The Single Market Emergency Instrument is supposed to prepare the EU’s internal market for crises. Commission President Ursula von der Leyen plans to present the instrument during her State of the Union address on September 13. But the first details are already out in the open: According to an internal document, the Commission wants to be able to instruct member states to set aside “strategic reserves” and specify the criteria according to which they should be allocated to the industry, in the event of a crisis. Markus Grabitz took a look at the paper and summarized the most important points.
Currently, two-thirds of the world’s chips come from East Asia. If Europe and the USA have their way, that will soon change due to the European Chips Act and the “Chips and Science Act” – as the law to strengthen the domestic semiconductor industry is called in Washington political slang – that was passed by the US Senate a few days ago. However, Beijing is also spending a lot of money to promote the Chinese chip industry – and is apparently enjoying considerable success. Felix Lee analyzed the global race for the chips lead.
Lars Hänsel is convinced that “Europe needs to completely rethink its business model”. The head of the Europe and North America department at the Konrad Adenauer Foundation wants to rethink Europe. For him, this also includes giving the member states more freedom and finding a different way of dealing with the Eastern European countries. Read more about Hänsel in today’s profile by Lisa-Martina Klein.
According to information available to Europe.Table, the new crisis instrument for the single market, which EU Commission President Ursula von der Leyen plans to present on September 13 during her State of the Union address to the EU Parliament in Strasbourg, is to be switched like a traffic light in three phases – green, yellow, and red. Officials around Internal Market Commissioner Thierry Breton are still working flat out on the details of the Single Market Emergency Instrument (SMEI). Europe.Table has received an internal paper from the Commission that provides information on what the instrument could look like in concrete terms.
Accordingly, the crisis instrument is to have three “fundamental objectives”. The most important goal is to ensure the functioning of the internal market – even in times of crises such as a pandemic or a disruption of supply chains due to a war. The goal is also to minimize disruptions to the internal EU exchange of goods, services, and employees. It is also supposed to combat shortages of services and goods.
With the crisis instrument, the Commission aims to learn the lesson from the first months of the pandemic, when uncoordinated measures by member states, such as export bans on masks and medical devices, ruptured supply chains and led to severe disruptions in the internal market.
The Commission wants to design the instrument for the broadest possible application in the internal market: It covers all products of high relevance for the internal market, such as energy, fuels, agricultural products, or fisheries. It is intended to complement existing crisis instruments, such as export controls or the screening of foreign investments in the EU.
The governance structure of the SMEI has obviously not yet been finalized. It is clear that a committee is planned in which the Commission and all member states are represented. However, the Commission leaves it open whether the member states will be able to participate in decision-making in the committee and have voting rights or whether the Commission alone will decide.
In normal times, the crisis instrument is in the “green” phase in the traffic light logic below. In this phase, “the Commission will collect risk assessment information based on voluntary contributions from industry and member states”. The risk assessment is to be delivered once a year.
The traffic light switches to “yellow” when crises loom or when it is a question of preventing a crisis. Triggers could be drastic events such as earthquakes, floods, foreseeable shortages of raw materials, or threats to supply chains of overriding importance, such as a blockade of the Suez Canal. At this stage, the crisis instrument provides for a “more stringent” collection of information. The panel is increasingly dependent on feedback and “input” from industry.
In the case of “yellow”, initial measures could be taken: For example, member states could be instructed to create “strategic reserves“. It is explicitly stated that the member states, “not the industry”, are responsible for creating the reserves. The decision to create reserves should either be made by the Commission alone, or there should be a “consultation procedure” in which the member states are involved. In any case, the reserves should be created before a crisis breaks out and exorbitant price increases occur.
The “red” phase is the crisis mode. The crisis instrument is armed when the emergency phase is activated according to a sequence of defined criteria. In this phase, the member states are obliged to inform the Commission closely about the supply situation.
The most severe measure conceivable in the case of “red” is that the Commission can order the strategic reserves created in the case of “yellow” to be distributed in a coordinated and mandatory manner. It is also conceivable that specifications will be issued as to which customers have priority in the distribution of strategically important goods.
Companies can be obliged to give priority to selling their goods to certain customers. The Commission can also undertake public procurement in this phase, as it did with vaccines during the pandemic. However, as in the case of vaccines, the member states must pay for the public procurement.
A particular focus is on the mobility of employees. The Commission intends to pay very close attention to ensuring that no member state unilaterally imposes measures that impede the free movement of persons. A list of measures that are expressly prohibited is to be drawn up. Here, as an example, reference is made to the fact that Hungary, for example, banned medical personnel from leaving the country at the height of the pandemic.
Internal market expert Andreas Schwab (CDU) told Europe.Table: “It is to be welcomed that the Commission is expanding the toolbox for crises. Situations like at the beginning of the pandemic, when Germany stopped the export of medical equipment to Italy and Hungary did not allow medical personnel to leave the country, must not be repeated.” In emergencies, he said, it is also necessary to build up reserves of sensitive products. “However,” the MEP continued, “the Commission should be careful not to dictate to companies where they manufacture products.”
Where do we go from here? By the end of the month, the Commission’s internal Regulatory Scrutiny Board is due to deliver its second assessment of plans for the crisis instrument. In a first impact assessment, the controllers had pointed out shortcomings and obliged the Commission to rework. According to reports in Brussels, a number of member states have reservations about the crisis instrument. Nevertheless, Ursula von der Leyen wants it to be presented as part of the “State of the Union” speech in Strasbourg as a central project in the coming months.
