Fiscal reform + China as rival + Lessons from Qatargate

Dear reader,

For the Commission, it is clear that the Stability and Growth Pact cannot remain as it was. But after loud demands from the traffic light coalition that it needed fixed benchmark values, Brussels wants to respond to Berlin’s criticism. Table.Media is familiar with the proposal, which will be presented by the Commission today. The key points: In the future, the states will be given national reference paths for budget restructuring, and there will be some fixed criteria, report Till Hoppe and Christoph Roche.

China, China and China again: That’s what the big “China Strategy 2023” was all about. One central topic: China as a rival and how this challenge can and must be dealt with. For the EU, this poses a particular challenge, writes Michael Radunski.

Qatargate is far from being resolved. And the European Parliament must do more to restore citizens’ trust. This is what the European Ombudswoman Emily O’Reilly called for yesterday when she presented her latest activity report. Read more about her criticisms in our News.

Your
Alina Leimbach

Fiscal reform: How the Commission wants to encourage governments to save money

The EU Commission is proposing a departure from the current budget rules for EU states. In the future, the Brussels authority wants to give countries national reference paths for budget restructuring. These are to be the basis for negotiations with governments on their medium-term fiscal and reform plans. The proposal will be presented today, the draft was available to our colleagues from “Contexte”.

The Commission should consider some criteria in the reference paths:

the level of debt should be lower after four years than at the beginning of the period;
net primary expenditure (excluding interest charges, one-off expenditure and cyclical expenditure for unemployment) is expected to increase at a lower rate than the economy’s potential growth;
the consolidation should not be pushed back within the period (no backloading);
if the expected budget deficit is more than three percent of GDP, expenditure should be reduced by at least 0.5 percent annually – probably without initiating an excessive deficit procedure.

‘Substantial concessions’ to Berlin

The Commission is thus addressing the German government’s concerns to some extent. The traffic light coalition is calling for fixed criteria for national spending paths and fiscal plans to limit the Commission’s discretionary powers. For example, primary spending by highly indebted countries should be at least one percent below the potential growth of their economies, the German government wrote in a position paper in early April. In addition, these countries should have to reduce their debt levels by at least one percentage point per year.

The Commission does not get that specific in its proposal, which was still under final negotiation in the authority on Tuesday. The draft, however, contains significant improvements to an earlier version, according to a statement in Berlin. Chancellor Olaf Scholz and Minister of Finance Christian Lindner intervened in Brussels to achieve improvements from the German perspective.

Nils Redeker, deputy director of the Jacques Delors Centre in Berlin, also sees “substantial concessions” to the traffic light coalition. “It would be hard to understand if the federal government were not willing to talk now“, he said.

How does Lindner behave?

On Tuesday, however, German Minister of Finance Christian Lindner renewed his fundamental criticism of the new approach: “Instead of bilateral procedures and negotiations, we need a functioning system of fiscal rules that leads to equal treatment of all member states”, the FDP leader wrote in a guest article for the Financial Times. A reform of the Stability Pact would only be acceptable if it significantly improved the existing framework, he said.

The Commission hopes that the new rules will promote growth and at the same time improve debt sustainability in the member states. The upper limits for new debt of three percent of economic output and 60 percent for total debt will continue to apply.

Individual plans instead of fixed rules

In contrast to the current rules of the Stability and Growth Pact, the states are to achieve these targets with individual plans. The Commission is to provide the basis for this with an analysis of debt sustainability and a reference path for budget restructuring. Blanket targets such as the one-twentieth rule, which envisages a reduction in excessive debt by five percent a year, are now unrealistic in the view of the authority.

According to the Commission’s ideas, countries should set their budgets for four years. The period can be extended by up to three years if a government commits to relevant reforms and public investment, for example in climate protection. The Commission and the EU Council must approve and adopt the national plans.

Increased control and transparency

For the first time, the Commission intends to set up multi-year control accounts to monitor individual national budgets in terms of the extent to which countries comply with the expenditure path. In this context, annual upward and downward deviations from the expenditure path will be accounted for in aggregate at the end of the period.

The Commission will also publish annual progress reports, and the fact that both the Commission and the member states will publish their calculations will provide additional transparency. When drawing up their multi-year budgets, the member states are to take into account the opinion of an independent national body with fiscal expertise.

Commission wants stricter enforcement

If member states nevertheless deviate from the net expenditure path, the Commission intends to take stricter action in the future. The regular Excessive Deficit Procedure (EDP) will continue to apply. In making its decision, the Commission is to take into account whether the member state is facing a “substantial” challenge in terms of public debt. The basis for this is to be the current Debt Sustainability Monitor.

If a member state is above the three percent limit, governments must reduce the deficit by at least 0.5 percent of GDP per year. If the Council finds a breach of this, the country in question faces penalties of a maximum of 0.5 percent of GDP. However, this would only be achieved over a period of five years at the earliest, as the maximum penalty payments can reach 0.05 percent of GDP every six months. By Till Hoppe and Christof Roche

Europe cannot hide away on the geopolitical stage

Michael Roth had nothing good to say about the joint China trip of EU Commission President Ursula von der Leyen and French President Emmanuel Macron. “I felt like played for a fool. That was disastrous”, said the chairman of the Committee on Foreign Affairs in the Bundestag in Berlin on Tuesday. The topic was China as a rival in the second part of Table.Media’s “China Strategy 2023”, bringing together more than 30 distinguished China experts from politics, business, academia and society.

Roth attributed a special role to Germany regarding its relationship with China: On the one hand, as a strong economy, Germany is particularly heard in Beijing. On the other hand, it is also the most vulnerable. Therefore, Roth believes that Germany must coordinate closely with its partners in Europe – and avoid a cacophony like the one between von der Leyen and Macron.

No contradiction between focus on values and interests

Roth does not see any contradiction between values-based and interest-driven foreign policy. “The old foreign policy warhorses [sic] like to make that point. I find that very old-fashioned. That’s 20th century”.

