Host Charles Michel overturned the agenda of the summit several times and thus caused some confusion. Nevertheless, shortly after 10 p.m., he announced the summit’s completion – all contentious issues had been resolved. Chancellor Olaf Scholz spoke of a “council that was as short as it was constructive.” Earlier, the Polish head of government Mateusz Morawiecki had given up his opposition to the implementation of the global minimum tax for large companies and paved the way for the ninth sanctions package against Russia, as Eric Bonse reports.
There was not yet much fuel on the main topic of yesterday’s meeting – the response to the US Inflation Reduction Act and the feared exodus of domestic industry. Negotiations with Washington on improvements could soon bring results. But concerns about Europe as a business location remain. Commission President Ursula von der Leyen is expected to present concrete proposals as early as the beginning of 2023, a special summit is to decide on them on February 9/10. Till Hoppe summarized what can be expected.
The countdown is running: The Commission, Parliament, and Council want to agree on key parts of the Fit for 55 package before the end of 2022. Central to this is the emissions trading system, which is so closely linked to the carbon border adjustment mechanism and the climate social fund that all three legislative proposals will be negotiated together. Lukas Scheid analyzes which issues still need to be resolved at this weekend’s jumbo trilogue.
The corruption case surrounding Parliament Vice President Eva Kaili is drawing further consequences. Parliament Speaker Roberta Metsola announced a reform package, and eleven NGO employees have also been expelled from the European Parliament. Scholz warned that the scandal could “shake confidence in democracy and parliamentarianism.”
Should big video platforms like Google, Netflix, and Facebook bear their “Fair Share“ of the costs of network expansion? The EU Commission has not yet come up with a concrete proposal, and the German government is refusing to participate. Corinna Visser and Falk Steiner explain why in their Feature.
The dispute with Washington over the Inflation Reduction Act (IRA) could soon be settled. On Thursday in Brussels, High-ranking representatives of the US Treasury negotiated a compromise that addresses the concerns of European automakers in particular. Today, Friday, Treasury officials will be received by the Chancellor’s Office in Berlin and the Federal Ministry of Economics, according to information from Europe.Table. They will also travel to Paris.
According to informed circles, an agreement could be reached soon. Chancellor Olaf Scholz said he was “quite confident” to achieve improvements. However, this is unlikely to be a vocal announcement for now – out of consideration for the Democrats in Congress. Party friends of President Joe Biden could be critical of the loopholes in the IRA for European companies.
The Europeans criticize the IRA for tying a significant portion of tax breaks and subsidies for EVs, batteries, or energy-intensive industries to North America as a production location. The US government seems willing to take the objections into account to some extent in the implementing regulations for the IRA.
Specifically, two approaches are negotiated:
These points should be fixed by the end of the year at the latest, at which point parts of the IRA will enter into force. In Brussels and Berlin, the willingness of the US government to compromise is appreciated, which defuses the danger of a transatlantic trade conflict.
But this does not mean that the concerns about the creeping exodus of European industry have disappeared, as the heads of state and government made clear during their discussion in Brussels on Thursday. It is clear “that this does not solve all the problems,” Scholz said.
After all, even without discriminatory “local content” requirements, the generous US subsidies for climate-friendly technology sectors could tempt companies to invest in the United States instead of Europe. Energy prices there are much lower than in Europe.
The heads of state and government also discussed this matter at the summit, albeit briefly: As expected, they gave the energy ministers a mandate to reach an agreement on the market correction mechanism, the official name for the gas price cap. Energy ministers will meet again in Brussels on Monday to try to reach an agreement. They are “close to it,” said Chancellor Olaf Scholz.
EU Commission President Ursula von der Leyen was given the task of quickly compiling the facts and swiftly presenting proposals on how to keep important industries in Europe. The latest letter from Ursula von der Leyen to the heads of state and government goes in the right direction, said French President Emmanuel Macron. The following approaches are emerging:
“We need to make our state aid rules simpler, faster, and more targeted to facilitate green investments,” Competition Commissioner Margrethe Vestager admits. Von der Leyen plans to propose concrete changes as early as January that would allow state support along the entire production chain. The member states now have until December 20 to submit their ideas. These approaches will be discussed in concrete terms:
Financially strong countries such as Germany rely above all on financing the promotion of industry from national budgets. Others, however, such as Italy or Spain, want to avoid putting their domestic industry at a disadvantage. Von der Leyen is also relying on additional European funding:
However, several member states have so far refused to set up new EU pots. This point is also meeting with resistance in Berlin’s traffic light coalition, especially from the FDP led by German Finance Minister Christian Lindner. Scholz also argued that the existing pots, such as the Covid reconstruction program, are still well-filled. With Stephan Israel
Ukraine has called on Germany and the EU for further arms deliveries as well as help with energy supplies. In addition to modern tanks and air defense, his country also needs gas and electricity to survive the winter despite Russian attacks on its energy infrastructure, President Volodymyr Zelenskiy said in a video address at the EU summit in Brussels.
“I ask you to show leadership,” declared Zelenskiy. “The first to supply modern tanks will open the possibility of supplying to the whole world and will be remembered as one of the most important defenders of freedom of our time” The appeal was directed primarily at Germany. There has been a weeks-long dispute over the delivery of Leopard 2 tanks.
