized and sufficient EU debt instruments could establish themselves as European safe assets in the financial market, similar to US Treasury bonds, which play an important role in the US financial market.
Letta and Draghi both support the Capital Markets Union project, which they consider essential for Europe’s investment needs. In his speech, Draghi called for the capital requirements of banks to be reformed so that they can make riskier investments. Letta is calling for the same for the insurance industry. Since the financial crisis, the trend has been in the opposite direction out of consideration for financial stability.
In order to mobilize more funds for European investments, Letta is calling for a European pension product. In addition, the supervision of the capital markets should be gradually Europeanized, at least for the largest players, so that the European rules are also applied uniformly.
In general, the two Italian ex-prime ministers want the EU to finally be able to use its size. Market integration and harmonization should lead to economies of scale that are not yet possible today due to fragmentation.
One harmonization proposal that both support is a European company law. As the harmonization of the 27 European company laws would be too complicated, a 28th system is to be introduced, which can be used by start-ups, for example. This Europe-wide uniform system should also attract more investors.
CDU MEP Andreas Schwab welcomes this proposal: “The idea of a European Company Code would be a good opportunity to remove unnecessary regulations, create coherence and thus make Europe an interesting place for business development again”, he told Table.Briefings.
The Italian experts also want economies of scale in the energy and telecommunications markets. Both markets are to be more closely integrated. Draghi and Letta are calling for more consolidation in the latter in particular.
At a press conference on Wednesday, Letta assured that he did not want a situation like that in the USA, where the telecommunications market has an oligopolistic structure. However, the call for larger European companies that can also hold their own on the international stage is likely to raise competition-related questions. Especially if, as Draghi and Letta propose, European industry is also to be better protected from foreign competition.
Public procurement is likely to play an important role here. In his speech, Draghi argued that the EU member states should buy much more together, for example for defense equipment, and that they should buy more from Europe in order to reduce dependencies.
Taken as a whole, the changes proposed by Draghi and Letta are indeed “radical”. They want to restructure almost every aspect of the single market so that it can withstand the tougher international environment and the EU can maintain its position in the world.
Whether this will succeed remains uncertain in view of the many sensitive issues. Many internal market reports have already been written, only to disappear somewhere in Brussels offices. “The drawer is my biggest enemy”, says Enrico Letta. Nevertheless, he believes that the situation is so dramatic that the EU member states will move this time.
What was the concept for Chancellor Scholz’s visit to China? What was his approach?
It was business as usual. The purpose of the visit was to promote German interests. But we are confronted with a new China. And although the tone in Europe is changing, we are undergoing a paradigm shift and China is becoming a security threat, a challenge to European prosperity and competitiveness, the German Chancellor is traveling to China with a large business delegation and three ministers to push German interests while ignoring the European reality.
How important was this visit for the EU?
Every time a European head of government travels to China, it is also very important for the EU. Relations between the EU and China have deteriorated so rapidly that every national exchange is also important for Europe in some way. Germany plays a special role in EU-China relations as it is one of the few countries that does not have a trade deficit. 70 percent of German direct investment goes to China. The Chinese leadership sees the EU as a collection of 27 different interests. For them, the EU itself is a very opaque international organization. Beijing considers France and Germany to be important in the EU. France for political reasons and Germany for economic reasons. At the top of the Chinese leadership, however, Germany is seen as the driving factor behind the European approach to China.
Can Scholz exert influence on Beijing? Or is Beijing just trying to make Germany and the EU believe it?
Beijing attaches great importance to Germany and the German voice in Europe. Against the backdrop of deteriorating bilateral relations and increasing geopolitical tensions, the European dimension of the Scholz visit was even more important than a few years ago or than the visits by representatives of other member states. This is because the Chinese leadership sees Germany as the decisive shaper and driver of the European approach.
Is Brussels satisfied with Scholz’s approach?
In Brussels, it is assumed that there should be a European dimension in the way the member states organize their exchanges with China. There may be differences of opinion. But there is a degree of necessary unity and coherence in terms of the messages that are sent. Europe had little presence in Scholz’s press conference. He didn’t say much about the fact that Chinese overcapacity and unfair trade practices must have consequences. Or that Germany stands by the European Union’s decision to launch investigations into electric vehicles and wind turbines and to exert pressure on the issue of public procurement.
And what about Russia?
There were also only very weak calls for China to play a constructive role when it came to Russia, especially concerning nuclear safety. Brussels is also demanding and acting more concretely in terms of the real impact of China’s support for Russia: sanctions. That is the line from Brussels, and we have not seen much support for that. A great deal of consensus and strong support for Brussels’ position on all these issues was unfortunately lacking.
