Table.Briefing: Europe (English)

Trouble among Social Democrats + Chancellor Merz + Hydrogen crisis

Dear reader,

Today, the European Parliament could pave the way for the new Commission. For this to happen, however, S&D leader Iratxe García Pérez must convince the Socialist coordinators in the group meeting to vote in favor of the nomination of Raffaele Fitto as Executive Vice-President of the Commission. They could also give up their opposition to Olivér Várhelyi, the Hungarian Commissioner for Health and Animal Welfare.

Iratxe García Pérez expressed her willingness to do so yesterday in a meeting with the S&D heads of delegation. The decisive factor was apparently a word of power from Spanish Prime Minister Pedro Sánchez at the weekend. It is uncertain whether the socialist MEPs will follow her lead. They are very reluctant to raise their hands for Fitto, who was nominated by the right-wing government in Italy, and for Várhelyi, who was sent by Viktor Orbán.

The Spaniard must now explain to her MEPs what she has achieved in the past few days. According to reports, not too much: Várhelyi will no longer be responsible for sexually reproductive medicine. Social Democrat Roxana Mînzatu is also to be given responsibility for workers’ rights in her title.

After all, there is to be a cooperation agreement between the EPP, S&D and Renew, which the EPP had refused to sign in the summer. The three group leaders probably want to publicly declare before or after the meeting of the group leaders (CoP) that they will work together in the pro-European center for the next five years. A written declaration on this should be ready by next week’s plenary session at the latest. This should also define a number of substantive priorities that are closely aligned with von der Leyen’s political guidelines.

The script for the nomination was not yet entirely clear yesterday: It is conceivable that the six vice-presidents and Várhelyi will be nominated by the coordinators in the committees as soon as the socialist Teresa Ribera has completed her hearing in the Spanish parliament. This is planned for the morning. The CoP would then officially announce the breakthrough in the late afternoon. Or the committees could vote individually. However, this procedure would entail risks. The anxious question would be: Would the dissatisfied Social Democrats just clench their fists in their pockets or would they end up destroying the agreements reached by the group leaders?

Get through this exciting day safely!

Your
Markus Grabitz
Image of Markus  Grabitz

Feature

What a Chancellor Merz would stand for in European policy

Nov. 6: It has been clear since the morning that Donald Trump will become president again in the USA; in the evening, the traffic light coalition in Germany collapses. At midday on this historic day, Friedrich Merz sits on a stage in the auditorium of Berlin’s Hertie School to talk about Europe. For 90 minutes, he discusses with Italy’s former Prime Minister Enrico Letta how the EU can become more competitive.

The CDU leader takes time for the interview, just as he had taken time months earlier to speak with Letta for his report on the EU Single Market. The topic is close to his heart and takes the 68-year-old back to the beginnings of his political career: From 1989 to 1994, he sat in the European Parliament, when Commission President Jacques Delors created the Single Market. “We passed almost 300 regulations and directives for this in the Economic and Monetary Affairs Committee,” he says. The Single Market is still one of Europe’s greatest achievements today.

Merz is more European than many think

Friedrich Merz, the likely next Federal Chancellor, is not the nationalist hardliner that some people think he is. Even if he himself contributed to this reputation when he offended neighboring countries in the summer by calling for Germany’s borders to be closed to most asylum seekers. After the attack in Solingen and before the state elections, he felt compelled to make this radical demand.

However, Merz attaches great importance to good relations with EU partners, particularly France and Poland. He has a lot in common with Emmanuel Macron when it comes to security policy, and there are also overlaps in terms of competition policy. He is less fundamentally opposed to higher contributions to the European Union or new EU debt programs than Christian Lindner, for example.

“As a representative of his generation, Friedrich Merz knows that he cannot solve problems at a national level,” says long-time CDU European politician Elmar Brok. “He understands the structures of the EU and has an inner connection to it.”

Merz knows that a German chancellor must also be able to handle European policy. Helmut Kohl and Angela Merkel earned a lot of respect from their partners, but Olaf Scholz remained pale during his three years in office. He was unable to connect with Macron, and he also had difficulties with Donald Tusk from Poland.

Network maintenance at the Élysée Palace

Merz wants to do better. He has already visited Macron twice at the Élysée Palace. According to the CDU, the interpersonal atmosphere is much better than between Scholz and Macron. Good relations are also maintained with the Christian Democrat Tusk. Merz also likes to demonstrate his closeness to his party colleague, Commission President Ursula von der Leyen.

The CDU politician shares much of what Macron propagates under the heading of European strategic sovereignty. He is a convinced transatlanticist, led the Atlantik-Brücke for ten years and, after leaving the Bundestag in 2005, became a partner at the US law firm Mayer Brown.

However, Merz believes it is necessary to break Germany’s and Europe’s security policy dependency on the United States. “We must pool our efforts and create a market in which we are strong enough with the European arms industry to reduce our dependence, especially on the American market,” he said during the discussion with Letta. In a guest article for the French newspaper Le Monde at the beginning of November, he criticized “the desolate state of European foreign and security policy at such a critical time” following the cancellation of the Ramstein conference.

More money for weapons

Merz sharply attacked Scholz for not supporting Ukraine, which is under attack from Russia, with enough determination. “The history of aid for Ukraine is a history of constant dithering and hesitation, of calculation and delaying tactics,” he wrote in Le Monde. Merz is saying what many allies are thinking – behind closed doors, diplomats are accusing the Scholz-led chancellery of defeatism. The SPD politician’s phone call with Vladimir Putin on Friday, the content of which was not agreed in advance, caused new irritation in Paris and Warsaw.

As Chancellor, however, Merz would have to answer the question of how he intends to finance a stronger European defense force. The designated Defense Commissioner Andrius Kubilius puts the need at €500 billion. The EU Commission is currently working on a paper with options on how the gap could be closed – however, in view of the German election campaign, it will probably not be presented until March.

