Olaf Scholz and Emmanuel Macron have not really warmed to each other so far. On the one hand, the sober chancellor; on the other, the president, who sometimes tends toward the theatrical. But what is not yet, can still become: On Tuesday evening, Scholz is inviting his guest to dinner in Potsdam.
In any case, they should not run out of things to talk about over dinner in a restaurant. According to reports, the main topic will be Ukraine – the Europeans need a strategy for the further course of the war. Should the expected offensive by the Ukrainian armed forces be followed by further arms deliveries and/or peace negotiations?
The topic of EU enlargement is also likely to occupy both of them, and with it, in turn, the questions of the EU’s institutional structure. Scholz and Macron are largely in agreement: Without reforms, qualified majority decisions in further policy areas, for example, the community can hardly accept further members. However, the idea is met with great skepticism in other member states. The reform debate has therefore not yet really begun, at least not at the level of the heads of state.
The dinner discussion is likely to be more heated when it comes to financial issues: the upcoming review of the Multiannual Financial Framework and, in particular, the reform of the Stability and Growth Pact. Berlin and Paris are currently at the poles of opinion on the deficit rules among the 27, but perhaps a glass of red wine will help to better understand the other’s point of view.
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The Critical Raw Materials Act (CRMA) is supposed to be part of the European response to the US Inflation Reduction Act (IRA). But while the USA has set up a massive subsidy package worth hundreds of billions with the IRA, question marks continue to surround the financing of strategic EU raw materials projects. In the draft legislation, the EU Commission mentions private sources of financing, funds from the European Investment Bank, instruments of the member states, and EU subsidy and financing programs. But can it close the gap with countries like the USA, Japan, Canada or Australia, which have been investing massively for a long time?
It’s not just the industry that sees this as a problem. Inga Carry, a researcher at the German Institute for International and Security Affairs (SWP), explains, “In the US and Canada, completely different facts are created, clear frameworks and financing conditions are set – that’s an enormous incentive for companies”. Mining, she says, is extremely capital-intensive, risky and, above all, very long-term. “These are infrastructure projects of thirty years or more”, Carry says. “That’s why you need both guarantees that a project will pay off in the long term and incentives, whether in the form of start-up financing or tax benefits“. In Europe, conditions are much less favorable anyway, simply because of the lack of infrastructure and high energy prices.
It is clear that the Inflation Reduction Act is having a very rapid impact on the investment world, says an EU official. That’s because the US government has been able to use tax incentives as tools that are extremely easy to use. “If this were a perfect world, I would probably want us to take a similar approach”, they explain. “But we can’t. We work differently in some ways“. The US approach, they say, is the result of an inability to regulate “because they just couldn’t get similar measures through Congress“.
They said the EU Commission’s response was two-pronged: the Feb. 1 communication, the Green Deal Industrial Plan for the Climate-Neutral Age, first sent a series of signals to member states to take action that could not be done at the EU level. The results: France is setting up a €2 billion investment fund for critical metals. Germany also has such a plan.
As a second track, the official mentions existing European funds and the planned sovereignty fund announced by Commission President Ursula von der Leyen last fall. The Commission is currently still discussing its form and function. On June 20, it intends to present it together with the revision of the Medium-Term Financial Framework (MFF). What is known so far is that the money will be raised primarily through reallocations – and that the fund will probably be significantly smaller than previously thought.
Another program to which the Commission refers is the Global Gateway Strategy, with which the EU aims to mobilize investments of up to €300 billion in global infrastructure projects by 2027. This could then also include strategic raw materials projects in third countries. For these, the EU wants to use Global Gateway to create investment incentives and secure access for industrial customers. So far, however, very little is known about the initiative.
The name of the European Investment Bank (EIB) comes up again and again. According to its own information, the latter has signed loans totaling around €3 billion in the last seven years, including around €1.3 billion for battery materials. A similar number of projects in this area are in the pipeline. For example, the EIB financed the construction of the Umicore plant for the production of cathode material in Nysa, Poland, with a loan of €125 million.
In preparation for the CRMA, there have been regular meetings between the EIB and the Commission in recent years. According to the EIB, the focus of these discussions has been on barriers to investment and access to finance, CRM project experience, and key priority areas. Beyond that, no specific plans are known.
