In the gas crisis, the EU community is anxiously holding their breath while waiting for next Wednesday, when Commission Vice President Frans Timmermans presents the joint emergency plan for the winter. Manuel Berkel took a sneak peek at the draft paper and reports on the strategy the Commission is using to minimize the cuts in industrial production.
Yesterday, the EU Commission presented its annual Rule of Law Report. Unsurprisingly, the authority sees the biggest problems in Hungary and Poland. The Commission gives the German rule of law a good report card but also criticizes it: While there has been improvement in the transfer of politicians to the business world, the “cool-off period” is too short. But this is precisely where Brussels fails to live up to its own standards, as Eric Bonse reports.
Thierry Breton is once again in crisis mode. He is currently on the road a lot, saying he wants to be “very present in all member states during this difficult period”. Breton played a key role during the COVID crisis. And then there are the numerous major legislative projects that fall within his remit. Yet at the beginning of his time in Brussels, Breton had trouble gaining a foothold in the Commission, as Stephan Israel and Till Hoppe write in their profile of the EU Internal Market Commissioner.
With a catalog of recommendations, best practices, and common criteria for industrial shutdowns, Brussels aims to prepare the community of nations for a possible gas shortage in winter. “The Commission’s analysis shows that it would be much more cost-effective to reduce gas demand moderately over a longer period of time and to start doing so earlier than to drastically cut demand suddenly and without adequate preparation,” the authority writes in a draft of its emergency plan, which is available to Europe.Table.
There could still be significant changes; Vice President Frans Timmermans plans to present the official version on July 20. However, one political direction already seems clear: Energy saving is now to be taken seriously.
The paper clearly identifies the risks: If Russia were to completely cut off gas supplies in July, storage facilities could only be filled to 65 to 71 percent. According to simulations by the European Network of Transmission System Operators for Gas (ENTSOG), there is a risk of an EU-wide gas shortfall of 20 billion cubic meters (bcm) in winter – around five percent of annual consumption.
Yesterday afternoon, a cryptic announcement from Gazprom showed just how real the danger is. The Russian company called into question the delivery of the Siemens turbine from Canada and thus the restart of Nord Stream 1.
In the emergency plan, Brussels officials now write: “Every citizen, every household can save gas.” Only on Tuesday, German Minister for Economic Affairs Robert Habeck (Greens) had emphasized that protected customers – meaning primarily households – would also have to contribute their share. Cuts in the industry should be limited so, it says in this regard in the Commission draft. However, the paper is still undecided on concrete measures.
In one place, it simply states that the heating temperature in public buildings should be lowered to 19 degrees. In another place, however, temperature limits for households are also brought into play. On July 20, it will become clear which of these proposals will remain.
More specific are the proposals for gas-fired power plants. An initial analysis by the European Network of Transmission System Operators (ENTSO-E) for the Commission showed that only half of the gas consumption in the power sector was indispensable for security of supply. Four to 40 bcm of gas could be saved in power plants. However, the Commission’s legal options are limited.
The paper once again points out that the energy mix is a matter for the member states. The Commission sees a legal lever for fuel switching at best via the regulation on risk provisioning in the electricity sector.
For industry, the Commission proposes the rapid introduction of gas-saving tenders. Germany is already working on such a system and plans to introduce it by the end of the summer. The Commission’s strategy is not to shut down individual, particularly large industrial consumers for long periods, but to encourage a large number of targeted, short shutdowns. The paper refers to experience with energy management systems in the electricity sector, where recurring shutdowns of just one minute minimize the impact on production.
The Commission expects lower costs if the tenders for industrial shutdowns are carried out across borders. The paper also proposes swap transactions between industrial companies that produce similar goods. If gas became scarce in one region, the contractual partner from another state could step into the supply obligations.
Finally, the Commission suggests common criteria for non-protected consumers in the industry to be shut down by authorities in the event of a shortage when market means are exhausted. The four groups include social criteria, cross-border supply chains, fuel switching and consumption reduction options, and potential damage to production facilities.
On Wednesday, the EU Commission presented its annual report on the rule of law in Luxembourg for the third time. Against the backdrop of the Russian invasion of Ukraine, this report is of particular importance, according to Commission Vice-President Věra Jourová. While Russian President Vladimir Putin is also campaigning against democracy and human rights in Ukraine, the EU “can only be credible if there is order in our own house”.
In order to ensure greater order, the Commission has for the first time included recommendations for action in its 27 country reports, which focus on justice, corruption, the media and the separation of powers in the 27 EU states. However, the Brussels-based authority itself falls short of some of the recommendations, for example, on lobbying. In addition, enforcement continues to be lacking, according to the European Parliament.
As in the previous year, the “2022 Rule of Law Report” identifies Hungary and Poland as the biggest problem cases. In Hungary, the EU authority criticizes “high-profile cases of corruption” that are not being prosecuted or are being prosecuted inadequately. Independent control mechanisms are still not sufficient to uncover corruption. The report speaks of “an environment in which the risks of clientelism, favoritism, and nepotism in high-level public administration are not addressed”.
The Commission is therefore withholding disbursement of the money from the reconstruction fund and has initiated proceedings under the conditionality mechanism. If Prime Minister Viktor Orbán does not take action against the abuses, the authority could also deny Budapest funds from the regular EU budget. So far, the government has shown little willingness to give in, Brussels says.
In Poland, the Commission is once again denouncing state interference in the judiciary. The national conservative government in Warsaw has taken a step toward Brussels and dissolved the controversial disciplinary chamber for judges. But the EU Commission continues to see “serious concerns about the independence of the Polish judiciary“. The Commission wants to withhold the money from the reconstruction fund promised by the head of the authorities, Ursula von der Leyen, until Poland makes improvements and, in Brussels’ view, reaches the agreed milestones.
The verdict on Germany is contradictory. On the one hand, the Commission gives the German constitutional state a good report card. The independence of the judiciary is perceived to be very high, the report says. On the other hand, the Commission criticizes the fact that judges are not paid well enough. This is also about the attractiveness of the profession. The Commission also sees a need for improvement in the transfer of politicians to the business world. The “cooling-off period” should be longer.
