Last Tuesday, Ukrainian units broke through Russian defense lines for the first time near Balakliia and they rapidly conquered large parts of the Kharkiv region in northeastern Ukraine over the weekend. Russian forces are retreating in an unsorted fashion from key logistics hubs such as Izium, leaving masses of war materiel behind. Meanwhile, the Kremlin remains silent.
The war has taken an astounding turn. A Ukrainian victory suddenly seems possible. The question is: How will Vladimir Putin react – and what about the West? Ukrainian President Volodymyr Zelenskiy immediately called for more heavy weapons, especially battle tanks, which Kyiv believes are needed. Until now, Chancellor Olaf Scholz had stressed that Russia must not win this war. Now he will soon have to give his answer to the question whether the goal is Moscow’s defeat.
Putin still has plenty of options to further escalate the conflict. This includes the Zaporizhzhia nuclear power plant, which was shut down over the weekend for safety reasons, among other things, the remaining energy supplies. The leverage is still so strong that EU states are wary of a price cap on Russian gas imports. Manuel Berkel brings you up to speed on the outcome of the energy ministers’ council.
The energy crisis will also take center stage when Commission President Ursula von der Leyen addresses the state of the EU on Wednesday. Find out what other impulses can be expected from the SOTEU in my Feature.
I wish you a great start to the new week!
Commission President Ursula von der Leyen announced her temporary defeat on Saturday with four bullet points – the topics for Tuesday’s college meeting in Strasbourg: smart energy saving, financial contributions from the energy sector for households and businesses, liquidity support for utilities and faster implementation of REPowerEU – which includes faster expansion of renewable energies.
Von der Leyen also wrote which topic was missing from her five-point plan on twitter: “On the cost of gas, we continue to work on answers adapted to a global market. Objective: to ensure lower prices in Europe while guaranteeing security of supply.” With this, the Commission President admits to having failed with her political push for now.
As recently as Wednesday, von der Leyen surprisingly proposed a price cap on Russian gas imports to end Russia’s ability to manipulate gas prices. Such a cap could come very quickly, the EU leader threatened in the direction of Moscow – whereupon President Vladimir Putin immediately announced a supply stop.
By postponing the gas price cap, von der Leyen follows the concerns of many EU states. At the Council of Energy Ministers on Friday, Hungary, Austria and Slovakia had spoken out clearly against such a step towards Russia. The Czech presidency also did not want to follow von der Leyen and keep the issue small. Some states are currently still dependent on Russian gas and, according to their own statements, have difficulties finding alternative supply routes, said Energy Commissioner Kadri Simson after the meeting.
German Chancellor Olaf Scholz had also spoken out in favor of putting the plans on hold on Friday afternoon. “When it comes to the question of what happens on the gas market, there are still very many very different proposals. It would be far too early to say now: we will do this and that,” he said after a meeting with Council President Charles Michel in Berlin.
Scholz referred to the consideration shown by EU partners when Germany spoke out against a gas embargo in the spring. What the chancellor did not say was that how much gas Central and Eastern European member states will receive in the winter also depends on how much energy German industry saves in the coming months. And on the willingness of neighbors to pay compensation for gas supplies in a shortage situation. Solidarity agreements with Poland and a number of other states are currently failing because of this, according to a recent report by the Ministry for Economic Affairs to the Bundestag.
Scholz also initially rejected a price cap on all gas imports – for example from Norway, the USA or LNG supplies from all over the world. Belgium, for example, had called for this. “We should not take the last step before the first,” the SPD politician said. What kind of price limits for gas are feasible for Germany should first be clarified by a group of experts. The coalition committee had announced this with the third relief package.
Nevertheless, the Council gave the Commission the task of examining a general cap. For pipeline deliveries from partner states, von der Leyen is actually counting on negotiations and a faster start of the joint procurement platform.
For liquefied natural gas, the situation is much more delicate. “A general price cap including LNG imports could pose a risk to supply,” Simson warned. The EU has too little market power for that. So if the purchase price of European suppliers is too low, more liquefied gas could be shipped to Asia again.
Scholz wants the Commission’s proposals on the electricity market to be discussed first. In Brussels, Economic Affairs Minister Robert Habeck even set a time limit. If the EU does not implement the skimming of high profits on the electricity market by the end of the year, Germany will relieve consumers with its own levy.
This scenario should also explain why a small state like Lithuania opposes the Council majority that actually supports the Commission’s plan for skimming excess profits in electricity trading. This is a red line for his country, said Energy Minister Dainius Kreivys.
