Europe’s in soccer fever, and the summery weather, combined with a loosening of Corona measures is putting everyone in a great mood. We wish you a wonderful start into your weekend and week with the newest Krautshell edition.
Enjoy and ping us for more!
FIRST, SOME SOLID INTEL:
#RoadToBTW21 The CDU/CSU’s Election Program (Finally!)
This week, it was blisteringly hot in Germany, and exactly when we all wanted to enjoy a cold drink in our favorite bar while watching some European Championship games, the CDU/CSU decided to leak drafts of their election program. Well, THANKS FOR NOTHING, guys! Anyways, here’s a first overview of the program which will be officially presented this weekend.
The central task for the CDU/CSU is to somehow herald the often conjured “decade of modernization”, while still remembering they are conservative parties with voters that tendentially don’t appreciate big changes. The election program incorporates this spirit. Both parties affirm well-known concepts like not taking on more debt, decreasing taxes, providing better internet and so on. One central issue is of course climate protection where the CDU/CSU have to fulfil a difficult role. Their voters accept climate change as a challenge, but it’s the key competence of their biggest competitor the Greens. CDU/CSU voters seem to want to “solve” climate change, but, please, without too many big changes in their daily lives. Therefore, the CDU/CSU want to increase the CO2 price while reducing other burdens, without explicitly stating how high dues could become for citizens (note: Annalena Baerbock (Greens) received a real shitstorm when she talked about increasing gasoline prices). A second highly important issue for the next government will be reforming the pension system (we reported). The CDU/CSU reaffirm their support of not increasing the age to begin receiving pension beyond the current level of 67. And while they have some ideas on how to re-design the tax-financed part of the system, real reforms on how to react to demographic change are not visible so far.
Obviously, listing every area and every proposal goes beyond our format, so if you are interested in a 10-page memo about the program, just ping us. We are happy to give more insights.
Which Chancellor Candidate Will Get the Photo Op?
The Bundestags-election is two months away, and the three chancellor candidates Olaf Scholz (SPD), Armin Laschet (CDU), and Annalena Baerbock (Greens) are looking for anything to give them that slight edge over their competitors. One way to do this: show the German electorate how important you are. Specifically, the candidates want to demonstrate to voters that they are taken seriously by prominent international politicians and personalities, and what better way to do this than with a strategic photo op in the US?
All three candidates have plans to (separately) take a trip across the Atlantic, but the outlook for who will meet with whom is vastly different for each. First, both Baerbock and Scholz have a meeting with Vice President Kamala Harris at the tippy top of their wish list. A photo op with the US’s de-facto ambassador for diversity would be worth gold for the Greens candidate, but not every wish can come true. Baerbock has no concrete reason to meet with the Vice President, so a meeting, however beneficial for her campaign, is quite unlikely. Meanwhile, Scholz is optimistic that he can make this meeting happen, but only because of his current position as Merkel’s Vice Chancellor. Furthermore, Scholz will get together with his thematic counterpart, Treasury Secretary Janet Yellen. Getting back onto the Kamala-train, Laschet actually turned down an offer to meet with her and other prominent US political figures in July as part of a delegation of the Munich Security Conference traveling to Washington D.C. His rationale: Merkel will also be present, and he wants to avoid being seen as a sidekick. Instead, Laschet will rely on his extensive network to get him the campaign photo-ops he needs. If you’re curious about what the content of these transatlantic meetings could be, feel free to ping us!
Biden in the EU: Implications for Tech and China Policy
We’re almost certain this week your newsfeed has been chock-full of news stories about President Biden’s visit to Europe because over here, ours certainly were. So, staying true to our philosophy of only providing you with the information you need, we’re going to focus on developments in transatlantic tech- and China policies (because let’s be honest, at this point the two can hardly be separated). First, the two sides agreed to the establishment of a “Trade and Technology Council,” whose main task, at least officially, is to develop joint positions on a wide range of digital topics like AI rules and data protection. Unofficially, the council will seek to use its recommendations to present a united Western front against China to combat its rising influence in the technology sector. That being said, the past week wasn’t all smiles and head-nodding. One aspect of tech policy that the two sides have still not been able to come to an understanding on is the EU’s upcoming digital levy, which will impose new taxes on tech companies operating in the single market. The main point of contention: the US believes the tax burden will disproportionally fall onto American companies, while the Commission President Ursula von der Leyen has repeatedly insisted this would not be the case. A third, major conversational point was the rebalancing of global supply chains in semiconductors: the two sides want to work together to reduce dependency on China, which currently dominates mining and processing of rare earth metals needed to produce microchips. Overall, as the German Coordinator for Transatlantic Cooperation Peter Beyer put it in a Politico interview, going forward, the transatlantic relationship will not return to its pre-Trump status, but this is not necessarily a bad thing as the two sides will work together to “forge the New West.”
For Franco-German defense projects, a temporary end to the transatlantic airplane debate, and Germany’s newest technological addition, click here:
Merkel and Macron: Get Me Those Planes!
It’s currently the biggest European armaments project: the Future Combat Air System (FCAS) with a volume of €100 billion. It incorporates the development of a warplane of the sixth generation. It will form part of a holistic air combat system with drones, satellites, AI and a combat cloud. The planes are expected to be ready by 2040. It’s a project for prestige, technological leadership, industry, and probably also a bit about convincing NATO that we are still on board (even though our current aircrafts are sub-par to say the least). Merkel and
Macron took control of the project and the German parliament doesn’t like that one bit. Here’s the conflict.