This recommendation is piquant – because Brussels itself has a problem with lobbying. For example, it was only revealed on Monday that former EU Commissioner Neelie Kroes worked for the American Uber group shortly after leaving the EU authority. Previously, numerous jobs of former German EU Commissioner Günther Oettinger had been revealed. Von der Leyen has ignored complaints from the European Parliament.
Accordingly, the reaction of the MEPs to the Rule of Law Report is harsh. “Commission President Ursula von der Leyen must finally act. We will not solve the rule of law problem in the EU if Ursula von der Leyen only writes reports,” warns Green MEP Daniel Freund, who has long campaigned for more transparency and an independent ethics authority. In the event of violations, he says, there must be financial sanctions.
“The time is more than ripe for consequences,” says Moritz Körner of the FDP. The Commission’s report on Hungary is damning, he says. “Whether judiciary, corruption or freedom of the media – the Hungarian rule of law is broken.” EU funds to Hungary would have to be withheld immediately to respond to systemic corruption.
Katarina Barley of the SPD draws a more positive conclusion. She is pleased that the Commission has also issued recommendations for action to the member states, as the European Parliament had demanded. The EU authority must now “follow up on whether the governments also implement their recommendations and otherwise enforce them through financial pressure or infringement proceedings”.
The EU is not living up to its own standards, says civil rights activist Patrick Breyer (Pirates). The Union itself has a problem with the rule of law, he says, because the rulings of the EU Court of Justice are being disregarded with the retention of location and communications data. “The EU Commission must now finally do its job and start enforcing the fundamental rulings instead of secretly pushing for the reintroduction of data retention,” Breyer demands. With Till Hoppe
Yesterday, the Committee on Industry, Research and Energy (ITRE) adopted the reports on the Renewables and Energy Efficiency Directives. As previously reported, the targets for primary and final energy savings will be raised to 14.5 percent by 2030 compared to expected levels. However, the targets will again be expressed in terms of 2007, rather than 2020, to take greater account of successes already achieved by member states in energy savings, said rapporteur Niels Fuglsang (S&D).
Committee members also supported the goal of generating 45 percent of energy from renewable sources by 2030 (Europe.Table reported). However, by a margin of two votes, the proposal by rapporteur Markus Pieper (EPP) to set the criteria for green hydrogen in the Renewable Energy Directive rather than in the Commission’s delegated act was blocked. Pieper, however, announced yesterday that he would continue to fight for his initiative in the plenary vote. Pieper gave an example: Pragmatic criteria are needed so that renewable energy plants that are already subsidized can also produce hydrogen.
The plenum is scheduled to vote on RED III and the EED in the second week of September. The Commission, on the other hand, does not want to regulate simplified approval procedures for renewable energies until a further amendment to the Renewable Energies Directive (RED IV). Pieper announced the corresponding ITRE report for September 26. His goal is to negotiate RED III and RED IV together in the trilogue. ber
Lithuania welcomed the EU Commission’s clarification of guidelines on transit traffic between Russia and its Baltic Sea exclave Kaliningrad but also voiced criticism. In a statement on Wednesday, the Foreign Ministry in Vilnius assessed positively that the clarification would not create any special exceptions or different treatment of the territories of EU member states. However, according to Lithuania, the new regulation could possibly give the wrong impression that the transatlantic community is softening its position and sanctions policy toward Russia.
Following protests and threats from Moscow, the EU Commission had previously drawn up new guidelines concerning transit traffic between Russia and its Baltic exclave Kaliningrad. This became necessary because the transit runs through Lithuania and thus through EU territory.
Russia is therefore allowed to transport civilian goods on the sanctions list through Lithuania by rail without major restrictions. The EU state had recently stopped allowing sanctioned goods to pass through. This affected luxury goods and steel products, for example. According to the document published on Wednesday, however, road transport by Russian forwarders through EU territory are still prohibited. In addition, no goods that can also be used for military purposes may be transported by rail.
According to dpa information, the EU Commission’s guidelines on the transport of civilian goods by rail state that these may only be transported in the usual quantities. To this end, there will continue to be targeted and effective controls. If it becomes apparent that larger quantities of goods than usual are being transported, they must be stopped, according to the guidelines. This is intended to prevent Russia from transporting goods on sanctions lists via Kaliningrad to other countries and thus circumventing punitive measures.
“Lithuania will effectively ensure the application of sanctions by closely monitoring, principally and effectively verifying whether Russia attempts to abuse its transit facilities,” according to the Foreign Ministry statement. Should such a thing be detected, Lithuania reserves the right to unilaterally prevent such attempts. The same applies in the case of national security interests.
With the new guideline, the EU Commission makes it clear that it places Russia’s right of transit above the legal view according to which Russia should be prohibited from transporting goods via Lithuania against the background of the sanctions regulations.
It initially remained unclear when Lithuania will again allow sanctioned goods to pass to and from Kaliningrad. “For the time being, we are waiting for clarification from the relevant institutions,” according to a spokeswoman for Lithuanian Railways. dpa
Five central European EU member states have called on the European Union to grant candidate status to the Western Balkan country of Bosnia-Herzegovina. “It is about a signal from our governments that the Western Balkans is important for the EU,” Austrian Foreign Minister Alexander Schallenberg said on Wednesday in Budapest. Meeting in the Hungarian capital, the foreign ministers of the so-called C5 (Austria, Hungary, the Czech Republic, Slovakia, and Slovenia) demanded that the next EU summit in October put the issue on the agenda.
At the EU summit in June, Ukraine, which had been attacked by Russia, and Moldova were granted EU candidate status. Bosnia, which is still suffering from the consequences of the 1992-1995 war, was passed over at that summit. Some Western Balkan countries, such as Serbia and Montenegro, have been negotiating EU accession for some time. Only Bosnia and Kosovo do not yet have candidate status.
The C5 group of countries was established in 2020, originally to strengthen regional cooperation in the COVID crisis. The meeting in Budapest was the first since Russia’s aggression against Ukraine began. Participants disagreed on some issues, Schallenberg acknowledged. According to observers, Hungary, in particular, pursues a rather Russia-friendly foreign and energy policy. dpa
A first breakthrough has been achieved in the dispute over grain exports from Ukraine, according to UN Secretary-General António Guterres. A “critical step” toward a solution was taken at talks between representatives of the United Nations, Ukraine, Russia and Turkey in Istanbul, Guterres told reporters in New York on Wednesday. “Today we finally have some hope.”
