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Issue #7

Issue #7


EU Corona Spending (I): Another €500 Billion, summing up to €3 Trillion

The €3 trillion the EU wants to spend to combat the Corona crisis is making some people feel dizzy. €500 billion of this amount stems from plans for a recovery fund announced by France and Germany this week. Not only is the sum historic: But for the first time, Chancellor Merkel is willing to allow an extension of the EU budget based on debt. The money shall be borrowed by the EU Commission and given to the Member States as grants, not as credit.

A short E(U)xplaining again:

The EU treaties enjoin the EU to get into debt. This means, the debts incurring now must be repaid in the long-term via contributions to the EU budget, supposedly from all Member States. But the states envisioned to receive the grants are for the most part already net receivers of EU money (they receive more than they contribute, e.g. Italy). So, it is to be expected that net payers (e.g. Germany) will carry a bigger chunk in repaying the debt.

It goes without saying that net receivers LOVE the idea, while net payers are HIGHLY skeptical. And since ALL Member States’ national parliaments have to approve of the plan, the realization of Mercron’s* plan is not a given. If you are interested in the spending priorities France and Germany defined in a related document, just ping us.

EU Corona Spending (II): Reactions to the Merkel-Macron Plan

Reactions: Expectedly divided between net payers and net receivers. In the latter group: Netherlands, Sweden, Denmark and Austria, with Austria’s Chancellor Sebastian Kurz not only denying his support for common debt but announcing his own plan together with Sweden and the Netherlands (First not yet public draft: DOWNLOAD HERE). Big debates to be expected!

While Kurz is certainly right about not giving up easily on principles because of a crisis, the alternative – Member States going broke as a result – is not exactly a preferable outcome. Even if those Member States have been relying on the EU’s support in the past, just like a chronically broke friend you need to help by paying his rent again and again.

And Commission President Ursula von der Leyen? She just commented, the plan was basically what she was working on all along. Duh.

Broadband Expansion and IT Security Law

Broadband expansion has been a sore spot in Germany for ages. Now a long-awaited draft for an update of Germany’s IT security law again gives cause for concern. A short reminder: Security issues about Huawei’s hardware used for the 5G rollout sparked intense discussions in the months before the pandemic. To address those issues, the German Government came up with safety requirements to make sure our data stays secure.

Many say, the formulation of the safety requirements is not at all concrete and will cause further delay in the expansion. And the released draft offers some more controversial topics, like the substantial extension of powers for the Federal Office for Information Security.

Companies in the digital sector should pay close attention, since this law can directly impact their business model. Further developments are expected in the next months. Ping us for updates.

*Mercron is a couple’s nickname for Germany’s Merkel and France’s Macron, just like Bennifer or Brangelina in the old days…

For part III on Corona spending, an update of German EU Presidency priorities and the status of Lufthansa rescue, check out the PDF:

Download the PDF


German Elections Ahead – Why a Reform of the Electoral Law is Needed (but probably won’t happen…)

In some countries it’s easy: Whoever gets the most votes in an electoral district becomes Member of Parliament. Sometimes it takes two rounds, depending on the requirement for an absolute or relative majority. But then, take all the winners, and you have the Parliament, Congress, National Assembly.

It’s not that easy in Germany:

Out of the 598 to-be-elected Members, only half are supposed to be elected in a direct vote in the constituencies (first vote). To give smaller parties a voice as well, the other half of the seats come from lists, drafted in the 16 states (second vote). SOUNDS easy, but here’s the catch: The final composition of the German Parliament has to represent the proportions from the list votes. And what happens if a party in one state gets all 10 direct mandates, but no votes in the second vote? More seats are created and all the direct candidates get to go, which is why the German Parliament usually has some more seats than the envisioned 598. 

This system worked well since its introduction, but in the few last years, things have changed. The big parties (think of the German version of Republicans and Democrats), which usually win most districts directly, are now getting fewer votes in the second vote. Instead, more and more votes are going to smaller parties, which have little chance of winning an electoral district directly. Due to this development, the German Parliament has been growing with each election, from 601 MPs in 2005 (to 611, then 620, then 630) to 709 MPs in the current Parliament. For the next elections we are expecting  around 800 Members of Parliament.

And here the problems start: Not only isn’t there enough office space in Berlin’s Parliament buildings, there isn’t enough space for the additional chairs in the plenary hall.

Which is why everyone agrees that Germany needs an overhaul of its electoral law. Here, the consensus stops. While the smaller parties want to reduce the number of districts (because they don’t win any), the bigger parties want to reduce the number of candidates from the list (because voters have a special bond with the directly elected MP).

While the discussions continue, time’s running out, as the law needs to be changed one year before the next elections (read September 2020). Given the differing positions, the Parliament should probably be looking at expanding its physical size to accommodate everyone. Or, as so often in the case of Corona-times, maybe Zoom and home office will be the solution.

Download the PDF

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