Merz does not fundamentally rule out another special budget for Germany or additional funds for the EU level. “We can talk about anything, but first we have to define our interests,” he said at the Hertie School. The CDU leader appears to be more open than his own party in this respect: In a position paper on EU policy, the CDU/CSU parliamentary group “strictly rejects any further communitization of debt and budgetary risks in the EU (…)”.

‘Yes’ to the deepening of the Capital Markets Union

Merz claims to have raised the issue of economic competitiveness to the top of the agenda in many discussions with von der Leyen. He is calling for more free trade agreements, a moratorium on regulation and the removal of barriers in the internal market. In terms of energy policy, Merz wants to overcome ideological divides, particularly with regard to nuclear power, and drive forward the expansion of networks between EU countries in order to reduce energy prices.

Merz is relying primarily on private capital to finance the investments. In order to mobilize this more strongly, the former Blackrock supervisory board member advocates a deepening of the capital market and banking union. He does not want his criticism of the German government in view of Italian Unicredit’s investment in Commerzbank to be understood as a rejection of a takeover: The criticism was aimed solely at the government’s lack of strategy in the sale of the state-owned shares.

Stock exchange mergers for stronger EU markets

Merz also wants to make Europe more attractive for IPOs so that successful companies such as Biontech do not have to switch to the New York Nasdaq in their search for capital. As a member of the Supervisory Board of Deutsche Börse, he has witnessed three failed attempts to merge with other stock exchanges, Merz told the Hertie School. The most important attempt, the merger with the London Stock Exchange, was stopped by the EU Commission’s Directorate-General for Competition.

Merz considers this to be a capital mistake that must not be repeated. “We must allow stock exchange mergers in order to create a genuine European market and be able to compete globally with New York, Chicago or Shanghai.”

He also draws a lesson for competition regulators from the case: The relevant benchmark for assessing planned company mergers is not the national market, nor is it the European market. “The relevant market is the world.” As a supporter of European industrial champions, Emmanuel Macron would hardly put it any other way. For many smaller EU states, however, such words set alarm bells ringing.

  • EU-Binnenmarkt
  • European Defense
Translation missing.

Hydrogen: Regulator warns against excessive grid expansion

According to the regulatory agency ACER, the plans for the European hydrogen network are oversized. “You get the impression that everyone is acting according to the motto: ‘If you just build a lot of pipelines, then demand will follow’,” said agency head Christian Zinglersen on Tuesday at the most important industry gathering, the European Hydrogen Week in Brussels. Like ACER, the organizer Hydrogen Europe presented a report that confirmed the latest reports: Europe will probably miss its most ambitious hydrogen targets for 2030 by a landslide.

The EU target of 20 million tons of renewable hydrogen consumption in 2030 will probably only be matched by domestic production of 2.5 to 4.4 Mt, Hydrogen Europe writes in its new market report. The ACER report therefore advises EU member states to gradually build up hydrogen networks and adapt them to actual demand: “As far as hydrogen is concerned, they should improve their demand forecasting capabilities and not just follow ambitious targets.” In the future, planning should be based on binding commitments from customers, even if they have not yet made final investment decisions.

Commission puts hydrogen targets into perspective

On Tuesday, the EU Commission relativized its ambitious targets for 2030, which had been raised during the energy crisis. “We should focus our attention on the targets we have set in the Renewable Energy Directive. A 42% share of green hydrogen in industry and 29% in transport,” said Mechthild Wörsdörfer, Deputy Director-General at DG Energy.

However, according to Hydrogen Europe, these targets could also be achieved with the current policy. The RED3 targets would require 1.85 Mt of green hydrogen. However, it is crucial that at least the infrastructure for these quantities is actually built. Many countries would otherwise not be able to achieve their hydrogen targets – at least not with hydrogen from the EU: Italy, Austria, all Eastern European countries and, surprisingly, the Netherlands and Belgium.

Renewables directive lacks sanctions

However, some hydrogen bosses don’t want to go along with the new low-level stunt. “We shouldn’t be cautious, we should panic. We must once again recognize the urgency with which we must act,” said Maarten Wetselaar, CEO of Moeve, who has to trim the Spanish oil company to green. Under no circumstances should the EU lower its ambitions now.

Even if the RED3 targets are missed, however, it is unclear whether sanctions will be imposed, criticized Jorgo Chatzimarkakis, CEO of Hydrogen Europe, in a press conference. The association is urging the EU to support the hydrogen economy with additional measures and at least get closer to the target of ten million tons of domestic production with 4.4 Mt.

Agricultural subsidies for green ammonia

According to Chatzimarkakis, two measures could quickly support demand and reduce the risks for project developers. The EU could pay farmers bonuses from the agricultural funds for the use of synthetic fertilizers made from green hydrogen. In refineries, the demand for green hydrogen must be stimulated by the member states implementing RED3 quickly.

The Netherlands, for example, is resisting an overly accommodating interpretation of the Renewable Energy Directive. The government fears that fossil fuel plants will run longer if green hydrogen is counted too generously towards the production of conventional fuels. Hydrogen has always been a production aid in refineries.

Lower requirements for imports

In order to facilitate the production of green hydrogen, Chatzimarkakis supported a call by Hydrogen Europe manager Sopna Sury to revise the delegated act for green hydrogen (RFNBO) earlier than 2028. Four points need to be changed:

  • Monthly instead of hourly correlation.
  • Criteria for the additionality of green electricity production should take effect later, as called for by Minister Habeck.
  • Allow accumulation of state subsidies.
  • For imports, the requirement that the green electricity must come from the same bidding zone as the electrolyzer is to be waived.

National reserve of green hydrogen

The last point, for example, hinders the import of hydrogen from India, the partner country of this year’s Hydrogen Week. “If we don’t change anything, Indian hydrogen will be exported to Japan or South Korea. That cannot be in our interest,” said Chatzimarkakis. The EU could also take an example from the Indian tenders. Contracts there are concluded within three weeks in a transparent bidding process.

