Brussels Playbook: Mr Macron goes to Washington —
Michel’s terrible timing — Oil impasse
BY JAKOB
HANKE VELA
NOVEMBER
29, 2022 7:16 AM CET
POLITICO
Brussels Playbook
By JAKOB
HANKE VELA
with ZOYA
SHEFTALOVICH
DRIVING THE
DAY: MACRON IN WASHINGTON Share on
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CAN OLD
ALLIES MEND TRANSATLANTIC TIES? French President Emmanuel Macron flies to
Washington tonight, for a three-day state visit planned months ago, which has
now gained new urgency.
Macron has
a wish-list for Joe Biden: He wants to know whether the U.S. president can
offer Europeans cheaper gas, as well as access to a multibillion-dollar U.S.
subsidy scheme for green industries. If Biden can’t deliver, a transatlantic
trade war will be somewhat inevitable, risking a Europe vs. America subsidy
race and tit-for-tat retaliatory tariffs.
Background:
Macron’s visit comes amid strained relations between the EU and U.S., hurt by
Biden’s Inflation Reduction Act, which grants billions in subsidies and tax
breaks for things such as electric vehicle and renewable energy — but only if
they are assembled and key parts such as the batteries are made in America. The
main provisions of the IRA will enter force on January 1.
Slap in the
face: EU countries are fuming at the U.S. suggestion that they should stop
whining and simply subsidize their own green tech. The EU has been doing that
for years now — without discriminating against American carmakers such as
Tesla.
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What can
Macron achieve? While France is under no illusion that Biden will back down on
the package, Paris is seeking to convince the U.S. Treasury to finesse its
implementation of the IRA so that European companies are given similar
exceptions as Canada and Mexico. Read this story by Clea Caulcutt and Giorgio
Leali for more details on Macron’s trip.
Stately
reception: Macron will get the cordon bleu, black-tie treatment — basking in
all the pomp and ceremony of the first full state visit Biden has laid on, with
a troop review and musical accompaniment from grammy-award winning musician Jon
Batiste. (Macron is in for a real treat — if you aren’t familiar with Batiste,
we suggest you start with this absolute banger, and don’t stop.)
Tuesday
agenda: But we digress. Late on Tuesday local time, Macron and France’s first
lady will arrive at their accommodations, Blair House, the historic residence
across the street from the White House. There, the head chef plans to serve
dinner based loosely on the traditional American Thanksgiving menu. (Our U.S.
colleagues have been assured that, unlike most families, they’re not thinking
of just heating up leftovers from last week’s feast.)
After that:
There will be a ceremony at Arlington military cemetery and then a private
dinner with the Bidens on Wednesday. Then, the French president will be
officially welcomed at the White House with cannon volleys and a review of the
troops on Thursday. The two leaders will then hold bilateral meetings, followed
by a joint press conference and a state dinner.
FURTHER
READING: Amid calls for new “Buy European” rules to emulate America’s
protectionist turn, a new study by Frontier Economics for free-trade-loving
think tank ECIPE warns that the EU’s “strategic autonomy” policies — meant to
encourage reshoring— will cost the bloc up to 0.75 percentage points in gross
national income over the long term.
The costs
are unevenly distributed: While larger countries such as France and Germany would
fare comparatively well, according to the study, smaller ones that are more
exposed to international trade, such as Ireland (or Nordic countries such as
Sweden), would fare worse.
PLAYBOOK
PREVIEW — EU SOVEREIGNTY FUND: Meanwhile, EU Industry Commissioner Thierry
Breton will meet with German Economy Minister Robert Habeck in Berlin today to
hash out the EU’s emergency response to the deindustrialization risk. Breton
will call for an “EU sovereignty fund” that would allow the bloc to react
quickly to U.S. subsidies (and attempts by China to lure EU companies).
Breton will
argue that the EU fund should have sufficient firepower to offer both grants
and loans as well as procurement and equity. Crucially, the fund should allow
all EU countries to access money at the same market conditions to avoid further
fragmentation, Breton will say.
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DRIVING THE
WEEK: CHINA PROTESTS Share on
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HONG KONG
FLICKERS BACK TO LIFE: The protests that have broken out across China have now
spread to Hong Kong, where dozens gathered last night for a vigil. Some held
blank pieces of paper over their faces and chanted: “No PCR tests but freedom”
and “Oppose dictatorship, don’t be slaves,” reports ABC News. The protest —
though relatively sparsely attended — was held despite the notorious national
security law imposed by Beijing in 2020, which has been used to harshly crack
down on dissent.
