And welcome to a new Krautshell episode in a uniquely troublesome week. Russia started an unprovoked invasion of Ukraine that clearly violates international law. We are shocked and our thoughts this week are with the brave people of Ukraine. This time, Christian argues in WOOM, thoughts and prayers might not be enough. Still, we wanted to include some other topics besides this tragedy in this week’s Krautshell. The EU Commission launched its space strategy at the beginning of the week and in the House’s View we have an absolute expert and special guest for an interview on this topic. So, we hope you can still enjoy this week’s episode, even though all our priorities this week have probably shifted.
FIRST, SOME SOLID INTEL:
The Schedule Of Drama
What a week, huh? Let’s quickly recap what happened and give you an overview of EU reactions to Putin’s unprovoked attack on the Ukraine. And allow us to mention that our thoughts and prayers are with the people of Ukraine who are enduring hardships we can’t even imagine.
On Monday evening (our time), Putin announced he would recognize the self-appointed separatists’ republics as countries, which was the first clear indication that he had chosen to go down a very dangerous road. On Wednesday, the separatists asked Putin for military help.
So, the situation completely unraveled on Thursday. The attacks by the Russian troops, (mainly) on military targets all around the country started. Condemned by all Western countries, Putin is continuing his missile attacks on Friday and is allegedly moving towards Kiev with tanks and paratroopers. How did the EU react over the course of this week?
On Tuesday (warp speed by EU standards), EU foreign ministers approved a first list of sanctions that came into force Wednesday. The EU sanctions package includes a trade ban on Russian government bonds. In addition, several individuals and companies are supposed to be added to the EU sanctions list, as the French presidency announced on Tuesday evening. On Tuesday, Olaf Scholz then also pulled the plug on the project “Nord Stream 2”, telling reporters that Germany decided to reassess the certification of the gas pipeline.
On Thursday, another round of sanctions was agreed upon after the attacks started, mainly targeting the energy, finance and transport industry in Russia, including some export bans. The EU leaders still held back some of the really “tough” sanctions, even though critics already raised the issue that the agreed upon sanctions were way too weak, especially concerning Russia’s energy industry which could hit Russia the most effectively (see graphic below). Another harsh sanction would be the exclusion of Russia from the payment system “Swift”. It seems like Chancellor Scholz is actively advocating for strategically waiting with some stronger sanctions to retain some sanction escalation potential. We will keep you posted.
Habeck’s Competition Policy
This week, we had a look at a paper distributed by Federal Minister of Economic Affairs and Climate Action Robert Habeck (Greens). In that paper, Habeck laid out his visions and plans for competition policy until 2025. Habeck is a fan of regulatory policies and intends to give public authorities and government a stronger say in economic affairs. He deems this necessary, mainly to combat the climate crisis but also to design an economy that is more equitable. Here are his central plans.
Habeck mainly targets two industries: the energy and digital sector. In the area of energy production, he wants to prolong a privilege of the German competition authority. Whenever energy suppliers increase their prices in Germany, they must prove to the authority that this increase is justified due to higher production costs. In every other industry, this sequence is reversed, as the authority would have to first prove an unjust increase in prices. A stronger role for the competition authority is also envisaged in the digital sector. Here, the authority will have to enforce the rules and regulations that come with the EU’s Digital Markets Act (we reported). Primarily, this change is about restricting the market power of Google, Facebook, Amazon and co. The bulk of the discussion in Germany regarding this topic concerns the EU focus of the German authority. Habeck strongly supports the EU processes regarding the Digital Markets Act, but still strives for a powerful German competition authority that can also impose measures on the national level. The vision behind Habeck’s goal is a competition authority that keeps consumer protection in mind and thereby automatically supports Habeck’s plan for a stronger regulatory policy. If you want to know what is REALLY important in competition policy the coming years in Germany and the EU, ping us for more.
The EU Data Act: Innovation Driver or Competition Killer?