Chatzimarkakis also had a very special suggestion for the German government to boost demand: A quarter of the national energy supply should consist of green hydrogen in the future.

  • Grüner Wasserstoff

Missiles for Ukraine: Borrell wants EU states to follow suit

For Josep Borrell, the case is clear: At his last Defense Council on Tuesday, the EU foreign policy chief welcomed the US decision to allow Ukraine to deploy ATACMS missiles with a range of 300 kilometers deeper inside Russia.

Specifically, the UK and France are also said to be prepared to lift the restrictions on the Storm Shadow and Scalp cruise missiles. The new NATO Secretary General Mark Rutte, a guest at the meeting of EU defense ministers, expressed similar views to Borrell. In principle, he was in favor of making weapons available to Ukraine without restrictions. However, the decision was up to the allies. The pressure on Germany to supply Taurus cruise missiles to Ukraine is now likely to increase.

Pistorius: ‘Others are changing their line’

Boris Pistorius said in Brussels that nothing had changed in Germany’s position regarding Taurus deliveries: “We have not changed our line, others are changing theirs,” said the Defense Minister, backing the German Chancellor. It was legitimate that the USA had reconsidered its position on the use of long-range weapons. However, the Taurus cruise missiles differed from the other Western systems that had been made available to Ukraine.

In Brussels, Pistorius also defended Chancellor Olaf Scholz’s phone call to Putin. It had not been as effective as everyone had hoped. However, the phone call had at least provided proof that the Russian President was not prepared to negotiate anything. Everyone in Germany and other European countries must now understand that this is not the right time to talk about peace. The damaged data cables in the Baltic Sea were also discussed on the sidelines of the meeting. Pistorius said that it had to be assumed that this was sabotage. Although there was no evidence yet, no one believed that the cables had been cut by mistake.

One million artillery shells

The meeting of the defense ministers took place 1,000 days after the start of the Russian war of aggression against Ukraine. Borrell pointed out that the Russian attack on Ukraine actually began 4,000 days ago with the seizure of Crimea.

Borrell referred to similar statements by Boris Pistorius, saying that the EU states had made poor use of the time to expand their defense capabilities. Today, the EU states must regain these capabilities and at the same time support Ukraine by all means. In any case, this would be cheaper than having to bear the consequences of Ukraine’s defeat. The future of Europe would be decided in Ukraine. Since February 2022, the EU states have supported Ukraine with armaments worth a total of €45 billion. That is not much less than the USA. The EU has also now achieved its goal of supplying Ukraine with one million artillery shells.

Thanks and appeal to parliamentarians

In the EU Parliament, Volodymyr Zelenskyi thanked the Europeans for their support during a special session. Europe is stronger with united forces than Putin, who is now dependent on the help of North Korea. The Ukrainian President warned that North Korea could provide Russia with up to 100,000 soldiers.

Zelenskyi refrained from calling for more weapons before the EU Parliament, but pleaded for stronger punitive measures, particularly against oil sales. The Kremlin must be deprived of its money. Oil is the lifeblood of Putin’s regime and the shadow fleet of tankers is keeping it alive. While some European leaders were thinking about elections, Putin was focused on winning the war. The Russian president will not stop by himself. Everything must be done to end the war fairly and justly.

  • EU-Gipfel
  • Verteidigungspolitik

News

CSRD: German implementation further delayed

Following the first reading and a hearing of associations in mid-October, the remaining rapporteurs from the SPD and Greens have now agreed on a version that provides for changes to the government draft. Three of them:

  • Not only auditors are to be approved to audit the reports, but also technical experts such as TÜV and Dekra. This issue has been one of the most controversial so far. Numerous associations had spoken out in favor of the opening.
  • The so-called preparation solution will be retained, but suspended for two years. This requires companies to adapt their internal processes, systems and the preparation of reports to the digital format ESEF (“European Single Electronic Format”). The procedure, which is complex even for large corporations, was met with criticism. However, the EU Commission wants to stick to ESEF in principle, which is why only an extension of the deadline is possible.
  • Public companies are to be given a longer transitional period for the implementation of the CSRD. The government draft previously equated them with the groups subject to reporting requirements in the first step, provided they were founded as “large” corporations. They are now to be given more leeway.

Union unlikely to agree quickly

To get these proposals through the Bundestag, the SPD and Greens would need the help of another parliamentary group. As a positive vote from the FDP is questionable, only the CDU/CSU remains. However, CSRD rapporteur Stephan Mayer (CSU) once again pointed out to Table.Briefings last week the “disproportionate burden” and “excessive bureaucracy” that the law would impose on the economy. In view of the economic situation, “the reduction of bureaucracy must be given top priority”.

On the other hand, the EU directive must ultimately be incorporated into national law. There would be little scope for further weakening in the interests of the Union. If the CSRD is not passed now, the next government, possibly led by the CDU, will have to set about implementing the unpopular directive.

The calendar now also speaks against a timely conclusion of the procedure. The Bundestag has canceled session days, which limits the options for adoption there. The originally planned date of Dec. 20 for the equally necessary vote in the Bundesrat can hardly be kept. However, there are still a few weeks left in the current Bundestag session to transpose the directive into German law. If the CSRD is not tackled again until after the elections in February, observers and stakeholders do not expect it to be passed before the fall of 2025.

The German government must answer the EU Commission by next week at the latest as to why the CSRD is still taking so long. Among other things, it has opened infringement proceedings against Germany because the deadline for implementation had already expired at the beginning of July. maw

  • Nachhaltigkeitsberichterstattung

Damaged Baltic Sea cable: Chinese freighter under suspicion

According to media reports, a Chinese freighter has become the focus of a Danish naval investigation into the case of the damaged data cable in the Baltic Sea. The ship “Yi Peng 3” made conspicuous maneuvers south of the Swedish island of Öland early on Monday, reported the Financial Times on Tuesday, citing security circles. The cable damage is suspected to have occurred not far from the island. According to records of data from tracking apps, it is known that the 226-metre-long ship stopped, drifted and made two circles in the sea area south of Öland for almost 90 minutes on Monday morning.