They are at the heart of modern industrial products, and whoever masters their production will decide who is the leader in future technologies: Semiconductors, more commonly known as microchips. That is why China, the USA and the EU are currently doing everything to bolster their technological position.
The USA is now pressing ahead. The Senate passed a bill to this effect on Wednesday. All that remains is the approval of the House of Representatives, which is considered certain. But the EU and China are also trying hard to boost their own semiconductor production with subsidies, tax breaks and other incentives. The EU has already presented a corresponding proposal for a bundle of measures with the European Chips Act.
The stakes are high. It is no longer just a matter of principle to be at the forefront of technology. In the wake of geopolitical and trade rivalries, national economies aim to restore their manufacturing independence after decades of relying on foreign sourcing. The pandemic has shown, not least to the German electronics and automotive industries, what happens when supplies from the Far East fail to arrive. Some car manufacturers have had to cut their production by a third at times.
Currently, more than two-thirds of all modern semiconductors are manufactured in Taiwan, South Korea, China and Japan. The Germans do not want to rely on supplies from Taiwan, in particular, in the long term. After all, there is a fear that the leadership in Beijing will launch an attack on the democratically governed island state because it considers Taiwan to be its own territory.
Not least in light of the Chinese catch-up campaign, Albert Heuberger, chip expert and Director of the Fraunhofer Institute for Integrated Circuits, believes that the European Chips Act is both right and important. The chip industry is a key industry that strongly determines the technological foundations in this country. “We also have to fight for such manufacturing industries to be located in Germany and Europe so that we have the know-how,” Heuberger said. “Chip companies will base their location decisions on where the right workforce is available.”
The EU already acted in the spring with the European Chips Act and initiated a program of around €15 billion to expand the domestic chip industry, in addition to the already planned public investment of €30 billion.
Admittedly, there is also criticism of the Commission’s approach: The focus on ultra-modern chips ignores the fact that simpler components are also needed as workhorses of the industry. In addition, Brussels is not providing enough money out of its own pocket. Of the €43 billion, only €4 billion will actually come from EU funds; the rest is to be provided by member states or private investors.
But the EU’s subsidy programs show effect: Bosch has announced plans to take advantage of the subsidies and invest almost €1 billion in its semiconductor development centers in the German cities of Reutlingen and Dresden, among others. The chip giants STMicroelectronics and GlobalFoundries want to invest around €5.7 billion in a new semiconductor plant in France. The US company Intel even wants to build a new mega-chip site in Germany and has budgeted €17 billion for the construction of two semiconductor plants.
Washington now wants to directly stimulate the domestic semiconductor industry with $52 billion. In addition, the US government intends to exempt chip factories from taxation and provide no less than $170 billion for the R&D of new semiconductors. Both the European Chips Act and the US program are designed to attract private investment through public subsidies.
China is putting up a similar amount of money as the USA. The state development fund is equipped with €170 billion. Regional players are also getting involved. The technology metropolis of Shenzhen currently has a manufacturer of memory chips in the works for €40 billion. Not all money always flows into the right channels when things need to happen fast. But overall, funding already has an impact.
Despite sanctions imposed by the US on China’s high-tech sector, leading Chinese chipmaker SMIC has apparently managed to pull off a technical leap, also with massive government backing. The company has managed to ship its first chips with a structure width of just 7 nanometers. At least that is what the news agency Bloomberg reports. If this news proves true, then the learning curve would be considerable. Because until now, many observers assumed that China’s chip industry was behind the top countries Taiwan, South Korea and the USA by about four years.
The Chinese manufacturer SMIC has so far mainly been active in the 14-nanometer segment, i.e. in much larger semiconductors. The rule here is that the fewer nanometers wide the current paths are, the faster and more efficiently the components calculate. China is already extremely successful in the 14-nanometer range. With the transition to the 7-nanometer range, however, applications and thus market opportunities for Chinese products are broadening. Recently, Korean economics professor Keun Lee called older generation chips “almost worthless” in a guest article for China.Table.
It is not known whether the 7-nanometer chips are really market-ready and can be produced in large quantities while maintaining good quality. But what can be gleaned from this development is that the Chinese are obviously not as out of touch as the USA would like them to be. The harder it becomes to stock up on the global market, the more attractive it becomes to order from Chinese suppliers.
The fact is that German companies are also purchasing more and more chips from China. In 2001, China’s share of the global chip market was still less than one percent. By 2010, it had surpassed 10 percent. At the beginning of the pandemic, it reached 20 percent. According to US observers, it could reach nearly one quarter by 2030.
German experts have also been pointing to the rapid development in the People’s Republic for some time: “China already has a stronger ecosystem for chip design than Europe,” according to a joint analysis by the Berlin-based China think tank Merics and the Stiftung Neue Verantwortung last December. High investments would also enable Chinese companies to scale more quickly, i.e., to achieve higher quantities and thus lower prices.
Nevertheless, there is “a lot of catching up to do” in China compared to the US and its Asian neighbors, says Heuberger. The production of modern chips is a particularly challenging undertaking that requires a great deal of experience.
Heuberger also believes that the EU initiative will only show a clear effect in a few years. “In a growing market, we need to triple to quadruple production in Europe to get to the targeted 20 percent global market share. A period of five to eight years is needed before we catch up,” said Heuberger, who is also a spokesman for the Fraunhofer Group for Microelectronics.
