It took Germany’s Chancellor Olaf Scholz a while till he addressed European issues in his traditional summer Q&A session at yesterday’s Federal Press Conference. Scholz answered journalists’ questions on topics such as energy diversification, commodity dependency on China and a new borrowing spree. Below you will find the analysis by my colleagues Falk Steiner, Lukas Scheid and Nico Beckert.
Falk Steiner also took a look at how effective Western sanctions against Russia are. Loopholes were to be expected. However, a report by London’s Royal United Services Institute shows that sanctioned goods still make it to Russia, especially in the tech sector.
In the meantime, Estonia is getting serious and decided on stricter visa regulations for Russian citizens yesterday. However, a spokeswoman for the EU Commission reminded that a general ban on entry was not possible under current law.
Estonia also takes a critical stance on cooperation with China and, together with Latvia, has now withdrawn from the so-called 16+1 format (officially 17+1). The two Baltic countries are thus following Lithuania, which has already left it some time ago.
100 percent renewable energy by 2050 – according to scientific consensus, this is no longer a dream. More and more studies show that this is possible. The need for a significant reduction of carbon emissions and increased efforts to fight climate change has also been emphasized by the head of the European Space Agency (ESA), Josef Aschbacher. “We have seen extremes that have not been observed before,” Aschbacher said.
On a related note, I recommend today’s Profile of Lili Fuhr, who works at the Center for International Environmental Law (CIEL) on legal issues related to the phase-out of oil and gas. Above all, her main goal ist to oppose the powerful industry lobby.
But this should also apply to the EU, especially in the impending energy crisis, the chancellor stressed in response to a question from Europe.Table: “Solidarity in the European Union is better than was predicted a few years ago, after all.” In the Covid pandemic, after initial difficulties, cooperation was largely successful, Scholz said.
The European Recovery Program in particular had shown that Europe could stick together and contributed to the fact that Europe had emerged from this crisis better than predicted. This also helped prevent a repeat of the events that occurred during the Lehman crisis and the resulting European Sovereign Debt Crisis in 2009.
The reaction to the Russian aggression was “very unified and very solidary”. Scholz stressed that “many very far-reaching changes have come about,” for instance, that the six Western Balkan states, with which accession negotiations were opened in 2003, are now moving forward again. Europe has also shown itself to be united in the steps toward the possible accession of Ukraine and Moldova to the EU, as well as the jointly drafted sanctions packages.
“We have taken decisions to improve our energy supply and to ensure that we create European infrastructures that make mutual support easier.” Scholz told journalists. “That’s why I’m sure that – if things get tight now – we will continue to show solidarity. Germany will in any case.”
“The European Union must handle these difficult times in solidarity, this is something I explicitly commit to,” Scholz said, adding that he believes Germany has a special task “as the biggest country with the greatest economy and the largest population at the center of Europe.”
Scholz warned at the same time against setting national interests against European interests: “A German chancellor, a German federal government, but also a German Bundestag, and also the citizens cannot play a game against Brussels or against other countries in the European Union for the national debate, according to the motto ‘They’re all wrong, I’ll go there and tell them what’s what.’” Germany would have to ensure that progress and Europe’s future viability succeeded.
In the Chancellor’s view, a key instrument is strategic diversification, both in terms of supply sources and infrastructures. This applies, on the one hand, to energy. Here, the Chancellor emphasized that he had been actively involved in talks with France, Spain and Portugal on the continued construction of the so-called MidCat pipeline. This pipeline could be used in the future to connect the seven LNG terminals on the Iberian Peninsula with the Central European gas pipeline network.
This pipeline, which currently still misses a good 200 kilometers between the Spanish and French networks, is also planned to be designed for hydrogen transport – in order to be able to transport hydrogen from North Africa in the distant future.
Especially in energy policy, Scholz tried to distance himself from the previous governments, in which he also most recently served as Minister of Finance and Vice-Chancellor: “We are addressing all the failures of the last few years.” While it will be expensive for Germany to procure gas now, “we will always get enough.” Almost immediately after taking office, he claimed to have personally instructed the federal government to examine the scenario of losing Russian gas supplies and to prepare accordingly.