Skimming profits above a revenue cap not only affects the forward market for electricity, it also destroys the level playing field in the EU’s internal market. Companies in different EU countries would also receive different subsidies, Kreivys probably said with regard to the distribution of excess profits.
The revenue from the levy would also vary depending on the type of power plants different EU states have. Poland, with its high share of electricity from hard coal, which is also expensive, is therefore calling for intervention in emissions trading to push down electricity prices. “Issuing additional emission allowances from the market stability reserve could be part of the solution,” said Czech Minister Jozef Síkela, summarizing the discussion.
It remains to be seen whether there will be a majority in the member states for binding electricity savings targets – Poland and Spain, for example, are relying on voluntary measures. Síkela expects a similar solution to the gas savings plan adopted in July – initially voluntary targets that become binding after a defined mechanism. The gas model, however, does not suggest that there will be much pressure. Last week, the Netherlands advocated taking the next step. But the number of member states required for the mandatory gas savings target was not yet sufficient, reported a senior EU diplomat one day ahead of the summit.
This week, the Commission intends to present a concrete draft legislation. Síkela promised a quick decision in the Council. If necessary, there will be another meeting of energy ministers in September. In any case, EU diplomats expect an agreement before the meeting of EU heads of state and government on October 7 in Prague.
Outside the EU bubble, the acronym SOTEU is hardly known to anyone. However, within the Brussels circle of influence, the State of the Union address is eagerly awaited, as it sets the agenda for the political year. Commission President Ursula von der Leyen is therefore carefully preparing her speech in the Strasbourg European Parliament – for months, her staff has been collecting ideas and material, in the Directorates General and also from external experts.
The content of the speech itself will be kept strictly confidential until von der Leyen appears before the plenum at 9 a.m. on Wednesday morning. However, some things are becoming clear:
Energy: The electricity and gas price crisis dominates the political agenda, and even von der Leyen cannot avoid the topic. However, she will probably not have much new to announce on Wednesday: The concrete proposals for emergency measures will already be decided in college the day before and are unlikely to be kept under wraps. Von der Leyen is therefore likely to give an outlook on which measures are planned for the internal energy market in the medium term and appeal to the cohesion of the EU states in the crisis.
At their meeting with the group chairmen on Thursday, EPP leader Manfred Weber coined the term “winter of solidarity” for this. The co-chairwoman of the CDU/CSU members of parliament, Angelika Niebler, also called for all legislative proposals that would impose further burdens on companies to be “put to the test again” in view of the enormously high energy prices. It is hard to imagine, however, that von der Leyen will agree to this and withdraw, for example, the EU Supply Chain Act or the revised Industrial Emissions Directive.
Ukraine: At the meeting with von der Leyen, the chairman of the liberal Renew Group called for a firm stand against the Kremlin narrative that the sanctions were hurting Europeans more than Russia. In view of the social tensions, it is a matter of “re-anchoring the truth,” Stéphane Séjourné said, according to participants. In her speech, Von der Leyen is also likely to emphasize that sanctions are working against the Russian economy. In view of Ukraine’s recent military successes, she also sees her support for President Volodymyr Zelenskiy confirmed. She is sure to receive applause: The European Parliament is discussing awarding this year’s Sakharov Prize to the president and his people.
EU reform: In her speech at the end of the Future Conference in May, von der Leyen promised to present concrete initiatives for implementing the citizens’ reform proposals in September. Now she has to deliver. The European parliamentarians are hoping for support from the Commission President for her request to convene a constitutional convention and will pay very close attention to what von der Leyen says about strengthening the parliament, in particular a right of initiative of its own. The head of the CDU, Daniel Caspary, harshly criticizes the member states for refusing to implement the necessary EU reforms – he speaks of a “complete failure”.
Economy: The Commission President is expected to present plans for making the single market more crisis-proof. The content of these plans has already been leaked – in an emergency, for example, the Commission wants to be able to instruct member states as to which sensitive products should be stockpiled. Additionally, von der Leyen is expected to outline the authority’s ideas for a reform of the fiscal rules. The concrete proposal is scheduled for the second half of October, as her deputy Valdis Dombrovskis announced (read more about this in today’s News).
Tonight, the Bureau of the European Parliament meets in Strasbourg to elect a new Secretary General. The Italian Alessandro Chiocchetti (53), until now head of cabinet of Parliament President Roberta Metsola, has the best chance of becoming Klaus Welle’s successor.