Reinhard Buetikofer, China expert in the European Parliament, pointed out that the EU is an organization that prides itself on its unity with diversity. “The EU will never speak with one voice. But we should not allow contradictions to arise”. Macron allowed himself to be lured onto a little branch in Beijing, which he then tumbled down with. But according to Buetikofer, one thing is clear: “Europe cannot escape its global responsibility. The French president should also remember that”.

Patrick Koellner called the Indo-Pacific the new strategic center of gravity in Asia, calling it not a natural region of the world. Rather, the former Asia-Pacific, which was mainly characterized by economic issues, has been deliberately expanded to include India and the Indian Ocean, Koellner said. “The transition from Asia-Pacific to Indo-Pacific marks the real Zeitenwende” in international Asia policy, says the Vice President of the German Institute for Global and Area Studies (Giga). This is because adding India would reduce the danger of China’s hegemony in the region.

Köllner pointed to new alliances such as Quad or Aukus as evidence of the new Indo-Pacific geopolitical era. Here, billions are invested in armaments such as nuclear submarines, which Köllner sees as “a daring and expensive bet on the future”. It is questionable whether China will allow itself to be swayed by this or will even quickly create facts as a countermeasure, for example with regard to Taiwan, he said.

Danger – for Taiwan and privacy

May-Britt Stumbaum of the Center for Intelligence and Security Studies (CISS) in Munich made clear: If there were a war over Taiwan, some assembly lines in Germany would come to a standstill and quite a few shelves would be left empty. “Taiwan is not just a historical mission or a legacy to be finished. Taiwan is a very hard-core strategic consideration“. China is after a position on the first island chain, with direct access to the deep sea. President Xi Jinping is currently preparing the military option, Stumbaum said.

Tim Ruehlig from the German Council on Foreign Relations drew attention to another topic: setting technical standards. Here, too, China is increasingly taking on a leading role – with far-reaching consequences: From practical competitive advantages and patent fees to effects on political and social values, if China is setting standards for security and privacy in products. Such details should be considered in Germany’s China strategy, Ruehlig emphasizes.

More China expertise needed

But who should formulate this strategy? Marina Rudyak, a sinologist at the University of Heidelberg, warned: “It is like this in the USA: The more China is perceived as a rival there, the more is invested in China expertise. Here in Germany, the opposite is the case: The more difficult the relationship with China becomes, the less we in Germany want to deal with it. That is not very strategic“.

Cora Jungbluth from the Bertelsmann Foundation agreed with her and underlined how China expertise is by no means only missing in the German ministries. “China education is needed at all levels, not only in the federal ministries. You have to start at the education level”. Many Chinese direct investments happen at the municipal level. But it is precisely there that China competence is not particularly well established.

Mikko Huotari then attempted to bring the focus back to the current situation. At present, there is no lack of understanding of China, said the director of the Berlin-based China Institute Merics. “We have a very clear analysis of where China’s domestic development is going, where the relationship between China and the USA is heading. It is now a matter of developing the capacity for action. It is important that we do not completely go on the defensive, but look at where our interests lie and then try to assert them as best we can with our partners“. By Michael Radunski

Corruption scandal: Ombudswoman calls for far-reaching reforms

The European Parliament must do more to overcome the corruption scandal involving Qatar and leading MEPs (“Qatargate“), which has still not been fully cleared up, and to restore citizens’ trust. This is the verdict of European Ombudswoman Emily O’Reilly in her new activity report, which she presented in Brussels on Tuesday.

O’Reilly said she has no reason to doubt the goodwill of House Speaker Roberta Metsola, who has announced full disclosure. However, she said she is concerned because there is resistance to the reforms that have been announced. As an example, she cited the recently introduced so-called cooling-off period for former MEPs.

‘Six months is not a real cooling-off period’

In the future, EU parliamentarians are to be given the right to act as lobbyists six months after the end of their mandate at the earliest. That’s too short, O’Reilly said. “Six months is not a real cooling-off period”. She also criticized a planned advisory panel to investigate possible conflicts of interest by members of Congress. Independence leaves something to be desired, she said.

Metsola must do more, O’Reilly demanded. The scandal was “a risk to the reputation of the entire EU“, O’Reilly said. Parliament Speaker Metsola had even spoken of an “attack on European democracy”. “Without moral authority, there is no political legitimacy”, the ombudswoman warned about a year before the next European elections, which are due to take place in spring 2024.

Parliamentarian sees labeling fraud

Criticism also came from Parliament. Of the 14 reforms announced, only one has been implemented so far, Green MEP Daniel Freund told Table.Media. The fact that a “minimal solution” was chosen for the cooling-off period was also Metsola’s fault – because she had cast the decisive dissenting vote against a more ambitious reform.

“If this is the answer to the corruption scandal, well, whoop-de-doo”, Freund said. He said it was also worrying that the new ethics authority called for by Parliament to tackle conflicts of interest and enforce stricter transparency rules was a long time coming. Initial drafts from the EU Commission pointed to a “labeling scam”. The proposal is expected in May. ebo

Due Diligence Act: EP decides on ‘director’s duty’

The proposal of rapporteur Lara Wolters (S&D) for the Due Diligence Act, has received a clear majority in the vote in the Legal Affairs Committee (JURI). 19 votes in favor, three against and three abstentions was the result on Tuesday. Greens, Renew and EPP also voted in favor.

The main features of the parliamentary position were already clear yesterday. However, it was uncertain until the very end whether the so-called “director’s duty” clause would make it into the final text. This concerns the question of whether the payment of board members should be linked to compliance with due diligence obligations and climate transition plans. Now it is clear: the item was adopted by a narrow majority (13:12). The EPP in particular resisted the clause until the very end. That point had “nothing to do with supply chain legislation“, commented CDU shadow rapporteur Axel Voss, for example.