The Merics study identifies European weaknesses primarily in so-called back-end manufacturing, that is, the assembly, testing and packaging of high-tech chips. However, this part of the production will become significantly more important in the future, especially for the development of high-performance and energy-efficient chips. China, on the other hand, already has a considerable global market share in back-end manufacturing, experts say. That is why Europe is likely to continue to rely on chips from China in the foreseeable future.
France, Italy, and Spain are stepping up pressure on the European Commission to come up with legislation that ensures Big Tech firms partly finance telecoms infrastructure in the bloc, a document showed on Monday. This was the first time the three governments have expressed their joint position on the issue.
EU regulators said in May they were analyzing the question of whether tech giants Alphabet’s Google, Meta, and Netflix should shoulder some of the costs of upgrading telecoms networks. In a joint paper, a copy of which was seen by Reuters, the three governments said the six largest content providers accounted for 55 percent of internet traffic.
“This imposes specific costs on European telecom operators in terms of capacity, at a time when they are already investing massively in the most costly parts of the networks with 5G and Fiber-To-The-Home ,” the paper said. The authors urge that European telecom networks and major online content providers pay a fair share of network costs. “We call for a legislative proposal that ensures that all market players contribute to the cost of digital infrastructure.”
Two Italian government officials confirmed details of the joint document. One of them said Rome’s government was set to give informal support in its caretaking capacity ahead of a general election in September.
According to a study released by telecoms lobbying group ETNO earlier this year, an annual contribution of 20 billion euros to network costs by the tech giants could give a €72 billion boost to the EU economy. However, digital rights activists have warned making Big Tech pay for networks could threaten EU net neutrality rules, which they feared could be watered down in a deal with online giants to help fund telecoms network. rtr
After the fall of the pro-Western government in Bulgaria at the end of June, President Rumen Radev appointed an interim cabinet. The government, which was put together by the head of state from experts and included Prime Minister Galab Donev, took the oath of office on Tuesday. It will govern the EU country until the formation of a regular government after the early parliamentary elections on October 2. The previous liberal-socialist coalition led by the head of government, Kiril Petkov, was toppled by a vote of no confidence after just over half a year.
Head of State Radev listed the priorities of the interim cabinet as securing energy and food supplies, dealing with “runaway inflation”, and corruption practices. Referring to the Ukraine war, the head of state, who is considered Russia-friendly, urged toward the interim government: “Your top priority should be to avoid the country’s involvement in the conflict.”
The EU country, which is heavily dependent on Russian energy sources, no longer receives gas directly from Russia. Former Prime Minister Petkov had refused to pay the bill in Russian rubles. The NATO country’s relations with Russia were further strained by the expulsion of 70 diplomats and employees of the Russian embassy on suspicion of espionage.
Head of State Radev also dissolved parliament on Tuesday after less than a year. Bulgaria will elect a new People’s Assembly in October for the fourth time since April 2021. Political analysts expect nationalist and pro-Russian parties to be more strongly represented than before. dpa
In Italy, the Social Democrats (PD) have agreed on a pact in the current election campaign with the small parties of the center Azione and +Europa. This means that a first alliance has formed in the center-left camp against the center-right bloc, which is currently far ahead in the polls. “The elections will be a choice between an Italy that is one of the great countries of Europe and an Italy allied with Orbán and Putin,” according to the agreement, which the parties published Tuesday in Rome.
The parties agreed to continue the foreign and defense policies of the current government of Prime Minister Mario Draghi. The alliance wants to make the country less dependent on energy supplies from Russia by expanding renewable energies. It also wants to introduce the minimum wage envisaged by the EU, as the two leading candidates, Enrico Letta (PD) and Carlo Calenda (Azione) made clear.
In order to compete with the center-right bloc of the Fratelli d’Italia (around 24 percent), which is currently leading in the polls, the right-wing Lega and Forza Italia, the PD and Azione/+Europa need additional alliance partners. With around 23 percent, the Social Democrats would currently be the second strongest force. But Azione/+Europa’s 5 percent are not enough to pose a threat to the center-right.
About 40 percent of current respondents are still undecided or do not plan to go to the polls on September 25. The doors are open to all, said Calenda. This means that there could possibly also be talks with the controversial ex-prime minister and former PD leader Matteo Renzi and his splinter party Italia Viva. dpa
Many Italian energy companies have apparently refused to make an initial payment of an excess profits tax due by the end of June. The government is thus missing revenue of more than €9 billion, according to a document from the Finance Ministry in Rome obtained by the Reuters news agency on Tuesday.
Between €10 and €11 billion euros should be raised through a 25 percent excess profits tax on energy companies that have profited from the drastic rise in oil and gas prices. Prime Minister Mario Draghi wants to use this to finance part of the €33 billion aid package put together in January to provide relief for companies and households hit by high electricity, gas, and fuel costs.
Under the scheme, producers and sellers of electricity, natural gas, and petroleum products would have been required to pay a 40 percent deposit by the end of June. The remainder would then be due by November. The Finance Ministry document provides an update on tax forecasts for the mid-year budget. According to the document, revenues are more than €9 billion lower than expected.
Last week, state-controlled energy company Eni announced that it had already paid the first installment of the special tax. Italy’s largest energy company, Enel, said it had booked a total of €2.6 billion for payment of the special taxes imposed by the Italian, Spanish and Romanian governments. Several energy companies complained about the excess profits tax. They stressed that fluctuating energy prices were also causing them problems.