Klaus Welle retires at the age of 58. For 13 years, he headed the civil service apparatus with more than 8100 posts. Welle has achieved a great deal for the Parliament in the struggle among the EU institutions for influence. For example, the Westphalian with a CDU party book also developed the top-candidate principle. Welle is now learning the ropes, it is said.
Four candidates will compete tonight in the secret ballot by the 14 vice presidents and Metsola. The meeting has been brought forward by half an hour to 6 p.m. This indicates that it could be late before the new secretary general is decided.
In addition to Chiocchetti, three directors-general from the EU Parliament administration are vying for the top post: Poland’s Agnieszka Walter-Drop, in charge of conference services (DG LINC); Finland’s Leena Maria Linnus, in charge of the Parliament’s real estate (DG INLO); and Spain’s Jaume Duch Guillot, who heads the communications department (DG COMM).
The application of a fifth candidate was not admitted. The unnamed person, who was also not from the civil service of the Parliament, had not fulfilled the conditions of the tender, according to parliamentary circles. Chiocchetti is considered the favorite. As director, he is below the other three candidates in the administrative hierarchy, but he is likely to be elected.
He has the most supporters in the presidency: the votes of Christian Democrats (EPP), Liberals (Renew), Conservatives (ECR) and the Left are regarded as secure for him; from the Social Democrats (S&D) one hears that they still want to get something for themselves until the last minute. They still want to “make gains on the ground” but are ready for a “conditional OK”. The S&D representatives are calling for term limits, for example. However, the EPP is unlikely to agree to this. Chiocchetti probably does not need the votes of the Social Democrats for his election.
Manfred Weber (CSU), EPP group and party leader, defends the procedure against criticism that it is a backroom deal: “In the past, there was always only one candidate, this time, the presidium has the choice between four highly competent candidates in a secret ballot, that has never happened before.” A member of the Presidium told Europe.Table, “This time there is as little backroom as ever.”
Parliament’s scientific service has confirmed that a promotion of Chiocchetti from director level to the post of secretary general is permissible, Brussels hears. Metsola has also made it clear that she did not know Chiocchetti before he applied for the post of her office director. Thus, the accusation that she only made the Italian head of cabinet in order to pave his way to the top of the Parliament is absurd.
The deal, which four, possibly five, party families support, includes not only the post at the top of the administration, which comes with a monthly salary of €19,958. The smaller parties have pledged to bring civil servants close to them to high-ranking jobs in the administration as well, if they have the necessary competencies.
The EPP, for example, is willing to cede to the conservatives the right to appoint the director general for the scientific service. The Liberals will also get access to a director-general post. A 13th Directorate General is also to be created in the administration, headed by a politician with a left-wing pedigree. Interviews for the posts at the top of the directorates general have been held in recent weeks, it is said. As required by the statutes, “shortlists” have also been drawn up.
Package solutions are common for high-level personnel decisions in EU institutions. Only with the support of several party families can the necessary majorities be achieved. Without a doubt, however, the personnel deals lead to the administrative apparatus at the top becoming ever larger. The Greens were also reportedly involved in the talks. Criticism was voiced from within the parliamentary group that nothing had been extracted for their own people.
On the sidelines of the informal meeting of finance ministers in Prague, German Finance Minister Christian Lindner and his colleagues from France, Italy, Spain and the Netherlands announced their approach: “As inflation hits heavily the spending power of our fellow citizens, companies must pay their fair share of the burden to alleviate the impact of the global energy crisis,” reads a joint statement by the G5 finance ministers. All five want to introduce the minimum taxes in a nationally coordinated way if necessary.
It is not least the cash situation that is forcing Lindner, Bruno Le Maire and the others to press ahead. “We don’t want to keep raising taxes for our populations and our economy,” Lindner said. “In order for us to remain able to act nonetheless, large international companies must also make their fair contribution to financing the commonwealth.”
For some countries, there is the added problem that they could otherwise lose planned revenues. The agreement on a global minimum tax based on the OECD model also provides for planned or already introduced digital taxes to be suspended from 2023.
The two pillars of the OECD model, as subsequently also proposed by the EU Commission, change the place of taxability for companies and sub-companies with an input tax turnover of more than 750 million. Local subsidiaries will then also have to pay their share of the tax on the basis of a minimum taxation of 15 percent at their place of activity (a more detailed explanation can be found here).