The vote is scheduled for the mini-plenary in Brussels on June 1. Although rapporteur Lara Wolters had to make concessions (exclusion of SMEs, no reverse burden of proof, delayed implementation), her compromise remains significantly more ambitious than the Commission proposal and the Council position. In the trilogue, the scope of the law, the role of the financial industry, civil liability and the payment of directors are likely to be major hurdles. cw

Methane regulation: Paulus tightens proposal

The co-rapporteur in the Industry Committee, Jutta Paulus (Greens), is confident that the compromise text on the methane regulation will be adopted today in the two lead committees. This is despite the fact that the text is more restrictive than the EU Commission’s proposal. The regulation aims to regulate methane leaks from gas and oil fields and the coal industry.

Its text is more ambitious than the Commission’s proposal and the Council’s position: It wants to impose stricter standards on the fossil fuel industry. “All political groups voted in favor of the text, except for the ID group and the left on the coal part”, Paulus said. The MEP underscores the commitment of the other groups not to introduce last-minute amendments during the committee vote. The report will be voted on today in the Environment (ENVI) and Industry (ITRE) committees. If it is adopted, the Parliament will vote on May 9, after which the trilogues could begin.

‘Climate killer methane’

Methane, the main component of natural gas, escapes from leaking pipelines, outdated valves and poorly maintained gas networks. It is also released unused into the atmosphere during oil production or flows out of the shafts of coal mines. Even small amounts have a damaging effect on the climate: Over a period of 20 years, the damage caused by methane is over 80 times greater than that caused by CO2, Paulus emphasized: “Methane is a real climate killer”.

Their report wants binding targets for reducing methane emissions in the EU to be set by 2025. Most importantly, the compromise amendments aim to bind third-country producers to the new EU commitments. “The mechanism is reminiscent of CBAM“, Jutta Paulus explained. In the case of the methane regulation, this means that importers of coal, gas, and oil into the EU will have to demonstrate that their imports comply with the EU regulation’s methane leakage estimation and repair measures from 2026. The EU Commission estimates that 75 to 90 percent of methane emissions recorded in the EU come from fossil fuel imports from third countries. cst

DSA: Breton names 19 VLOPS and VLOSE

Which platforms and search engine providers are considered so large that they should fall directly under Commission control under the Digital Services Act? EU Digital Commissioner Thierry Breton announced the answer yesterday. He detailed which providers in the EU have more than 45 million daily users and should therefore come under the Commission’s supervision.

The list corresponds to what Europe.Table already expected in February: In addition to the search providers Google and Bing (VLOSE), 17 “very large online platforms” (VLOPS) are to fall under the direct supervision of DG Connect: the Chinese online retailer AliExpress, the Amazon Store, the German online retailer Zalando, Apple’s App Store and the Dutch hotel booking platform Booking are among them. Google Maps, Shopping and Play services also fall under the Commission’s supervision. In addition to that: the social networks Twitter, Facebook, Instagram, Pinterest, Snapchat, the video platforms TikTok and YouTube, and the non-profit Wikipedia.

Designated search engines and platforms will have to meet additional obligations under the DSA starting Aug. 25. “They can no longer hide behind lengthy terms of use”, Breton said at a press briefing. As systemically relevant providers, they will have to offer plain-text summaries of their terms of service in all EU languages and provide an opt-out from profile-based recommendation algorithms. Ads will be prohibited from using sensitive data as defined by the General Data Protection Regulation. AI-generated content that is potentially considered disinformation must be labeled as such.

Users must expect significant changes

Probably the biggest change for users will be in the content moderation rules. The DSA stipulates that platforms and search engine providers must take action against all illegal content – and thus against significantly more content than under the German Network Enforcement Act, for example, for which there is an exhaustive catalog of criminal offenses. Also relevant for platform users: the DSA prohibits the use of misleading interface design, so-called dark patterns. Children must be given special protection under the DSA – control systems for parents and age verification systems become mandatory, and advertising explicitly directed at children is prohibited. For the time being, however, there are still no implementing regulations for the implementation of these obligations.

Breton wants to meet Musk and Zuckerberg

Breton is also using the attention surrounding the DSA launch to meet with the big names in the industry: In June, Breton writes in a LinkedIn post, he wants to meet Elon Musk at Twitter headquarters. He is still waiting for a corresponding invitation from TikTok operator Bytedance and is also prepared to talk to Mark Zuckerberg. Apparently, there is no date yet for either of these meetings. Breton expects the operators to be ready for takeoff by Aug. 25 to meet the new obligations.

One of the most controversial providers is not among the named platforms. Telegram is the subject of ongoing proceedings in Germany for alleged violations of its obligations under the Network Enforcement Act. “Unless Telegram is designated by the Commission as a very large online platform, the Network Enforcement Act will continue to apply until Feb. 17, 2024, and the Federal Office of Justice will remain responsible for its enforcement”, the responsible Federal Ministry of Justice said in response to a Table.Media request. Telegram could still be classified as a VLOP by the Commission at a later date.

According to the Digital Ministry, the German implementation law for the Digital Services Act, which will then also require the other platforms and search engine providers – albeit fewer than the largest providers – to fulfill further obligations, is to be introduced to the German cabinet in July. It must then be decided which authority will coordinate German supervision. fst

AI Act: ChatGPT not a high-risk system

General purpose AI (GPAI) systems are not classified as high-risk systems per se in the parliamentary draft of the AI Act. The reporters have deleted a corresponding entry in Annex III, as Table.Media has learned from negotiating circles.

General purpose AI systems are those that can be used for and adapted to a wide range of applications for which they were not intentionally and specifically designed. This includes large-scale language models such as ChatGPT. Many observers had feared that they would be classified as high-risk systems.

Broad agreement at technical level

However, this contradicts the systematics of the law, which provides for regulation for specific areas of application and there again for specific applications. By definition, GPAI is not developed for any specific application. Still, systems that are further developed on the basis of GPAI for specific applications may fall under the regulation. Anyone who develops and uses such applications is then bound by certain obligations. In order to fulfill them, developers of GPAI are obliged to pass on the necessary information.

With the introduction of GPAI into the legislation, one of the last points of negotiation at the technical level has largely been clarified. While negotiators have often described the rapporteurs’ timetable as unrealistic in the past, they are now confident that they will be able to clarify the outstanding points in a timely manner.