“A key challenge is the time it takes for projects to become ‘bankable’“, explains Laura Piovesan, EIB Director General for Innovation, Environment and Natural Resources, when asked by Table.Media. “For more investments in natural resource projects to mature sufficiently to be financed by banks, it is important to address regulatory barriers“. These include lengthy permitting processes and regulatory standards for the circular economy, two issues addressed in the CRMA. In addition, she said, price volatility, social acceptability of mining projects, ESG aspects and the lack of a definition of critical raw materials in the taxonomy to date are also key.
Shadow rapporteur Hildegard Bentele (EPP) also listed these obstacles during the last meeting of the lead industry committee and announced further talks on the issue. In Parliament, the deadline for amendments to the draft report by rapporteur Nicola Beer (Renew) ended last week.
In the US, production capacity for lithium-ion battery cells has already grown by 61 percent since the Inflation Reduction Act was announced. “So you can already see that rapid change is possible if the right investment climate is created”, says Inga Carry. Whether the result ultimately aligns with the IRA’s goals is another matter, she adds. “But a feeling has arisen: Now something can change and now something can really be set in motion. I don’t have that feeling at the European level so far“.
Mr. Wang, we are in the second year of the Ukraine war – and China has stepped forward with a proposal for peace talks. At the same time, however, the leadership in Beijing maintains a “borderless” friendship with Russia. How serious is China’s initiative?
I think China is quite serious. It has thrown its political weight around and sent a special envoy to Ukraine and five other destinations. And as for the “borderless” relationship with Russia, the Chinese envoy in Brussels has made it clear that this is just rhetoric. I think Beijing is not happy about what is going on in Ukraine.
But is China ready to use its influence on Putin as well?
I understand that many in the West insist that China has enormous influence and can put pressure on Moscow. But the reality is much more complicated. The Chinese don’t feel that they can push Moscow too hard in one direction.
On the other hand, Putin would be in big trouble without China’s support.
Let me put it this way: Whenever a Chinese looks at China on the world map, he or she sees an overpowering Russia, a huge country right above China. Russia had a tremendous influence on China throughout the 20th century. After many problems, it is only in the past decade or so that the two countries have become close geopolitical partners – especially in terms of what they perceive as US containment and encirclement. Russia’s economic output may now be only about as strong as Guangdong Province’s, but in China’s eyes, it is still a superpower with a large nuclear arsenal and sophisticated technology. And don’t forget: The border between China and Russia is thousands of kilometers long, which does not need to be guarded very heavily if relations are good.
But to make a serious case for peace talks…
As for the initiative for a political solution: China has not intervened in crises in the past, certainly not where China is not involved – unlike the United States, which likes to behave like the world’s policeman. China’s foreign policy has been based on non-interference since the 1950s. Therefore, it must now develop its own approach.
Quite, but to be an honest broker requires at least a little distance from Russia.
Such demands from the West mean for China to make great sacrifices with regard to its own interests, in the end even to anger Russia. If China were to comply with these demands and sanction Russia, it would mean that China would have to bear high costs for something it did not cause.
Why is China so reluctant?
Not just China. Look at the votes at the United Nations: More than 140 countries have condemned Russia’s invasion of Ukraine. But if you look at who has imposed sanctions on Russia, that basically leaves just over 40 countries – and 27 of them are EU member states. No country in the Global South has joined the sanctions against Russia, including China, India, and Brazil. The overwhelming majority of the world, especially the poorer countries, do not feel obliged to bear the cost of something they believe they did not start.
How important is this war to countries in Asia and the rest of the world anyway?
I absolutely understand that it is very important for the EU, especially for the Eastern European countries bordering Ukraine, as they are the second biggest victims after the Ukrainian people. I lived in Europe for 29 months and I admire the European project, it is a peace project. But for faraway countries, the conflict is something people see on TV and social media. In addition, because of its history and the Cold War, the European Union has been used to protecting itself from Russian troops for many years. But that history is not shared in other parts of the world. And last, perhaps more importantly, the countries of the global South share a common history of colonialism. They share a sense that developed countries have not behaved as they should. All of this translates into a sense of distance from the conflict.