At present, the EU-wide introduction is failing primarily because of Hungary. Viktor Orbán’s economic miracle country has so far levied just 9 percent as a corporate tax rate. Originally, the government had agreed to the OECD framework, but since June 2022, the Hungarians have been resisting. Many observers assume that this is less about taxes as such than about a showdown in the dispute over the rule of law deficits.
But in Ireland, too, there are still unanswered questions about the design. The US interpretation of the once celebrated agreement on global minimum taxation also continues to cause debate.
If the other EU countries were to consistently introduce the OECD regulations, Hungary would gain little: The OECD’s second-pillar rules also include a so-called top-up tax: If tax dumping is practiced in one country and thus effectively falls below the 15 percent mark overall, other countries can levy additional taxes until the mark is reached. In any case, the Group of Five is now massively increasing the pressure. “We have an agreement and we have to move forward,” said Dutch Finance Minister Sigrid Kaag.
The Federal Ministry of Finance is already working on concrete implementation regulations in line with the OECD framework. Germany is ready to introduce the global minimum taxation in national law as well, Lindner emphasized.
A BMF spokesman explained on request that the adoption of the EU directive has “top priority“. But Berlin wants to be prepared for the worst-case scenario: The ministry has already begun work on drafting German implementation regulations based on the OECD standards and is pressing ahead with them, the spokesman said. So, with or without the EU, the minimum tax will come.
For the EU Commission, on the other hand, nationally introduced minimum taxes would create a completely different problem: This would dash all hopes that at least part of it would flow into the European coffers to refinance the loans taken out by the recovery fund without national detours.
Recently, Jana Puglierin was a guest on the Brussels Sprouts podcast and did what she often does: explain to a non-German audience what is actually going on with the Germans.
It was about the German chancellor’s visit to Prague and Germany’s role in the EU since Russia’s attack on Ukraine. Puglierin believes that Olaf Scholz’s choice of the Czech capital for his keynote speech on European policy is a skillful attempt to regain lost trust in Eastern and Central Europe. Six months after the announced turnaround, the tenor in many Eastern European countries is that Germany has not delivered. “Berlin has not lived up to the expectations that were placed on it,” the political scientist explains in the US podcast.
Puglierin, head of the Berlin office of the European Council on Foreign Relations, has been a highly sought-after interview guest since the outbreak of the war. She has been studying foreign, security and defense policy for years. “These are not niche issues for the back rooms; they concern everyone,” she says. To raise awareness, the 44-year-old accepts invitations to talk shows, radio interviews, panel discussions and podcasts. There, she tries to explain why Germany cannot duck out of the way when it comes to the war in Ukraine.
“I have had to listen to people tell me what they consider the real threat for the longest time,” says Puglierin. She, as well as others, has long called for Germany to increase its defense spending and to invest in a powerful army. She has always found the assumption that the concept of war in Europe will forever be a thing of the past “ahistorical”. “The fact that my parents’ generation did not live through war is something I consider a coincidence, albeit a happy one.”
The conflict with Russia cannot be sat out, she is convinced. “We must manage to maintain the unity of the West, find a way to deal with disinformation and at the same time avoid a hot conflict with Russia,” she demands. However, Putin can only be impressed by military strength, which is why it is in Germany’s and the EU’s own security interests to be able to defend themselves.
In doing so, she is not only making friends – as are other analysts and experts who advocate rearmament. After a talk show appearance, she often receives messages in her mailbox in which people use her real name to hurl pages of insults or abuse. She and her friend Claudia Major, a security expert at the German Institute for International and Security Affairs (SWP), joke on Twitter that they will someday hold a poetry slam with the worst messages.
The think tanker travels frequently and participates in events throughout Europe and the United States. “A big part of my job is to explain abroad what the mood and political debate are like in Germany.” On the other hand, it’s important to her to put aside her German bias and look at things from a different point of view.
Taking a pan-European perspective to address the greatest strategic challenges in foreign and security policy is also the goal of ECFR. The think tank maintains seven offices in various European capitals and networks decision-makers, activists and multipliers.