Tudorache expects strong negotiating mandate

“We are in the very last phase of our negotiations”, rapporteur Dragoș Tudorache (Renew) told Table.Media. He said that it was possible to present a balanced and coherent text that significantly improves the Commission’s proposal. As examples, he cited the addition of a separate article on Foundation Models (basic models as a form of GPAI) to reflect recent developments in the development of artificial intelligence. “We are confident that with these final negotiations, we will soon be ready to vote and have a strong mandate from the Parliament to negotiate with the Council”.

The agenda for the political meeting today is quite extensive. Nevertheless, the rapporteurs hope to reach a political agreement on the whole dossier by Thursday at the latest. The vote in the committees is scheduled to take place on May 11. vis

Nutrition: Committee wants to reduce dependence on imports

In a resolution, the Parliament’s Agriculture Committee (AGRI) calls for a long-term strengthening of the EU’s food security and agricultural autonomy. The Covid pandemic as well as the war in Ukraine have revealed structural problems in the European agricultural sector in this regard, says the initiative report, which was adopted by a clear majority on Tuesday.

According to the report, the Commission should draw up a holistic strategy plan aimed at reducing dependence on imports, for example for fertilizers and animal feed. Among other things, MEPs advocate the use of new breeding techniques to make plants more resistant and thus reduce the use of synthetic fertilizers and pesticides. Access to digital technologies for small farmers is to be promoted, as is an improvement in water management.

In addition, the committee calls for the high level of food waste in the EU to be combated. For example, through national campaigns or higher investment in sustainable transport and storage. According to the report, the establishment and use of strategic food stocks should also be considered in order to guarantee the EU’s food supply at all times.

“Securing our food has become a global challenge and cannot be taken for granted in Europe either”, says rapporteur Marlene Mortler (CDU). “The Green Deal must not lead to more food imports from third countries“. The plenum is scheduled to vote on the report at its June session. til

Raw materials strategy: German government works on fund and strategic reserves

The German Federal Ministry for Economic Affairs and Technology (BMWK) and the German Federal Ministry of Finance (BMF) are working on a raw materials fund to support raw materials projects in Germany and abroad. Both ministries confirmed this on request. They are also looking at ways to incentivize strategic stockpiling of critical raw materials. Both are measures announced at the beginning of the year in the BMWK’s key issues paper on the German raw materials strategy.

According to information from Table.Media, there will be no joint fund of Germany and France, as originally planned. However, both countries are closely coordinating their commodity strategies.

The Bloomberg news agency had previously reported that the federal government’s fund was to start next year and be endowed with funds of €1 to €2 billion. Neither of the two ministries confirmed this, as it was not possible to comment on the details of the ongoing internal coordination.

Federal government wants to create planning security

The measures from the key points paper are intended to support companies in diversifying their raw material supplies and would be “developed and implemented step by step“, a BMWK spokeswoman explained. “They are more or less a roadmap for all the players concerned and thus provide planning security”. A research program to support the development of sustainable and climate-friendly processes and technologies and the substitution of critical raw materials is also planned, she said.

Measures to stockpile raw materials are also an objective of the EU Commission’s draft Critical Raw Materials Act. According to this, member states are to build up larger strategic reserves in order to be prepared for short-term shortages. Commenting on the German government’s plans, a BMF spokeswoman said, “We will work closely with companies and trade associations to use appropriate incentives to encourage companies to stockpile more strategically”. leo

Chantal Kopf – reforming European electoral law

Chantal Kopf is the European policy spokesperson for the Green Party in the Bundestag.

The words John F. Kennedy chose when he gave his famous speech in West Berlin in 1963 were to go around the world. “Ich bin ein Berliner”, he said with such fervor that people simply had to believe him. If Chantal Kopf were in a similar position today, the words would be different, to be sure; she would probably say, “I am a European“. But the conviction, the fervor, the deep will to fight for the right cause, these things would certainly be just as present. Anyone who talks to Chantal Kopf about her love of Europe – and the major changes she is trying to initiate there – will quickly be convinced of this.

One afternoon in March, she smiles into the webcam, behind her an angular image, blue, with golden stars on it. When she tilts her head, a counterpart sees that it is the European flag enthroned behind her. How could it be otherwise?

Transnational lists and lowered voting age

The spokeswoman for European policy in the Green Party’s parliamentary group in the German Bundestag has currently chosen a more than comprehensive reform of European electoral law as her pet project. Two changes are particularly important to her: “We want transnational lists, so that in addition to national candidacies, an EU-wide constituency is created for which candidates compete across countries“, Kopf says. “And we want there to be real top candidates so that people decide more directly who ends up heading the Commission”.

In addition, the lowering of the voting age to 16 has been completed, which will already apply in the upcoming European elections in 2024. “With all these measures, we want to make Europe closer to people, more alive”, Kopf says. “That is incredibly important to me”.

2021: Kopf wins direct mandate

Her own love for the EU was sparked in 1995 in Baden-Baden, where she was born. With France just around the corner, she learned French and is still involved in cooperation between the two countries, for example as a member of the board of the Franco-German Parliamentary Assembly, a body consisting of 50 members of parliament from each of the two countries, which is intended to promote joint exchange.

That she would one day end up in politics was almost to be expected, given her curriculum vitae: Her parents were also interested in politics. Later, Kopf moved to Freiburg, where she studied politics and became involved with the Green Party on the side. Why there in particular? “My interests were Europe and climate. So the Greens were a perfect fit”, she says today. She then rose quickly, ran for the Bundestag in 2021 – and was one of only a few Greens to win a direct mandate in the Freiburg constituency.