Guterres did not share details at first, but he said, “More technical work will now be needed for today’s progress to materialize.”
The international community has been demanding that Russia allow the export of Ukrainian grain for weeks. Ukraine complains that the Russian navy is blocking its ports in the Black Sea. Russia denies preventing wheat exports. The two countries are among the largest wheat exporters and play an important role in the world’s food security. The United Nations recently warned of the biggest famine in decades. dpa
Germany and the other EU states are calling on the European Parliament to forgo the planned recruitment of nearly 170 additional staff. Against the backdrop of high inflation rates, restraint in spending is currently necessary, according to a statement by government representatives on the upcoming EU budget negotiations for 2023 published on Wednesday.
Last year, the Parliament had already negotiated out funds for 142 internal and 180 external staff. This year, according to member states, money is being requested for 52 additional posts and for 116 additional accredited parliamentary assistants.
According to its own data, the Parliament had 8132 employees at its various locations such as Brussels, Strasbourg, and Luxembourg at last count. Around 1100 of these worked for the parliamentary groups. dpa
In view of the chaotic conditions at some European airports, MEP Dennis Radtke (CDU) calls for intervention by the EU Commission as well as national governments. He said there was a lack of staff for check-in, security checks, and baggage loading. This is the main reason why many passengers miss their flights and sometimes have to wait for hours. The staff shortage is the result of numerous layoffs during the COVID pandemic.
However, security checks, in particular, are a sovereign task and therefore also the responsibility of the regulatory authorities, the social politician said on Wednesday. To remedy the situation in the short term, he suggests that the federal police take over security-related tasks at airports.
Radtke considers the “disastrous price competition practiced by some airlines and airports” to be a major trigger of the current situation. Brussels is responsible for regulating European air traffic and allows “merciless price dumping by airports and airlines“.
Self-employed pilots without employment contracts, the outsourcing of safety-related work to external service providers, and “blacklists” for pilots who factor in too much fuel for their flights are the result of downward price competition, Radtke said. This is not only problematic in terms of labor law but also an aspect of safety.
He cited the airport in Vienna as a positive counter model, where the company is foregoing outsourcing and is instead relying “on its own staff with a corresponding remuneration structure”. While passengers at German and Dutch airports have had to adjust to long waiting times and flight cancellations in recent weeks, operations in Vienna have been comparatively unobtrusive.
Radtke is therefore demanding that Commission President Ursula von der Leyen present appropriate measures to prevent price competition from being “decided on the backs of the employees”. It is not about a ban on outsourcing but about strengthening labor rights in the industry. The last time this was done was during the liberalization of air traffic. Now we have to ask ourselves whether better social conditions are not more important than low fares.
With a written question, the social policy spokesman of the EPP wants to force the Commission to comment on the current situation, its own responsibility, and possible measures. The Commission has three months to reply.
A short-term solution to the staff shortage at some European airports and the associated chaotic conditions is therefore not to be expected. Any measures taken by the Commission would probably not take effect before the end of the vacation season. luk
The Stuttgart-based technology group Bosch is expanding its chip production. The automotive supplier plans to invest another €3 billion in the division by 2026, as announced by Group CEO Stefan Hartung in Dresden on Wednesday. Bosch plans to expand capacities and build development centers both in Dresden, where a new plant costing €1 billion went into operation a year ago, and in Reutlingen near Stuttgart.
Hartung is hoping for further subsidies as part of the IPCEI funding program, with which the EU wants to boost semiconductor production in Europe. Subsidies are important, Hartung emphasized: “The plant wouldn’t be standing here like this if it weren’t for the subsidies.”
By the end of the decade, the EU wants one-fifth of the world’s chips to come from Europe, twice as much as at present. That is a “super-ambitious goal,” said Hartung, because production is also being expanded in other parts of the world. So far, the US and Asia have dominated the market. The long distances had caused supply chains to break down during the COVID pandemic.
The quota is not decisive anyway, Hartung said. “You shouldn’t expect it to make Europe self-sufficient.” Rather, the aim is to build chips specifically for the needs of European industry, for example, for e-mobility. €800 worth of chips are installed in EVs, four times as much as in conventional vehicles.
The first chips produced in the new factory in Saxony, for example, were installed in Bosch cordless screwdrivers. The group has ramped up the factory faster than planned because of supply bottlenecks. “We’re pushing the pace.” In the final stage, after the €250 million expansion of the clean rooms, some 700 people are expected to work there, compared with 350 at present.
In the short term, however, Hartung is not giving the all-clear for chip demand, even if demand from the consumer goods sector, for example, is slowing in view of the weakening economy and rising inflation. However, there are other areas where capacities have not been expanded as much and where demand remains high. At Bosch, supply chains are still very tight, with little room to maneuver, Hartung said. “That will certainly remain the case for some months to come.” rtr
In the future, satellites are to be launched into space from Europe. This is what Anna Christmann, the German government’s space commissioner, has called for. “We need launch capacities in Europe as well,” she said in an interview with Reuters. “The North Sea is a possible location, along with Scotland, Norway, but also Sweden.”
The decisive factor is not necessarily that there are launch opportunities for missiles in Germany, said the Green politician. But for the North Sea, there is already a private consortium examining the possibilities there. So far, for example, the European Ariane rockets are sent into space for the spaceport in French Guiana in South America.
In light of the Russian attack on Ukraine, Christmann pointed to the strategic importance of space. “The war in Europe shows us that space is increasingly becoming a critical infrastructure. We need the information from orbit for situation assessment, including a military one,” she stressed.
For Europe’s sovereignty, it is important to be there. “In space as in energy supply, international cooperation is important, dependencies are dangerous,” she said, alluding to the past use of Russian launchers. Currently, two satellites of the European Galileo navigation system cannot be launched into space because the planned launch with a Russian rocket is no longer possible due to the sanctions.
The aerospace coordinator is therefore urging rapid completion of the new European Ariane 6 launcher, which has been repeatedly delayed. The ESA Council of Ministers in the fall will have to discuss how the additional costs will be distributed. But the priority was rapid deployment.