“Germany as a player in Europe remains a central issue because we are so rich and big and everyone is looking at us,” says Puglierin. The positive feeling of 1989, when Europe suddenly grew together, still guides her in her work today. She is convinced that the EU is doomed to succeed more than ever. “I wish that the EU would come back from this experience, that war is possible, to what it is worth.” Ulrike Christl
Last Tuesday, Ukrainian units broke through Russian defense lines for the first time near Balakliia and they rapidly conquered large parts of the Kharkiv region in northeastern Ukraine over the weekend. Russian forces are retreating in an unsorted fashion from key logistics hubs such as Izium, leaving masses of war materiel behind. Meanwhile, the Kremlin remains silent.
The war has taken an astounding turn. A Ukrainian victory suddenly seems possible. The question is: How will Vladimir Putin react – and what about the West? Ukrainian President Volodymyr Zelenskiy immediately called for more heavy weapons, especially battle tanks, which Kyiv believes are needed. Until now, Chancellor Olaf Scholz had stressed that Russia must not win this war. Now he will soon have to give his answer to the question whether the goal is Moscow’s defeat.
Putin still has plenty of options to further escalate the conflict. This includes the Zaporizhzhia nuclear power plant, which was shut down over the weekend for safety reasons, among other things, the remaining energy supplies. The leverage is still so strong that EU states are wary of a price cap on Russian gas imports. Manuel Berkel brings you up to speed on the outcome of the energy ministers’ council.
The energy crisis will also take center stage when Commission President Ursula von der Leyen addresses the state of the EU on Wednesday. Find out what other impulses can be expected from the SOTEU in my Feature.
I wish you a great start to the new week!
Commission President Ursula von der Leyen announced her temporary defeat on Saturday with four bullet points – the topics for Tuesday’s college meeting in Strasbourg: smart energy saving, financial contributions from the energy sector for households and businesses, liquidity support for utilities and faster implementation of REPowerEU – which includes faster expansion of renewable energies.
Von der Leyen also wrote which topic was missing from her five-point plan on twitter: “On the cost of gas, we continue to work on answers adapted to a global market. Objective: to ensure lower prices in Europe while guaranteeing security of supply.” With this, the Commission President admits to having failed with her political push for now.
As recently as Wednesday, von der Leyen surprisingly proposed a price cap on Russian gas imports to end Russia’s ability to manipulate gas prices. Such a cap could come very quickly, the EU leader threatened in the direction of Moscow – whereupon President Vladimir Putin immediately announced a supply stop.
By postponing the gas price cap, von der Leyen follows the concerns of many EU states. At the Council of Energy Ministers on Friday, Hungary, Austria and Slovakia had spoken out clearly against such a step towards Russia. The Czech presidency also did not want to follow von der Leyen and keep the issue small. Some states are currently still dependent on Russian gas and, according to their own statements, have difficulties finding alternative supply routes, said Energy Commissioner Kadri Simson after the meeting.
German Chancellor Olaf Scholz had also spoken out in favor of putting the plans on hold on Friday afternoon. “When it comes to the question of what happens on the gas market, there are still very many very different proposals. It would be far too early to say now: we will do this and that,” he said after a meeting with Council President Charles Michel in Berlin.
Scholz referred to the consideration shown by EU partners when Germany spoke out against a gas embargo in the spring. What the chancellor did not say was that how much gas Central and Eastern European member states will receive in the winter also depends on how much energy German industry saves in the coming months. And on the willingness of neighbors to pay compensation for gas supplies in a shortage situation. Solidarity agreements with Poland and a number of other states are currently failing because of this, according to a recent report by the Ministry for Economic Affairs to the Bundestag.
Scholz also initially rejected a price cap on all gas imports – for example from Norway, the USA or LNG supplies from all over the world. Belgium, for example, had called for this. “We should not take the last step before the first,” the SPD politician said. What kind of price limits for gas are feasible for Germany should first be clarified by a group of experts. The coalition committee had announced this with the third relief package.
Nevertheless, the Council gave the Commission the task of examining a general cap. For pipeline deliveries from partner states, von der Leyen is actually counting on negotiations and a faster start of the joint procurement platform.
For liquefied natural gas, the situation is much more delicate. “A general price cap including LNG imports could pose a risk to supply,” Simson warned. The EU has too little market power for that. So if the purchase price of European suppliers is too low, more liquefied gas could be shipped to Asia again.
Scholz wants the Commission’s proposals on the electricity market to be discussed first. In Brussels, Economic Affairs Minister Robert Habeck even set a time limit. If the EU does not implement the skimming of high profits on the electricity market by the end of the year, Germany will relieve consumers with its own levy.
This scenario should also explain why a small state like Lithuania opposes the Council majority that actually supports the Commission’s plan for skimming excess profits in electricity trading. This is a red line for his country, said Energy Minister Dainius Kreivys.