Companies that missed the payment deadline at the end of June can pay the levy in arrears in the coming weeks or months. However, penalty fees and interest will then be due, the ministry’s paper says. rtr
The Spanish government has adopted “urgent measures” to save energy and use it more efficiently due to the Russian war of aggression against Ukraine. All public sector buildings, as well as department stores, cinemas, workplaces, hotels, train stations, and airports, will in the future be allowed to cool their premises to no less than 27 degrees in summer and heat them to no more than 19 degrees in winter. This was decided at the weekly cabinet meeting in Madrid, said Monday evening the Minister of Ecological Change, Teresa Ribera.
According to Ribera, the measures in the royal decree must be implemented after a one-week “adjustment period” following publication in the Official Gazette, at the latest. They are to remain in force until November 1, 2023. It is a first package of measures necessary in a “critical situation”. Europe needs Spain’s help. “It is time to show solidarity,” stressed the minister of the leftist government.
Among other measures, stores and businesses with automatic systems, which must be installed by September 30, must keep their doors closed to prevent the escape of heat or cool air, depending on the season. The lighting of offices not in use, of shop windows and monuments, must also be turned off after 10 pm. Reviews of the energy efficiency of certain buildings are to be brought forward. Ribera called on the private sector to increase home office work.
With these and other measures to be decided after the summer break, Spain aims to meet the commitments it made as part of the European emergency plan agreed on last week. The country is to reduce gas consumption by seven percent. Spain, like other EU countries, had initially opposed the emergency plan, but in the end approved the plan after making concessions. dpa
Insurers in Germany will exercise caution when investing in nuclear power, according to an industry expert. “I think insurers will generally tend to rule it out due to the critical attitude many people have toward nuclear power in Germany,” Herbert Schneidemann, chairman of the German Actuarial Society, told news agencies dpa and dpa-AFX. “Personally, I think it will be hard for any company to afford to call nuclear power in Germany green and then invoke EU taxonomy.”
Under the EU taxonomy, putting money into certain gas and nuclear power plants will also be considered climate-friendly from January 2023. “Nuclear power would be a good technology in terms of climate, but it is something that comes at the expense of the future,” according to Schneidemann.
In principle, he sees good opportunities for the industry to contribute to climate protection. Insurers could use investments as leverage to get companies to move and become greener. In addition to investments in wind turbines, for example, the industry could make at least as much of a difference by helping “to make brown industries a bit greener. After all, it doesn’t help to tell brown industries: You won’t get any more money from us.”
Therefore, he considers a gradual transformation of insurers’ investment assets to be important. According to the latest data from the insurance association GDV, the industry’s investment portfolio amounted to just under €1.8 trillion at the end of 2020. dpa
The Europe of the future? Lars Hänsel (55), head of the Europe and North America department at the Konrad Adenauer Foundation, has a very precise vision of this: a common Europe that is capable of acting globally. For him, this means being able to ensure its own security – independently of the United States, but in strong partnership with it. When it comes to the economy, for him it means no longer being dependent on China for survival and no longer being dependent on Russia for raw materials.
“Europe needs to completely rethink its business model,” says Hänsel. But not only that: “I would like to rethink Europe completely, especially the principle of subsidiarity. What exactly do we need to tackle together, what do we need to leave to the countries?” It’s clear, he said, that the big issues like climate change, security, and energy need to be solved together. “But beyond that, shouldn’t countries be given more freedom?”
This also means, says Hänsel, that cooperation with Eastern European countries is conducted differently. In the Western EU member states, there is often a lack of deeper understanding of where the Eastern European countries have historically come from and where their reservations about Brussels stem from: “Why does a country like Poland defend its sovereignty so vehemently? It has always been occupied by other countries. Therefore, they think differently about sovereignty.”
Many Eastern European countries have also often warned against Russia but were not heard by the West. “Germany is strongly characterized by never wanting to be the perpetrator again,” says Hänsel. On the other hand, Eastern Europeans no longer want to be victims. Countries like Germany also set benchmarks, such as in dealing with minorities, that other countries then have to meet, which simply aren’t as far along in this area. “A certain amount of basic diversity is something the EU must be able to tolerate.” Eastern Europeans often feel they must first meet a Western European expectation in order to be accepted and belong.
To conform, to meet the expectations of others, not to be able to develop in a self-determined way – the aversion to this often drove Hänsel. He grew up in the GDR, did not join any party, did not share the prevailing ideology as a Christian, and became a construction soldier when he was drafted into the National People’s Army. While this was a legal way to refuse to serve in the armed forces, it had harsh consequences.
And so he was also denied his great desire to study medicine as he did not meet the ideological expectations for a degree. This drove him onto the streets to join protests in Leipzig in 1989. After the fall of the Berlin Wall, as one of a few East German theology students at the university in Tübingen, he was often confronted with the question: “How long will it take you to be like us?” And again he faced the expectation to conform.
For his doctorate, Hänsel received a scholarship from the Konrad Adenauer Foundation. He has not left the foundation since, spending many years in the offices in St. Augustin (NRW), Jerusalem, and Washington. Above all, Israel’s social and religious complexity fascinates the theologian to this day. From Berlin, he now heads 34 offices throughout Europe and North America, and until recently also one in Russia.