Scholz reminded that he had already sought an LNG terminal in Germany in 2020. At the time, Scholz presented the Trump government with the offer of state subsidies for an LNG terminal in Brunsbüttel. What Scholz failed to mention yesterday was that the USA was supposed to end its sanctions against the completion of Nord Stream 2 in return.
Scholz also called for further diversification beyond energy issues, explicitly from the business community. It was a question of national security to diversify supply chains, he said. With this, the chancellor answered in his own way a question about dependencies on the People’s Republic of China.
Unilateral relationships must be avoided, including by companies themselves, Scholz demanded. Companies should avoid dependence on just one supplier, even if this came with higher costs, and preferably have “one foot in Europe at all times,” he urged. Specifically, Scholz named the raw materials lithium and cobalt. The semiconductor policy, for example, the planned Intel plant in Magdeburg, was precisely one example of the reduction of such dependencies. He called the most important component, however, the expansion of renewable energies.
Scholz somewhat dampened expectations from other countries on a fiscal union on Thursday. His statement that the EU is on the way to a fiscal union, as he said in the Bundestag on February 25, was not about loans. But the EU’s own revenue for loans as part of the NextGenerationEU program, which will have to be repaid from 2028 to 2050, with roughly €13 billion a year.
“For me, it’s always about the question: How to deal with the credits,” Scholz said, trying to remove any grounds for debates about possible further new EU debt. Currently, it was a “really tough program” to reach an agreement on the EU’s direct revenues earmarked for this purpose, he said.
A few days ago, Budget Commissioner Johannes Hahn urged a quick agreement in an interview with Europe.Table. The German government outlined its common position on the stability and growth pact regarding European fiscal policy, he said. “Within the framework of the current pact, we must continue to use the possibilities of flexibility as we did in crisis management.” Falk Steiner with Lukas Scheid and Nico Beckert
At the heart of the EU’s technology sanctions against the Russian Federation are two components: First, the Dual-Use Regulation, which was revised only last year and places certain goods under a licensing regime. The other is the actual sanctions, which are used to specifically target actors that the EU considers to be partly responsible for Russia’s war against Ukraine. Unlike US sanctions, for example, both instruments are used exclusively on EU territory. But do the measures have any effect at all?
Alina Epifanova of the German Council on Foreign Relations sees several factors working together: “The exit of numerous Western tech companies from the Russian market has negative consequences for Russian industry and the economy as a whole,” she says. The halt of business and tech sanctions would mainly affect new products and licenses. “Already existing technologies are still used by many Russian customers,” Epifanova says. “However, Western technologies are already missing in many areas.” In particular, the chip shortage is massive, she says, leading to quality reduction, creative recycling attempts and, in some cases, missing functions.
In the chip sector, Russia has reserves for about 1 to 2 years, she estimates. “Overall, Russia is on the path to regressive tech import substitution, which will enormously complicate the country’s technological and economic development.” According to Epifanova, the Russian tech sector is particularly affected: “Cloud computing companies (Yandex, VK Cloud, SberCloud) lack servers, the supercomputers of Sberbank, Yandex and MTS, which are based on Nvidia solutions, may also face problems,” the expert says.
Just how dependent Russia is on Western suppliers was revealed in a report published this week by London’s Royal United Services Institute (PDF). The scientists examined 27 Russian weapons systems – and found chips and electronic components from Western production in almost every device. From Iskander cruise missile systems to kamikaze drones: Russian weapons manufacturers can hardly be considered self-sufficient, despite all the soapbox speeches made by the grandees in Moscow.
The supply for these systems was supposed to dry up at the latest since the beginning of the second attack on Ukraine after 2014 on February 24, or so the political decision-makers in the West wanted it to be. Many of the goods were already on export blacklists since the Russian annexation of Crimea via the Dual-Use Regulation. But even after the invasion six months ago, many problematic components continued to enter the Russian Federation, Reuters reports, citing Russian customs data.