Chancellor Olaf Scholz does not want to deliver the tanks until other allies also take this step. The SPD politician has repeatedly emphasized that Germany will not go it alone. This position has not changed, he said on the fringes of the summit. Germany had already taken the lead in air defense.
As expected, the heads of state and government gave the green light for low-interest aid loans that Ukraine can use to finance current government spending. However, the release of the €18 billion aid package dragged on. Poland initially withheld its approval to obtain concessions on another issue – the global minimum tax for large companies.
Finally, the EU Commission was tasked to advocate for the Polish cause. The issue is that international digital corporations should not only be taxed in their home country – but also where they actually do business. As a result, the head of government Mateusz Morawiecki abandoned his opposition to the aid loan for Ukraine and other issues from the so-called Hungary package.
There was a dispute over the ninth sanctions package, which primarily targets the Russian military and drone production. The EU ambassadors were supposed to reach an agreement on Wednesday but had to discuss it again on Thursday. Poland says the sanctions do not go far enough and wants to add more people to the criminal list. The EU states also wrestled over whether existing sanctions should be made more precise.
The background to this is Russia’s complaint that the EU sanctions make it more difficult to export Russian agricultural products and fertilizers to emerging markets – and thus call the grain agreement with Ukraine into question. Poland and Lithuania reject this as “Russian propaganda.” Germany and five other EU states, on the other hand, are calling for the criticism to be addressed to safeguard the grain deal.
In the end, an agreement was reached on this issue as well. The sanctions package is to be sealed by written procedure on Friday. In addition to the military, Russian banks and media are again being punished. This time, the Russian Bank for Regional Development will be hit, as well as the NTV/NTV Mir, Rossiya 1, REN TV, and Pervyi Kanal channels. “We are targeting the Russian propaganda machine,” Brussels says.
Not just one legislative proposal, but three are to be negotiated this weekend in a huge trilogue. At the center is the revision of the EU Emissions Trading System (ETS). But inextricably linked to the ETS are the Carbon Border Adjustment Mechanism (CBAM) and the Social Climate Fund. To clarify all outstanding issues this year, the jumbo trilogue starts today at 11 a.m. in Brussels.
Key unanswered questions:
If the carbon price is high, it is comparatively cheap to avoid carbon. This is why the ETS reform aims to reduce the quantity of emission allowances on the market. The shortage is supposed to increase the price. This will mainly be achieved through the one-off cancellation of surplus allowances – also known as rebasing.
It is still unclear how many emission rights are to be withdrawn and when. The parliament initially wants to remove 70 million carbon allowances from the market in 2024 and another 50 million in 2026. This would be equivalent to an emissions reduction of around 63 percent. The Council, on the other hand, wants to reduce emissions by 61 percent through a one-time withdrawal in 2024. This corresponds to around 117 million allowances.
The Commission presented a compromise last week. It proposes a one-off withdrawal of 90 million allowances in 2024. At the same time, it wants to remove more allowances each year than the Parliament and the Council. This would result in a 63 percent reduction in emissions.
However, the Parliament already announced to reject the proposal, because the comparatively small number of one-time canceled allowances would result in more allowances cumulatively ending up on the market by 2030 than the Council’s proposal (see chart). Nevertheless, a compromise seems possible. However, the Parliament insists on a two-phase rebasing. In the trilogue, the question will be whether the member states in the Council will agree to this.
In the second emissions trading, which will run parallel to the existing one, reaching an agreement is considered to be particularly difficult. The disagreement already starts with the question of when ETS 2 will come into force. But the crucial sticking point is another: Unlike in the existing emissions trading system, the carbon price in ETS 2 would affect consumers directly and immediately in their heating bills and at the gas pump. Even the entry price would be quite high. And because a uniform carbon price would apply to the entire EU, the burdens would be very different due to different wage levels.
This is why ETS 2 is drawing criticism – especially from the parliament. MEPs have agreed to differentiate between commercial and private use of fuels (Table.Media reported). Private households should remain exempt from the carbon price, while commercial users would have to pay. The Commission and Council do not envisage such a separation in ETS 2, relying on the price signal to reduce emissions from consumers as well.
The Parliament’s condition for dropping the separation would be adequate social compensation. To this end, the Commission proposed a 72 billion euro Social Climate Fund (SCF), which would be fed from the revenues of ETS 2. However, the member countries do not want to forgo the revenue for their own budgets and want to reduce the fund to 59 billion (Europe-Table).
The Parliament would agree with the Commission’s proposal but calls for compensation for consumers from the fund to take effect three years before ETS 2 enters into force to help them prepare for higher heating oil and gasoline prices.
Parliament and Council show little will to compromise on this issue. Both are willing to completely abandon ETS 2 if no compromise can be reached. This would be a major setback for European climate action, as ETS 2 is considered the most effective means of reducing carbon emissions in the road transport and building sectors, which are in urgent need of decarbonization.