In his work, it is always important for him to identify partners for common goals. “An important task in the coming years will be dealing with China. The challenge here is also to find a common European approach in the face of different interests.” Lisa-Martina Klein
The Single Market Emergency Instrument is supposed to prepare the EU’s internal market for crises. Commission President Ursula von der Leyen plans to present the instrument during her State of the Union address on September 13. But the first details are already out in the open: According to an internal document, the Commission wants to be able to instruct member states to set aside “strategic reserves” and specify the criteria according to which they should be allocated to the industry, in the event of a crisis. Markus Grabitz took a look at the paper and summarized the most important points.
Currently, two-thirds of the world’s chips come from East Asia. If Europe and the USA have their way, that will soon change due to the European Chips Act and the “Chips and Science Act” – as the law to strengthen the domestic semiconductor industry is called in Washington political slang – that was passed by the US Senate a few days ago. However, Beijing is also spending a lot of money to promote the Chinese chip industry – and is apparently enjoying considerable success. Felix Lee analyzed the global race for the chips lead.
Lars Hänsel is convinced that “Europe needs to completely rethink its business model”. The head of the Europe and North America department at the Konrad Adenauer Foundation wants to rethink Europe. For him, this also includes giving the member states more freedom and finding a different way of dealing with the Eastern European countries. Read more about Hänsel in today’s profile by Lisa-Martina Klein.
According to information available to Europe.Table, the new crisis instrument for the single market, which EU Commission President Ursula von der Leyen plans to present on September 13 during her State of the Union address to the EU Parliament in Strasbourg, is to be switched like a traffic light in three phases – green, yellow, and red. Officials around Internal Market Commissioner Thierry Breton are still working flat out on the details of the Single Market Emergency Instrument (SMEI). Europe.Table has received an internal paper from the Commission that provides information on what the instrument could look like in concrete terms.
Accordingly, the crisis instrument is to have three “fundamental objectives”. The most important goal is to ensure the functioning of the internal market – even in times of crises such as a pandemic or a disruption of supply chains due to a war. The goal is also to minimize disruptions to the internal EU exchange of goods, services, and employees. It is also supposed to combat shortages of services and goods.
With the crisis instrument, the Commission aims to learn the lesson from the first months of the pandemic, when uncoordinated measures by member states, such as export bans on masks and medical devices, ruptured supply chains and led to severe disruptions in the internal market.
The Commission wants to design the instrument for the broadest possible application in the internal market: It covers all products of high relevance for the internal market, such as energy, fuels, agricultural products, or fisheries. It is intended to complement existing crisis instruments, such as export controls or the screening of foreign investments in the EU.
The governance structure of the SMEI has obviously not yet been finalized. It is clear that a committee is planned in which the Commission and all member states are represented. However, the Commission leaves it open whether the member states will be able to participate in decision-making in the committee and have voting rights or whether the Commission alone will decide.
In normal times, the crisis instrument is in the “green” phase in the traffic light logic below. In this phase, “the Commission will collect risk assessment information based on voluntary contributions from industry and member states”. The risk assessment is to be delivered once a year.
The traffic light switches to “yellow” when crises loom or when it is a question of preventing a crisis. Triggers could be drastic events such as earthquakes, floods, foreseeable shortages of raw materials, or threats to supply chains of overriding importance, such as a blockade of the Suez Canal. At this stage, the crisis instrument provides for a “more stringent” collection of information. The panel is increasingly dependent on feedback and “input” from industry.
In the case of “yellow”, initial measures could be taken: For example, member states could be instructed to create “strategic reserves“. It is explicitly stated that the member states, “not the industry”, are responsible for creating the reserves. The decision to create reserves should either be made by the Commission alone, or there should be a “consultation procedure” in which the member states are involved. In any case, the reserves should be created before a crisis breaks out and exorbitant price increases occur.
The “red” phase is the crisis mode. The crisis instrument is armed when the emergency phase is activated according to a sequence of defined criteria. In this phase, the member states are obliged to inform the Commission closely about the supply situation.
The most severe measure conceivable in the case of “red” is that the Commission can order the strategic reserves created in the case of “yellow” to be distributed in a coordinated and mandatory manner. It is also conceivable that specifications will be issued as to which customers have priority in the distribution of strategically important goods.
Companies can be obliged to give priority to selling their goods to certain customers. The Commission can also undertake public procurement in this phase, as it did with vaccines during the pandemic. However, as in the case of vaccines, the member states must pay for the public procurement.
A particular focus is on the mobility of employees. The Commission intends to pay very close attention to ensuring that no member state unilaterally imposes measures that impede the free movement of persons. A list of measures that are expressly prohibited is to be drawn up. Here, as an example, reference is made to the fact that Hungary, for example, banned medical personnel from leaving the country at the height of the pandemic.
Internal market expert Andreas Schwab (CDU) told Europe.Table: “It is to be welcomed that the Commission is expanding the toolbox for crises. Situations like at the beginning of the pandemic, when Germany stopped the export of medical equipment to Italy and Hungary did not allow medical personnel to leave the country, must not be repeated.” In emergencies, he said, it is also necessary to build up reserves of sensitive products. “However,” the MEP continued, “the Commission should be careful not to dictate to companies where they manufacture products.”
Where do we go from here? By the end of the month, the Commission’s internal Regulatory Scrutiny Board is due to deliver its second assessment of plans for the crisis instrument. In a first impact assessment, the controllers had pointed out shortcomings and obliged the Commission to rework. According to reports in Brussels, a number of member states have reservations about the crisis instrument. Nevertheless, Ursula von der Leyen wants it to be presented as part of the “State of the Union” speech in Strasbourg as a central project in the coming months.