Companies whose products were on customs lists are also investigating how exactly the electronic components found their way to Russia. In some cases, shipments were already on their way or in transit before the attack began. Shipments via third countries and resellers are also believed to play a role. A spokesman for TDK Technologies, whose components are mentioned in the RUSI report, explains that “it cannot be completely ruled out that individual elements will find their way into the Russian Federation, for example via unauthorized distributors.”
This is despite the fact that, according to the company’s own information, supply agreements and customer contracts expressly prohibit the use of its own products in military applications. The chip manufacturer Infineon, which is also listed in the report, explained that it was doing everything in its power to comply with the sanctions and was even exceeding them. However, end-use control is not possible. All in all, the RUSI report includes many European suppliers – a total of 56 European products, the authors write.
The Federal Ministry of Economics and Technology (BMWK), which is politically responsible for export controls, has no knowledge of possible problems with the enforcement of sanctions or the Dual-Use Regulation – it shifts responsibility to the Federal Office for Economic Affairs and Export Control (BAFA), which is in charge of enforcing the sanctions. The BAFA states that it has not issued any export licenses for such goods to Russia since February.
However, there are not only gaps in the sanctions regime when it comes to available hardware: Russian AI provider NTechLab, for example, is still active on the European market despite sanctions. The company, which has gained questionable fame with its involvement in the facial recognition system of the Moscow Metro and the FindFace recognition software, among other things, counts both US and EU companies among its customers and partners.
The company itself has not yet been included on the EU sanctions lists, as an EU official confirms, especially not in the important Annex IV of the sanctions, which lists companies maintaining ties to the arms industry. However, the relevant authorities of the member states could initiate stricter checks of their own at any time under the Dual-Use Regulation if there were reasonable suspicions that companies failed to meet human rights criteria.
In this context, Czech Pirate MEP Markéta Gregorová criticizes that the sanctions and dual-use efforts would by no means have a sufficient impact: Russia’s surveillance state was benefiting from Western inactivity. DGAP researcher Alena Epifanova also sees NTechLab as an example of loopholes in the system: “It’s very unfortunate because it increases the market and revenues of IT companies that cooperate with the Kremlin, and that does not contribute in any way to ending the war.”
“This role was made for me,” says Lili Fuhr about her new position at the Center for International Environmental Law (CIEL). The organization focuses on global oil and gas phase-out and supports other projects when it comes to legal issues. The 42-year-old has been Deputy Director of the Climate and Energy Program since June. Her goal: CIEL should become more involved at the EU level.
Fuhr is the only CIEL employee working from Berlin. Her mornings are quiet since many of her colleagues are located in Washington. It is challenging to even discuss a phase-out of oil and gas in Europe due to the war in Ukraine. “We need to wake up and realize that dependence on fossil fuels makes us insecure,” Fuhr says. For CIEL, this is also always a matter of human rights.
She calls it “rash reactions” that the German government is now looking for new oil and gas in Africa. Fuhr talks about her exchanges with environmental and human rights organizations on the ground. There is an impression that Germany wants to engage in neocolonialist exploitation. “Explaining to people from Namibia or Senegal that we now want to use their countries as new sources of oil and gas – that is shameful,” says Fuhr.
Oil and gas not only provide us with energy, but they are also used to make plastics or fertilizers for agriculture. That is why Fuhr wants to extend the debate about a phase-out to petrochemicals and agricultural policy as well.
Instead of a phase-out, the industry wants to continue to use fossil fuels and capture and store carbon, with technologies such as carbon capture storage (CCS). “We have to be careful that we don’t get caught up in false solutions and wrong tracks,” Fuhr says on the subject.
The graduate geographer has 16 years of experience working for the Heinrich Böll Foundation, where she began as a staff member in the Africa department, later worked as an international policy officer, and became an international environmental policy officer in 2008. As such, she spent a lot of time “scanning the horizon”. Fuhr closely monitors what new technologies the industry develops and wants to keep her finger on the pulse.