At just 28 years old, she missed the record for the youngest member of parliament. But Chantal Kopf says that she has set at least one record since the last Bundestag election: She is the Green Party member of the Bundestag with the longest journey. More than 800 kilometers lie between her constituency of Freiburg, near the French border, and the Bundestag in Berlin. It takes more than eight hours by car, but Kopf – as befits a true Green – usually takes the train across Germany to explain Europe to others: in Berlin, in Freiburg or somewhere in between. It’s not an easy job. But for Kopf, there probably couldn’t be a better one. Nils Wischmeyer

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

For the Commission, it is clear that the Stability and Growth Pact cannot remain as it was. But after loud demands from the traffic light coalition that it needed fixed benchmark values, Brussels wants to respond to Berlin’s criticism. Table.Media is familiar with the proposal, which will be presented by the Commission today. The key points: In the future, the states will be given national reference paths for budget restructuring, and there will be some fixed criteria, report Till Hoppe and Christoph Roche.

China, China and China again: That’s what the big “China Strategy 2023” was all about. One central topic: China as a rival and how this challenge can and must be dealt with. For the EU, this poses a particular challenge, writes Michael Radunski.

Qatargate is far from being resolved. And the European Parliament must do more to restore citizens’ trust. This is what the European Ombudswoman Emily O’Reilly called for yesterday when she presented her latest activity report. Read more about her criticisms in our News.

Your
Alina Leimbach

Fiscal reform: How the Commission wants to encourage governments to save money

The EU Commission is proposing a departure from the current budget rules for EU states. In the future, the Brussels authority wants to give countries national reference paths for budget restructuring. These are to be the basis for negotiations with governments on their medium-term fiscal and reform plans. The proposal will be presented today, the draft was available to our colleagues from “Contexte”.

The Commission should consider some criteria in the reference paths:

the level of debt should be lower after four years than at the beginning of the period;
net primary expenditure (excluding interest charges, one-off expenditure and cyclical expenditure for unemployment) is expected to increase at a lower rate than the economy’s potential growth;
the consolidation should not be pushed back within the period (no backloading);
if the expected budget deficit is more than three percent of GDP, expenditure should be reduced by at least 0.5 percent annually – probably without initiating an excessive deficit procedure.

‘Substantial concessions’ to Berlin

The Commission is thus addressing the German government’s concerns to some extent. The traffic light coalition is calling for fixed criteria for national spending paths and fiscal plans to limit the Commission’s discretionary powers. For example, primary spending by highly indebted countries should be at least one percent below the potential growth of their economies, the German government wrote in a position paper in early April. In addition, these countries should have to reduce their debt levels by at least one percentage point per year.

The Commission does not get that specific in its proposal, which was still under final negotiation in the authority on Tuesday. The draft, however, contains significant improvements to an earlier version, according to a statement in Berlin. Chancellor Olaf Scholz and Minister of Finance Christian Lindner intervened in Brussels to achieve improvements from the German perspective.

Nils Redeker, deputy director of the Jacques Delors Centre in Berlin, also sees “substantial concessions” to the traffic light coalition. “It would be hard to understand if the federal government were not willing to talk now“, he said.

How does Lindner behave?

On Tuesday, however, German Minister of Finance Christian Lindner renewed his fundamental criticism of the new approach: “Instead of bilateral procedures and negotiations, we need a functioning system of fiscal rules that leads to equal treatment of all member states”, the FDP leader wrote in a guest article for the Financial Times. A reform of the Stability Pact would only be acceptable if it significantly improved the existing framework, he said.

The Commission hopes that the new rules will promote growth and at the same time improve debt sustainability in the member states. The upper limits for new debt of three percent of economic output and 60 percent for total debt will continue to apply.

Individual plans instead of fixed rules

In contrast to the current rules of the Stability and Growth Pact, the states are to achieve these targets with individual plans. The Commission is to provide the basis for this with an analysis of debt sustainability and a reference path for budget restructuring. Blanket targets such as the one-twentieth rule, which envisages a reduction in excessive debt by five percent a year, are now unrealistic in the view of the authority.

According to the Commission’s ideas, countries should set their budgets for four years. The period can be extended by up to three years if a government commits to relevant reforms and public investment, for example in climate protection. The Commission and the EU Council must approve and adopt the national plans.

Increased control and transparency

For the first time, the Commission intends to set up multi-year control accounts to monitor individual national budgets in terms of the extent to which countries comply with the expenditure path. In this context, annual upward and downward deviations from the expenditure path will be accounted for in aggregate at the end of the period.

The Commission will also publish annual progress reports, and the fact that both the Commission and the member states will publish their calculations will provide additional transparency. When drawing up their multi-year budgets, the member states are to take into account the opinion of an independent national body with fiscal expertise.

Commission wants stricter enforcement

If member states nevertheless deviate from the net expenditure path, the Commission intends to take stricter action in the future. The regular Excessive Deficit Procedure (EDP) will continue to apply. In making its decision, the Commission is to take into account whether the member state is facing a “substantial” challenge in terms of public debt. The basis for this is to be the current Debt Sustainability Monitor.

If a member state is above the three percent limit, governments must reduce the deficit by at least 0.5 percent of GDP per year. If the Council finds a breach of this, the country in question faces penalties of a maximum of 0.5 percent of GDP. However, this would only be achieved over a period of five years at the earliest, as the maximum penalty payments can reach 0.05 percent of GDP every six months. By Till Hoppe and Christof Roche

Europe cannot hide away on the geopolitical stage

Michael Roth had nothing good to say about the joint China trip of EU Commission President Ursula von der Leyen and French President Emmanuel Macron. “I felt like played for a fool. That was disastrous”, said the chairman of the Committee on Foreign Affairs in the Bundestag in Berlin on Tuesday. The topic was China as a rival in the second part of Table.Media’s “China Strategy 2023”, bringing together more than 30 distinguished China experts from politics, business, academia and society.

Roth attributed a special role to Germany regarding its relationship with China: On the one hand, as a strong economy, Germany is particularly heard in Beijing. On the other hand, it is also the most vulnerable. Therefore, Roth believes that Germany must coordinate closely with its partners in Europe – and avoid a cacophony like the one between von der Leyen and Macron.

No contradiction between focus on values and interests

Roth does not see any contradiction between values-based and interest-driven foreign policy. “The old foreign policy warhorses [sic] like to make that point. I find that very old-fashioned. That’s 20th century”.