They are at the heart of modern industrial products, and whoever masters their production will decide who is the leader in future technologies: Semiconductors, more commonly known as microchips. That is why China, the USA and the EU are currently doing everything to bolster their technological position.
The USA is now pressing ahead. The Senate passed a bill to this effect on Wednesday. All that remains is the approval of the House of Representatives, which is considered certain. But the EU and China are also trying hard to boost their own semiconductor production with subsidies, tax breaks and other incentives. The EU has already presented a corresponding proposal for a bundle of measures with the European Chips Act.
The stakes are high. It is no longer just a matter of principle to be at the forefront of technology. In the wake of geopolitical and trade rivalries, national economies aim to restore their manufacturing independence after decades of relying on foreign sourcing. The pandemic has shown, not least to the German electronics and automotive industries, what happens when supplies from the Far East fail to arrive. Some car manufacturers have had to cut their production by a third at times.
Currently, more than two-thirds of all modern semiconductors are manufactured in Taiwan, South Korea, China and Japan. The Germans do not want to rely on supplies from Taiwan, in particular, in the long term. After all, there is a fear that the leadership in Beijing will launch an attack on the democratically governed island state because it considers Taiwan to be its own territory.
Not least in light of the Chinese catch-up campaign, Albert Heuberger, chip expert and Director of the Fraunhofer Institute for Integrated Circuits, believes that the European Chips Act is both right and important. The chip industry is a key industry that strongly determines the technological foundations in this country. “We also have to fight for such manufacturing industries to be located in Germany and Europe so that we have the know-how,” Heuberger said. “Chip companies will base their location decisions on where the right workforce is available.”
The EU already acted in the spring with the European Chips Act and initiated a program of around €15 billion to expand the domestic chip industry, in addition to the already planned public investment of €30 billion.
Admittedly, there is also criticism of the Commission’s approach: The focus on ultra-modern chips ignores the fact that simpler components are also needed as workhorses of the industry. In addition, Brussels is not providing enough money out of its own pocket. Of the €43 billion, only €4 billion will actually come from EU funds; the rest is to be provided by member states or private investors.
But the EU’s subsidy programs show effect: Bosch has announced plans to take advantage of the subsidies and invest almost €1 billion in its semiconductor development centers in the German cities of Reutlingen and Dresden, among others. The chip giants STMicroelectronics and GlobalFoundries want to invest around €5.7 billion in a new semiconductor plant in France. The US company Intel even wants to build a new mega-chip site in Germany and has budgeted €17 billion for the construction of two semiconductor plants.
Washington now wants to directly stimulate the domestic semiconductor industry with $52 billion. In addition, the US government intends to exempt chip factories from taxation and provide no less than $170 billion for the R&D of new semiconductors. Both the European Chips Act and the US program are designed to attract private investment through public subsidies.
China is putting up a similar amount of money as the USA. The state development fund is equipped with €170 billion. Regional players are also getting involved. The technology metropolis of Shenzhen currently has a manufacturer of memory chips in the works for €40 billion. Not all money always flows into the right channels when things need to happen fast. But overall, funding already has an impact.
Despite sanctions imposed by the US on China’s high-tech sector, leading Chinese chipmaker SMIC has apparently managed to pull off a technical leap, also with massive government backing. The company has managed to ship its first chips with a structure width of just 7 nanometers. At least that is what the news agency Bloomberg reports. If this news proves true, then the learning curve would be considerable. Because until now, many observers assumed that China’s chip industry was behind the top countries Taiwan, South Korea and the USA by about four years.
The Chinese manufacturer SMIC has so far mainly been active in the 14-nanometer segment, i.e. in much larger semiconductors. The rule here is that the fewer nanometers wide the current paths are, the faster and more efficiently the components calculate. China is already extremely successful in the 14-nanometer range. With the transition to the 7-nanometer range, however, applications and thus market opportunities for Chinese products are broadening. Recently, Korean economics professor Keun Lee called older generation chips “almost worthless” in a guest article for China.Table.
It is not known whether the 7-nanometer chips are really market-ready and can be produced in large quantities while maintaining good quality. But what can be gleaned from this development is that the Chinese are obviously not as out of touch as the USA would like them to be. The harder it becomes to stock up on the global market, the more attractive it becomes to order from Chinese suppliers.
The fact is that German companies are also purchasing more and more chips from China. In 2001, China’s share of the global chip market was still less than one percent. By 2010, it had surpassed 10 percent. At the beginning of the pandemic, it reached 20 percent. According to US observers, it could reach nearly one quarter by 2030.
German experts have also been pointing to the rapid development in the People’s Republic for some time: “China already has a stronger ecosystem for chip design than Europe,” according to a joint analysis by the Berlin-based China think tank Merics and the Stiftung Neue Verantwortung last December. High investments would also enable Chinese companies to scale more quickly, i.e., to achieve higher quantities and thus lower prices.
Nevertheless, there is “a lot of catching up to do” in China compared to the US and its Asian neighbors, says Heuberger. The production of modern chips is a particularly challenging undertaking that requires a great deal of experience.
Heuberger also believes that the EU initiative will only show a clear effect in a few years. “In a growing market, we need to triple to quadruple production in Europe to get to the targeted 20 percent global market share. A period of five to eight years is needed before we catch up,” said Heuberger, who is also a spokesman for the Fraunhofer Group for Microelectronics.