Were there other issues where Scholz took a rather passive stance?
Human rights were not mentioned during the press conference. This underlines the fact that these were very low on the Chancellor’s agenda. But if we do not push these points more strongly, we are acknowledging that we have moved to an interest-based relationship and that we have abandoned a European, value-based foreign policy.
Perhaps being too passive on certain issues is one thing. But Berlin has also agreed with Beijing to cooperate more on e-vehicles and data exchange between cars. This is something that Brussels is specifically trying to avoid. Is Berlin also actively shooting against EU approaches?
For me, the question is rather: Where is Europe in Germany’s dealings with China? Here in Berlin, the debate is fragmented between different poles of power and Scholz is failing to implement the European component of the China strategy and the statements on China in the coalition agreement. This is due to internal pressure, not only from the political parties that form his coalition but also from companies and business interests, which carry particular weight in the way Germany defines its policy towards China.
I am not sure whether we can say that this is deliberately contrary to European interests. But we can say with certainty that the European approach, which according to the coalition agreement and the China strategy should be the driver of Germany’s China policy, is not there. In my opinion, this is the main problem. If Germany does not adapt its policy to have the same thrust as the EU, how can we expect other member states that have trade deficits or are facing economic constraint scenarios to do so?
The situation in Ukraine is on the agenda of the EU Council. After the meeting with Scholz, German media quoted Xi in this context: “All countries must have a seat at the table. No country should be left off the menu.” Who is he referring to?
China’s position on the war in Ukraine has always been consistent. There have been minimal changes, but only marginally. Xi has repeatedly said that Russia must be taken into account if peace is to be achieved. When the special envoy Li came to Europe a few months ago, he already said that the precondition for China’s participation in the peace conference in Switzerland was that Russia would sit at the table and the Russian peace plan would be discussed. That is the condition for China. In Europe, we want the war to end quickly. The Chinese have a slower timetable and say that the war, which has already lasted more than two years, could last even longer because the conditions for negotiations are not right at the moment. They don’t have a clear picture of what the final phase will look like. But in Beijing’s view, Russian interests should definitely not be forgotten. It is quite clear that we are in deep disagreement about the timetable and, more importantly, about China’s position as an economic and political lifeline for Moscow.
Xi is traveling to France, Serbia, and Hungary in May. Is there a risk that he will play Emmanuel Macron and Olaf Scholz off against each other?
I think that Xi playing Macron and Scholz off against each other is not just a possibility, but has long been a reality. The danger is rather that the lack of an EU perspective during Scholz’s trip will mean that Xi’s visit to Europe will also not focus enough on the pan-European approach. Paris must consider the possibility of Europeanizing the visit and clearly support the European approach towards China. One of the challenges for France now is to draw some conclusions: Why have we failed to push forward a common European agenda, which China will take advantage of? France has enormous political capital in China. Xi is traveling to France to celebrate the 60th anniversary of the establishment of diplomatic relations. This political capital should be used, on two counts: First, the issue of China’s support for Russia’s war effort should be placed at the center of the agenda. The only way China can be persuaded to change its position is if the cost of supporting Russia increases.
The second point is the trade imbalance and the issue of overcapacity and unfair trade practices related to China’s aggressive industrial policy. Beijing must be aware that this will also have consequences, both in terms of de-risking for European governments and companies and in terms of the use of European trade instruments such as anti-subsidy investigations.
Abigaël Vasselier heads the Foreign Relations team at the German-China think tank Merics. The Frenchwoman was previously Deputy Head of Department for China, Hong Kong, Macao, Taiwan, and Mongolia at the European External Action Service (EEAS) and established the Asia program at the European Council on Foreign Relations (ECFR).
Should the name of a drug lord be a protected trademark in the EU? The name of a man who is responsible for countless mafia murders and who has exported endless suffering, particularly by smuggling cocaine in breathtaking quantities? The European Union Intellectual Property Office (EUIPO) was against it. And rejected the applicants who wanted to register the name of Pablo Escobar, the head of the Medellín cartel who died in 1993.
The applicant, a company based in the US state of Puerto Rico, appealed against the decision to the EU Court of Justice in Luxembourg. And lost. The court has now ruled that the EUIPO had decided correctly. The name Pablo Escobar is associated with drug trafficking and drug terrorism, crime and suffering.
This analysis is certainly shared by everyone who witnessed the coverage of the Medellín cartel and Escobar’s atrocities at the time. The more interesting question is: How can anyone in their right mind come up with the idea that advertising with this name would be a good thing? Markus Grabitz