At the same time, she indicated that in the future, “all possibilities” should be examined when it comes to launching satellites into space. The background to this is that up to now, it has not been possible to launch publicly funded satellites with commercial American rockets, for example. Christmann sees opportunities for Europe precisely because of a very rapidly changing industry and, above all, the trend toward small satellites.
That’s because space travel is central to future challenges, especially with regard to the climate. “We realize how crucial technology is once it fails, such as in the control of wind turbines.” Satellites are being used for early forest fire detection, as they are now in Brandenburg. “They can detect CO2 sources and are quite important for sustainable agriculture.” New business models are emerging in these areas, combining the use of public data from companies with the use of their own satellites. rtr
Thierry Breton is on the road a lot these days. Like last week when he met with Wolfgang Schmidt, head of the Chancellery, or before that when he spoke with France’s Economy and Finance Minister Bruno Le Maire in Paris and visited Portugal’s Prime Minister António Costa in Lisbon. “I want to be very present in all member states during these difficult times,” he said.
The EU Internal Market Commissioner has taken up the mantle of crisis manager yet again. The EU states face a tough winter in view of the contentious gas supplies from Russia, and Breton wants to prevent “us from giving in once again to the temptation to keep everything to ourselves”. This is what happened in the early days of the COVID pandemic, for example, when the German government refused to provide Italy with urgently needed protective masks and respirators. Breton intervened and advocated to then Health Minister Jens Spahn – but while Berlin did overcome initial hesitancy and deliver, the damage was already done in Italy.
The 67-year-old, therefore, continuously preaches solidarity during his visits. His mantra: Only together can the member states overcome the looming gas crisis; after all, their countries are closely intertwined – via energy supplies and industrial cross-border supply chains. When governments closed the Schengen borders in the spring of 2020 to slow the spread of the virus, the machinery quickly came to a standstill because of the resulting precursor shortage.
To Breton, practicing solidarity, in this case, means: “Each country must produce as much energy as it can – to meet its own needs, but also those of its European neighbors.” That, he says, includes bringing coal-fired power plants back online in Germany; extending nuclear power plant lifetimes in Belgium; or speeding up the maintenance of nuclear reactors that have been taken offline in France. As a proponent of nuclear technology, Breton makes no secret of his opinion that Germany should also reconsider the decision to decommission its remaining nuclear power plants.
Roughly two months ago, he already sought talks with the industrial associations, the BDI, the French MEDEF, the Italian Confindustria. The aim was to align on a common stance and to come up with solutions to how the affected sectors could replace Russian gas in their processes. As far as possible, the aim is to avoid having to shut down production in the basic materials industry due to a shortage of gas, among other things: “We want to prevent disruptions to supply chains.”
In the meantime, they have a good overview and a plan, according to Breton. Next Wednesday, Commission Vice President Frans Timmermans will present the crisis plan for the fall and winter. Breton makes it sound as if this plan is largely his own achievement – modesty is not really his thing.
This trait doesn’t necessarily endear him to everyone in the Commission. But even his internal critics acknowledge that the former CEO has initiated and delivered many projects. The Digital Markets Act, the Digital Services Act, the Data Act, and the Chips Act – all of these legislative projects fall within his remit, and others are in the works, for example, on raw materials and an emergency mechanism for the single market.
In industry, his actionism is not exclusively met with enthusiasm. For many business representatives from Germany and other more market-oriented countries, the Frenchman’s actions are too interventionist: Nine member states recently warned in a letter that the planned crisis instrument for the single market could be abused for extensive intervention in industries.
Breton also oversteps with the Chips Act: His instruments for supply crises include the possibility of export controls and the joint procurement of semiconductors by the Commission. The instruments developed for COVID vaccines cannot be transferred to highly differentiated products such as semiconductors, according to the criticism from experts from the New Responsibility Foundation.
Elsewhere, companies miss the industry commissioner’s commitment to their interests. In the case of the Due Diligence Act, for example, Breton did not oppose the far-reaching plans of Justice Commissioner Didier Reynders with sufficient determination, according to voices in industry. The Commission’s proposal goes far beyond the German supply chain law and bears the hallmarks of NGOs. This is less problematic for French industry than for the globally active German economy. That’s why Breton probably didn’t fight his corner here, says an industry representative.
In Brussels, former “patron “Thierry Breton was somewhat peculiar from the start. Under President Jacques Chirac, he made a brief two-year foray into politics as Minister for the Economy, Finance and Industry back in 2005. He made his name first and foremost as a corporate reorganizer and businessman. He was CEO of Honeywell Bull, Thomson, France Telekom, and Atos. He doesn’t hesitate to remind his Commission colleagues that he’s a practical man. This first and foremost puts him at odds with Vice President Margrethe Vestager – he takes on the role of “state interventionist” and advocate for “European sovereignty” while she embodies the market liberal fighter against “protectionism” and professional politician from Denmark.
When it came to advancing the prestigious DSA and DMA project, the two opponents barely managed to conceal their rivalry. Thierry Breton, usually always the man in charge, does not like to be subordinate. The starting position was not easy for the Frenchman since Vestager was higher up in the hierarchy as one of the vice presidents under Ursula von der Leyen. In the end, the pair came to an arrangement. In the meantime, the fact that Thierry Breton was originally the second choice and came to his position because Macron’s preferred candidate, Sylvie Goulard, failed in the EU Parliament due to an affair about assistants’ salaries has faded from memory.
In the beginning, Thierry Breton had trouble finding his footing in Brussels and carving out his role under Ursula von der Leyen. That changed with the COVID crisis, where the Frenchman played a key role in making the vaccine procurement a success after all, after a difficult start. He tirelessly canvassed all the production sites and suppliers in Europe: “I know every factory on the continent, and I know what’s going on there,” he boasted when the supply of vaccine doses was finally secured. He is not afraid to negotiate with company leaders and government leaders at eye level.
Thierry Breton has also held professor posts at Harvard and written countless non-fiction books on information technology, as well as co-authored a novel about cyberspace. He is married and has three grown-up children. He reportedly plans to write more books after his mandate in Brussels. It is quite possible that Thierry Breton will then retire to Senegal with his wife. A country with which he feels connected, whose nationality he has adopted, and where he owns a house. Stephan Israel and Till Hoppe
In the gas crisis, the EU community is anxiously holding their breath while waiting for next Wednesday, when Commission Vice President Frans Timmermans presents the joint emergency plan for the winter. Manuel Berkel took a sneak peek at the draft paper and reports on the strategy the Commission is using to minimize the cuts in industrial production.
