Guten Morgen!

Welcome back to another edition of Krautshell! Before the vacation mood can spread across Europe, some major events are still happening. Check out this week’s articles, to hear from the diplomatic dance of the 7^th German-Chinese government consultations as well as from the new strategy of the EU to protect its carefully accumulated (industrial) assets. And finally, start your weekend off with the latest WOOM from Anna about the internal struggle of the former chancellor party CDU.

Anna                                                     Szilvia

A Difficult Dance: The German-Chinese Relationship

Get ready for a diplomatic rendezvous that brought together Germany and China in their long-awaited joint government consultation. With Chancellor Olaf Scholz and Prime Minister Li Qiang leading the charge, ten Chinese and nine German ministers gathered under the banner of “Acting Sustainably Together.” 

The German and Chinese governments tackled climate change and sustainability, establishing dialogues and forums to address environmental concerns. They also signed agreements on hydrogen and electric mobility regulation. But wait, there’s more! The debate heated up over de-risking versus de-coupling. Scholz advocated for de-risking, and mentioned challenges accessing the Chinese market. Li Qiang supported risk diversification but cautioned against discriminatory practices. It’s a clash between business, geopolitics and global fairness. 

But what about the internal drama within Germany’s traffic light coalition? The Social Democratic Party (SPD) emphasized the importance of dialogue, while the Free Democratic Party (FDP) recognized China as both a partner and a rival, urging for a realistic and self-confident approach. To make things complicated, let’s not forget the Greens who demanded an open dialogue and fair competition, but also voiced their concerns about past policy mistakes. 

In the end, this joint government consultation was a rollercoaster ride. Chancellor Scholz addressed critical issues like the Ukraine war and human rights, while Prime Minister Li Qiang put the spotlight firmly on economic cooperation. The future of German-Chinese relations, however, hangs in the balance, waiting for the unveiling of Germany’s China strategy led by the China skeptical Foreign Minister Annalena Baerbock. Brace yourselves, folks, the rollercoaster ride is not over yet!

Securing Europe’s Fortune: Unveiling the European Economic Security Strategy

Ladies and gentlemen, get ready for the grand unveiling of the European Economic Security Strategy. In a dynamic duo, President Ursula von der Leyen and High Representative Josep Borrell presented this strategy with the aim of protecting the EU’s economic security while keeping the business wheels turning.

So, what’s on the menu? Risks, risks, and more risks! The Commission wants to assess the vulnerabilities lurking in four areas: supply chains, critical infrastructures, technology, and economic dependencies.

But fear not, brave Europeans, because the Commission has an action plan up its sleeve. First, they’re all about self-improvement, investing in critical infrastructure and beefing up supply chain protection. Second, they’re getting serious about security, setting new standards and improving cybersecurity. Third, the Commission wants to make friends and form partnerships with like-minded countries. And finally, the Commission plans to propose improvements to the EU export control system.

Now, the elephant in the room: China. Although they don’t explicitly mention it, we all know it’s a big player here. Europe’s got some dependency issues with China, especially when it comes to raw materials and technologies. It’s like a love-hate relationship that needs some serious counseling.

Opinions within the EU are all over the map. France is throwing punches at China’s unfair advantages, while Germany is trying to play nice due to their economic ties. It’s like a tug-of-war between economic interests and standing up for what’s right.

In the end, the European Economic Security Strategy aims to find a balance, satisfying different member states’ appetites. The next step is for this strategy to be discussed at the EU Summit, where European leaders will either give it a thumbs up or send it back to the kitchen for some more seasoning.

Source: n-tv.de

• Rebuilding Ukraine: While the Russian war in Ukraine wages on, Ukrainian politicians are already looking ahead to rebuild their country. The EU is providing support on this way, with the announcement of a 50€ billion package. This is meant as a first big step towards rebuilding the country, while at the same time supporting its way towards the EU.
• Chips for Germany: In line with the focus on de-risking, the German government tries to establish a computer chip production made in Germany. A cornerstone of this strategy is a deal with Intel to build a new factory near Magdeburg, signed this Monday. While this 30€ billion investment is the biggest ever FDI in Germany, it also profits from subsidies of 10€ billion by the German taxpayers. Evoking a divided echo across German politics.
• Next Chancellor from the AfD?! Recently, the German far-right party AfD has soared in the polls. The success took everybody by surprise and is probably mostly due to dissatisfaction with the current three-partner “Traffic-Light” Coalition, and their internal disputes. However, seizing the moment, the AfD announced that they will present their own candidate for chancellorship in the next federal elections in 2025.

PATIENCE IS A VIRTUE

The government coalition and the Green Party are not the only ones in a dispute. After a 16-year reign, marked with the memorable tenure of Chancellor Angela Merkel, the CDU suffered a significant blow, losing the 2021 federal elections. They also cycled through several party chairpersons, before finally settling on Friedrich Merz (in his third attempt) as their leader. In Germany, the party leader usually becomes the candidate for Chancellor, a position Merz ultimately aspires to.

However, Merz’s leadership has been contentious from the start, with the situation deteriorating rather than improving. His conservative and old-fashioned image, perceived lack of social awareness, has led many to view him as a relic of the old CDU. His election was largely driven by party members yearning for the glory of the old days. Unfortunately, his approval ratings have remained low ever since. Current polls suggest that even within his party, only 34% believe he is doing a great job, not to mention the even lower approval ratings among the general population.

As a result, more than two years before the next election, potential rivals are beginning to voice their ambition. While it is understandable that ambitious individuals may want to capitalize on Merz’s weakness, it is ill-advised to do it publicly. German citizens never appreciated fights over personnel, and public disagreements always result in a loss of public approval. The CDU, currently leading with around 30% in the polls, should tread carefully to maintain this momentum. Plus, with more than 2 years to go, a fight over the Chancellery seems a bit premature.

Having said that: Maybe not now, but ultimately, they need to figure out their candidate lineup. Polls indicate that Merz is less favored than Scholz, and less favored than some of his own party rivals. In this situation, even a head start of 10% for the CDU might not suffice to win the election.