Reinhard Buetikofer, China expert in the European Parliament, pointed out that the EU is an organization that prides itself on its unity with diversity. “The EU will never speak with one voice. But we should not allow contradictions to arise”. Macron allowed himself to be lured onto a little branch in Beijing, which he then tumbled down with. But according to Buetikofer, one thing is clear: “Europe cannot escape its global responsibility. The French president should also remember that”.

Patrick Koellner called the Indo-Pacific the new strategic center of gravity in Asia, calling it not a natural region of the world. Rather, the former Asia-Pacific, which was mainly characterized by economic issues, has been deliberately expanded to include India and the Indian Ocean, Koellner said. “The transition from Asia-Pacific to Indo-Pacific marks the real Zeitenwende” in international Asia policy, says the Vice President of the German Institute for Global and Area Studies (Giga). This is because adding India would reduce the danger of China’s hegemony in the region.

Köllner pointed to new alliances such as Quad or Aukus as evidence of the new Indo-Pacific geopolitical era. Here, billions are invested in armaments such as nuclear submarines, which Köllner sees as “a daring and expensive bet on the future”. It is questionable whether China will allow itself to be swayed by this or will even quickly create facts as a countermeasure, for example with regard to Taiwan, he said.

Danger – for Taiwan and privacy

May-Britt Stumbaum of the Center for Intelligence and Security Studies (CISS) in Munich made clear: If there were a war over Taiwan, some assembly lines in Germany would come to a standstill and quite a few shelves would be left empty. “Taiwan is not just a historical mission or a legacy to be finished. Taiwan is a very hard-core strategic consideration“. China is after a position on the first island chain, with direct access to the deep sea. President Xi Jinping is currently preparing the military option, Stumbaum said.

Tim Ruehlig from the German Council on Foreign Relations drew attention to another topic: setting technical standards. Here, too, China is increasingly taking on a leading role – with far-reaching consequences: From practical competitive advantages and patent fees to effects on political and social values, if China is setting standards for security and privacy in products. Such details should be considered in Germany’s China strategy, Ruehlig emphasizes.

More China expertise needed

But who should formulate this strategy? Marina Rudyak, a sinologist at the University of Heidelberg, warned: “It is like this in the USA: The more China is perceived as a rival there, the more is invested in China expertise. Here in Germany, the opposite is the case: The more difficult the relationship with China becomes, the less we in Germany want to deal with it. That is not very strategic“.

Cora Jungbluth from the Bertelsmann Foundation agreed with her and underlined how China expertise is by no means only missing in the German ministries. “China education is needed at all levels, not only in the federal ministries. You have to start at the education level”. Many Chinese direct investments happen at the municipal level. But it is precisely there that China competence is not particularly well established.

Mikko Huotari then attempted to bring the focus back to the current situation. At present, there is no lack of understanding of China, said the director of the Berlin-based China Institute Merics. “We have a very clear analysis of where China’s domestic development is going, where the relationship between China and the USA is heading. It is now a matter of developing the capacity for action. It is important that we do not completely go on the defensive, but look at where our interests lie and then try to assert them as best we can with our partners“. By Michael Radunski

Corruption scandal: Ombudswoman calls for far-reaching reforms

The European Parliament must do more to overcome the corruption scandal involving Qatar and leading MEPs (“Qatargate“), which has still not been fully cleared up, and to restore citizens’ trust. This is the verdict of European Ombudswoman Emily O’Reilly in her new activity report, which she presented in Brussels on Tuesday.

O’Reilly said she has no reason to doubt the goodwill of House Speaker Roberta Metsola, who has announced full disclosure. However, she said she is concerned because there is resistance to the reforms that have been announced. As an example, she cited the recently introduced so-called cooling-off period for former MEPs.

‘Six months is not a real cooling-off period’

In the future, EU parliamentarians are to be given the right to act as lobbyists six months after the end of their mandate at the earliest. That’s too short, O’Reilly said. “Six months is not a real cooling-off period”. She also criticized a planned advisory panel to investigate possible conflicts of interest by members of Congress. Independence leaves something to be desired, she said.

Metsola must do more, O’Reilly demanded. The scandal was “a risk to the reputation of the entire EU“, O’Reilly said. Parliament Speaker Metsola had even spoken of an “attack on European democracy”. “Without moral authority, there is no political legitimacy”, the ombudswoman warned about a year before the next European elections, which are due to take place in spring 2024.

Parliamentarian sees labeling fraud

Criticism also came from Parliament. Of the 14 reforms announced, only one has been implemented so far, Green MEP Daniel Freund told Table.Media. The fact that a “minimal solution” was chosen for the cooling-off period was also Metsola’s fault – because she had cast the decisive dissenting vote against a more ambitious reform.

“If this is the answer to the corruption scandal, well, whoop-de-doo”, Freund said. He said it was also worrying that the new ethics authority called for by Parliament to tackle conflicts of interest and enforce stricter transparency rules was a long time coming. Initial drafts from the EU Commission pointed to a “labeling scam”. The proposal is expected in May. ebo

Due Diligence Act: EP decides on ‘director’s duty’

The proposal of rapporteur Lara Wolters (S&D) for the Due Diligence Act, has received a clear majority in the vote in the Legal Affairs Committee (JURI). 19 votes in favor, three against and three abstentions was the result on Tuesday. Greens, Renew and EPP also voted in favor.

The main features of the parliamentary position were already clear yesterday. However, it was uncertain until the very end whether the so-called “director’s duty” clause would make it into the final text. This concerns the question of whether the payment of board members should be linked to compliance with due diligence obligations and climate transition plans. Now it is clear: the item was adopted by a narrow majority (13:12). The EPP in particular resisted the clause until the very end. That point had “nothing to do with supply chain legislation“, commented CDU shadow rapporteur Axel Voss, for example.