This Wednesday, the EU Commission finally presented their first proposal for the EU Data Act. Therefore, a new draft legislation is introduced and now needs to be agreed upon by the three main EU institutions (Commission, Parliament and Council). The new data law envisages a world in which the use of industrial data is heavily facilitated. For instance, the EU body wants car drivers to be able to decide whether they want to share their driving data with their insurance. Data of many car drivers shared with repair and maintenance industry could result in better repair opportunities. However, manufacturers of products would need to design them in a way that makes data transfer and exchange possible. Industry representatives of big companies, such as the German Automotive Association, are fighting fiercely against this law for this reason.
What’s behind the conflict? Currently, 80% of industrial data in the EU remains unused. It is mainly a problem of access to data that limits the utilization of it. Especially the manufacturers of technological equipment or any devices that produce data would preferably prevent others from getting access to it in fear of losing their competitive advantage. While this fear is certainly not unsubstantiated, we also face the problem that big corporations in the EU often lack motivation or pressure to invest in the optimization of their products. Offering industrial data to more players, especially innovative SMEs and startups, could very likely boost the economy overall, as smaller players would be able to challenge the big players. The EU Commission expects the Data Act to increase the EU GDP by €270 billion until 2028. If this estimate is accurate, the benefits may outweigh the potential damages that big companies could endure when forced to share their data. Another aspect of the law touches upon the problem of data transfer. The law is also designed to limit the possibilities of data transfer outside the EU. Thereby, the EU hopes to keep control of its data and how it can be used.
TAKE A BREAK, GIVE YOUR EYES A REST.
For calculating the changes in Russia’s GDP, a full ban of exports and imports for the respective category was assumed.
THE HOUSE’S VIEW: Interview Edition
It’s our great pleasure to have Stella Schübel, parliamentary assistant to MEP Niklas Nienaß (Greens) and graduate of international relations with a focus on space activities, as a guest for the first ever Krautshell Interview. Stella works for MEP Nienaß on space policy and is a REAL expert in this area. Read the interview to find out more about the EU’s space strategy and why we as “average” citizens should care about it.
Why should I – the average working citizen – care about what’s happening in the development of space policy?
It’s actually surprising how little is known about spaced-based tools. We are using space-based services in various communication aspects like broadband access or navigation. Another important aspect is earth observation. This is crucial in combatting climate change. If space services were to fail, it would have an immediate impact on everyone.
What is the scope of EU space policy? What topics are even covered in this area?
As the regulations are complex, space activities in Europe are complex as well and involve lots of different stakeholders. First, the Member States of the EU are responsible for their own space activities, but they also join for common projects within the European Space Agency (ESA). Last year, the EU formed an agency to execute the EU space policies Copernicus (earth observation) and Galileo (navigation system): EUSPA.
In the US, private companies are active in space. Are there efforts, also in the EU, to promote the private sector in space? What are advantages of being a company in this sector in Europe?
We are seeing more initiatives in this regard coming from the EU Commission. Even though plans in the so-called “Space Proposals” are not clearly laid out yet, it is imaginable that also the EU strives to facilitate projects such as SpaceX. The ideas of the Space Proposals can provide secure communications for intergovernmental activities and provide broadband access throughout Europe and Africa. Sure, in the past many activities in the EU were largely government-driven, but this is now changing. In the US, NASA has procurement mechanisms for private industry, which is imaginable here as well. The advantage of the EU for private companies will be a clear set of rules that levels the playing field for all competitors in space industry in the future.
Lately, you could read a lot about space garbage. Is this problem on the EU’s radar and what efforts are taken at this point?
The EU is very aware of the problem and has already put some efforts in place right now. On an international level, the EU actively advocates for long-term sustainability guidelines. The ESA is also working on tasks to remove debris from space. And we need to be clear here: we cannot continue using the space the way we use it now. If we continue doing so, we couldn’t generate any revenue or benefits from space use. Programs like the Clean Space Initiative are really needed to design different models and possibilities to reduce and prevent space garbage.
Does the EU anticipate territorial claims or even battles in space in the broadest sense? If so, what are possible solutions?