War is bad everywhere in the world, for everyone. That is why it should end quickly.
Yes. But the US and Europe are only putting pressure on China. So far, they have not succeeded in also creating incentives to get China on their side. For Europe, in particular, it would be more pragmatic to provide incentives.
In what way, and why?
Because there is very tough competition between China and the US, which will continue for quite some time. In addition, Beijing clearly wants Europe to distance itself from its transatlantic partner and wants it to move closer to China. So Europe has some leverage over a China that is eager for it.
What could or should Europe offer?
China’s ambassador to Brussels has already said several times that China wants to bring the Comprehensive Agreement on Investment (CAI) back to the table and is open to proposals. I think Europe is actually in a position to create incentives for China instead of just pressuring China.
CAI could make the difference?
If Europe were to consider this idea, I think there would be many options.
What options do you mean exactly?
For example, the withdrawal of US-initiated restrictions on Huawei and ZTE. Or refraining from joining the US in export controls on technology. That would send strong strategic signals of autonomy. That, in turn, could fit well with a China committed to achieving European and Ukrainian goals, such as the exchange of prisoners of war, the establishment of humanitarian corridors for civilians, the repatriation of Ukrainian children, and ultimately a cease-fire and peace.
Wang Zichen is deputy director and research fellow at the Center for China and Globalization (CCG), a leading non-governmental think tank in China.
Johannes Pollak’s day-to-day work is stressful: “It helps to know that 99 percent of my work decisions are not life-and-death decisions,” says the 54-year-old. Pollak is rector at the private Webster University in Vienna. At the same time, he is chairman of the board of the Institute for European Politics in Berlin. His schedule is full and his workday is jam-packed. “But there’s nothing I don’t enjoy“, he says nonchalantly. “Funny, right?”
The day of the father of a seven-year-old son begins at 6:30 a.m. “I get up quietly so I don’t wake my son”. He lives in Eisenstadt, near Vienna with lots of forest. Being close to nature is important to him, he says, in order to find peace.
Once in the Vienna office, he talks to staff and to external people who want something from the institute or from whom the institute wants something. “The day is crammed with meetings”, Pollak says. If he needs time to work on one of his books, he blocks it out on the calendar. Currently, he’s working on a piece on the geopolitical state of Europe. Pollak is the book’s editor. It’s a polarizing topic, especially in these times of war in Ukraine. Pollak is admittedly impressed by how well the EU functions. At the same time, he would like to see more assistance for Ukraine in the current situation: “Especially because of the financial resources Europe has, I expect more”.
Pollak specialized in the EU during his political studies. “I’m fascinated by how the community has managed to make relatively good joint decisions in the past“, Pollak says, explaining his interest, “despite different mentalities and, above all, interests in the countries”.
After graduating from Vienna, he studied and worked at the London School of Economics. Back in Austria, he helped establish the Institute for European Integration Studies at the Academy of Sciences, where he later worked. In between, he went to Florence for a fellowship. Pollak’s stints in various European cities show his enthusiasm for Europe. He lives the freedoms the EU offers in the education sector. But Pollak never planned his career, he says: “I’ve been very lucky and always enjoyed what I do”, he says. “Keeping my composure in the process was helpful”. Today, he says, young people plan their careers.
So do students at Webster University. The university, with its headquarters in St. Louis, USA, is renowned. Those who graduate here usually have a steep career ahead of them. Depending on the subject and degree, students can expect to pay between €18,000 and €44,000 a year.
Pollak has big plans for the institute’s Vienna headquarters. He wants to add more STEM subjects to the university’s previously strong social science profile: software engineering, IT security systems or behavioral economics, for example. “I want to offer subjects that students can use to help solve the problems of today’s society“, he says. It’s a lofty goal that can generate a lot of pressure – from students and from Pollak. “You have to be aware of the individual insignificance of your own privileged life compared to 99 percent of people”, Pollak advises. “That helps take the pressure off, put things in perspective and be grateful”. Franziska Kotthoff
Olaf Scholz and Emmanuel Macron have not really warmed to each other so far. On the one hand, the sober chancellor; on the other, the president, who sometimes tends toward the theatrical. But what is not yet, can still become: On Tuesday evening, Scholz is inviting his guest to dinner in Potsdam.