This is important to her because CIEL is up against a powerful industry lobby. “We have to anticipate what’s going to happen next,” Fuhr says. Only then, can CIEL provide its partner organizations with the relevant legal information. If that succeeds, Fuhr says, “then the program has served its function.” Jana Hemmersmeier
It took Germany’s Chancellor Olaf Scholz a while till he addressed European issues in his traditional summer Q&A session at yesterday’s Federal Press Conference. Scholz answered journalists’ questions on topics such as energy diversification, commodity dependency on China and a new borrowing spree. Below you will find the analysis by my colleagues Falk Steiner, Lukas Scheid and Nico Beckert.
Falk Steiner also took a look at how effective Western sanctions against Russia are. Loopholes were to be expected. However, a report by London’s Royal United Services Institute shows that sanctioned goods still make it to Russia, especially in the tech sector.
In the meantime, Estonia is getting serious and decided on stricter visa regulations for Russian citizens yesterday. However, a spokeswoman for the EU Commission reminded that a general ban on entry was not possible under current law.
Estonia also takes a critical stance on cooperation with China and, together with Latvia, has now withdrawn from the so-called 16+1 format (officially 17+1). The two Baltic countries are thus following Lithuania, which has already left it some time ago.
100 percent renewable energy by 2050 – according to scientific consensus, this is no longer a dream. More and more studies show that this is possible. The need for a significant reduction of carbon emissions and increased efforts to fight climate change has also been emphasized by the head of the European Space Agency (ESA), Josef Aschbacher. “We have seen extremes that have not been observed before,” Aschbacher said.
On a related note, I recommend today’s Profile of Lili Fuhr, who works at the Center for International Environmental Law (CIEL) on legal issues related to the phase-out of oil and gas. Above all, her main goal ist to oppose the powerful industry lobby.
But this should also apply to the EU, especially in the impending energy crisis, the chancellor stressed in response to a question from Europe.Table: “Solidarity in the European Union is better than was predicted a few years ago, after all.” In the Covid pandemic, after initial difficulties, cooperation was largely successful, Scholz said.
The European Recovery Program in particular had shown that Europe could stick together and contributed to the fact that Europe had emerged from this crisis better than predicted. This also helped prevent a repeat of the events that occurred during the Lehman crisis and the resulting European Sovereign Debt Crisis in 2009.
The reaction to the Russian aggression was “very unified and very solidary”. Scholz stressed that “many very far-reaching changes have come about,” for instance, that the six Western Balkan states, with which accession negotiations were opened in 2003, are now moving forward again. Europe has also shown itself to be united in the steps toward the possible accession of Ukraine and Moldova to the EU, as well as the jointly drafted sanctions packages.
“We have taken decisions to improve our energy supply and to ensure that we create European infrastructures that make mutual support easier.” Scholz told journalists. “That’s why I’m sure that – if things get tight now – we will continue to show solidarity. Germany will in any case.”
“The European Union must handle these difficult times in solidarity, this is something I explicitly commit to,” Scholz said, adding that he believes Germany has a special task “as the biggest country with the greatest economy and the largest population at the center of Europe.”
Scholz warned at the same time against setting national interests against European interests: “A German chancellor, a German federal government, but also a German Bundestag, and also the citizens cannot play a game against Brussels or against other countries in the European Union for the national debate, according to the motto ‘They’re all wrong, I’ll go there and tell them what’s what.’” Germany would have to ensure that progress and Europe’s future viability succeeded.
In the Chancellor’s view, a key instrument is strategic diversification, both in terms of supply sources and infrastructures. This applies, on the one hand, to energy. Here, the Chancellor emphasized that he had been actively involved in talks with France, Spain and Portugal on the continued construction of the so-called MidCat pipeline. This pipeline could be used in the future to connect the seven LNG terminals on the Iberian Peninsula with the Central European gas pipeline network.
This pipeline, which currently still misses a good 200 kilometers between the Spanish and French networks, is also planned to be designed for hydrogen transport – in order to be able to transport hydrogen from North Africa in the distant future.
Especially in energy policy, Scholz tried to distance himself from the previous governments, in which he also most recently served as Minister of Finance and Vice-Chancellor: “We are addressing all the failures of the last few years.” While it will be expensive for Germany to procure gas now, “we will always get enough.” Almost immediately after taking office, he claimed to have personally instructed the federal government to examine the scenario of losing Russian gas supplies and to prepare accordingly.