This problem is quite visible with orbital frequencies which you have to think of as “highways in orbit”. Currently, they are distributed based on a first come-first serve principle, which highly benefits large players that are taking up all the space like the US. Currently, the EU plans to tackle this problem by securing the orbits with placeholders to secure the orbital frequencies. Another example are resources that can be extracted from the moon like oxygen or water. There are only certain places on the moon where resources can be utilized. The EU’s approach to ensure that all actors can make use of this is the Moon Treaty adopted by the UN. It proposes a regime which contributes to regulating mining sites on the moon. Generally, we can see that the EU is favoring a cooperative approach also in this area of space policy.
Who are the major players regarding space in Europe?
Luxembourg is a pioneer in space resources and tries to attract a lot of industrial players. They have a very attractive space regulation, but it also potentially violates international law. That’s a very critical point for the EU as we want to prevent harsh competition in Europe regarding the space.
What do you hope for the development of space policy in the future?
First of all, an agreement of space traffic management is urgently needed. The EU wants to have a common approach between the Member States in this area to save time and be prepared for a multilateral discussion on the international scale. I would wish for cooperation on every scale. Space has always been in area in which global cooperation is possible, if you think about the ISS (which will be terminated in 2024) for instance. I think that multilateral communication on space traffic management, sustainability and space resources need to drive the discussions of the coming years.
LONG STORY SHORT:
- Not that I really cared… This week, as a result of the Russian attack, every institution, company or person seems to be drawing conclusions. Some of those seem rather ridiculous, when compared to the unbelievable suffering of the Ukrainian people. Nevertheless, congrats to UEFA for shifting the Champions League Final location from St. Petersburg to Paris. And congrats to Ex-Chancellor of Austria Christian Kern (SPÖ) for vacating his job in the supervisory board of the Russian Railways.
- Not So Fast… says Vice-President of the EU Commission Margrethe Vestager when she was asked for a renewal of the EU-US Privacy Shield. This question was raised this week during the presentation of the EU Data Act. After news broke about the considerable progression in the negotiations between the EU and the US, Vestager curbed expectations again.
- Suisse Secrets… A data leak at the Switzerland-based bank Credit Suisse clearly showed that the bank was working with criminals, kleptocrats and corrupt political leaders all around the world. This revelation raises a number of questions. Questions about consequences. It increasingly seems like European financial authorities are not equipped to tackle transnational illegal cash streams.
WHAT’S ON OUR MINDS
With all we have
From a Berlin perspective, all of this still feels like a bad dream. As a matter of brutal fact, a war is unleashing in Europe leaving the continent with equally unexpected and existential threat scenarios and the certainty of a paradigm shift in the international order. Yet, while feelings of shock and solidarity with the people of Ukraine are expressed in all conversations, the atrocious reality still doesn’t seem to really sink in, and people are like
Maybe one reason for this is that we are all aware that supporting Ukraine with less than a military deterrence was a lost cause once Putin started the invasion. This might lead to the conclusion that Putin might win this battle but lose the war in the long run. The combined force of political and economic sanctions is being deployed and will do its magic soon. Hence, while wishing the Ukrainians all the best, not being part of NATO or the EU, the Western rational mind might be tempted to say
So, life goes on and the Western democracies will prevail? Let’s not be so sure. Russia might actually like the skyrocketing prices for their commodities. At least China will still be interested in buying them. Russia might use the ban from SWIFT to accelerate the alternative SPFS system with China. The Kremlin knows that the carefully forged bond with China will mitigate the impact of being isolated from the West. The US government has understood China’s crucial role in the current game and has tried several times to get Beijing to do something about it. Their response? Not more than
This time, the people and leaders of the EU member states will not get away with economic measures and thoughts and prayers. The future of the EU is at stake. After Putin’s tangible threat against Finland and Sweden, the Scandinavians are not coordinating with Brussels first, but count on the “Nordic unity”. With little regard to the EU’s institutional reactions, Poland is leading the support for Ukraine with resolve and, in doing so, securing for itself a key role for the EU’s security. There might only be a few days left for Berlin to wake up and act, for example by clarifying that the solidarity clause in the EU Treaty would be interpreted as full-scale military support for all EU Members in the event of a Russian aggression. We should let our friends in the EU know today that we will stand behind them with all we have. Otherwise, we will continue to stand by idly with useless European values while others determine the order of tomorrow.