In any case, they should not run out of things to talk about over dinner in a restaurant. According to reports, the main topic will be Ukraine – the Europeans need a strategy for the further course of the war. Should the expected offensive by the Ukrainian armed forces be followed by further arms deliveries and/or peace negotiations?
The topic of EU enlargement is also likely to occupy both of them, and with it, in turn, the questions of the EU’s institutional structure. Scholz and Macron are largely in agreement: Without reforms, qualified majority decisions in further policy areas, for example, the community can hardly accept further members. However, the idea is met with great skepticism in other member states. The reform debate has therefore not yet really begun, at least not at the level of the heads of state.
The dinner discussion is likely to be more heated when it comes to financial issues: the upcoming review of the Multiannual Financial Framework and, in particular, the reform of the Stability and Growth Pact. Berlin and Paris are currently at the poles of opinion on the deficit rules among the 27, but perhaps a glass of red wine will help to better understand the other’s point of view.
If you enjoy reading Europe.Table, please feel free to forward this briefing. If this mail was sent to you: Here you can test our briefing for free.
Have a successful day!
The Critical Raw Materials Act (CRMA) is supposed to be part of the European response to the US Inflation Reduction Act (IRA). But while the USA has set up a massive subsidy package worth hundreds of billions with the IRA, question marks continue to surround the financing of strategic EU raw materials projects. In the draft legislation, the EU Commission mentions private sources of financing, funds from the European Investment Bank, instruments of the member states, and EU subsidy and financing programs. But can it close the gap with countries like the USA, Japan, Canada or Australia, which have been investing massively for a long time?
It’s not just the industry that sees this as a problem. Inga Carry, a researcher at the German Institute for International and Security Affairs (SWP), explains, “In the US and Canada, completely different facts are created, clear frameworks and financing conditions are set – that’s an enormous incentive for companies”. Mining, she says, is extremely capital-intensive, risky and, above all, very long-term. “These are infrastructure projects of thirty years or more”, Carry says. “That’s why you need both guarantees that a project will pay off in the long term and incentives, whether in the form of start-up financing or tax benefits“. In Europe, conditions are much less favorable anyway, simply because of the lack of infrastructure and high energy prices.
It is clear that the Inflation Reduction Act is having a very rapid impact on the investment world, says an EU official. That’s because the US government has been able to use tax incentives as tools that are extremely easy to use. “If this were a perfect world, I would probably want us to take a similar approach”, they explain. “But we can’t. We work differently in some ways“. The US approach, they say, is the result of an inability to regulate “because they just couldn’t get similar measures through Congress“.
They said the EU Commission’s response was two-pronged: the Feb. 1 communication, the Green Deal Industrial Plan for the Climate-Neutral Age, first sent a series of signals to member states to take action that could not be done at the EU level. The results: France is setting up a €2 billion investment fund for critical metals. Germany also has such a plan.
As a second track, the official mentions existing European funds and the planned sovereignty fund announced by Commission President Ursula von der Leyen last fall. The Commission is currently still discussing its form and function. On June 20, it intends to present it together with the revision of the Medium-Term Financial Framework (MFF). What is known so far is that the money will be raised primarily through reallocations – and that the fund will probably be significantly smaller than previously thought.
Another program to which the Commission refers is the Global Gateway Strategy, with which the EU aims to mobilize investments of up to €300 billion in global infrastructure projects by 2027. This could then also include strategic raw materials projects in third countries. For these, the EU wants to use Global Gateway to create investment incentives and secure access for industrial customers. So far, however, very little is known about the initiative.
The name of the European Investment Bank (EIB) comes up again and again. According to its own information, the latter has signed loans totaling around €3 billion in the last seven years, including around €1.3 billion for battery materials. A similar number of projects in this area are in the pipeline. For example, the EIB financed the construction of the Umicore plant for the production of cathode material in Nysa, Poland, with a loan of €125 million.