The Merics study identifies European weaknesses primarily in so-called back-end manufacturing, that is, the assembly, testing and packaging of high-tech chips. However, this part of the production will become significantly more important in the future, especially for the development of high-performance and energy-efficient chips. China, on the other hand, already has a considerable global market share in back-end manufacturing, experts say. That is why Europe is likely to continue to rely on chips from China in the foreseeable future.
France, Italy, and Spain are stepping up pressure on the European Commission to come up with legislation that ensures Big Tech firms partly finance telecoms infrastructure in the bloc, a document showed on Monday. This was the first time the three governments have expressed their joint position on the issue.
EU regulators said in May they were analyzing the question of whether tech giants Alphabet’s Google, Meta, and Netflix should shoulder some of the costs of upgrading telecoms networks. In a joint paper, a copy of which was seen by Reuters, the three governments said the six largest content providers accounted for 55 percent of internet traffic.
“This imposes specific costs on European telecom operators in terms of capacity, at a time when they are already investing massively in the most costly parts of the networks with 5G and Fiber-To-The-Home ,” the paper said. The authors urge that European telecom networks and major online content providers pay a fair share of network costs. “We call for a legislative proposal that ensures that all market players contribute to the cost of digital infrastructure.”
Two Italian government officials confirmed details of the joint document. One of them said Rome’s government was set to give informal support in its caretaking capacity ahead of a general election in September.
According to a study released by telecoms lobbying group ETNO earlier this year, an annual contribution of 20 billion euros to network costs by the tech giants could give a €72 billion boost to the EU economy. However, digital rights activists have warned making Big Tech pay for networks could threaten EU net neutrality rules, which they feared could be watered down in a deal with online giants to help fund telecoms network. rtr
After the fall of the pro-Western government in Bulgaria at the end of June, President Rumen Radev appointed an interim cabinet. The government, which was put together by the head of state from experts and included Prime Minister Galab Donev, took the oath of office on Tuesday. It will govern the EU country until the formation of a regular government after the early parliamentary elections on October 2. The previous liberal-socialist coalition led by the head of government, Kiril Petkov, was toppled by a vote of no confidence after just over half a year.
Head of State Radev listed the priorities of the interim cabinet as securing energy and food supplies, dealing with “runaway inflation”, and corruption practices. Referring to the Ukraine war, the head of state, who is considered Russia-friendly, urged toward the interim government: “Your top priority should be to avoid the country’s involvement in the conflict.”
The EU country, which is heavily dependent on Russian energy sources, no longer receives gas directly from Russia. Former Prime Minister Petkov had refused to pay the bill in Russian rubles. The NATO country’s relations with Russia were further strained by the expulsion of 70 diplomats and employees of the Russian embassy on suspicion of espionage.
Head of State Radev also dissolved parliament on Tuesday after less than a year. Bulgaria will elect a new People’s Assembly in October for the fourth time since April 2021. Political analysts expect nationalist and pro-Russian parties to be more strongly represented than before. dpa
In Italy, the Social Democrats (PD) have agreed on a pact in the current election campaign with the small parties of the center Azione and +Europa. This means that a first alliance has formed in the center-left camp against the center-right bloc, which is currently far ahead in the polls. “The elections will be a choice between an Italy that is one of the great countries of Europe and an Italy allied with Orbán and Putin,” according to the agreement, which the parties published Tuesday in Rome.
The parties agreed to continue the foreign and defense policies of the current government of Prime Minister Mario Draghi. The alliance wants to make the country less dependent on energy supplies from Russia by expanding renewable energies. It also wants to introduce the minimum wage envisaged by the EU, as the two leading candidates, Enrico Letta (PD) and Carlo Calenda (Azione) made clear.
In order to compete with the center-right bloc of the Fratelli d’Italia (around 24 percent), which is currently leading in the polls, the right-wing Lega and Forza Italia, the PD and Azione/+Europa need additional alliance partners. With around 23 percent, the Social Democrats would currently be the second strongest force. But Azione/+Europa’s 5 percent are not enough to pose a threat to the center-right.
About 40 percent of current respondents are still undecided or do not plan to go to the polls on September 25. The doors are open to all, said Calenda. This means that there could possibly also be talks with the controversial ex-prime minister and former PD leader Matteo Renzi and his splinter party Italia Viva. dpa
Many Italian energy companies have apparently refused to make an initial payment of an excess profits tax due by the end of June. The government is thus missing revenue of more than €9 billion, according to a document from the Finance Ministry in Rome obtained by the Reuters news agency on Tuesday.
Between €10 and €11 billion euros should be raised through a 25 percent excess profits tax on energy companies that have profited from the drastic rise in oil and gas prices. Prime Minister Mario Draghi wants to use this to finance part of the €33 billion aid package put together in January to provide relief for companies and households hit by high electricity, gas, and fuel costs.
Under the scheme, producers and sellers of electricity, natural gas, and petroleum products would have been required to pay a 40 percent deposit by the end of June. The remainder would then be due by November. The Finance Ministry document provides an update on tax forecasts for the mid-year budget. According to the document, revenues are more than €9 billion lower than expected.
Last week, state-controlled energy company Eni announced that it had already paid the first installment of the special tax. Italy’s largest energy company, Enel, said it had booked a total of €2.6 billion for payment of the special taxes imposed by the Italian, Spanish and Romanian governments. Several energy companies complained about the excess profits tax. They stressed that fluctuating energy prices were also causing them problems.