Yesterday, the EU Commission presented its annual Rule of Law Report. Unsurprisingly, the authority sees the biggest problems in Hungary and Poland. The Commission gives the German rule of law a good report card but also criticizes it: While there has been improvement in the transfer of politicians to the business world, the “cool-off period” is too short. But this is precisely where Brussels fails to live up to its own standards, as Eric Bonse reports.
Thierry Breton is once again in crisis mode. He is currently on the road a lot, saying he wants to be “very present in all member states during this difficult period”. Breton played a key role during the COVID crisis. And then there are the numerous major legislative projects that fall within his remit. Yet at the beginning of his time in Brussels, Breton had trouble gaining a foothold in the Commission, as Stephan Israel and Till Hoppe write in their profile of the EU Internal Market Commissioner.
With a catalog of recommendations, best practices, and common criteria for industrial shutdowns, Brussels aims to prepare the community of nations for a possible gas shortage in winter. “The Commission’s analysis shows that it would be much more cost-effective to reduce gas demand moderately over a longer period of time and to start doing so earlier than to drastically cut demand suddenly and without adequate preparation,” the authority writes in a draft of its emergency plan, which is available to Europe.Table.
There could still be significant changes; Vice President Frans Timmermans plans to present the official version on July 20. However, one political direction already seems clear: Energy saving is now to be taken seriously.
The paper clearly identifies the risks: If Russia were to completely cut off gas supplies in July, storage facilities could only be filled to 65 to 71 percent. According to simulations by the European Network of Transmission System Operators for Gas (ENTSOG), there is a risk of an EU-wide gas shortfall of 20 billion cubic meters (bcm) in winter – around five percent of annual consumption.
Yesterday afternoon, a cryptic announcement from Gazprom showed just how real the danger is. The Russian company called into question the delivery of the Siemens turbine from Canada and thus the restart of Nord Stream 1.
In the emergency plan, Brussels officials now write: “Every citizen, every household can save gas.” Only on Tuesday, German Minister for Economic Affairs Robert Habeck (Greens) had emphasized that protected customers – meaning primarily households – would also have to contribute their share. Cuts in the industry should be limited so, it says in this regard in the Commission draft. However, the paper is still undecided on concrete measures.
In one place, it simply states that the heating temperature in public buildings should be lowered to 19 degrees. In another place, however, temperature limits for households are also brought into play. On July 20, it will become clear which of these proposals will remain.
More specific are the proposals for gas-fired power plants. An initial analysis by the European Network of Transmission System Operators (ENTSO-E) for the Commission showed that only half of the gas consumption in the power sector was indispensable for security of supply. Four to 40 bcm of gas could be saved in power plants. However, the Commission’s legal options are limited.
The paper once again points out that the energy mix is a matter for the member states. The Commission sees a legal lever for fuel switching at best via the regulation on risk provisioning in the electricity sector.
For industry, the Commission proposes the rapid introduction of gas-saving tenders. Germany is already working on such a system and plans to introduce it by the end of the summer. The Commission’s strategy is not to shut down individual, particularly large industrial consumers for long periods, but to encourage a large number of targeted, short shutdowns. The paper refers to experience with energy management systems in the electricity sector, where recurring shutdowns of just one minute minimize the impact on production.
The Commission expects lower costs if the tenders for industrial shutdowns are carried out across borders. The paper also proposes swap transactions between industrial companies that produce similar goods. If gas became scarce in one region, the contractual partner from another state could step into the supply obligations.
Finally, the Commission suggests common criteria for non-protected consumers in the industry to be shut down by authorities in the event of a shortage when market means are exhausted. The four groups include social criteria, cross-border supply chains, fuel switching and consumption reduction options, and potential damage to production facilities.
On Wednesday, the EU Commission presented its annual report on the rule of law in Luxembourg for the third time. Against the backdrop of the Russian invasion of Ukraine, this report is of particular importance, according to Commission Vice-President Věra Jourová. While Russian President Vladimir Putin is also campaigning against democracy and human rights in Ukraine, the EU “can only be credible if there is order in our own house”.
In order to ensure greater order, the Commission has for the first time included recommendations for action in its 27 country reports, which focus on justice, corruption, the media and the separation of powers in the 27 EU states. However, the Brussels-based authority itself falls short of some of the recommendations, for example, on lobbying. In addition, enforcement continues to be lacking, according to the European Parliament.
As in the previous year, the “2022 Rule of Law Report” identifies Hungary and Poland as the biggest problem cases. In Hungary, the EU authority criticizes “high-profile cases of corruption” that are not being prosecuted or are being prosecuted inadequately. Independent control mechanisms are still not sufficient to uncover corruption. The report speaks of “an environment in which the risks of clientelism, favoritism, and nepotism in high-level public administration are not addressed”.
The Commission is therefore withholding disbursement of the money from the reconstruction fund and has initiated proceedings under the conditionality mechanism. If Prime Minister Viktor Orbán does not take action against the abuses, the authority could also deny Budapest funds from the regular EU budget. So far, the government has shown little willingness to give in, Brussels says.
In Poland, the Commission is once again denouncing state interference in the judiciary. The national conservative government in Warsaw has taken a step toward Brussels and dissolved the controversial disciplinary chamber for judges. But the EU Commission continues to see “serious concerns about the independence of the Polish judiciary“. The Commission wants to withhold the money from the reconstruction fund promised by the head of the authorities, Ursula von der Leyen, until Poland makes improvements and, in Brussels’ view, reaches the agreed milestones.
The verdict on Germany is contradictory. On the one hand, the Commission gives the German constitutional state a good report card. The independence of the judiciary is perceived to be very high, the report says. On the other hand, the Commission criticizes the fact that judges are not paid well enough. This is also about the attractiveness of the profession. The Commission also sees a need for improvement in the transfer of politicians to the business world. The “cooling-off period” should be longer.