In preparation for the CRMA, there have been regular meetings between the EIB and the Commission in recent years. According to the EIB, the focus of these discussions has been on barriers to investment and access to finance, CRM project experience, and key priority areas. Beyond that, no specific plans are known.
“A key challenge is the time it takes for projects to become ‘bankable’“, explains Laura Piovesan, EIB Director General for Innovation, Environment and Natural Resources, when asked by Table.Media. “For more investments in natural resource projects to mature sufficiently to be financed by banks, it is important to address regulatory barriers“. These include lengthy permitting processes and regulatory standards for the circular economy, two issues addressed in the CRMA. In addition, she said, price volatility, social acceptability of mining projects, ESG aspects and the lack of a definition of critical raw materials in the taxonomy to date are also key.
Shadow rapporteur Hildegard Bentele (EPP) also listed these obstacles during the last meeting of the lead industry committee and announced further talks on the issue. In Parliament, the deadline for amendments to the draft report by rapporteur Nicola Beer (Renew) ended last week.
In the US, production capacity for lithium-ion battery cells has already grown by 61 percent since the Inflation Reduction Act was announced. “So you can already see that rapid change is possible if the right investment climate is created”, says Inga Carry. Whether the result ultimately aligns with the IRA’s goals is another matter, she adds. “But a feeling has arisen: Now something can change and now something can really be set in motion. I don’t have that feeling at the European level so far“.
Mr. Wang, we are in the second year of the Ukraine war – and China has stepped forward with a proposal for peace talks. At the same time, however, the leadership in Beijing maintains a “borderless” friendship with Russia. How serious is China’s initiative?
I think China is quite serious. It has thrown its political weight around and sent a special envoy to Ukraine and five other destinations. And as for the “borderless” relationship with Russia, the Chinese envoy in Brussels has made it clear that this is just rhetoric. I think Beijing is not happy about what is going on in Ukraine.
But is China ready to use its influence on Putin as well?
I understand that many in the West insist that China has enormous influence and can put pressure on Moscow. But the reality is much more complicated. The Chinese don’t feel that they can push Moscow too hard in one direction.
On the other hand, Putin would be in big trouble without China’s support.
Let me put it this way: Whenever a Chinese looks at China on the world map, he or she sees an overpowering Russia, a huge country right above China. Russia had a tremendous influence on China throughout the 20th century. After many problems, it is only in the past decade or so that the two countries have become close geopolitical partners – especially in terms of what they perceive as US containment and encirclement. Russia’s economic output may now be only about as strong as Guangdong Province’s, but in China’s eyes, it is still a superpower with a large nuclear arsenal and sophisticated technology. And don’t forget: The border between China and Russia is thousands of kilometers long, which does not need to be guarded very heavily if relations are good.
But to make a serious case for peace talks…
As for the initiative for a political solution: China has not intervened in crises in the past, certainly not where China is not involved – unlike the United States, which likes to behave like the world’s policeman. China’s foreign policy has been based on non-interference since the 1950s. Therefore, it must now develop its own approach.
Quite, but to be an honest broker requires at least a little distance from Russia.
Such demands from the West mean for China to make great sacrifices with regard to its own interests, in the end even to anger Russia. If China were to comply with these demands and sanction Russia, it would mean that China would have to bear high costs for something it did not cause.
Why is China so reluctant?
Not just China. Look at the votes at the United Nations: More than 140 countries have condemned Russia’s invasion of Ukraine. But if you look at who has imposed sanctions on Russia, that basically leaves just over 40 countries – and 27 of them are EU member states. No country in the Global South has joined the sanctions against Russia, including China, India, and Brazil. The overwhelming majority of the world, especially the poorer countries, do not feel obliged to bear the cost of something they believe they did not start.
How important is this war to countries in Asia and the rest of the world anyway?
I absolutely understand that it is very important for the EU, especially for the Eastern European countries bordering Ukraine, as they are the second biggest victims after the Ukrainian people. I lived in Europe for 29 months and I admire the European project, it is a peace project. But for faraway countries, the conflict is something people see on TV and social media. In addition, because of its history and the Cold War, the European Union has been used to protecting itself from Russian troops for many years. But that history is not shared in other parts of the world. And last, perhaps more importantly, the countries of the global South share a common history of colonialism. They share a sense that developed countries have not behaved as they should. All of this translates into a sense of distance from the conflict.