It is unclear whether the freighter also dropped its anchor and dragged across the seabed. According to the Financial Times, the freighter was en route from the Russian port of Ust-Luga to Port Said in Egypt. “Yi Peng 3″ belongs to Ningbo Yipeng Shipping, a company that owns only one other ship and is based near the eastern Chinese port city of Ningbo.

On Monday, damage was reported to communication cables in the Baltic Sea between the new NATO members Finland and Sweden and their alliance partners Germany and Lithuania. The Finnish state-owned company Cinia had announced that a defect had been detected in the C-Lion1 submarine data cable between Finland and Germany and that communication links via the cable had been interrupted as a result.

The incident is reminiscent of a similar event in 2023, when the Baltic Connector between Finland and Estonia was damaged. It later transpired that the Hong Kong-registered container ship “NewNew Polar Bear” had dragged its anchor across the pipeline. ari

  • Finland
  • Infrastructure
  • Shipping
  • Sweden

Subsidies: How the EU wants to hold China to account

The EU wants to make China more accountable for access to the European market with stricter regulations for clean technologies. This was reported by the Financial Times. When Brussels announces grants of one billion euros for the development of batteries in December, Chinese companies will have to set up factories in Europe and transfer their intellectual property to European companies in return for the EU subsidies.

The scheme is similar to the requirements that China imposes on foreign companies when entering its own market. This is a pilot project that could be extended to other EU subsidy programs.

Behind this is Europe’s tougher stance towards China, which is intended to protect EU companies from competition from the People’s Republic. Most recently, the EU had already decided on additional tariffs on electric vehicles from China and stricter requirements for companies applying for hydrogen subsidies. With Donald Trump’s presidency, the EU may face a growing volume of goods from China if the People’s Republic is subject to a blanket 60 percent tariff on its exports, as announced by Trump. At the same time, Europe is dependent on cheap green technologies from China, particularly for its efforts in the fight against climate change. jul

  • Batterien
  • China
  • Donald Trump
  • European Commission
  • Semiconductor
  • Subsidies
  • Technology
  • Trade dispute

Cognac tariffs: Strike due to trial relocation from France to China

Hundreds of workers at French cognac producer Hennessy have gone on strike in the southwest of France, according to trade unions. The company had previously announced its intention to bottle cognac in China on a trial basis in order to avoid customs tariffs.

Hennessy said it was exploring all options to counter the anti-dumping measures imposed by Beijing last month, including shipping cognac to China where it could be bottled locally. A decision would only be made based on the results of a trial.

China is an important sales market

China is the second largest export market for Cognac after the United States and the industry’s most profitable territory, with exports totaling $1.7 billion last year. However, the difficult economic situation in China and the US has led to a sharp decline in Cognac sales, and the industry is also suffering from a poor harvest in 2024.

News of Hennessy’s plans prompted some 500 workers, about half the workforce, at the bottling plant in Cognac to walk off the job on Tuesday, said Michael Lablanche, a regional representative of the CGT union. The workers plan to continue their strike on Wednesday, Lablanche added. Beijing had imposed tariffs of more than 30 percent on imports of bottled cognac from the EU in October. In addition to Hennessy, other French companies are also affected. rtr

  • China

EU Council: Ban on products from forced labor clears final legal hurdle

The EU Council has adopted a ban on products from forced labor. The regulation has thus cleared the final legal hurdle. It still has to be signed by the President of the EU Parliament and the President of the EU Council. The ban will come into force one day after publication in the Official Journal and will then initially apply for three years. The Xinjiang region in particular will become the focus of attention as a result.

As part of the regulation, the EU Commission will create a database of risk regions and risk products. The national authorities in the member states will then use this database to assess possible risks associated with the products. If Xinjiang is listed in the database, this would give the national customs authorities a reason to monitor imports from there more closely and ultimately – if the suspicion of forced labor is confirmed – ban access to the EU market.

It is also important to note that the decision of one national authority automatically applies to all other member states. ari

  • Arbeit

Dessert

Female majority in the cabinets

Ursula von der Leyen, President of the European Commission, receives the Commissioners-designate: On September 18, 2024, Ursula von der Leyen, President of the European Commission, receives the Commissioners-designate.
Fewer women have made it into the front row of the Commission than von der Leyen had hoped. However, this will change in the cabinets – where at least half of the employees must be female.

At the College of Commissioners level, Commission President Ursula von der Leyen has not managed to achieve her goal of gender parity. With her, there are eleven women compared to 16 male colleagues. The President of the Commission had no control over who the governments nominated. However, she was able to take countermeasures with regard to the distribution of tasks within the Commission.

Von der Leyen is now also influencing the requirements for the composition of the cabinet. The aim is no longer “only” to achieve gender parity, as was previously the case. In the cabinets, at least 50% of the employees in the highest personnel category “Administration” must be women.

The difference to the previous requirement is small, but can be decisive with an odd number of cabinet members. Previously, the narrow majority could tip in either direction. Now, with an odd number of cabinet members, it is guaranteed that female civil servants will gain the numerical upper hand.

In the new Commission, the normal Commissioners will have six officials from the highest staff category and the executive Vice-Presidents nine. However, this number may also increase to seven or ten, as the Commissioners may also have a personal assistant from the highest staff category in their team.

In all likelihood, it will be a female assistant. A look at the teams of the current Commission shows that only two female Commissioners (Margrethe Vestager and Věra Jourová) and one Commissioner (Johannes Hahn) have male assistants. The rest rely on female assistants. At least in this area, the Commission still follows a very conservative distribution of roles. János Allenbach-Ammann

Europe.Table Editorial Team

EUROPE.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    Today, the European Parliament could pave the way for the new Commission. For this to happen, however, S&D leader Iratxe García Pérez must convince the Socialist coordinators in the group meeting to vote in favor of the nomination of Raffaele Fitto as Executive Vice-President of the Commission. They could also give up their opposition to Olivér Várhelyi, the Hungarian Commissioner for Health and Animal Welfare.