The vote is scheduled for the mini-plenary in Brussels on June 1. Although rapporteur Lara Wolters had to make concessions (exclusion of SMEs, no reverse burden of proof, delayed implementation), her compromise remains significantly more ambitious than the Commission proposal and the Council position. In the trilogue, the scope of the law, the role of the financial industry, civil liability and the payment of directors are likely to be major hurdles. cw

Methane regulation: Paulus tightens proposal

The co-rapporteur in the Industry Committee, Jutta Paulus (Greens), is confident that the compromise text on the methane regulation will be adopted today in the two lead committees. This is despite the fact that the text is more restrictive than the EU Commission’s proposal. The regulation aims to regulate methane leaks from gas and oil fields and the coal industry.

Its text is more ambitious than the Commission’s proposal and the Council’s position: It wants to impose stricter standards on the fossil fuel industry. “All political groups voted in favor of the text, except for the ID group and the left on the coal part”, Paulus said. The MEP underscores the commitment of the other groups not to introduce last-minute amendments during the committee vote. The report will be voted on today in the Environment (ENVI) and Industry (ITRE) committees. If it is adopted, the Parliament will vote on May 9, after which the trilogues could begin.

‘Climate killer methane’

Methane, the main component of natural gas, escapes from leaking pipelines, outdated valves and poorly maintained gas networks. It is also released unused into the atmosphere during oil production or flows out of the shafts of coal mines. Even small amounts have a damaging effect on the climate: Over a period of 20 years, the damage caused by methane is over 80 times greater than that caused by CO2, Paulus emphasized: “Methane is a real climate killer”.

Their report wants binding targets for reducing methane emissions in the EU to be set by 2025. Most importantly, the compromise amendments aim to bind third-country producers to the new EU commitments. “The mechanism is reminiscent of CBAM“, Jutta Paulus explained. In the case of the methane regulation, this means that importers of coal, gas, and oil into the EU will have to demonstrate that their imports comply with the EU regulation’s methane leakage estimation and repair measures from 2026. The EU Commission estimates that 75 to 90 percent of methane emissions recorded in the EU come from fossil fuel imports from third countries. cst

DSA: Breton names 19 VLOPS and VLOSE

Which platforms and search engine providers are considered so large that they should fall directly under Commission control under the Digital Services Act? EU Digital Commissioner Thierry Breton announced the answer yesterday. He detailed which providers in the EU have more than 45 million daily users and should therefore come under the Commission’s supervision.

The list corresponds to what Europe.Table already expected in February: In addition to the search providers Google and Bing (VLOSE), 17 “very large online platforms” (VLOPS) are to fall under the direct supervision of DG Connect: the Chinese online retailer AliExpress, the Amazon Store, the German online retailer Zalando, Apple’s App Store and the Dutch hotel booking platform Booking are among them. Google Maps, Shopping and Play services also fall under the Commission’s supervision. In addition to that: the social networks Twitter, Facebook, Instagram, Pinterest, Snapchat, the video platforms TikTok and YouTube, and the non-profit Wikipedia.

Designated search engines and platforms will have to meet additional obligations under the DSA starting Aug. 25. “They can no longer hide behind lengthy terms of use”, Breton said at a press briefing. As systemically relevant providers, they will have to offer plain-text summaries of their terms of service in all EU languages and provide an opt-out from profile-based recommendation algorithms. Ads will be prohibited from using sensitive data as defined by the General Data Protection Regulation. AI-generated content that is potentially considered disinformation must be labeled as such.

Users must expect significant changes

Probably the biggest change for users will be in the content moderation rules. The DSA stipulates that platforms and search engine providers must take action against all illegal content – and thus against significantly more content than under the German Network Enforcement Act, for example, for which there is an exhaustive catalog of criminal offenses. Also relevant for platform users: the DSA prohibits the use of misleading interface design, so-called dark patterns. Children must be given special protection under the DSA – control systems for parents and age verification systems become mandatory, and advertising explicitly directed at children is prohibited. For the time being, however, there are still no implementing regulations for the implementation of these obligations.

Breton wants to meet Musk and Zuckerberg

Breton is also using the attention surrounding the DSA launch to meet with the big names in the industry: In June, Breton writes in a LinkedIn post, he wants to meet Elon Musk at Twitter headquarters. He is still waiting for a corresponding invitation from TikTok operator Bytedance and is also prepared to talk to Mark Zuckerberg. Apparently, there is no date yet for either of these meetings. Breton expects the operators to be ready for takeoff by Aug. 25 to meet the new obligations.

One of the most controversial providers is not among the named platforms. Telegram is the subject of ongoing proceedings in Germany for alleged violations of its obligations under the Network Enforcement Act. “Unless Telegram is designated by the Commission as a very large online platform, the Network Enforcement Act will continue to apply until Feb. 17, 2024, and the Federal Office of Justice will remain responsible for its enforcement”, the responsible Federal Ministry of Justice said in response to a Table.Media request. Telegram could still be classified as a VLOP by the Commission at a later date.

According to the Digital Ministry, the German implementation law for the Digital Services Act, which will then also require the other platforms and search engine providers – albeit fewer than the largest providers – to fulfill further obligations, is to be introduced to the German cabinet in July. It must then be decided which authority will coordinate German supervision. fst

AI Act: ChatGPT not a high-risk system

General purpose AI (GPAI) systems are not classified as high-risk systems per se in the parliamentary draft of the AI Act. The reporters have deleted a corresponding entry in Annex III, as Table.Media has learned from negotiating circles.

General purpose AI systems are those that can be used for and adapted to a wide range of applications for which they were not intentionally and specifically designed. This includes large-scale language models such as ChatGPT. Many observers had feared that they would be classified as high-risk systems.

Broad agreement at technical level

However, this contradicts the systematics of the law, which provides for regulation for specific areas of application and there again for specific applications. By definition, GPAI is not developed for any specific application. Still, systems that are further developed on the basis of GPAI for specific applications may fall under the regulation. Anyone who develops and uses such applications is then bound by certain obligations. In order to fulfill them, developers of GPAI are obliged to pass on the necessary information.

With the introduction of GPAI into the legislation, one of the last points of negotiation at the technical level has largely been clarified. While negotiators have often described the rapporteurs’ timetable as unrealistic in the past, they are now confident that they will be able to clarify the outstanding points in a timely manner.