Skimming profits above a revenue cap not only affects the forward market for electricity, it also destroys the level playing field in the EU’s internal market. Companies in different EU countries would also receive different subsidies, Kreivys probably said with regard to the distribution of excess profits.
The revenue from the levy would also vary depending on the type of power plants different EU states have. Poland, with its high share of electricity from hard coal, which is also expensive, is therefore calling for intervention in emissions trading to push down electricity prices. “Issuing additional emission allowances from the market stability reserve could be part of the solution,” said Czech Minister Jozef Síkela, summarizing the discussion.
It remains to be seen whether there will be a majority in the member states for binding electricity savings targets – Poland and Spain, for example, are relying on voluntary measures. Síkela expects a similar solution to the gas savings plan adopted in July – initially voluntary targets that become binding after a defined mechanism. The gas model, however, does not suggest that there will be much pressure. Last week, the Netherlands advocated taking the next step. But the number of member states required for the mandatory gas savings target was not yet sufficient, reported a senior EU diplomat one day ahead of the summit.
This week, the Commission intends to present a concrete draft legislation. Síkela promised a quick decision in the Council. If necessary, there will be another meeting of energy ministers in September. In any case, EU diplomats expect an agreement before the meeting of EU heads of state and government on October 7 in Prague.
Outside the EU bubble, the acronym SOTEU is hardly known to anyone. However, within the Brussels circle of influence, the State of the Union address is eagerly awaited, as it sets the agenda for the political year. Commission President Ursula von der Leyen is therefore carefully preparing her speech in the Strasbourg European Parliament – for months, her staff has been collecting ideas and material, in the Directorates General and also from external experts.
The content of the speech itself will be kept strictly confidential until von der Leyen appears before the plenum at 9 a.m. on Wednesday morning. However, some things are becoming clear:
Energy: The electricity and gas price crisis dominates the political agenda, and even von der Leyen cannot avoid the topic. However, she will probably not have much new to announce on Wednesday: The concrete proposals for emergency measures will already be decided in college the day before and are unlikely to be kept under wraps. Von der Leyen is therefore likely to give an outlook on which measures are planned for the internal energy market in the medium term and appeal to the cohesion of the EU states in the crisis.
At their meeting with the group chairmen on Thursday, EPP leader Manfred Weber coined the term “winter of solidarity” for this. The co-chairwoman of the CDU/CSU members of parliament, Angelika Niebler, also called for all legislative proposals that would impose further burdens on companies to be “put to the test again” in view of the enormously high energy prices. It is hard to imagine, however, that von der Leyen will agree to this and withdraw, for example, the EU Supply Chain Act or the revised Industrial Emissions Directive.
Ukraine: At the meeting with von der Leyen, the chairman of the liberal Renew Group called for a firm stand against the Kremlin narrative that the sanctions were hurting Europeans more than Russia. In view of the social tensions, it is a matter of “re-anchoring the truth,” Stéphane Séjourné said, according to participants. In her speech, Von der Leyen is also likely to emphasize that sanctions are working against the Russian economy. In view of Ukraine’s recent military successes, she also sees her support for President Volodymyr Zelenskiy confirmed. She is sure to receive applause: The European Parliament is discussing awarding this year’s Sakharov Prize to the president and his people.
EU reform: In her speech at the end of the Future Conference in May, von der Leyen promised to present concrete initiatives for implementing the citizens’ reform proposals in September. Now she has to deliver. The European parliamentarians are hoping for support from the Commission President for her request to convene a constitutional convention and will pay very close attention to what von der Leyen says about strengthening the parliament, in particular a right of initiative of its own. The head of the CDU, Daniel Caspary, harshly criticizes the member states for refusing to implement the necessary EU reforms – he speaks of a “complete failure”.
Economy: The Commission President is expected to present plans for making the single market more crisis-proof. The content of these plans has already been leaked – in an emergency, for example, the Commission wants to be able to instruct member states as to which sensitive products should be stockpiled. Additionally, von der Leyen is expected to outline the authority’s ideas for a reform of the fiscal rules. The concrete proposal is scheduled for the second half of October, as her deputy Valdis Dombrovskis announced (read more about this in today’s News).
Tonight, the Bureau of the European Parliament meets in Strasbourg to elect a new Secretary General. The Italian Alessandro Chiocchetti (53), until now head of cabinet of Parliament President Roberta Metsola, has the best chance of becoming Klaus Welle’s successor.