Large parts of the industry currently pay no carbon price, even though they are subject to the ETS. To ensure that they are not at a disadvantage in international competition, they receive free carbon allowances as protection against carbon leakage. This is set to end by the mid-2030s at the latest. Instead, the climate tariff CBAM is to be levied, which manufacturers from non-EU countries have to pay when importing at the EU borders, in order to compensate for the competitive disadvantage of European manufacturers.
The free allowances are to be gradually phased out. The start and end dates as well as the rate of reduction are being negotiated in the jumbo trilogue. The negotiations will also deal with the question of how to treat exports from the EU to non-EU countries.
The Parliament shows some flexibility in its position but insists that at least half of industrial emissions be subject to the carbon price by 2030. If the Council agrees, a compromise would be possible.
Roberta Metsola wants to draw consequences from the corruption case in parliament with a far-reaching reform package centered on her former deputy Eva Kaili. Metsola said she will coordinate the reform of transparency rules herself. “We will correct what went wrong,” she says on the sidelines of the EU summit. These are the central points:
As an emergency measure, eleven employees of the NGO “No Peace Without Justice” had their access authorization to the EP revoked yesterday. The NGO was founded by former Commissioner Emma Bonino. It is based at the same address as the NGO Fight Impunity, founded by ex-MEP Pier Antonio Panzeri, who is in pre-trial detention.
He may have accepted money from autocratic regimes, declared it as funding for NGOs, and then used it partly for himself and partly passed it on to politicians as bribes. Metsola speaks of “criminal corruption.” About the Kaili case, she says it is a matter of individuals “who did not refuse a bag of cash.” At the same time, however, the “bag of cash was offered by someone.”
She had received an invitation from Qatar to the World Cup. But she declined because of reservations she had about the country. She also had two meetings with “representatives” of Qatar in Brussels. She said during those meetings, they expressed a desire to approach the EP. “I refused,” Metsola added.
In the meantime, she arranged for all decisions in the EP to be checked to see whether there had been any influence from outside. In this context, she mentioned the visa liberalization for the Gulf states and the aviation agreement with Qatar. On Monday, she said, visa liberalization was put on hold, and ratification of the aviation agreement was still pending. Everything is being examined, she said.
Yesterday, with only two votes against, the parliament passed a resolution to learn the lessons of the case. The reforms announced by Metsola would also have to be passed in plenary. But there is already criticism. For example, against the proposal that contacts of members of parliament and assistants with representatives of third countries must be entered in the lobby register in the future.
One deputy says, “For interlocutors from Taiwan, this would be dangerous. The regime in China is very interested in this information.” Another congressman reports: He once received information that was important for a legislative project only because he could assure the interlocutor of confidentiality.
According to a report in the Belgian daily Le Soir, Kaili’s partner, Francesco Giorgi, confessed in court on Wednesday to being involved in bribery. The clients were Morocco and Qatar.
Is it still coming – or is it not? In May, Commission Vice-President Margrethe Vestager and Internal Market Commissioner Thierry Breton opened a discussion on whether companies whose Internet traffic makes particular use of the capacities should not also have a greater share of the high costs of network expansion. Spain, France, and Italy, in particular, had advocated this. But the EU Commission has made no proposal for regulation so far.
The lion’s share of traffic results from the offerings of large video platforms: Google with YouTube, streaming providers such as Netflix or Amazon but also social media platforms with large video shares. Sandvine (PDF) calculates that video already accounted for 53.7 percent of global Internet traffic in 2021, based on data from 160 Tier 1 and Tier 2 providers. And the trend is rising sharply.
Looking at the apps used, YouTube, Netflix, and Facebook dominate ahead of TikTok. Together, their apps account for nearly 40 percent of the attributable data volumes on the web. All traffic is triggered by users who pay for it. But wouldn’t it be fair to make the providers pay as well?
The German government is calling on the EU Commission to flesh out its ideas. “The EU Commission must justify in a well-founded way why it considers cost-sharing necessary,” says a spokeswoman for the digital ministry. “We currently see no need for regulation here.” After all, there is currently no lack of funding for network expansion.
The cost of expanding digital infrastructures is enormous: EU member states are investing hundreds of billions of euros in the coming years. The money is coming primarily from private investors. Expansion with fiber-optic lines is a priority; technically, these are also a prerequisite for 5G and 6G mobile communications.
The German government has set a target of 50 percent of households connected to the fiber-optic network by 2025 (“Homes Passed”). By 2030, all households should actually be supplied with fiber optics. The costs are enormous. That’s why the member states are also active with funding measures: The German government alone, for example, is currently providing €3 billion a year, usually in addition to funding from the states and local authorities.
But the expansion of digital infrastructures is not keeping pace with this financial volume: The industry complains that neither the approval processes are keeping up, nor can the construction companies process the mountain of expansion projects in a timely manner. Germany alone, the federal and state governments, is currently pushing a mountain of over €20 billion in funding ahead of it. These funds are firmly earmarked but can only be used gradually over the course of the next few years. So, what would be the point of further funding, and then by Google, Netflix, and Co. as well? So far, the Commission can not or will not answer that question.
The German Federal Ministry for Digital and Transport is demanding a comprehensive analysis from the EU Commission on the consequences for the market, competition, the Internet ecosystem, and consumers. And on net neutrality – in other words, on the principle laid down in the EU that data is always treated equally fast on its way to the consumer. By its own admission, however, the Commission does not want to change this.