    Iratxe García Pérez expressed her willingness to do so yesterday in a meeting with the S&D heads of delegation. The decisive factor was apparently a word of power from Spanish Prime Minister Pedro Sánchez at the weekend. It is uncertain whether the socialist MEPs will follow her lead. They are very reluctant to raise their hands for Fitto, who was nominated by the right-wing government in Italy, and for Várhelyi, who was sent by Viktor Orbán.

    The Spaniard must now explain to her MEPs what she has achieved in the past few days. According to reports, not too much: Várhelyi will no longer be responsible for sexually reproductive medicine. Social Democrat Roxana Mînzatu is also to be given responsibility for workers’ rights in her title.

    After all, there is to be a cooperation agreement between the EPP, S&D and Renew, which the EPP had refused to sign in the summer. The three group leaders probably want to publicly declare before or after the meeting of the group leaders (CoP) that they will work together in the pro-European center for the next five years. A written declaration on this should be ready by next week’s plenary session at the latest. This should also define a number of substantive priorities that are closely aligned with von der Leyen’s political guidelines.

    The script for the nomination was not yet entirely clear yesterday: It is conceivable that the six vice-presidents and Várhelyi will be nominated by the coordinators in the committees as soon as the socialist Teresa Ribera has completed her hearing in the Spanish parliament. This is planned for the morning. The CoP would then officially announce the breakthrough in the late afternoon. Or the committees could vote individually. However, this procedure would entail risks. The anxious question would be: Would the dissatisfied Social Democrats just clench their fists in their pockets or would they end up destroying the agreements reached by the group leaders?

    Get through this exciting day safely!

    Your
    Markus Grabitz
    Image of Markus  Grabitz

    Feature

    What a Chancellor Merz would stand for in European policy

    Nov. 6: It has been clear since the morning that Donald Trump will become president again in the USA; in the evening, the traffic light coalition in Germany collapses. At midday on this historic day, Friedrich Merz sits on a stage in the auditorium of Berlin’s Hertie School to talk about Europe. For 90 minutes, he discusses with Italy’s former Prime Minister Enrico Letta how the EU can become more competitive.

    The CDU leader takes time for the interview, just as he had taken time months earlier to speak with Letta for his report on the EU Single Market. The topic is close to his heart and takes the 68-year-old back to the beginnings of his political career: From 1989 to 1994, he sat in the European Parliament, when Commission President Jacques Delors created the Single Market. “We passed almost 300 regulations and directives for this in the Economic and Monetary Affairs Committee,” he says. The Single Market is still one of Europe’s greatest achievements today.

    Merz is more European than many think

    Friedrich Merz, the likely next Federal Chancellor, is not the nationalist hardliner that some people think he is. Even if he himself contributed to this reputation when he offended neighboring countries in the summer by calling for Germany’s borders to be closed to most asylum seekers. After the attack in Solingen and before the state elections, he felt compelled to make this radical demand.

    However, Merz attaches great importance to good relations with EU partners, particularly France and Poland. He has a lot in common with Emmanuel Macron when it comes to security policy, and there are also overlaps in terms of competition policy. He is less fundamentally opposed to higher contributions to the European Union or new EU debt programs than Christian Lindner, for example.

    “As a representative of his generation, Friedrich Merz knows that he cannot solve problems at a national level,” says long-time CDU European politician Elmar Brok. “He understands the structures of the EU and has an inner connection to it.”

    Merz knows that a German chancellor must also be able to handle European policy. Helmut Kohl and Angela Merkel earned a lot of respect from their partners, but Olaf Scholz remained pale during his three years in office. He was unable to connect with Macron, and he also had difficulties with Donald Tusk from Poland.

    Network maintenance at the Élysée Palace

    Merz wants to do better. He has already visited Macron twice at the Élysée Palace. According to the CDU, the interpersonal atmosphere is much better than between Scholz and Macron. Good relations are also maintained with the Christian Democrat Tusk. Merz also likes to demonstrate his closeness to his party colleague, Commission President Ursula von der Leyen.

    The CDU politician shares much of what Macron propagates under the heading of European strategic sovereignty. He is a convinced transatlanticist, led the Atlantik-Brücke for ten years and, after leaving the Bundestag in 2005, became a partner at the US law firm Mayer Brown.

    However, Merz believes it is necessary to break Germany’s and Europe’s security policy dependency on the United States. “We must pool our efforts and create a market in which we are strong enough with the European arms industry to reduce our dependence, especially on the American market,” he said during the discussion with Letta. In a guest article for the French newspaper Le Monde at the beginning of November, he criticized “the desolate state of European foreign and security policy at such a critical time” following the cancellation of the Ramstein conference.

    More money for weapons

    Merz sharply attacked Scholz for not supporting Ukraine, which is under attack from Russia, with enough determination. “The history of aid for Ukraine is a history of constant dithering and hesitation, of calculation and delaying tactics,” he wrote in Le Monde. Merz is saying what many allies are thinking – behind closed doors, diplomats are accusing the Scholz-led chancellery of defeatism. The SPD politician’s phone call with Vladimir Putin on Friday, the content of which was not agreed in advance, caused new irritation in Paris and Warsaw.

    As Chancellor, however, Merz would have to answer the question of how he intends to finance a stronger European defense force. The designated Defense Commissioner Andrius Kubilius puts the need at €500 billion. The EU Commission is currently working on a paper with options on how the gap could be closed – however, in view of the German election campaign, it will probably not be presented until March.

    Merz does not fundamentally rule out another special budget for Germany or additional funds for the EU level. “We can talk about anything, but first we have to define our interests,” he said at the Hertie School. The CDU leader appears to be more open than his own party in this respect: In a position paper on EU policy, the CDU/CSU parliamentary group “strictly rejects any further communitization of debt and budgetary risks in the EU (…)”.