To fulfil the project, the Bundestag budget committee needs to give green lights for various financing steps. The next committee meeting on coming Wednesday will settle whether spending roughly €25 million is acceptable or not. To be honest, it’s less about the amount of money, and more about the degree to which the Bundestag can control the project and the government(s) executing it going forward. One problem: The Greens are not big fans of the project but will likely be part of the future government. Furthermore, the SPD-led Finance Ministry sees some troubles in securing financing, while the CDU-led Defense Ministry is a big fan of the project. So, queue the conflict. And, ultimately, France isn’t jumping for joy about the German delays. The next days will show whether or not the government is able to enact enough pressure on the Bundestag to get the project rolling before the election.
Airbus-Boeing Issue Resolved – For Now
Of course, you all know about the import duties raised by the US on EU products because of Airbus subsidies, and the resulting response from the EU to impose on US products, causing a seemingly endless back-and-forth. Well, you probably also heard that this week, President Biden and EU Commission President von der Leyen, along with EU Council President Michel were able to resolve the issue. For now. We just wanted to give you a quick debrief about the EU side of the story.
Probably, the most important sign for the EU in this process is the notion that they finally have a partner across the Atlantic that they can trust in negotiations again. TV pictures looked great when Biden was in Brussels, no one said nasty words to one another, and no one was denied a handshake. So far, so good. But one shouldn’t mistake this as the conflict being completely resolved; we love to make that mistake in transatlantic relations here in Europe. Still, we might have some reasons to hope that this is a serious step forward. As far as the airplane market goes, and maybe even in other sectors, China continues to outperform both the EU and US, often with unfair practices, leading to major problems. Defining a strategy on China will be a crucial step for the EU the next years, especially as Angela Merkel, who is comparatively more “China-friendly” than other EU leaders, will step down in September. The best way to start this definition is most certainly united with our allies across the pond.
Quantum Computing: German Vision with American Technology
When it comes to the future of sectors like mobility, the environment, or healthcare Germany has pretty lofty goals. Reaching these objectives, like being climate neutral by 2045, won’t just happen through hard work and determination alone – the country needs technological support. Therefore, this week, Germany unveiled Europe’s first quantum computer. And, who better to christen the new machine than Germany’s highest quantum-chemist-turned-politician, Chancellor Angela Merkel herself?
Great, this highly advanced computer is here now, but what does that mean for Germany? First of all, with this computer, Europe is now back in the race with the US and China to develop new solutions in quantum technologies. That being said, entering the race isn’t the same as leading it. The computer itself highlights the problem very well: while it is operated by Germany’s leading applied research organization, the Fraunhofer-Gesellschaft, the device and the technology behind it comes from American tech giant IBM. For some in Germany, this is the part that stings a little. As a Christian Ospelkaus, a professor of quantum physics in Hannover put it (article in German), Germany is strong in all the technologies needed to build a quantum computer, but someone just needs to “do it.” We might have to wait a bit longer before that happens. If it is to happen though, there needs to be a clear demand for the solutions this innovative technology can offer. To provide some clarity on how exactly industry can benefit this powerful tool, ten major German companies including Volkswagen, BASF and Bosch have come together in a consortium. The group, called the Quantum Technology and Application Consortium (QUTAC), will be exploring and testing industrial applications of quantum computing. Be sure to reach out to us if you want to find out more about what the future of quantum technology looks like in Germany.
LONG STORY SHORT:
- Sorry, Elon: Germans want climate protection, but please not if they have to sacrifice peace and quiet in their own home. Currently, some climate activists are pursuing litigation to stop the building of Elon Musk’s “Gigafactory” near Berlin. It looks like they won’t be successful, which is positive, considering large parts of the factory and an access road has already been built…
- Paragliding: When Germany had his first match at the European Championship, a moment of shock went through Munich stadium shortly before kick-off. A paragliding activist of Greenpeace, who literally wanted to “drop” a message (in form of a ball), got tangled in cables near the stadium roof and nearly crashed. He could save himself but hit two fans, who thankfully only suffered minor injuries, in the process. Still, a doubtful form of activism.
- Curevac: At the beginning of the pandemic when reports were emerging that former President Trump wants to buy German company Curevac as they had first promising results for a Corona vaccine, Germans were in a panic. Trump didn’t buy Curevac, the German state did, and now it turns out their vaccine is only 47% effective. Well, we guess all the anxiety was for nothing. And we certainly feel sorry for the hardworking researchers at Curevac, who definitely gave everything to come up with a working vaccine.
WHAT’S ON OUR MINDS
MORE THAN SOCCER
This week the European Soccer Championship started (you know, SOCCER, which, for Germans, means as much as football and basketball combined for you). Now, I am not interested in soccer at all, as opposed to some other members of the Krautshell team (and regular readers most certainly will be able to take an educated guess), but I am following the games and outcomes and keeping my fingers crossed for the German team. Not for the usual patriotic reasons, but for purely political ones.
Soccer is a really big and emotional thing in Germany. Watching the games (especially if they are in a public viewing format) are the highlights of many people’s (or should I say guys) lives. Now that the lockdown is being lifted and the weather is playing along, even more so. The German team winning means happy people, and economic upswing for several industries, and election results without many protest voters giving their voice to right or left-wing parties.
The German team did not win its first game last week, and I have no clue why or even how they played. But I most certainly hope they win the next one, because, as I have been told, if they don’t, the European Championship will be over for Germany before it even started. And that would put serious obstacles in Germany’s path to the After-Corona-recovery.