Together with Austria, Estonia, Finland, Ireland, and the Netherlands, the Germans sent a dispatch to Brussels at the beginning of December. In doing so, they signaled a clear “no” to France, Italy, and Spain. The demand in the letter: The debate about an appropriate contribution by the large Internet companies (Fair Share) should be treated separately from the revision of the Broadband Cost Reduction Directive. Which should be tantamount to ending it, at least with this Commission.
In response to the wishes of the member states, the Directive is now to be dealt with separately next year as the Gigabit Infrastructure Act (GIA), according to Commission sources.
A spokesperson for the EU Commission emphasizes that an open dialog is currently being conducted with all stakeholders. In this context, Fair Share will also be discussed separately. The matter is complex, and a decision needs facts and figures, the spokesman said. Therefore, a public consultation is to be launched in the coming weeks. Commission sources say this should be part of a broader consultation that will address the future of connectivity as a whole. Which would hardly be possible in terms of time with a regulatory proposal based on it as early as 2023.
However, at the same time, the speaker also emphasizes a passage in the recently adopted “Digital Decade Program to promote digital transformation in Europe.” It states in recital 13: “All market actors benefiting from the digital transformation assume their social responsibilities and make a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all Europeans.”
Telecom providers read this as an implicit yes to Fair Share. The German government takes an explicitly different view, as a spokeswoman clarifies: “The wording […] is a general commitment to fair framework conditions and does not imply approval of demands that very large online platforms share in network expansion costs.”
However, that platforms will still have to pay their Fair Share to the community could be brought about by a completely different regulation: The EU finance ministers agreed on Monday – after Hungary hesitated for a long time – on the EU-wide introduction of the second pillar of the minimum tax model. The main aim is to make profit shifting and relocation more difficult.
From 2024, minimum taxes of 15 percent will be due. This also applies to the subsidiaries of large digital providers in the EU. If this works, Vestager and Breton could secretly and quietly say goodbye to their as-yet unsupported plan in the course of the consultation without fearing any damage. With Corinna Visser
“She managed to annoy many people,” Politico wrote about her and voted her 12th on the list of the most influential MEPs in the EU Parliament in 2019 – 16 places ahead of Manfred Weber. The medium called her the “chief budget watchdog.” Persistence, that is important to Ingeborg “Inge” Gräßle. Persistence and determination.
After completing a traineeship in journalism, Gräßle was the first in her family to study, in Stuttgart, Paris, and Berlin. She financed her studies herself, she says, through work and scholarships. She earned her doctorate and went into politics. Whether in the state parliament of Baden-Württemberg, in the EU Parliament, or today in the Bundestag: Gräßle wants to shape things. She doesn’t want to get lost in the mass of members of parliament.
That didn’t seem so easy in a parliament as big as the EU Parliament, she recalls. “When I made the switch, I wanted to choose a topic in which I also had something to contribute, where there was an influence,” Gräßle recalls. The ministerial administration in Baden-Württemberg recommended the Committee on Budgetary Control to her. That’s why her focus is still on budgetary policy today.
She always brought a “breath of fresh air” to her political positions: in 1996, she was not only the first woman to enter the state parliament for her home constituency of Heidenheim, but at 35, she was also one of the youngest members of parliament. And she did so at a time when politics was still very male-dominated. “The culture shock was on both sides.”
Her direct election to the European Parliament in 2004 was also about change, about a new dynamic, she recounts. The party was explicitly looking for a woman. Today, she is still campaigning for more diversity in her party, especially in her home state of Baden-Württemberg. Everyone should feel included and represented, she says. “However, if the CDU Baden-Württemberg runs again with four men in the next European elections, then the party will have damaged itself,” she predicts.
For fifteen years, Gräßle sat in the EU Parliament, was Chairwoman of the Committee on Budgetary Control, and was instrumental in ensuring that the EU now has a European Public Prosecutor’s Office. In 2019, she retired from the EU Parliament. Her list position number 5, behind four men, was not enough for re-election.
In 2021, she entered the Bundestag. There, she was confronted with less creative freedom and a lot of party ideology, as she says. At the EU level, she was able to turn “big wheels.” “The EU Parliament is the underestimated parliament.” A lot of influence on legislation and no “rigid ideological party blocs” – that’s what allows the EU Parliament to drive sensible solutions, she says.
The Bundestag, on the other hand, does not come off well. “I can’t work out solutions with a permanent party fight,” she says. Nor does the parliament have much to say, especially in the budgetary policy. There is a lack of transparency and modernization, and not just since this legislative period.
“In Europe, we are in last place regarding accountability and IT, virtually stuck in the 1980s.” According to Gräßle, it’s not just budgetary policy that needs to change. “There needs to be more European law that prohibits building more bureaucracy,” she says. “At the same time, ministers in Germany need to focus more on Brussels.”