Scholz reminded that he had already sought an LNG terminal in Germany in 2020. At the time, Scholz presented the Trump government with the offer of state subsidies for an LNG terminal in Brunsbüttel. What Scholz failed to mention yesterday was that the USA was supposed to end its sanctions against the completion of Nord Stream 2 in return.
Scholz also called for further diversification beyond energy issues, explicitly from the business community. It was a question of national security to diversify supply chains, he said. With this, the chancellor answered in his own way a question about dependencies on the People’s Republic of China.
Unilateral relationships must be avoided, including by companies themselves, Scholz demanded. Companies should avoid dependence on just one supplier, even if this came with higher costs, and preferably have “one foot in Europe at all times,” he urged. Specifically, Scholz named the raw materials lithium and cobalt. The semiconductor policy, for example, the planned Intel plant in Magdeburg, was precisely one example of the reduction of such dependencies. He called the most important component, however, the expansion of renewable energies.
Scholz somewhat dampened expectations from other countries on a fiscal union on Thursday. His statement that the EU is on the way to a fiscal union, as he said in the Bundestag on February 25, was not about loans. But the EU’s own revenue for loans as part of the NextGenerationEU program, which will have to be repaid from 2028 to 2050, with roughly €13 billion a year.
“For me, it’s always about the question: How to deal with the credits,” Scholz said, trying to remove any grounds for debates about possible further new EU debt. Currently, it was a “really tough program” to reach an agreement on the EU’s direct revenues earmarked for this purpose, he said.
A few days ago, Budget Commissioner Johannes Hahn urged a quick agreement in an interview with Europe.Table. The German government outlined its common position on the stability and growth pact regarding European fiscal policy, he said. “Within the framework of the current pact, we must continue to use the possibilities of flexibility as we did in crisis management.” Falk Steiner with Lukas Scheid and Nico Beckert
At the heart of the EU’s technology sanctions against the Russian Federation are two components: First, the Dual-Use Regulation, which was revised only last year and places certain goods under a licensing regime. The other is the actual sanctions, which are used to specifically target actors that the EU considers to be partly responsible for Russia’s war against Ukraine. Unlike US sanctions, for example, both instruments are used exclusively on EU territory. But do the measures have any effect at all?
Alina Epifanova of the German Council on Foreign Relations sees several factors working together: “The exit of numerous Western tech companies from the Russian market has negative consequences for Russian industry and the economy as a whole,” she says. The halt of business and tech sanctions would mainly affect new products and licenses. “Already existing technologies are still used by many Russian customers,” Epifanova says. “However, Western technologies are already missing in many areas.” In particular, the chip shortage is massive, she says, leading to quality reduction, creative recycling attempts and, in some cases, missing functions.
In the chip sector, Russia has reserves for about 1 to 2 years, she estimates. “Overall, Russia is on the path to regressive tech import substitution, which will enormously complicate the country’s technological and economic development.” According to Epifanova, the Russian tech sector is particularly affected: “Cloud computing companies (Yandex, VK Cloud, SberCloud) lack servers, the supercomputers of Sberbank, Yandex and MTS, which are based on Nvidia solutions, may also face problems,” the expert says.
Just how dependent Russia is on Western suppliers was revealed in a report published this week by London’s Royal United Services Institute (PDF). The scientists examined 27 Russian weapons systems – and found chips and electronic components from Western production in almost every device. From Iskander cruise missile systems to kamikaze drones: Russian weapons manufacturers can hardly be considered self-sufficient, despite all the soapbox speeches made by the grandees in Moscow.
The supply for these systems was supposed to dry up at the latest since the beginning of the second attack on Ukraine after 2014 on February 24, or so the political decision-makers in the West wanted it to be. Many of the goods were already on export blacklists since the Russian annexation of Crimea via the Dual-Use Regulation. But even after the invasion six months ago, many problematic components continued to enter the Russian Federation, Reuters reports, citing Russian customs data.