Klaus Welle retires at the age of 58. For 13 years, he headed the civil service apparatus with more than 8100 posts. Welle has achieved a great deal for the Parliament in the struggle among the EU institutions for influence. For example, the Westphalian with a CDU party book also developed the top-candidate principle. Welle is now learning the ropes, it is said.
Four candidates will compete tonight in the secret ballot by the 14 vice presidents and Metsola. The meeting has been brought forward by half an hour to 6 p.m. This indicates that it could be late before the new secretary general is decided.
In addition to Chiocchetti, three directors-general from the EU Parliament administration are vying for the top post: Poland’s Agnieszka Walter-Drop, in charge of conference services (DG LINC); Finland’s Leena Maria Linnus, in charge of the Parliament’s real estate (DG INLO); and Spain’s Jaume Duch Guillot, who heads the communications department (DG COMM).
The application of a fifth candidate was not admitted. The unnamed person, who was also not from the civil service of the Parliament, had not fulfilled the conditions of the tender, according to parliamentary circles. Chiocchetti is considered the favorite. As director, he is below the other three candidates in the administrative hierarchy, but he is likely to be elected.
He has the most supporters in the presidency: the votes of Christian Democrats (EPP), Liberals (Renew), Conservatives (ECR) and the Left are regarded as secure for him; from the Social Democrats (S&D) one hears that they still want to get something for themselves until the last minute. They still want to “make gains on the ground” but are ready for a “conditional OK”. The S&D representatives are calling for term limits, for example. However, the EPP is unlikely to agree to this. Chiocchetti probably does not need the votes of the Social Democrats for his election.
Manfred Weber (CSU), EPP group and party leader, defends the procedure against criticism that it is a backroom deal: “In the past, there was always only one candidate, this time, the presidium has the choice between four highly competent candidates in a secret ballot, that has never happened before.” A member of the Presidium told Europe.Table, “This time there is as little backroom as ever.”
Parliament’s scientific service has confirmed that a promotion of Chiocchetti from director level to the post of secretary general is permissible, Brussels hears. Metsola has also made it clear that she did not know Chiocchetti before he applied for the post of her office director. Thus, the accusation that she only made the Italian head of cabinet in order to pave his way to the top of the Parliament is absurd.
The deal, which four, possibly five, party families support, includes not only the post at the top of the administration, which comes with a monthly salary of €19,958. The smaller parties have pledged to bring civil servants close to them to high-ranking jobs in the administration as well, if they have the necessary competencies.
The EPP, for example, is willing to cede to the conservatives the right to appoint the director general for the scientific service. The Liberals will also get access to a director-general post. A 13th Directorate General is also to be created in the administration, headed by a politician with a left-wing pedigree. Interviews for the posts at the top of the directorates general have been held in recent weeks, it is said. As required by the statutes, “shortlists” have also been drawn up.
Package solutions are common for high-level personnel decisions in EU institutions. Only with the support of several party families can the necessary majorities be achieved. Without a doubt, however, the personnel deals lead to the administrative apparatus at the top becoming ever larger. The Greens were also reportedly involved in the talks. Criticism was voiced from within the parliamentary group that nothing had been extracted for their own people.
On the sidelines of the informal meeting of finance ministers in Prague, German Finance Minister Christian Lindner and his colleagues from France, Italy, Spain and the Netherlands announced their approach: “As inflation hits heavily the spending power of our fellow citizens, companies must pay their fair share of the burden to alleviate the impact of the global energy crisis,” reads a joint statement by the G5 finance ministers. All five want to introduce the minimum taxes in a nationally coordinated way if necessary.
It is not least the cash situation that is forcing Lindner, Bruno Le Maire and the others to press ahead. “We don’t want to keep raising taxes for our populations and our economy,” Lindner said. “In order for us to remain able to act nonetheless, large international companies must also make their fair contribution to financing the commonwealth.”
For some countries, there is the added problem that they could otherwise lose planned revenues. The agreement on a global minimum tax based on the OECD model also provides for planned or already introduced digital taxes to be suspended from 2023.
The two pillars of the OECD model, as subsequently also proposed by the EU Commission, change the place of taxability for companies and sub-companies with an input tax turnover of more than 750 million. Local subsidiaries will then also have to pay their share of the tax on the basis of a minimum taxation of 15 percent at their place of activity (a more detailed explanation can be found here).