The work of the federal parliament has probably not had a deterrent effect on Gräßle. She says, Triggering modernization in parliament, that’s where she found her role. That’s the only way Germany can move forward, too. “I don’t mind getting on other people’s nerves for that.” Katharina Kausche
Host Charles Michel overturned the agenda of the summit several times and thus caused some confusion. Nevertheless, shortly after 10 p.m., he announced the summit’s completion – all contentious issues had been resolved. Chancellor Olaf Scholz spoke of a “council that was as short as it was constructive.” Earlier, the Polish head of government Mateusz Morawiecki had given up his opposition to the implementation of the global minimum tax for large companies and paved the way for the ninth sanctions package against Russia, as Eric Bonse reports.
There was not yet much fuel on the main topic of yesterday’s meeting – the response to the US Inflation Reduction Act and the feared exodus of domestic industry. Negotiations with Washington on improvements could soon bring results. But concerns about Europe as a business location remain. Commission President Ursula von der Leyen is expected to present concrete proposals as early as the beginning of 2023, a special summit is to decide on them on February 9/10. Till Hoppe summarized what can be expected.
The countdown is running: The Commission, Parliament, and Council want to agree on key parts of the Fit for 55 package before the end of 2022. Central to this is the emissions trading system, which is so closely linked to the carbon border adjustment mechanism and the climate social fund that all three legislative proposals will be negotiated together. Lukas Scheid analyzes which issues still need to be resolved at this weekend’s jumbo trilogue.
The corruption case surrounding Parliament Vice President Eva Kaili is drawing further consequences. Parliament Speaker Roberta Metsola announced a reform package, and eleven NGO employees have also been expelled from the European Parliament. Scholz warned that the scandal could “shake confidence in democracy and parliamentarianism.”
Should big video platforms like Google, Netflix, and Facebook bear their “Fair Share“ of the costs of network expansion? The EU Commission has not yet come up with a concrete proposal, and the German government is refusing to participate. Corinna Visser and Falk Steiner explain why in their Feature.
The dispute with Washington over the Inflation Reduction Act (IRA) could soon be settled. On Thursday in Brussels, High-ranking representatives of the US Treasury negotiated a compromise that addresses the concerns of European automakers in particular. Today, Friday, Treasury officials will be received by the Chancellor’s Office in Berlin and the Federal Ministry of Economics, according to information from Europe.Table. They will also travel to Paris.
According to informed circles, an agreement could be reached soon. Chancellor Olaf Scholz said he was “quite confident” to achieve improvements. However, this is unlikely to be a vocal announcement for now – out of consideration for the Democrats in Congress. Party friends of President Joe Biden could be critical of the loopholes in the IRA for European companies.
The Europeans criticize the IRA for tying a significant portion of tax breaks and subsidies for EVs, batteries, or energy-intensive industries to North America as a production location. The US government seems willing to take the objections into account to some extent in the implementing regulations for the IRA.
Specifically, two approaches are negotiated:
These points should be fixed by the end of the year at the latest, at which point parts of the IRA will enter into force. In Brussels and Berlin, the willingness of the US government to compromise is appreciated, which defuses the danger of a transatlantic trade conflict.
But this does not mean that the concerns about the creeping exodus of European industry have disappeared, as the heads of state and government made clear during their discussion in Brussels on Thursday. It is clear “that this does not solve all the problems,” Scholz said.
After all, even without discriminatory “local content” requirements, the generous US subsidies for climate-friendly technology sectors could tempt companies to invest in the United States instead of Europe. Energy prices there are much lower than in Europe.
The heads of state and government also discussed this matter at the summit, albeit briefly: As expected, they gave the energy ministers a mandate to reach an agreement on the market correction mechanism, the official name for the gas price cap. Energy ministers will meet again in Brussels on Monday to try to reach an agreement. They are “close to it,” said Chancellor Olaf Scholz.
EU Commission President Ursula von der Leyen was given the task of quickly compiling the facts and swiftly presenting proposals on how to keep important industries in Europe. The latest letter from Ursula von der Leyen to the heads of state and government goes in the right direction, said French President Emmanuel Macron. The following approaches are emerging:
“We need to make our state aid rules simpler, faster, and more targeted to facilitate green investments,” Competition Commissioner Margrethe Vestager admits. Von der Leyen plans to propose concrete changes as early as January that would allow state support along the entire production chain. The member states now have until December 20 to submit their ideas. These approaches will be discussed in concrete terms:
Financially strong countries such as Germany rely above all on financing the promotion of industry from national budgets. Others, however, such as Italy or Spain, want to avoid putting their domestic industry at a disadvantage. Von der Leyen is also relying on additional European funding:
However, several member states have so far refused to set up new EU pots. This point is also meeting with resistance in Berlin’s traffic light coalition, especially from the FDP led by German Finance Minister Christian Lindner. Scholz also argued that the existing pots, such as the Covid reconstruction program, are still well-filled. With Stephan Israel
Ukraine has called on Germany and the EU for further arms deliveries as well as help with energy supplies. In addition to modern tanks and air defense, his country also needs gas and electricity to survive the winter despite Russian attacks on its energy infrastructure, President Volodymyr Zelenskiy said in a video address at the EU summit in Brussels.
“I ask you to show leadership,” declared Zelenskiy. “The first to supply modern tanks will open the possibility of supplying to the whole world and will be remembered as one of the most important defenders of freedom of our time” The appeal was directed primarily at Germany. There has been a weeks-long dispute over the delivery of Leopard 2 tanks.