Companies whose products were on customs lists are also investigating how exactly the electronic components found their way to Russia. In some cases, shipments were already on their way or in transit before the attack began. Shipments via third countries and resellers are also believed to play a role. A spokesman for TDK Technologies, whose components are mentioned in the RUSI report, explains that “it cannot be completely ruled out that individual elements will find their way into the Russian Federation, for example via unauthorized distributors.”
This is despite the fact that, according to the company’s own information, supply agreements and customer contracts expressly prohibit the use of its own products in military applications. The chip manufacturer Infineon, which is also listed in the report, explained that it was doing everything in its power to comply with the sanctions and was even exceeding them. However, end-use control is not possible. All in all, the RUSI report includes many European suppliers – a total of 56 European products, the authors write.
The Federal Ministry of Economics and Technology (BMWK), which is politically responsible for export controls, has no knowledge of possible problems with the enforcement of sanctions or the Dual-Use Regulation – it shifts responsibility to the Federal Office for Economic Affairs and Export Control (BAFA), which is in charge of enforcing the sanctions. The BAFA states that it has not issued any export licenses for such goods to Russia since February.
However, there are not only gaps in the sanctions regime when it comes to available hardware: Russian AI provider NTechLab, for example, is still active on the European market despite sanctions. The company, which has gained questionable fame with its involvement in the facial recognition system of the Moscow Metro and the FindFace recognition software, among other things, counts both US and EU companies among its customers and partners.
The company itself has not yet been included on the EU sanctions lists, as an EU official confirms, especially not in the important Annex IV of the sanctions, which lists companies maintaining ties to the arms industry. However, the relevant authorities of the member states could initiate stricter checks of their own at any time under the Dual-Use Regulation if there were reasonable suspicions that companies failed to meet human rights criteria.
In this context, Czech Pirate MEP Markéta Gregorová criticizes that the sanctions and dual-use efforts would by no means have a sufficient impact: Russia’s surveillance state was benefiting from Western inactivity. DGAP researcher Alena Epifanova also sees NTechLab as an example of loopholes in the system: “It’s very unfortunate because it increases the market and revenues of IT companies that cooperate with the Kremlin, and that does not contribute in any way to ending the war.”
“This role was made for me,” says Lili Fuhr about her new position at the Center for International Environmental Law (CIEL). The organization focuses on global oil and gas phase-out and supports other projects when it comes to legal issues. The 42-year-old has been Deputy Director of the Climate and Energy Program since June. Her goal: CIEL should become more involved at the EU level.
Fuhr is the only CIEL employee working from Berlin. Her mornings are quiet since many of her colleagues are located in Washington. It is challenging to even discuss a phase-out of oil and gas in Europe due to the war in Ukraine. “We need to wake up and realize that dependence on fossil fuels makes us insecure,” Fuhr says. For CIEL, this is also always a matter of human rights.
She calls it “rash reactions” that the German government is now looking for new oil and gas in Africa. Fuhr talks about her exchanges with environmental and human rights organizations on the ground. There is an impression that Germany wants to engage in neocolonialist exploitation. “Explaining to people from Namibia or Senegal that we now want to use their countries as new sources of oil and gas – that is shameful,” says Fuhr.
Oil and gas not only provide us with energy, but they are also used to make plastics or fertilizers for agriculture. That is why Fuhr wants to extend the debate about a phase-out to petrochemicals and agricultural policy as well.
Instead of a phase-out, the industry wants to continue to use fossil fuels and capture and store carbon, with technologies such as carbon capture storage (CCS). “We have to be careful that we don’t get caught up in false solutions and wrong tracks,” Fuhr says on the subject.
The graduate geographer has 16 years of experience working for the Heinrich Böll Foundation, where she began as a staff member in the Africa department, later worked as an international policy officer, and became an international environmental policy officer in 2008. As such, she spent a lot of time “scanning the horizon”. Fuhr closely monitors what new technologies the industry develops and wants to keep her finger on the pulse.
This is important to her because CIEL is up against a powerful industry lobby. “We have to anticipate what’s going to happen next,” Fuhr says. Only then, can CIEL provide its partner organizations with the relevant legal information. If that succeeds, Fuhr says, “then the program has served its function.” Jana Hemmersmeier