    ‘Yes’ to the deepening of the Capital Markets Union

    Merz claims to have raised the issue of economic competitiveness to the top of the agenda in many discussions with von der Leyen. He is calling for more free trade agreements, a moratorium on regulation and the removal of barriers in the internal market. In terms of energy policy, Merz wants to overcome ideological divides, particularly with regard to nuclear power, and drive forward the expansion of networks between EU countries in order to reduce energy prices.

    Merz is relying primarily on private capital to finance the investments. In order to mobilize this more strongly, the former Blackrock supervisory board member advocates a deepening of the capital market and banking union. He does not want his criticism of the German government in view of Italian Unicredit’s investment in Commerzbank to be understood as a rejection of a takeover: The criticism was aimed solely at the government’s lack of strategy in the sale of the state-owned shares.

    Stock exchange mergers for stronger EU markets

    Merz also wants to make Europe more attractive for IPOs so that successful companies such as Biontech do not have to switch to the New York Nasdaq in their search for capital. As a member of the Supervisory Board of Deutsche Börse, he has witnessed three failed attempts to merge with other stock exchanges, Merz told the Hertie School. The most important attempt, the merger with the London Stock Exchange, was stopped by the EU Commission’s Directorate-General for Competition.

    Merz considers this to be a capital mistake that must not be repeated. “We must allow stock exchange mergers in order to create a genuine European market and be able to compete globally with New York, Chicago or Shanghai.”

    He also draws a lesson for competition regulators from the case: The relevant benchmark for assessing planned company mergers is not the national market, nor is it the European market. “The relevant market is the world.” As a supporter of European industrial champions, Emmanuel Macron would hardly put it any other way. For many smaller EU states, however, such words set alarm bells ringing.

    • EU-Binnenmarkt
    • European Defense
    Translation missing.

    Hydrogen: Regulator warns against excessive grid expansion

    According to the regulatory agency ACER, the plans for the European hydrogen network are oversized. “You get the impression that everyone is acting according to the motto: ‘If you just build a lot of pipelines, then demand will follow’,” said agency head Christian Zinglersen on Tuesday at the most important industry gathering, the European Hydrogen Week in Brussels. Like ACER, the organizer Hydrogen Europe presented a report that confirmed the latest reports: Europe will probably miss its most ambitious hydrogen targets for 2030 by a landslide.

    The EU target of 20 million tons of renewable hydrogen consumption in 2030 will probably only be matched by domestic production of 2.5 to 4.4 Mt, Hydrogen Europe writes in its new market report. The ACER report therefore advises EU member states to gradually build up hydrogen networks and adapt them to actual demand: “As far as hydrogen is concerned, they should improve their demand forecasting capabilities and not just follow ambitious targets.” In the future, planning should be based on binding commitments from customers, even if they have not yet made final investment decisions.

    Commission puts hydrogen targets into perspective

    On Tuesday, the EU Commission relativized its ambitious targets for 2030, which had been raised during the energy crisis. “We should focus our attention on the targets we have set in the Renewable Energy Directive. A 42% share of green hydrogen in industry and 29% in transport,” said Mechthild Wörsdörfer, Deputy Director-General at DG Energy.

    However, according to Hydrogen Europe, these targets could also be achieved with the current policy. The RED3 targets would require 1.85 Mt of green hydrogen. However, it is crucial that at least the infrastructure for these quantities is actually built. Many countries would otherwise not be able to achieve their hydrogen targets – at least not with hydrogen from the EU: Italy, Austria, all Eastern European countries and, surprisingly, the Netherlands and Belgium.

    Renewables directive lacks sanctions

    However, some hydrogen bosses don’t want to go along with the new low-level stunt. “We shouldn’t be cautious, we should panic. We must once again recognize the urgency with which we must act,” said Maarten Wetselaar, CEO of Moeve, who has to trim the Spanish oil company to green. Under no circumstances should the EU lower its ambitions now.

    Even if the RED3 targets are missed, however, it is unclear whether sanctions will be imposed, criticized Jorgo Chatzimarkakis, CEO of Hydrogen Europe, in a press conference. The association is urging the EU to support the hydrogen economy with additional measures and at least get closer to the target of ten million tons of domestic production with 4.4 Mt.

    Agricultural subsidies for green ammonia

    According to Chatzimarkakis, two measures could quickly support demand and reduce the risks for project developers. The EU could pay farmers bonuses from the agricultural funds for the use of synthetic fertilizers made from green hydrogen. In refineries, the demand for green hydrogen must be stimulated by the member states implementing RED3 quickly.

    The Netherlands, for example, is resisting an overly accommodating interpretation of the Renewable Energy Directive. The government fears that fossil fuel plants will run longer if green hydrogen is counted too generously towards the production of conventional fuels. Hydrogen has always been a production aid in refineries.

    Lower requirements for imports

    In order to facilitate the production of green hydrogen, Chatzimarkakis supported a call by Hydrogen Europe manager Sopna Sury to revise the delegated act for green hydrogen (RFNBO) earlier than 2028. Four points need to be changed:

    • Monthly instead of hourly correlation.
    • Criteria for the additionality of green electricity production should take effect later, as called for by Minister Habeck.
    • Allow accumulation of state subsidies.
    • For imports, the requirement that the green electricity must come from the same bidding zone as the electrolyzer is to be waived.

    National reserve of green hydrogen

    The last point, for example, hinders the import of hydrogen from India, the partner country of this year’s Hydrogen Week. “If we don’t change anything, Indian hydrogen will be exported to Japan or South Korea. That cannot be in our interest,” said Chatzimarkakis. The EU could also take an example from the Indian tenders. Contracts there are concluded within three weeks in a transparent bidding process.