Chancellor Olaf Scholz does not want to deliver the tanks until other allies also take this step. The SPD politician has repeatedly emphasized that Germany will not go it alone. This position has not changed, he said on the fringes of the summit. Germany had already taken the lead in air defense.
As expected, the heads of state and government gave the green light for low-interest aid loans that Ukraine can use to finance current government spending. However, the release of the €18 billion aid package dragged on. Poland initially withheld its approval to obtain concessions on another issue – the global minimum tax for large companies.
Finally, the EU Commission was tasked to advocate for the Polish cause. The issue is that international digital corporations should not only be taxed in their home country – but also where they actually do business. As a result, the head of government Mateusz Morawiecki abandoned his opposition to the aid loan for Ukraine and other issues from the so-called Hungary package.
There was a dispute over the ninth sanctions package, which primarily targets the Russian military and drone production. The EU ambassadors were supposed to reach an agreement on Wednesday but had to discuss it again on Thursday. Poland says the sanctions do not go far enough and wants to add more people to the criminal list. The EU states also wrestled over whether existing sanctions should be made more precise.
The background to this is Russia’s complaint that the EU sanctions make it more difficult to export Russian agricultural products and fertilizers to emerging markets – and thus call the grain agreement with Ukraine into question. Poland and Lithuania reject this as “Russian propaganda.” Germany and five other EU states, on the other hand, are calling for the criticism to be addressed to safeguard the grain deal.
In the end, an agreement was reached on this issue as well. The sanctions package is to be sealed by written procedure on Friday. In addition to the military, Russian banks and media are again being punished. This time, the Russian Bank for Regional Development will be hit, as well as the NTV/NTV Mir, Rossiya 1, REN TV, and Pervyi Kanal channels. “We are targeting the Russian propaganda machine,” Brussels says.
Not just one legislative proposal, but three are to be negotiated this weekend in a huge trilogue. At the center is the revision of the EU Emissions Trading System (ETS). But inextricably linked to the ETS are the Carbon Border Adjustment Mechanism (CBAM) and the Social Climate Fund. To clarify all outstanding issues this year, the jumbo trilogue starts today at 11 a.m. in Brussels.
Key unanswered questions:
If the carbon price is high, it is comparatively cheap to avoid carbon. This is why the ETS reform aims to reduce the quantity of emission allowances on the market. The shortage is supposed to increase the price. This will mainly be achieved through the one-off cancellation of surplus allowances – also known as rebasing.
It is still unclear how many emission rights are to be withdrawn and when. The parliament initially wants to remove 70 million carbon allowances from the market in 2024 and another 50 million in 2026. This would be equivalent to an emissions reduction of around 63 percent. The Council, on the other hand, wants to reduce emissions by 61 percent through a one-time withdrawal in 2024. This corresponds to around 117 million allowances.
The Commission presented a compromise last week. It proposes a one-off withdrawal of 90 million allowances in 2024. At the same time, it wants to remove more allowances each year than the Parliament and the Council. This would result in a 63 percent reduction in emissions.
However, the Parliament already announced to reject the proposal, because the comparatively small number of one-time canceled allowances would result in more allowances cumulatively ending up on the market by 2030 than the Council’s proposal (see chart). Nevertheless, a compromise seems possible. However, the Parliament insists on a two-phase rebasing. In the trilogue, the question will be whether the member states in the Council will agree to this.
In the second emissions trading, which will run parallel to the existing one, reaching an agreement is considered to be particularly difficult. The disagreement already starts with the question of when ETS 2 will come into force. But the crucial sticking point is another: Unlike in the existing emissions trading system, the carbon price in ETS 2 would affect consumers directly and immediately in their heating bills and at the gas pump. Even the entry price would be quite high. And because a uniform carbon price would apply to the entire EU, the burdens would be very different due to different wage levels.
This is why ETS 2 is drawing criticism – especially from the parliament. MEPs have agreed to differentiate between commercial and private use of fuels (Table.Media reported). Private households should remain exempt from the carbon price, while commercial users would have to pay. The Commission and Council do not envisage such a separation in ETS 2, relying on the price signal to reduce emissions from consumers as well.
The Parliament’s condition for dropping the separation would be adequate social compensation. To this end, the Commission proposed a 72 billion euro Social Climate Fund (SCF), which would be fed from the revenues of ETS 2. However, the member countries do not want to forgo the revenue for their own budgets and want to reduce the fund to 59 billion (Europe-Table).
The Parliament would agree with the Commission’s proposal but calls for compensation for consumers from the fund to take effect three years before ETS 2 enters into force to help them prepare for higher heating oil and gasoline prices.
Parliament and Council show little will to compromise on this issue. Both are willing to completely abandon ETS 2 if no compromise can be reached. This would be a major setback for European climate action, as ETS 2 is considered the most effective means of reducing carbon emissions in the road transport and building sectors, which are in urgent need of decarbonization.