This recommendation is piquant – because Brussels itself has a problem with lobbying. For example, it was only revealed on Monday that former EU Commissioner Neelie Kroes worked for the American Uber group shortly after leaving the EU authority. Previously, numerous jobs of former German EU Commissioner Günther Oettinger had been revealed. Von der Leyen has ignored complaints from the European Parliament.
Accordingly, the reaction of the MEPs to the Rule of Law Report is harsh. “Commission President Ursula von der Leyen must finally act. We will not solve the rule of law problem in the EU if Ursula von der Leyen only writes reports,” warns Green MEP Daniel Freund, who has long campaigned for more transparency and an independent ethics authority. In the event of violations, he says, there must be financial sanctions.
“The time is more than ripe for consequences,” says Moritz Körner of the FDP. The Commission’s report on Hungary is damning, he says. “Whether judiciary, corruption or freedom of the media – the Hungarian rule of law is broken.” EU funds to Hungary would have to be withheld immediately to respond to systemic corruption.
Katarina Barley of the SPD draws a more positive conclusion. She is pleased that the Commission has also issued recommendations for action to the member states, as the European Parliament had demanded. The EU authority must now “follow up on whether the governments also implement their recommendations and otherwise enforce them through financial pressure or infringement proceedings”.
The EU is not living up to its own standards, says civil rights activist Patrick Breyer (Pirates). The Union itself has a problem with the rule of law, he says, because the rulings of the EU Court of Justice are being disregarded with the retention of location and communications data. “The EU Commission must now finally do its job and start enforcing the fundamental rulings instead of secretly pushing for the reintroduction of data retention,” Breyer demands. With Till Hoppe
Yesterday, the Committee on Industry, Research and Energy (ITRE) adopted the reports on the Renewables and Energy Efficiency Directives. As previously reported, the targets for primary and final energy savings will be raised to 14.5 percent by 2030 compared to expected levels. However, the targets will again be expressed in terms of 2007, rather than 2020, to take greater account of successes already achieved by member states in energy savings, said rapporteur Niels Fuglsang (S&D).
Committee members also supported the goal of generating 45 percent of energy from renewable sources by 2030 (Europe.Table reported). However, by a margin of two votes, the proposal by rapporteur Markus Pieper (EPP) to set the criteria for green hydrogen in the Renewable Energy Directive rather than in the Commission’s delegated act was blocked. Pieper, however, announced yesterday that he would continue to fight for his initiative in the plenary vote. Pieper gave an example: Pragmatic criteria are needed so that renewable energy plants that are already subsidized can also produce hydrogen.
The plenum is scheduled to vote on RED III and the EED in the second week of September. The Commission, on the other hand, does not want to regulate simplified approval procedures for renewable energies until a further amendment to the Renewable Energies Directive (RED IV). Pieper announced the corresponding ITRE report for September 26. His goal is to negotiate RED III and RED IV together in the trilogue. ber
Lithuania welcomed the EU Commission’s clarification of guidelines on transit traffic between Russia and its Baltic Sea exclave Kaliningrad but also voiced criticism. In a statement on Wednesday, the Foreign Ministry in Vilnius assessed positively that the clarification would not create any special exceptions or different treatment of the territories of EU member states. However, according to Lithuania, the new regulation could possibly give the wrong impression that the transatlantic community is softening its position and sanctions policy toward Russia.
Following protests and threats from Moscow, the EU Commission had previously drawn up new guidelines concerning transit traffic between Russia and its Baltic exclave Kaliningrad. This became necessary because the transit runs through Lithuania and thus through EU territory.
Russia is therefore allowed to transport civilian goods on the sanctions list through Lithuania by rail without major restrictions. The EU state had recently stopped allowing sanctioned goods to pass through. This affected luxury goods and steel products, for example. According to the document published on Wednesday, however, road transport by Russian forwarders through EU territory are still prohibited. In addition, no goods that can also be used for military purposes may be transported by rail.
According to dpa information, the EU Commission’s guidelines on the transport of civilian goods by rail state that these may only be transported in the usual quantities. To this end, there will continue to be targeted and effective controls. If it becomes apparent that larger quantities of goods than usual are being transported, they must be stopped, according to the guidelines. This is intended to prevent Russia from transporting goods on sanctions lists via Kaliningrad to other countries and thus circumventing punitive measures.
“Lithuania will effectively ensure the application of sanctions by closely monitoring, principally and effectively verifying whether Russia attempts to abuse its transit facilities,” according to the Foreign Ministry statement. Should such a thing be detected, Lithuania reserves the right to unilaterally prevent such attempts. The same applies in the case of national security interests.
With the new guideline, the EU Commission makes it clear that it places Russia’s right of transit above the legal view according to which Russia should be prohibited from transporting goods via Lithuania against the background of the sanctions regulations.
It initially remained unclear when Lithuania will again allow sanctioned goods to pass to and from Kaliningrad. “For the time being, we are waiting for clarification from the relevant institutions,” according to a spokeswoman for Lithuanian Railways. dpa
Five central European EU member states have called on the European Union to grant candidate status to the Western Balkan country of Bosnia-Herzegovina. “It is about a signal from our governments that the Western Balkans is important for the EU,” Austrian Foreign Minister Alexander Schallenberg said on Wednesday in Budapest. Meeting in the Hungarian capital, the foreign ministers of the so-called C5 (Austria, Hungary, the Czech Republic, Slovakia, and Slovenia) demanded that the next EU summit in October put the issue on the agenda.
At the EU summit in June, Ukraine, which had been attacked by Russia, and Moldova were granted EU candidate status. Bosnia, which is still suffering from the consequences of the 1992-1995 war, was passed over at that summit. Some Western Balkan countries, such as Serbia and Montenegro, have been negotiating EU accession for some time. Only Bosnia and Kosovo do not yet have candidate status.
The C5 group of countries was established in 2020, originally to strengthen regional cooperation in the COVID crisis. The meeting in Budapest was the first since Russia’s aggression against Ukraine began. Participants disagreed on some issues, Schallenberg acknowledged. According to observers, Hungary, in particular, pursues a rather Russia-friendly foreign and energy policy. dpa
A first breakthrough has been achieved in the dispute over grain exports from Ukraine, according to UN Secretary-General António Guterres. A “critical step” toward a solution was taken at talks between representatives of the United Nations, Ukraine, Russia and Turkey in Istanbul, Guterres told reporters in New York on Wednesday. “Today we finally have some hope.”