Tudorache expects strong negotiating mandate

“We are in the very last phase of our negotiations”, rapporteur Dragoș Tudorache (Renew) told Table.Media. He said that it was possible to present a balanced and coherent text that significantly improves the Commission’s proposal. As examples, he cited the addition of a separate article on Foundation Models (basic models as a form of GPAI) to reflect recent developments in the development of artificial intelligence. “We are confident that with these final negotiations, we will soon be ready to vote and have a strong mandate from the Parliament to negotiate with the Council”.

The agenda for the political meeting today is quite extensive. Nevertheless, the rapporteurs hope to reach a political agreement on the whole dossier by Thursday at the latest. The vote in the committees is scheduled to take place on May 11. vis

Nutrition: Committee wants to reduce dependence on imports

In a resolution, the Parliament’s Agriculture Committee (AGRI) calls for a long-term strengthening of the EU’s food security and agricultural autonomy. The Covid pandemic as well as the war in Ukraine have revealed structural problems in the European agricultural sector in this regard, says the initiative report, which was adopted by a clear majority on Tuesday.

According to the report, the Commission should draw up a holistic strategy plan aimed at reducing dependence on imports, for example for fertilizers and animal feed. Among other things, MEPs advocate the use of new breeding techniques to make plants more resistant and thus reduce the use of synthetic fertilizers and pesticides. Access to digital technologies for small farmers is to be promoted, as is an improvement in water management.

In addition, the committee calls for the high level of food waste in the EU to be combated. For example, through national campaigns or higher investment in sustainable transport and storage. According to the report, the establishment and use of strategic food stocks should also be considered in order to guarantee the EU’s food supply at all times.

“Securing our food has become a global challenge and cannot be taken for granted in Europe either”, says rapporteur Marlene Mortler (CDU). “The Green Deal must not lead to more food imports from third countries“. The plenum is scheduled to vote on the report at its June session. til

Raw materials strategy: German government works on fund and strategic reserves

The German Federal Ministry for Economic Affairs and Technology (BMWK) and the German Federal Ministry of Finance (BMF) are working on a raw materials fund to support raw materials projects in Germany and abroad. Both ministries confirmed this on request. They are also looking at ways to incentivize strategic stockpiling of critical raw materials. Both are measures announced at the beginning of the year in the BMWK’s key issues paper on the German raw materials strategy.

According to information from Table.Media, there will be no joint fund of Germany and France, as originally planned. However, both countries are closely coordinating their commodity strategies.

The Bloomberg news agency had previously reported that the federal government’s fund was to start next year and be endowed with funds of €1 to €2 billion. Neither of the two ministries confirmed this, as it was not possible to comment on the details of the ongoing internal coordination.

Federal government wants to create planning security

The measures from the key points paper are intended to support companies in diversifying their raw material supplies and would be “developed and implemented step by step“, a BMWK spokeswoman explained. “They are more or less a roadmap for all the players concerned and thus provide planning security”. A research program to support the development of sustainable and climate-friendly processes and technologies and the substitution of critical raw materials is also planned, she said.

Measures to stockpile raw materials are also an objective of the EU Commission’s draft Critical Raw Materials Act. According to this, member states are to build up larger strategic reserves in order to be prepared for short-term shortages. Commenting on the German government’s plans, a BMF spokeswoman said, “We will work closely with companies and trade associations to use appropriate incentives to encourage companies to stockpile more strategically”. leo

Chantal Kopf – reforming European electoral law

The words John F. Kennedy chose when he gave his famous speech in West Berlin in 1963 were to go around the world. “Ich bin ein Berliner”, he said with such fervor that people simply had to believe him. If Chantal Kopf were in a similar position today, the words would be different, to be sure; she would probably say, “I am a European“. But the conviction, the fervor, the deep will to fight for the right cause, these things would certainly be just as present. Anyone who talks to Chantal Kopf about her love of Europe – and the major changes she is trying to initiate there – will quickly be convinced of this.

One afternoon in March, she smiles into the webcam, behind her an angular image, blue, with golden stars on it. When she tilts her head, a counterpart sees that it is the European flag enthroned behind her. How could it be otherwise?

Transnational lists and lowered voting age

The spokeswoman for European policy in the Green Party’s parliamentary group in the German Bundestag has currently chosen a more than comprehensive reform of European electoral law as her pet project. Two changes are particularly important to her: “We want transnational lists, so that in addition to national candidacies, an EU-wide constituency is created for which candidates compete across countries“, Kopf says. “And we want there to be real top candidates so that people decide more directly who ends up heading the Commission”.

In addition, the lowering of the voting age to 16 has been completed, which will already apply in the upcoming European elections in 2024. “With all these measures, we want to make Europe closer to people, more alive”, Kopf says. “That is incredibly important to me”.

2021: Kopf wins direct mandate

Her own love for the EU was sparked in 1995 in Baden-Baden, where she was born. With France just around the corner, she learned French and is still involved in cooperation between the two countries, for example as a member of the board of the Franco-German Parliamentary Assembly, a body consisting of 50 members of parliament from each of the two countries, which is intended to promote joint exchange.

That she would one day end up in politics was almost to be expected, given her curriculum vitae: Her parents were also interested in politics. Later, Kopf moved to Freiburg, where she studied politics and became involved with the Green Party on the side. Why there in particular? “My interests were Europe and climate. So the Greens were a perfect fit”, she says today. She then rose quickly, ran for the Bundestag in 2021 – and was one of only a few Greens to win a direct mandate in the Freiburg constituency.

At just 28 years old, she missed the record for the youngest member of parliament. But Chantal Kopf says that she has set at least one record since the last Bundestag election: She is the Green Party member of the Bundestag with the longest journey. More than 800 kilometers lie between her constituency of Freiburg, near the French border, and the Bundestag in Berlin. It takes more than eight hours by car, but Kopf – as befits a true Green – usually takes the train across Germany to explain Europe to others: in Berlin, in Freiburg or somewhere in between. It’s not an easy job. But for Kopf, there probably couldn’t be a better one. Nils Wischmeyer