Large parts of the industry currently pay no carbon price, even though they are subject to the ETS. To ensure that they are not at a disadvantage in international competition, they receive free carbon allowances as protection against carbon leakage. This is set to end by the mid-2030s at the latest. Instead, the climate tariff CBAM is to be levied, which manufacturers from non-EU countries have to pay when importing at the EU borders, in order to compensate for the competitive disadvantage of European manufacturers.
The free allowances are to be gradually phased out. The start and end dates as well as the rate of reduction are being negotiated in the jumbo trilogue. The negotiations will also deal with the question of how to treat exports from the EU to non-EU countries.
The Parliament shows some flexibility in its position but insists that at least half of industrial emissions be subject to the carbon price by 2030. If the Council agrees, a compromise would be possible.
Roberta Metsola wants to draw consequences from the corruption case in parliament with a far-reaching reform package centered on her former deputy Eva Kaili. Metsola said she will coordinate the reform of transparency rules herself. “We will correct what went wrong,” she says on the sidelines of the EU summit. These are the central points:
As an emergency measure, eleven employees of the NGO “No Peace Without Justice” had their access authorization to the EP revoked yesterday. The NGO was founded by former Commissioner Emma Bonino. It is based at the same address as the NGO Fight Impunity, founded by ex-MEP Pier Antonio Panzeri, who is in pre-trial detention.
He may have accepted money from autocratic regimes, declared it as funding for NGOs, and then used it partly for himself and partly passed it on to politicians as bribes. Metsola speaks of “criminal corruption.” About the Kaili case, she says it is a matter of individuals “who did not refuse a bag of cash.” At the same time, however, the “bag of cash was offered by someone.”
She had received an invitation from Qatar to the World Cup. But she declined because of reservations she had about the country. She also had two meetings with “representatives” of Qatar in Brussels. She said during those meetings, they expressed a desire to approach the EP. “I refused,” Metsola added.
In the meantime, she arranged for all decisions in the EP to be checked to see whether there had been any influence from outside. In this context, she mentioned the visa liberalization for the Gulf states and the aviation agreement with Qatar. On Monday, she said, visa liberalization was put on hold, and ratification of the aviation agreement was still pending. Everything is being examined, she said.
Yesterday, with only two votes against, the parliament passed a resolution to learn the lessons of the case. The reforms announced by Metsola would also have to be passed in plenary. But there is already criticism. For example, against the proposal that contacts of members of parliament and assistants with representatives of third countries must be entered in the lobby register in the future.
One deputy says, “For interlocutors from Taiwan, this would be dangerous. The regime in China is very interested in this information.” Another congressman reports: He once received information that was important for a legislative project only because he could assure the interlocutor of confidentiality.
According to a report in the Belgian daily Le Soir, Kaili’s partner, Francesco Giorgi, confessed in court on Wednesday to being involved in bribery. The clients were Morocco and Qatar.
Is it still coming – or is it not? In May, Commission Vice-President Margrethe Vestager and Internal Market Commissioner Thierry Breton opened a discussion on whether companies whose Internet traffic makes particular use of the capacities should not also have a greater share of the high costs of network expansion. Spain, France, and Italy, in particular, had advocated this. But the EU Commission has made no proposal for regulation so far.
The lion’s share of traffic results from the offerings of large video platforms: Google with YouTube, streaming providers such as Netflix or Amazon but also social media platforms with large video shares. Sandvine (PDF) calculates that video already accounted for 53.7 percent of global Internet traffic in 2021, based on data from 160 Tier 1 and Tier 2 providers. And the trend is rising sharply.
Looking at the apps used, YouTube, Netflix, and Facebook dominate ahead of TikTok. Together, their apps account for nearly 40 percent of the attributable data volumes on the web. All traffic is triggered by users who pay for it. But wouldn’t it be fair to make the providers pay as well?
The German government is calling on the EU Commission to flesh out its ideas. “The EU Commission must justify in a well-founded way why it considers cost-sharing necessary,” says a spokeswoman for the digital ministry. “We currently see no need for regulation here.” After all, there is currently no lack of funding for network expansion.
The cost of expanding digital infrastructures is enormous: EU member states are investing hundreds of billions of euros in the coming years. The money is coming primarily from private investors. Expansion with fiber-optic lines is a priority; technically, these are also a prerequisite for 5G and 6G mobile communications.
The German government has set a target of 50 percent of households connected to the fiber-optic network by 2025 (“Homes Passed”). By 2030, all households should actually be supplied with fiber optics. The costs are enormous. That’s why the member states are also active with funding measures: The German government alone, for example, is currently providing €3 billion a year, usually in addition to funding from the states and local authorities.
But the expansion of digital infrastructures is not keeping pace with this financial volume: The industry complains that neither the approval processes are keeping up, nor can the construction companies process the mountain of expansion projects in a timely manner. Germany alone, the federal and state governments, is currently pushing a mountain of over €20 billion in funding ahead of it. These funds are firmly earmarked but can only be used gradually over the course of the next few years. So, what would be the point of further funding, and then by Google, Netflix, and Co. as well? So far, the Commission can not or will not answer that question.
The German Federal Ministry for Digital and Transport is demanding a comprehensive analysis from the EU Commission on the consequences for the market, competition, the Internet ecosystem, and consumers. And on net neutrality – in other words, on the principle laid down in the EU that data is always treated equally fast on its way to the consumer. By its own admission, however, the Commission does not want to change this.