Guterres did not share details at first, but he said, “More technical work will now be needed for today’s progress to materialize.”
The international community has been demanding that Russia allow the export of Ukrainian grain for weeks. Ukraine complains that the Russian navy is blocking its ports in the Black Sea. Russia denies preventing wheat exports. The two countries are among the largest wheat exporters and play an important role in the world’s food security. The United Nations recently warned of the biggest famine in decades. dpa
Germany and the other EU states are calling on the European Parliament to forgo the planned recruitment of nearly 170 additional staff. Against the backdrop of high inflation rates, restraint in spending is currently necessary, according to a statement by government representatives on the upcoming EU budget negotiations for 2023 published on Wednesday.
Last year, the Parliament had already negotiated out funds for 142 internal and 180 external staff. This year, according to member states, money is being requested for 52 additional posts and for 116 additional accredited parliamentary assistants.
According to its own data, the Parliament had 8132 employees at its various locations such as Brussels, Strasbourg, and Luxembourg at last count. Around 1100 of these worked for the parliamentary groups. dpa
In view of the chaotic conditions at some European airports, MEP Dennis Radtke (CDU) calls for intervention by the EU Commission as well as national governments. He said there was a lack of staff for check-in, security checks, and baggage loading. This is the main reason why many passengers miss their flights and sometimes have to wait for hours. The staff shortage is the result of numerous layoffs during the COVID pandemic.
However, security checks, in particular, are a sovereign task and therefore also the responsibility of the regulatory authorities, the social politician said on Wednesday. To remedy the situation in the short term, he suggests that the federal police take over security-related tasks at airports.
Radtke considers the “disastrous price competition practiced by some airlines and airports” to be a major trigger of the current situation. Brussels is responsible for regulating European air traffic and allows “merciless price dumping by airports and airlines“.
Self-employed pilots without employment contracts, the outsourcing of safety-related work to external service providers, and “blacklists” for pilots who factor in too much fuel for their flights are the result of downward price competition, Radtke said. This is not only problematic in terms of labor law but also an aspect of safety.
He cited the airport in Vienna as a positive counter model, where the company is foregoing outsourcing and is instead relying “on its own staff with a corresponding remuneration structure”. While passengers at German and Dutch airports have had to adjust to long waiting times and flight cancellations in recent weeks, operations in Vienna have been comparatively unobtrusive.
Radtke is therefore demanding that Commission President Ursula von der Leyen present appropriate measures to prevent price competition from being “decided on the backs of the employees”. It is not about a ban on outsourcing but about strengthening labor rights in the industry. The last time this was done was during the liberalization of air traffic. Now we have to ask ourselves whether better social conditions are not more important than low fares.
With a written question, the social policy spokesman of the EPP wants to force the Commission to comment on the current situation, its own responsibility, and possible measures. The Commission has three months to reply.
A short-term solution to the staff shortage at some European airports and the associated chaotic conditions is therefore not to be expected. Any measures taken by the Commission would probably not take effect before the end of the vacation season. luk
The Stuttgart-based technology group Bosch is expanding its chip production. The automotive supplier plans to invest another €3 billion in the division by 2026, as announced by Group CEO Stefan Hartung in Dresden on Wednesday. Bosch plans to expand capacities and build development centers both in Dresden, where a new plant costing €1 billion went into operation a year ago, and in Reutlingen near Stuttgart.
Hartung is hoping for further subsidies as part of the IPCEI funding program, with which the EU wants to boost semiconductor production in Europe. Subsidies are important, Hartung emphasized: “The plant wouldn’t be standing here like this if it weren’t for the subsidies.”
By the end of the decade, the EU wants one-fifth of the world’s chips to come from Europe, twice as much as at present. That is a “super-ambitious goal,” said Hartung, because production is also being expanded in other parts of the world. So far, the US and Asia have dominated the market. The long distances had caused supply chains to break down during the COVID pandemic.
The quota is not decisive anyway, Hartung said. “You shouldn’t expect it to make Europe self-sufficient.” Rather, the aim is to build chips specifically for the needs of European industry, for example, for e-mobility. €800 worth of chips are installed in EVs, four times as much as in conventional vehicles.
The first chips produced in the new factory in Saxony, for example, were installed in Bosch cordless screwdrivers. The group has ramped up the factory faster than planned because of supply bottlenecks. “We’re pushing the pace.” In the final stage, after the €250 million expansion of the clean rooms, some 700 people are expected to work there, compared with 350 at present.
In the short term, however, Hartung is not giving the all-clear for chip demand, even if demand from the consumer goods sector, for example, is slowing in view of the weakening economy and rising inflation. However, there are other areas where capacities have not been expanded as much and where demand remains high. At Bosch, supply chains are still very tight, with little room to maneuver, Hartung said. “That will certainly remain the case for some months to come.” rtr
In the future, satellites are to be launched into space from Europe. This is what Anna Christmann, the German government’s space commissioner, has called for. “We need launch capacities in Europe as well,” she said in an interview with Reuters. “The North Sea is a possible location, along with Scotland, Norway, but also Sweden.”
The decisive factor is not necessarily that there are launch opportunities for missiles in Germany, said the Green politician. But for the North Sea, there is already a private consortium examining the possibilities there. So far, for example, the European Ariane rockets are sent into space for the spaceport in French Guiana in South America.
In light of the Russian attack on Ukraine, Christmann pointed to the strategic importance of space. “The war in Europe shows us that space is increasingly becoming a critical infrastructure. We need the information from orbit for situation assessment, including a military one,” she stressed.
For Europe’s sovereignty, it is important to be there. “In space as in energy supply, international cooperation is important, dependencies are dangerous,” she said, alluding to the past use of Russian launchers. Currently, two satellites of the European Galileo navigation system cannot be launched into space because the planned launch with a Russian rocket is no longer possible due to the sanctions.
The aerospace coordinator is therefore urging rapid completion of the new European Ariane 6 launcher, which has been repeatedly delayed. The ESA Council of Ministers in the fall will have to discuss how the additional costs will be distributed. But the priority was rapid deployment.
