Guten Morgen! 

Happy New Year! Wishing you a year filled with joy, success, and countless moments of happiness.

After a brief break to recharge our batteries, we’re thrilled to welcome you back to the first Krautshell edition of 2024. In this leap year, we aim to bring you fresh perspectives and insights sprinkled with some humor.

As we ring in the new year, let’s take a look at some of the important happenings so far. In the main article, we have intel on the farmer protest in Germany, the release of EU funds for Hungary, challenges faced by Germany’s traffic light coalition in 2024, and the UK’s current political landscape, including Parliament sessions, the passage of the Rwanda Bill, and the government’s stance on military action and aid to Ukraine.

And last but not least, Ansgars WOOM on how global industry leaders brace for a potential second Trump administration. So, fasten your seatbelts, grab your favorite reading beverage, and let’s dive into it.

Anna                                                     Szilvia

WHAT TO WATCH THIS WEEK: 

Tractors are taking over Berlin

It’s not every day that you see thousands of tractors taking over Berlin’s city center. The unexpected happened this week when farmers from all over Germany assembled to protest planned cuts to tax relief in the agricultural sector. The rally was the climax of a week of protests across Germany. The farmers called to assemble in front of the notorious Brandenburg Gate and a wide range of representatives from other industries like fishing, gastronomy and logistics answered and joined the protest. Thus, an impressive column of tractors, forklift trucks and lorries made its way through Berlin on Monday morning. German Finance Minister Christian Lindner took to the stage to calm the situation but was instead chased away with pitchforks. Well, not quite, but he was impressively booed off the stage by the farmers during his speech. 

Following Monday’s demonstration, leaders of the traffic light coalition met with the agricultural associations and demonstrated a willingness to reform. They agreed on a roadmap to reform agriculture and to make some concessions to farmers. Concrete plans are to be presented in the first quarter of 2024 and corresponding measures shall be adopted by summer. So far, points regarding the animal welfare levy, the development of land and lease prices, fair producer prices and the market power of retail chains are being discussed. The controversial reduction of agricultural diesel subsidies however will remain. The last word has not yet been spoken, so better watch out, when you see the tractors rolling. 

INSIGHTS FROM PARLIAMENT:

EU funds for Hungary – a comedy of errors?

In a not-so-serious episode in the European Parliament, Commission President Ursula von der Leyen found herself on the hot seat defending the decision to release €10.2 billion to Hungary. The saga unfolded like a political sitcom, complete with unexpected twists and turns that left MEPs scratching their heads. Attempting to play the role of seasoned diplomat amid the chaos, von der Leyen insisted that the Commission’s mission since the beginning of its mandate had been to make Hungary a country of reform. In a theatrical statement, she highlighted how Hungary had carried out a judicial overhaul in response to the Commission’s May directive, earning a round of applause – or was it skeptical laughter – from the audience.

The plot thickened, however, when pro-European MEPs accused von der Leyen of starring in a political soap opera, suggesting that the Commission’s decision was more about backstage compromises than genuine reform assessments. As the Parliament prepared to vote on the resolution, the scriptwriters hinted at potential legal drama, with the possibility of invoking Article 7 of the Lisbon Treaty looming like a suspenseful cliffhanger.

Adding a surprising twist to the unfolding comedy, the European Parliament in Strasbourg on Thursday passed a resolution by a large majority to investigate the release of 10.2 billion euros to Hungary by the European Commission. The resolution sharply criticizes Hungarian Prime Minister Viktor Orbán, condemning the government’s “deliberate, continuous and systematic efforts” to undermine the EU’s core values. MEPs express deep concern about the erosion of democracy, the rule of law and fundamental rights in Hungary, calling for reforms and questioning Hungary’s ability to hold the rotating EU presidency. Stay tuned for more updates in this unfolding political comedy, “Funds, Fumbles, and Federal Funk”.

THE BIG PICTURE: 

2024: Will this crucial year of elections take down the traffic light coalition?

New year, new luck? The sound of popping champagne corks has barely faded as the bad news for the traffic light coalition trickle in: 2024 starts with an all-time low according to an INSA survey conducted for the “Bild” newspaper. Accordingly, the three traffic light parties together are as strong as the CDU/CSU, which comes in at 31%. The far-right party, AfD, comes in as second strongest force. Thus, if federal elections were held on Sunday, a change of government would be very likely. 