War is bad everywhere in the world, for everyone. That is why it should end quickly.
Yes. But the US and Europe are only putting pressure on China. So far, they have not succeeded in also creating incentives to get China on their side. For Europe, in particular, it would be more pragmatic to provide incentives.
In what way, and why?
Because there is very tough competition between China and the US, which will continue for quite some time. In addition, Beijing clearly wants Europe to distance itself from its transatlantic partner and wants it to move closer to China. So Europe has some leverage over a China that is eager for it.
What could or should Europe offer?
China’s ambassador to Brussels has already said several times that China wants to bring the Comprehensive Agreement on Investment (CAI) back to the table and is open to proposals. I think Europe is actually in a position to create incentives for China instead of just pressuring China.
CAI could make the difference?
If Europe were to consider this idea, I think there would be many options.
What options do you mean exactly?
For example, the withdrawal of US-initiated restrictions on Huawei and ZTE. Or refraining from joining the US in export controls on technology. That would send strong strategic signals of autonomy. That, in turn, could fit well with a China committed to achieving European and Ukrainian goals, such as the exchange of prisoners of war, the establishment of humanitarian corridors for civilians, the repatriation of Ukrainian children, and ultimately a cease-fire and peace.
Wang Zichen is deputy director and research fellow at the Center for China and Globalization (CCG), a leading non-governmental think tank in China.
Johannes Pollak’s day-to-day work is stressful: “It helps to know that 99 percent of my work decisions are not life-and-death decisions,” says the 54-year-old. Pollak is rector at the private Webster University in Vienna. At the same time, he is chairman of the board of the Institute for European Politics in Berlin. His schedule is full and his workday is jam-packed. “But there’s nothing I don’t enjoy“, he says nonchalantly. “Funny, right?”
The day of the father of a seven-year-old son begins at 6:30 a.m. “I get up quietly so I don’t wake my son”. He lives in Eisenstadt, near Vienna with lots of forest. Being close to nature is important to him, he says, in order to find peace.
Once in the Vienna office, he talks to staff and to external people who want something from the institute or from whom the institute wants something. “The day is crammed with meetings”, Pollak says. If he needs time to work on one of his books, he blocks it out on the calendar. Currently, he’s working on a piece on the geopolitical state of Europe. Pollak is the book’s editor. It’s a polarizing topic, especially in these times of war in Ukraine. Pollak is admittedly impressed by how well the EU functions. At the same time, he would like to see more assistance for Ukraine in the current situation: “Especially because of the financial resources Europe has, I expect more”.
Pollak specialized in the EU during his political studies. “I’m fascinated by how the community has managed to make relatively good joint decisions in the past“, Pollak says, explaining his interest, “despite different mentalities and, above all, interests in the countries”.
After graduating from Vienna, he studied and worked at the London School of Economics. Back in Austria, he helped establish the Institute for European Integration Studies at the Academy of Sciences, where he later worked. In between, he went to Florence for a fellowship. Pollak’s stints in various European cities show his enthusiasm for Europe. He lives the freedoms the EU offers in the education sector. But Pollak never planned his career, he says: “I’ve been very lucky and always enjoyed what I do”, he says. “Keeping my composure in the process was helpful”. Today, he says, young people plan their careers.
So do students at Webster University. The university, with its headquarters in St. Louis, USA, is renowned. Those who graduate here usually have a steep career ahead of them. Depending on the subject and degree, students can expect to pay between €18,000 and €44,000 a year.
Pollak has big plans for the institute’s Vienna headquarters. He wants to add more STEM subjects to the university’s previously strong social science profile: software engineering, IT security systems or behavioral economics, for example. “I want to offer subjects that students can use to help solve the problems of today’s society“, he says. It’s a lofty goal that can generate a lot of pressure – from students and from Pollak. “You have to be aware of the individual insignificance of your own privileged life compared to 99 percent of people”, Pollak advises. “That helps take the pressure off, put things in perspective and be grateful”. Franziska Kotthoff