At the same time, she indicated that in the future, “all possibilities” should be examined when it comes to launching satellites into space. The background to this is that up to now, it has not been possible to launch publicly funded satellites with commercial American rockets, for example. Christmann sees opportunities for Europe precisely because of a very rapidly changing industry and, above all, the trend toward small satellites.
That’s because space travel is central to future challenges, especially with regard to the climate. “We realize how crucial technology is once it fails, such as in the control of wind turbines.” Satellites are being used for early forest fire detection, as they are now in Brandenburg. “They can detect CO2 sources and are quite important for sustainable agriculture.” New business models are emerging in these areas, combining the use of public data from companies with the use of their own satellites. rtr
Thierry Breton is on the road a lot these days. Like last week when he met with Wolfgang Schmidt, head of the Chancellery, or before that when he spoke with France’s Economy and Finance Minister Bruno Le Maire in Paris and visited Portugal’s Prime Minister António Costa in Lisbon. “I want to be very present in all member states during these difficult times,” he said.
The EU Internal Market Commissioner has taken up the mantle of crisis manager yet again. The EU states face a tough winter in view of the contentious gas supplies from Russia, and Breton wants to prevent “us from giving in once again to the temptation to keep everything to ourselves”. This is what happened in the early days of the COVID pandemic, for example, when the German government refused to provide Italy with urgently needed protective masks and respirators. Breton intervened and advocated to then Health Minister Jens Spahn – but while Berlin did overcome initial hesitancy and deliver, the damage was already done in Italy.
The 67-year-old, therefore, continuously preaches solidarity during his visits. His mantra: Only together can the member states overcome the looming gas crisis; after all, their countries are closely intertwined – via energy supplies and industrial cross-border supply chains. When governments closed the Schengen borders in the spring of 2020 to slow the spread of the virus, the machinery quickly came to a standstill because of the resulting precursor shortage.
To Breton, practicing solidarity, in this case, means: “Each country must produce as much energy as it can – to meet its own needs, but also those of its European neighbors.” That, he says, includes bringing coal-fired power plants back online in Germany; extending nuclear power plant lifetimes in Belgium; or speeding up the maintenance of nuclear reactors that have been taken offline in France. As a proponent of nuclear technology, Breton makes no secret of his opinion that Germany should also reconsider the decision to decommission its remaining nuclear power plants.
Roughly two months ago, he already sought talks with the industrial associations, the BDI, the French MEDEF, the Italian Confindustria. The aim was to align on a common stance and to come up with solutions to how the affected sectors could replace Russian gas in their processes. As far as possible, the aim is to avoid having to shut down production in the basic materials industry due to a shortage of gas, among other things: “We want to prevent disruptions to supply chains.”
In the meantime, they have a good overview and a plan, according to Breton. Next Wednesday, Commission Vice President Frans Timmermans will present the crisis plan for the fall and winter. Breton makes it sound as if this plan is largely his own achievement – modesty is not really his thing.
This trait doesn’t necessarily endear him to everyone in the Commission. But even his internal critics acknowledge that the former CEO has initiated and delivered many projects. The Digital Markets Act, the Digital Services Act, the Data Act, and the Chips Act – all of these legislative projects fall within his remit, and others are in the works, for example, on raw materials and an emergency mechanism for the single market.
In industry, his actionism is not exclusively met with enthusiasm. For many business representatives from Germany and other more market-oriented countries, the Frenchman’s actions are too interventionist: Nine member states recently warned in a letter that the planned crisis instrument for the single market could be abused for extensive intervention in industries.
Breton also oversteps with the Chips Act: His instruments for supply crises include the possibility of export controls and the joint procurement of semiconductors by the Commission. The instruments developed for COVID vaccines cannot be transferred to highly differentiated products such as semiconductors, according to the criticism from experts from the New Responsibility Foundation.
Elsewhere, companies miss the industry commissioner’s commitment to their interests. In the case of the Due Diligence Act, for example, Breton did not oppose the far-reaching plans of Justice Commissioner Didier Reynders with sufficient determination, according to voices in industry. The Commission’s proposal goes far beyond the German supply chain law and bears the hallmarks of NGOs. This is less problematic for French industry than for the globally active German economy. That’s why Breton probably didn’t fight his corner here, says an industry representative.
In Brussels, former “patron “Thierry Breton was somewhat peculiar from the start. Under President Jacques Chirac, he made a brief two-year foray into politics as Minister for the Economy, Finance and Industry back in 2005. He made his name first and foremost as a corporate reorganizer and businessman. He was CEO of Honeywell Bull, Thomson, France Telekom, and Atos. He doesn’t hesitate to remind his Commission colleagues that he’s a practical man. This first and foremost puts him at odds with Vice President Margrethe Vestager – he takes on the role of “state interventionist” and advocate for “European sovereignty” while she embodies the market liberal fighter against “protectionism” and professional politician from Denmark.
When it came to advancing the prestigious DSA and DMA project, the two opponents barely managed to conceal their rivalry. Thierry Breton, usually always the man in charge, does not like to be subordinate. The starting position was not easy for the Frenchman since Vestager was higher up in the hierarchy as one of the vice presidents under Ursula von der Leyen. In the end, the pair came to an arrangement. In the meantime, the fact that Thierry Breton was originally the second choice and came to his position because Macron’s preferred candidate, Sylvie Goulard, failed in the EU Parliament due to an affair about assistants’ salaries has faded from memory.
In the beginning, Thierry Breton had trouble finding his footing in Brussels and carving out his role under Ursula von der Leyen. That changed with the COVID crisis, where the Frenchman played a key role in making the vaccine procurement a success after all, after a difficult start. He tirelessly canvassed all the production sites and suppliers in Europe: “I know every factory on the continent, and I know what’s going on there,” he boasted when the supply of vaccine doses was finally secured. He is not afraid to negotiate with company leaders and government leaders at eye level.
Thierry Breton has also held professor posts at Harvard and written countless non-fiction books on information technology, as well as co-authored a novel about cyberspace. He is married and has three grown-up children. He reportedly plans to write more books after his mandate in Brussels. It is quite possible that Thierry Breton will then retire to Senegal with his wife. A country with which he feels connected, whose nationality he has adopted, and where he owns a house. Stephan Israel and Till Hoppe