    Chatzimarkakis also had a very special suggestion for the German government to boost demand: A quarter of the national energy supply should consist of green hydrogen in the future.

    • Grüner Wasserstoff

    Missiles for Ukraine: Borrell wants EU states to follow suit

    For Josep Borrell, the case is clear: At his last Defense Council on Tuesday, the EU foreign policy chief welcomed the US decision to allow Ukraine to deploy ATACMS missiles with a range of 300 kilometers deeper inside Russia.

    Specifically, the UK and France are also said to be prepared to lift the restrictions on the Storm Shadow and Scalp cruise missiles. The new NATO Secretary General Mark Rutte, a guest at the meeting of EU defense ministers, expressed similar views to Borrell. In principle, he was in favor of making weapons available to Ukraine without restrictions. However, the decision was up to the allies. The pressure on Germany to supply Taurus cruise missiles to Ukraine is now likely to increase.

    Pistorius: ‘Others are changing their line’

    Boris Pistorius said in Brussels that nothing had changed in Germany’s position regarding Taurus deliveries: “We have not changed our line, others are changing theirs,” said the Defense Minister, backing the German Chancellor. It was legitimate that the USA had reconsidered its position on the use of long-range weapons. However, the Taurus cruise missiles differed from the other Western systems that had been made available to Ukraine.

    In Brussels, Pistorius also defended Chancellor Olaf Scholz’s phone call to Putin. It had not been as effective as everyone had hoped. However, the phone call had at least provided proof that the Russian President was not prepared to negotiate anything. Everyone in Germany and other European countries must now understand that this is not the right time to talk about peace. The damaged data cables in the Baltic Sea were also discussed on the sidelines of the meeting. Pistorius said that it had to be assumed that this was sabotage. Although there was no evidence yet, no one believed that the cables had been cut by mistake.

    One million artillery shells

    The meeting of the defense ministers took place 1,000 days after the start of the Russian war of aggression against Ukraine. Borrell pointed out that the Russian attack on Ukraine actually began 4,000 days ago with the seizure of Crimea.

    Borrell referred to similar statements by Boris Pistorius, saying that the EU states had made poor use of the time to expand their defense capabilities. Today, the EU states must regain these capabilities and at the same time support Ukraine by all means. In any case, this would be cheaper than having to bear the consequences of Ukraine’s defeat. The future of Europe would be decided in Ukraine. Since February 2022, the EU states have supported Ukraine with armaments worth a total of €45 billion. That is not much less than the USA. The EU has also now achieved its goal of supplying Ukraine with one million artillery shells.

    Thanks and appeal to parliamentarians

    In the EU Parliament, Volodymyr Zelenskyi thanked the Europeans for their support during a special session. Europe is stronger with united forces than Putin, who is now dependent on the help of North Korea. The Ukrainian President warned that North Korea could provide Russia with up to 100,000 soldiers.

    Zelenskyi refrained from calling for more weapons before the EU Parliament, but pleaded for stronger punitive measures, particularly against oil sales. The Kremlin must be deprived of its money. Oil is the lifeblood of Putin’s regime and the shadow fleet of tankers is keeping it alive. While some European leaders were thinking about elections, Putin was focused on winning the war. The Russian president will not stop by himself. Everything must be done to end the war fairly and justly.

    • EU-Gipfel
    • Verteidigungspolitik

    News

    CSRD: German implementation further delayed

    Following the first reading and a hearing of associations in mid-October, the remaining rapporteurs from the SPD and Greens have now agreed on a version that provides for changes to the government draft. Three of them:

    • Not only auditors are to be approved to audit the reports, but also technical experts such as TÜV and Dekra. This issue has been one of the most controversial so far. Numerous associations had spoken out in favor of the opening.
    • The so-called preparation solution will be retained, but suspended for two years. This requires companies to adapt their internal processes, systems and the preparation of reports to the digital format ESEF (“European Single Electronic Format”). The procedure, which is complex even for large corporations, was met with criticism. However, the EU Commission wants to stick to ESEF in principle, which is why only an extension of the deadline is possible.
    • Public companies are to be given a longer transitional period for the implementation of the CSRD. The government draft previously equated them with the groups subject to reporting requirements in the first step, provided they were founded as “large” corporations. They are now to be given more leeway.

    Union unlikely to agree quickly

    To get these proposals through the Bundestag, the SPD and Greens would need the help of another parliamentary group. As a positive vote from the FDP is questionable, only the CDU/CSU remains. However, CSRD rapporteur Stephan Mayer (CSU) once again pointed out to Table.Briefings last week the “disproportionate burden” and “excessive bureaucracy” that the law would impose on the economy. In view of the economic situation, “the reduction of bureaucracy must be given top priority”.

    On the other hand, the EU directive must ultimately be incorporated into national law. There would be little scope for further weakening in the interests of the Union. If the CSRD is not passed now, the next government, possibly led by the CDU, will have to set about implementing the unpopular directive.

    The calendar now also speaks against a timely conclusion of the procedure. The Bundestag has canceled session days, which limits the options for adoption there. The originally planned date of Dec. 20 for the equally necessary vote in the Bundesrat can hardly be kept. However, there are still a few weeks left in the current Bundestag session to transpose the directive into German law. If the CSRD is not tackled again until after the elections in February, observers and stakeholders do not expect it to be passed before the fall of 2025.

    The German government must answer the EU Commission by next week at the latest as to why the CSRD is still taking so long. Among other things, it has opened infringement proceedings against Germany because the deadline for implementation had already expired at the beginning of July. maw

    • Nachhaltigkeitsberichterstattung

    Damaged Baltic Sea cable: Chinese freighter under suspicion

    According to media reports, a Chinese freighter has become the focus of a Danish naval investigation into the case of the damaged data cable in the Baltic Sea. The ship “Yi Peng 3” made conspicuous maneuvers south of the Swedish island of Öland early on Monday, reported the Financial Times on Tuesday, citing security circles. The cable damage is suspected to have occurred not far from the island. According to records of data from tracking apps, it is known that the 226-metre-long ship stopped, drifted and made two circles in the sea area south of Öland for almost 90 minutes on Monday morning.