Together with Austria, Estonia, Finland, Ireland, and the Netherlands, the Germans sent a dispatch to Brussels at the beginning of December. In doing so, they signaled a clear “no” to France, Italy, and Spain. The demand in the letter: The debate about an appropriate contribution by the large Internet companies (Fair Share) should be treated separately from the revision of the Broadband Cost Reduction Directive. Which should be tantamount to ending it, at least with this Commission.
In response to the wishes of the member states, the Directive is now to be dealt with separately next year as the Gigabit Infrastructure Act (GIA), according to Commission sources.
A spokesperson for the EU Commission emphasizes that an open dialog is currently being conducted with all stakeholders. In this context, Fair Share will also be discussed separately. The matter is complex, and a decision needs facts and figures, the spokesman said. Therefore, a public consultation is to be launched in the coming weeks. Commission sources say this should be part of a broader consultation that will address the future of connectivity as a whole. Which would hardly be possible in terms of time with a regulatory proposal based on it as early as 2023.
However, at the same time, the speaker also emphasizes a passage in the recently adopted “Digital Decade Program to promote digital transformation in Europe.” It states in recital 13: “All market actors benefiting from the digital transformation assume their social responsibilities and make a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all Europeans.”
Telecom providers read this as an implicit yes to Fair Share. The German government takes an explicitly different view, as a spokeswoman clarifies: “The wording […] is a general commitment to fair framework conditions and does not imply approval of demands that very large online platforms share in network expansion costs.”
However, that platforms will still have to pay their Fair Share to the community could be brought about by a completely different regulation: The EU finance ministers agreed on Monday – after Hungary hesitated for a long time – on the EU-wide introduction of the second pillar of the minimum tax model. The main aim is to make profit shifting and relocation more difficult.
From 2024, minimum taxes of 15 percent will be due. This also applies to the subsidiaries of large digital providers in the EU. If this works, Vestager and Breton could secretly and quietly say goodbye to their as-yet unsupported plan in the course of the consultation without fearing any damage. With Corinna Visser
“She managed to annoy many people,” Politico wrote about her and voted her 12th on the list of the most influential MEPs in the EU Parliament in 2019 – 16 places ahead of Manfred Weber. The medium called her the “chief budget watchdog.” Persistence, that is important to Ingeborg “Inge” Gräßle. Persistence and determination.
After completing a traineeship in journalism, Gräßle was the first in her family to study, in Stuttgart, Paris, and Berlin. She financed her studies herself, she says, through work and scholarships. She earned her doctorate and went into politics. Whether in the state parliament of Baden-Württemberg, in the EU Parliament, or today in the Bundestag: Gräßle wants to shape things. She doesn’t want to get lost in the mass of members of parliament.
That didn’t seem so easy in a parliament as big as the EU Parliament, she recalls. “When I made the switch, I wanted to choose a topic in which I also had something to contribute, where there was an influence,” Gräßle recalls. The ministerial administration in Baden-Württemberg recommended the Committee on Budgetary Control to her. That’s why her focus is still on budgetary policy today.
She always brought a “breath of fresh air” to her political positions: in 1996, she was not only the first woman to enter the state parliament for her home constituency of Heidenheim, but at 35, she was also one of the youngest members of parliament. And she did so at a time when politics was still very male-dominated. “The culture shock was on both sides.”
Her direct election to the European Parliament in 2004 was also about change, about a new dynamic, she recounts. The party was explicitly looking for a woman. Today, she is still campaigning for more diversity in her party, especially in her home state of Baden-Württemberg. Everyone should feel included and represented, she says. “However, if the CDU Baden-Württemberg runs again with four men in the next European elections, then the party will have damaged itself,” she predicts.
For fifteen years, Gräßle sat in the EU Parliament, was Chairwoman of the Committee on Budgetary Control, and was instrumental in ensuring that the EU now has a European Public Prosecutor’s Office. In 2019, she retired from the EU Parliament. Her list position number 5, behind four men, was not enough for re-election.
In 2021, she entered the Bundestag. There, she was confronted with less creative freedom and a lot of party ideology, as she says. At the EU level, she was able to turn “big wheels.” “The EU Parliament is the underestimated parliament.” A lot of influence on legislation and no “rigid ideological party blocs” – that’s what allows the EU Parliament to drive sensible solutions, she says.
The Bundestag, on the other hand, does not come off well. “I can’t work out solutions with a permanent party fight,” she says. Nor does the parliament have much to say, especially in the budgetary policy. There is a lack of transparency and modernization, and not just since this legislative period.
“In Europe, we are in last place regarding accountability and IT, virtually stuck in the 1980s.” According to Gräßle, it’s not just budgetary policy that needs to change. “There needs to be more European law that prohibits building more bureaucracy,” she says. “At the same time, ministers in Germany need to focus more on Brussels.”
The work of the federal parliament has probably not had a deterrent effect on Gräßle. She says, Triggering modernization in parliament, that’s where she found her role. That’s the only way Germany can move forward, too. “I don’t mind getting on other people’s nerves for that.” Katharina Kausche