How
authorities are responding 1: Without mentioning the protests, some local
governments eased COVID restrictions on Monday, according to media reports.
Beijing’s city authorities said they would stop barricading apartments
buildings where there are COVID cases. In the manufacturing center of
Guangzhou, some residents will no longer be required to undergo mass testing,
according to officials. In Ürümqi, the Xinjiang regional capital where a fire
last Thursday killed 10 people in an apartment block which locals said had
become a death trap as a result of lockdown measures, authorities announced
that certain businesses in low-risk areas would reopen this week and public
buses would resume.
How
authorities are responding 2: Police came out in force on Monday to crack down
on dissent, with Western media reporting that dozens of people were being
stopped and searched in places where the protests have broken out. According to
the Wall Street Journal, police were checking people’s phones for virtual
private networks, which are mostly illegal in China, and the Telegram app used
by protesters, which is blocked in the country. There were also more reports of
arrests and beatings.
MICHEL’S
TERRIBLE TIMING: Against this backdrop, European Council President Charles
Michel is supposed to fly out to China today for a meeting Thursday with
President Xi Jinping — the first Western leader to visit the country after the
biggest show of public disapproval in Beijing’s leaders since the Tiananmen
Square massacre in 1989.
Expectation
vs. reality: Michel’s trip was supposed to be part of an effort to strengthen
ties between Brussels and Beijing. Now, officials, politicians and EU diplomats
have told our colleague Stuart Lau that Michel must instead deliver a rebuke to
Xi and other Chinese representatives.
Going it
alone: Even before the protests broke out, Michel’s trip to China — to be made
without European Commission President Ursula von der Leyen — had raised
eyebrows in Brussels. “The whole trip has to be seen in the light of the
rivalry between von der Leyen and Michel,” one EU official told Stuart. The
Chinese will want to know about the details of trade policy and whether the EU
will follow U.S. export controls on microchips. “Those are the questions Xi
will ask and Charles can’t answer them — only Ursula can. It’s this eternal
rivalry that dominates everything,” the official said.
Michel’s
pipedream: Perhaps Xi will cancel the visit.
ZOOMING OUT
FOR THE BIGGER PICTURE: POLITICO Europe’s Editor-in-Chief Jamil Anderlini, who
spent two decades reporting on China, writes that almost all protests he
witnessed during that time involved isolated or localized grievances and were
brutally repressed. “So it was astonishing to hear people openly calling for
democracy, the end of party rule and the toppling of Xi at the weekend,” he
writes. “Something has definitely changed in the mood of the Chinese nation and
it does not bode well for Xi or the CCP. This is not just pent-up frustration
from three years of COVID lockdowns and a moribund economy. It is the
consequence of a decade of steadily worsening repression, following two decades
(the 1990s and 2000s) of relative loosening.”
RUSSIAN WAR
FALLOUT Share on Twitter Share on Facebook Share on Linkedin Share on Handclap1
NATO
MEETING TODAY: NATO ministers of foreign affairs begin their two-day meeting in
Bucharest today, with the agenda expected to include how to better support
Ukraine as it fends off Russia’s war. In an interview with Lili Bayer late
Monday (on a train in Ukraine, the precise location of which we cannot reveal),
Kyiv’s Foreign Minister Dmytro Kuleba said his country can’t win on the
battlefield in the longer term unless NATO countries invest in making more
weapons.
Kyiv’s
shopping list: “The last time I attended [a] NATO ministerial, I came with
three words: weapons, weapons, and weapons,” Kuleba said. “This time, while
this request remains absolutely acute, I will specify it by saying that we need
air defense, tanks and production lines.” Read Lili’s story here.
EU
COUNTRIES FAIL TO AGREE ON RUSSIAN OIL PRICE CAP: Meanwhile, closer to home, EU
ambassadors ended another round of negotiations Monday without a deal on a
Russian oil price cap, as Poland continued to push for a lower price to hit the
Kremlin’s sources of income. The European Commission proposed a cap of $62 per
barrel (down from the original $65 to $70), but Poland, as well as Estonia, are
holding out for a lower price, according to four diplomats.
Delay
‘plays into Putin’s hands’: The original plan was for a cap to enter into force
on December 5, when the EU’s partial embargo on Russian oil comes into effect.
But as POLITICO has previously reported, the U.S. has told the EU it will
require 90 days between agreement and enforcement, meaning “we are already
late,” according to one diplomat. A diplomat said Ursula von der Leyen’s chief
of staff Björn Seibert warned ambassadors at their meeting on Monday that a
failure to reach an agreement would play into Putin’s hands.