    It is unclear whether the freighter also dropped its anchor and dragged across the seabed. According to the Financial Times, the freighter was en route from the Russian port of Ust-Luga to Port Said in Egypt. “Yi Peng 3″ belongs to Ningbo Yipeng Shipping, a company that owns only one other ship and is based near the eastern Chinese port city of Ningbo.

    On Monday, damage was reported to communication cables in the Baltic Sea between the new NATO members Finland and Sweden and their alliance partners Germany and Lithuania. The Finnish state-owned company Cinia had announced that a defect had been detected in the C-Lion1 submarine data cable between Finland and Germany and that communication links via the cable had been interrupted as a result.

    The incident is reminiscent of a similar event in 2023, when the Baltic Connector between Finland and Estonia was damaged. It later transpired that the Hong Kong-registered container ship “NewNew Polar Bear” had dragged its anchor across the pipeline. ari

    • Finland
    • Infrastructure
    • Shipping
    • Sweden

    Subsidies: How the EU wants to hold China to account

    The EU wants to make China more accountable for access to the European market with stricter regulations for clean technologies. This was reported by the Financial Times. When Brussels announces grants of one billion euros for the development of batteries in December, Chinese companies will have to set up factories in Europe and transfer their intellectual property to European companies in return for the EU subsidies.

    The scheme is similar to the requirements that China imposes on foreign companies when entering its own market. This is a pilot project that could be extended to other EU subsidy programs.

    Behind this is Europe’s tougher stance towards China, which is intended to protect EU companies from competition from the People’s Republic. Most recently, the EU had already decided on additional tariffs on electric vehicles from China and stricter requirements for companies applying for hydrogen subsidies. With Donald Trump’s presidency, the EU may face a growing volume of goods from China if the People’s Republic is subject to a blanket 60 percent tariff on its exports, as announced by Trump. At the same time, Europe is dependent on cheap green technologies from China, particularly for its efforts in the fight against climate change. jul

    • Batterien
    • China
    • Donald Trump
    • European Commission
    • Semiconductor
    • Subsidies
    • Technology
    • Trade dispute

    Cognac tariffs: Strike due to trial relocation from France to China

    Hundreds of workers at French cognac producer Hennessy have gone on strike in the southwest of France, according to trade unions. The company had previously announced its intention to bottle cognac in China on a trial basis in order to avoid customs tariffs.

    Hennessy said it was exploring all options to counter the anti-dumping measures imposed by Beijing last month, including shipping cognac to China where it could be bottled locally. A decision would only be made based on the results of a trial.

    China is an important sales market

    China is the second largest export market for Cognac after the United States and the industry’s most profitable territory, with exports totaling $1.7 billion last year. However, the difficult economic situation in China and the US has led to a sharp decline in Cognac sales, and the industry is also suffering from a poor harvest in 2024.

    News of Hennessy’s plans prompted some 500 workers, about half the workforce, at the bottling plant in Cognac to walk off the job on Tuesday, said Michael Lablanche, a regional representative of the CGT union. The workers plan to continue their strike on Wednesday, Lablanche added. Beijing had imposed tariffs of more than 30 percent on imports of bottled cognac from the EU in October. In addition to Hennessy, other French companies are also affected. rtr

    • China

    EU Council: Ban on products from forced labor clears final legal hurdle

    The EU Council has adopted a ban on products from forced labor. The regulation has thus cleared the final legal hurdle. It still has to be signed by the President of the EU Parliament and the President of the EU Council. The ban will come into force one day after publication in the Official Journal and will then initially apply for three years. The Xinjiang region in particular will become the focus of attention as a result.

    As part of the regulation, the EU Commission will create a database of risk regions and risk products. The national authorities in the member states will then use this database to assess possible risks associated with the products. If Xinjiang is listed in the database, this would give the national customs authorities a reason to monitor imports from there more closely and ultimately – if the suspicion of forced labor is confirmed – ban access to the EU market.

    It is also important to note that the decision of one national authority automatically applies to all other member states. ari

    • Arbeit

    Dessert

    Female majority in the cabinets

    Ursula von der Leyen, President of the European Commission, receives the Commissioners-designate: On September 18, 2024, Ursula von der Leyen, President of the European Commission, receives the Commissioners-designate.
    Fewer women have made it into the front row of the Commission than von der Leyen had hoped. However, this will change in the cabinets – where at least half of the employees must be female.

    At the College of Commissioners level, Commission President Ursula von der Leyen has not managed to achieve her goal of gender parity. With her, there are eleven women compared to 16 male colleagues. The President of the Commission had no control over who the governments nominated. However, she was able to take countermeasures with regard to the distribution of tasks within the Commission.

    Von der Leyen is now also influencing the requirements for the composition of the cabinet. The aim is no longer “only” to achieve gender parity, as was previously the case. In the cabinets, at least 50% of the employees in the highest personnel category “Administration” must be women.

    The difference to the previous requirement is small, but can be decisive with an odd number of cabinet members. Previously, the narrow majority could tip in either direction. Now, with an odd number of cabinet members, it is guaranteed that female civil servants will gain the numerical upper hand.

    In the new Commission, the normal Commissioners will have six officials from the highest staff category and the executive Vice-Presidents nine. However, this number may also increase to seven or ten, as the Commissioners may also have a personal assistant from the highest staff category in their team.

    In all likelihood, it will be a female assistant. A look at the teams of the current Commission shows that only two female Commissioners (Margrethe Vestager and Věra Jourová) and one Commissioner (Johannes Hahn) have male assistants. The rest rely on female assistants. At least in this area, the Commission still follows a very conservative distribution of roles. János Allenbach-Ammann

    Europe.Table Editorial Team

    EUROPE.TABLE EDITORIAL OFFICE

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