At present, the EU-wide introduction is failing primarily because of Hungary. Viktor Orbán’s economic miracle country has so far levied just 9 percent as a corporate tax rate. Originally, the government had agreed to the OECD framework, but since June 2022, the Hungarians have been resisting. Many observers assume that this is less about taxes as such than about a showdown in the dispute over the rule of law deficits.
But in Ireland, too, there are still unanswered questions about the design. The US interpretation of the once celebrated agreement on global minimum taxation also continues to cause debate.
If the other EU countries were to consistently introduce the OECD regulations, Hungary would gain little: The OECD’s second-pillar rules also include a so-called top-up tax: If tax dumping is practiced in one country and thus effectively falls below the 15 percent mark overall, other countries can levy additional taxes until the mark is reached. In any case, the Group of Five is now massively increasing the pressure. “We have an agreement and we have to move forward,” said Dutch Finance Minister Sigrid Kaag.
The Federal Ministry of Finance is already working on concrete implementation regulations in line with the OECD framework. Germany is ready to introduce the global minimum taxation in national law as well, Lindner emphasized.
A BMF spokesman explained on request that the adoption of the EU directive has “top priority“. But Berlin wants to be prepared for the worst-case scenario: The ministry has already begun work on drafting German implementation regulations based on the OECD standards and is pressing ahead with them, the spokesman said. So, with or without the EU, the minimum tax will come.
For the EU Commission, on the other hand, nationally introduced minimum taxes would create a completely different problem: This would dash all hopes that at least part of it would flow into the European coffers to refinance the loans taken out by the recovery fund without national detours.
Recently, Jana Puglierin was a guest on the Brussels Sprouts podcast and did what she often does: explain to a non-German audience what is actually going on with the Germans.
It was about the German chancellor’s visit to Prague and Germany’s role in the EU since Russia’s attack on Ukraine. Puglierin believes that Olaf Scholz’s choice of the Czech capital for his keynote speech on European policy is a skillful attempt to regain lost trust in Eastern and Central Europe. Six months after the announced turnaround, the tenor in many Eastern European countries is that Germany has not delivered. “Berlin has not lived up to the expectations that were placed on it,” the political scientist explains in the US podcast.
Puglierin, head of the Berlin office of the European Council on Foreign Relations, has been a highly sought-after interview guest since the outbreak of the war. She has been studying foreign, security and defense policy for years. “These are not niche issues for the back rooms; they concern everyone,” she says. To raise awareness, the 44-year-old accepts invitations to talk shows, radio interviews, panel discussions and podcasts. There, she tries to explain why Germany cannot duck out of the way when it comes to the war in Ukraine.
“I have had to listen to people tell me what they consider the real threat for the longest time,” says Puglierin. She, as well as others, has long called for Germany to increase its defense spending and to invest in a powerful army. She has always found the assumption that the concept of war in Europe will forever be a thing of the past “ahistorical”. “The fact that my parents’ generation did not live through war is something I consider a coincidence, albeit a happy one.”
The conflict with Russia cannot be sat out, she is convinced. “We must manage to maintain the unity of the West, find a way to deal with disinformation and at the same time avoid a hot conflict with Russia,” she demands. However, Putin can only be impressed by military strength, which is why it is in Germany’s and the EU’s own security interests to be able to defend themselves.
In doing so, she is not only making friends – as are other analysts and experts who advocate rearmament. After a talk show appearance, she often receives messages in her mailbox in which people use her real name to hurl pages of insults or abuse. She and her friend Claudia Major, a security expert at the German Institute for International and Security Affairs (SWP), joke on Twitter that they will someday hold a poetry slam with the worst messages.
The think tanker travels frequently and participates in events throughout Europe and the United States. “A big part of my job is to explain abroad what the mood and political debate are like in Germany.” On the other hand, it’s important to her to put aside her German bias and look at things from a different point of view.
Taking a pan-European perspective to address the greatest strategic challenges in foreign and security policy is also the goal of ECFR. The think tank maintains seven offices in various European capitals and networks decision-makers, activists and multipliers.
“Germany as a player in Europe remains a central issue because we are so rich and big and everyone is looking at us,” says Puglierin. The positive feeling of 1989, when Europe suddenly grew together, still guides her in her work today. She is convinced that the EU is doomed to succeed more than ever. “I wish that the EU would come back from this experience, that war is possible, to what it is worth.” Ulrike Christl