Next
sanctions round: Warsaw is also asking for the price cap to be linked to a
ninth round of sanctions against Russia. In a concession, the Commission is
ready to start “confessionals” — talks with EU countries on what to include in
a new sanctions package — this week, officials said.
SPEAKING OF
SANCTIONS: In an op-ed for POLITICO, MEP Damian Boeselager and Ukrainian MP
Dmytro Natalukha call on the EU to sanction the members of pro-war Russian
parties.
EYES ON
EUTELSAT: EU culture ministers will today discuss how European satellite firms
such as France’s Eutelsat are still carrying Russian state-sponsored channels
spreading propaganda, at a Council meeting.
REBUILDING
UKRAINE: The time to invest in Ukraine is now, according to European Investment
Bank Vice President Teresa Czerwińska. “The longer we wait, the higher the bill
we will have,” she told POLITICO’s Paola Tamma on the sidelines of the Kyiv
Investment Forum, where she struck a deal to modernize Kyiv’s metro (full
details here).
In total:
The EIB has invested over €7 billion in Ukraine since 2007, and expects to have
spent €2.2 billion since the war started by the year’s end, according to
Jean-Erik de Zagon, head of the EIB’s Ukraine office, who participated to the
Kyiv Investment Forum. As with most EIB lending, this is backed by guarantees
from the European Commission.
De-risking:
One way to lower the risk of investments in this hot phase of the conflict is
to diversify across a number of smaller projects, so as to diminish the chances
of them ending up as Russian cannon fodder. “Now is not the time to invest in
one €200 million bridge, but to build 200 bridges for €1 million each,” de
Zagon said.
Priority
areas: Ukraine needs at least €350 billion for reconstruction, according to the
World Bank. The priority areas for investment should be public services,
transport, IT and energy infrastructure, Czerwińska said, but also health,
heating, food and education. Investment can already start in the west of the
country, which is further from the frontline, but also in areas Ukraine has
recaptured. “The economy is still running, they are still creating GDP, they
are producing, they want to export … and we want to invest to support this path
with bankable projects,” Czerwińska said.
More in the
works: According to a draft document that POLITICO obtained earlier this month,
the Commission and the EIB are discussing the possibility of another €1 billion
loan to Ukraine. But that needs more work: “We need a little bit more
discussions with the Commission,” Czerwińska said.
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IN OTHER
NEWS Share on Twitter Share on Facebook Share on Linkedin Share on Handclap1
PEGA
MEETING: The European Parliament’s special inquiry committee into the use of
spyware in Europe meets today for a hearing on the use of phone hacking
software in Spain, the largest EU country where the use of hacking tools by
governments has kicked off a major institutional crisis. More details on that
here.
Reminder:
The mobile phones of PM Pedro Sánchez and his defense and foreign ministers
were tapped (reportedly by Morocco), as were the devices of several Catalan
separatists (by Spain’s intelligence service, with judicial authorization by
the Supreme Court). Catalonia’s new EU Affairs Minister Meritxell Serret (who
returned to Spain from Belgium last year) told Playbook that “the widespread
use of such spyware across Europe, with multiple victims, up to heads of state,
shows that we need a harmonized EU framework to better protect citizens.”
Meanwhile,
Greek Predatorgate back to Square 1: In Greece, another parliamentary committee
convened without managing to shed light on the country’s spiraling spy scandal,
engulfing the government of PM Kyriakos Mitsotakis. The PM’s former chief of
staff, Grigoris Dimitriadis, denied having any knowledge on the state
surveillance of opposition leader (and MEP) Nikos Androulakis and repeated the
mantra that the government had nothing to do with the illegal spyware,
POLITICO’s Nektaria Stamouli reports from Athens.
EUROPE
PRIVATIZES MIGRANT RESCUES: The EU has outsourced a big chunk of its migration
policy to a fleet of privately run boats searching the Mediterranean waters for
asylum seekers in crisis. In recent weeks, these boats — run by a variety of
NGOs not directly controlled by any specific government — have become the focal
point of a mounting tempest over migration as countries fret about a new influx
of people and squabble over where they should be placed within the EU.
POLITICO’s Jacopo Barigazzi has the story.
MEANWHILE,
IN GERMANY: In a new effort to attract talented foreign workers to the country,
Chancellor Olaf Scholz announced plans to reform Germany’s immigration system
and citizenship laws on Monday, reports POLITICO’s Gabriel Rinaldi.
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