The on-going loss of confidence in the traffic light government across the German population clearly contributes to a strengthening of right-wing and populist parties in Germany. This is particularly concerning considering the planned state elections in Thuringia, Saxony and Brandenburg this year. According to a further study by the market and opinion research institute Forsa, the AfD would currently become the strongest party in all three state parliament elections, in some cases by a considerable margin. These developments as well as a meeting of AfD politicians and representatives of the Identitarians, a group of new-right and right-wing extremist activists, in Potsdam, discussing how to expel as many people with a history of migration from Germany as possible, caused a new debate on a possible ban of the AfD. Schleswig-Holstein’s Minister President Daniel Günther (CDU), among others, sees the party as a threat to democracy and calls for a ban. In the middle of this unstable political Germany, the CDU aims to position itself as a counter-model to the current government to regain people’s trust and shape a policy that takes the reality of people’s lives seriously.

Politics is back firing in the UK with Parliament sitting again and both Leaders making significant speeches to kick this year off. It’s an election year, so we can expect to see some big promises, many speeches and a lot of photo opportunities saturating the political landscape in 2024. Anything said this year is an indication of a future Government’s direction, so we (like many others) will be watching the Leaders closely.

At the risk of sounding like a broken record, the Rwanda Bill (which aims to curb illegal immigration) was back in Parliament again this week. Despite Conservative MPs from both sides of the party tabling amendments to the bill, the legislation passed through Parliament with only 11 Tory MPs voting against it. The Prime Minister is no doubt pleased with the result, but the past few days have been difficult – to have so many MPs effectively declare your scheme unworkable and inadequate was not ideal, to say the least. Throughout the ordeal the Prime Minister lost a number of colleagues, giving his opponents plenty of opportunities to land blows on the Government. The legislation now heads to the House of Lords and is not expected to complete all stages until the end of March.

Leader of the Opposition, Sir Keir Starmer MP has also faced criticism this week for watering down yet another of his ’10 pledges’ he announced in his 2020 leadership campaign. The Labour Leader has argued his pledge for military action to need support from the House of Commons only meant big ‘boots-on-the-ground’ campaigns, rather than targeted airstrikes like what we’ve seen this week in the Red Sea.

Speaking of the Red Sea, the Foreign Secretary and the Prime Minister have confirmed the Government will strike the Houthis again if they keep attacking commercial ships in the area. The Prime Minister also ended last week with a trip to Kyiv where he announced £2.5 billion of military aid to Ukraine. This show of ‘strength’ has given the Prime Minister an opportunity to flex his muscles and talk about something other than his contentious Rwanda Bill.

Source: destatis.de

• Germany’s economy shrinks by 0.3% in 2023 amid global challenges: Facing economic headwinds, Germany emerged as one of the worst-performing major economies last year. GDP contracted by 0.3% due to rising inflation, rising interest rates, and a fragile global economy. Household spending fell 0.8% and construction investment fell 2.1%. Weaker exports contributed to a negative trade balance. The outlook for 2024 remains modest, marked by ongoing challenges such as high energy costs and a growing labor shortage.

• Great potential for Wagenknecht’s party in upcoming election: According to a recent poll by the INSA Institute, Sahra Wagenknecht’s newly founded party “BSW” could win 17% of the votes in the state elections in Thuringia (1 September 2024) from scratch. This would put the new party of former Left Party politician Wagenknecht in third place, with similarly high figures to the CDU (20%) and the Left Party of Thuringian Minister President Bodo Ramelow (15%). The AfD remains in first place in INSA’s Sunday poll, with 31%.

• CDU seeks policy shift – nuclear power and strict refugee policy: The CDU’s federal executive committee recently met in Heidelberg for its annual kick-off meeting to discuss its priorities ahead of this year’s state elections in Saxony, Thuringia, and Brandenburg as well as the European elections in June. They also adopted the draft for the new basic programme there, that proposes a shift toward nuclear power, a tough refugee policy, and the abolition of basic income and certain energy regulations. 

Read the Memo!

Now that a second Trump administration becomes more likely every day, industry leaders around the globe start to ask questions to their GR teams: What does it might mean?

While we are usually very secretive about how GR works – the magic touch, the secret sauce – in this case, it is rather simple: It requires first and foremost the skill of READING

Here is what you should read: “Mandate for Leadership”, published by the conservative “think tank” Heritage Foundation. It not only contains detailed plans about what to do with each ministry (mostly: cutting it down, bringing in loads of MAGA dudes), but also policy action plans.

The most interesting parts are those where new style MAGA populism battles with the old Republicanism: On trade, Peter Navarro (tariff afficionado) fights it out with Kent Lassman (free trader). Also no consensus on the export-import bank (EXIM). Trade splits the party. Trump himself has already announced that he will rely on his favorite tool: Tariffs. 

https://www.nytimes.com/2023/12/26/us/politics/trump-2025-trade-china.html