Companies that missed the payment deadline at the end of June can pay the levy in arrears in the coming weeks or months. However, penalty fees and interest will then be due, the ministry’s paper says. rtr
The Spanish government has adopted “urgent measures” to save energy and use it more efficiently due to the Russian war of aggression against Ukraine. All public sector buildings, as well as department stores, cinemas, workplaces, hotels, train stations, and airports, will in the future be allowed to cool their premises to no less than 27 degrees in summer and heat them to no more than 19 degrees in winter. This was decided at the weekly cabinet meeting in Madrid, said Monday evening the Minister of Ecological Change, Teresa Ribera.
According to Ribera, the measures in the royal decree must be implemented after a one-week “adjustment period” following publication in the Official Gazette, at the latest. They are to remain in force until November 1, 2023. It is a first package of measures necessary in a “critical situation”. Europe needs Spain’s help. “It is time to show solidarity,” stressed the minister of the leftist government.
Among other measures, stores and businesses with automatic systems, which must be installed by September 30, must keep their doors closed to prevent the escape of heat or cool air, depending on the season. The lighting of offices not in use, of shop windows and monuments, must also be turned off after 10 pm. Reviews of the energy efficiency of certain buildings are to be brought forward. Ribera called on the private sector to increase home office work.
With these and other measures to be decided after the summer break, Spain aims to meet the commitments it made as part of the European emergency plan agreed on last week. The country is to reduce gas consumption by seven percent. Spain, like other EU countries, had initially opposed the emergency plan, but in the end approved the plan after making concessions. dpa
Insurers in Germany will exercise caution when investing in nuclear power, according to an industry expert. “I think insurers will generally tend to rule it out due to the critical attitude many people have toward nuclear power in Germany,” Herbert Schneidemann, chairman of the German Actuarial Society, told news agencies dpa and dpa-AFX. “Personally, I think it will be hard for any company to afford to call nuclear power in Germany green and then invoke EU taxonomy.”
Under the EU taxonomy, putting money into certain gas and nuclear power plants will also be considered climate-friendly from January 2023. “Nuclear power would be a good technology in terms of climate, but it is something that comes at the expense of the future,” according to Schneidemann.
In principle, he sees good opportunities for the industry to contribute to climate protection. Insurers could use investments as leverage to get companies to move and become greener. In addition to investments in wind turbines, for example, the industry could make at least as much of a difference by helping “to make brown industries a bit greener. After all, it doesn’t help to tell brown industries: You won’t get any more money from us.”
Therefore, he considers a gradual transformation of insurers’ investment assets to be important. According to the latest data from the insurance association GDV, the industry’s investment portfolio amounted to just under €1.8 trillion at the end of 2020. dpa
The Europe of the future? Lars Hänsel (55), head of the Europe and North America department at the Konrad Adenauer Foundation, has a very precise vision of this: a common Europe that is capable of acting globally. For him, this means being able to ensure its own security – independently of the United States, but in strong partnership with it. When it comes to the economy, for him it means no longer being dependent on China for survival and no longer being dependent on Russia for raw materials.
“Europe needs to completely rethink its business model,” says Hänsel. But not only that: “I would like to rethink Europe completely, especially the principle of subsidiarity. What exactly do we need to tackle together, what do we need to leave to the countries?” It’s clear, he said, that the big issues like climate change, security, and energy need to be solved together. “But beyond that, shouldn’t countries be given more freedom?”
This also means, says Hänsel, that cooperation with Eastern European countries is conducted differently. In the Western EU member states, there is often a lack of deeper understanding of where the Eastern European countries have historically come from and where their reservations about Brussels stem from: “Why does a country like Poland defend its sovereignty so vehemently? It has always been occupied by other countries. Therefore, they think differently about sovereignty.”
Many Eastern European countries have also often warned against Russia but were not heard by the West. “Germany is strongly characterized by never wanting to be the perpetrator again,” says Hänsel. On the other hand, Eastern Europeans no longer want to be victims. Countries like Germany also set benchmarks, such as in dealing with minorities, that other countries then have to meet, which simply aren’t as far along in this area. “A certain amount of basic diversity is something the EU must be able to tolerate.” Eastern Europeans often feel they must first meet a Western European expectation in order to be accepted and belong.
To conform, to meet the expectations of others, not to be able to develop in a self-determined way – the aversion to this often drove Hänsel. He grew up in the GDR, did not join any party, did not share the prevailing ideology as a Christian, and became a construction soldier when he was drafted into the National People’s Army. While this was a legal way to refuse to serve in the armed forces, it had harsh consequences.
And so he was also denied his great desire to study medicine as he did not meet the ideological expectations for a degree. This drove him onto the streets to join protests in Leipzig in 1989. After the fall of the Berlin Wall, as one of a few East German theology students at the university in Tübingen, he was often confronted with the question: “How long will it take you to be like us?” And again he faced the expectation to conform.
For his doctorate, Hänsel received a scholarship from the Konrad Adenauer Foundation. He has not left the foundation since, spending many years in the offices in St. Augustin (NRW), Jerusalem, and Washington. Above all, Israel’s social and religious complexity fascinates the theologian to this day. From Berlin, he now heads 34 offices throughout Europe and North America, and until recently also one in Russia.
In his work, it is always important for him to identify partners for common goals. “An important task in the coming years will be dealing with China. The challenge here is also to find a common European approach in the face of different interests.” Lisa-Martina Klein