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Issue #91

Issue #91

Guten Morgen!

Welcome to another edition of the Krautshell! This week, we sat down for an interview with Neil Willoughby, local Irish business and EU affairs expert in Brussels, to ask him about everything from Irish politics to UK-Ireland-EU-US trade relations. Next, we have a little surprise for you where the graphic normally is – you can thank us later. Check out our main articles to read about four European leaders’ trip to Kyiv, more Brexit drama, as well as the ups and downs of French parliamentary elections. Finally, finish it all off with Anna’s WOOM about the weather in sunny España. Enjoy the read, and happy weekend!  



Anna                                Christian


L’Équipe Magnifique: Scholz, Macron and Draghi Visit Kyiv 

This week, the time had finally come: Chancellor Olaf Scholz (SPD) visited Ukraine (by train). He had three other heads of government with him: Emmanuel Macron (France), Mario Draghi (Italy) and, so that not only the west of the EU would arrive, Klaus Iohannis (Romania). The visit was long awaited, but did it deliver what all parties had hoped for? 

In Ukraine, people were pleased with the German Chancellor’s visit. Ukraine is applying for EU membership status, which is preceded in the bureaucratic EU process by so-called candidate status. This has now been recommended by the EU Commission, but the Member States must first agree. An important step has now been taken: In a largely symbolic moment, Scholz, Macron, Draghi and Iohannis announced in Kiev their open support for Ukraine’s candidate status. The road to EU membership is long, Ukraine must meet further EU standards, adopt laws and much more. Nevertheless, it is a satisfying moment for Ukraine these days. Now, Ukraine hopes that in the coming weeks Germany and France will ensure that the other Member States also agree to candidate status. The outcome here is still relatively open, as various reservations of individual countries must be cleared up. 

Still, it was not all fun and games. The issue of arms deliveries remains. Scholz has been criticized, especially within Germany by the opposition, and by Ukrainian ambassador Melnyk, for his hesitancy and the sluggish weapons deliveries. However, the visit could at least provide a temporary halt to some embarrassing diplomatic fault lines between Ukraine and Germany. Also, the leaders involved reiterated that only Ukraine decides when it considers peace negotiations with Russia “finished” and what a good deal might look like. Fears that the EU wanted to impose a new Minsk negotiation process on Ukraine were thus dispelled. 

You can see below how the EU community processed the visit through memes. 


Brexit Episode 924: Return of the Protocol 

Remember when you were a kid and made a promise to someone, only to have them turn around immediately, blow you a raspberry, and tell you that their fingers were crossed so the agreement “didn’t count?” Well, it seems 57-year-old British Prime Minister Boris Johnson was crossing his fingers when his government agreed to the Northern Ireland Protocol (in case you need a refresher) with the EU in 2019. This week, the Johnson administration unveiled a new bill that, if passed, would essentially cherry-pick the parts of the painstakingly negotiated Protocol that are beneficial to the UK and disregard the ones that are not. As expected, hackles went up in the EU Commission, and two lawsuits were filed against the UK on Wednesday over this breach of international law.  

From the British perspective (fully outlined here), the Protocol puts “unnecessary barriers” to trade between Northern Ireland and the rest of the UK, and creates a “democratic deficit” as the rules are enforced by EU institutions, not British ones. Johnson might also have done this to appease the Democratic Unionist Party (DUP, pro-UK) in Northern Ireland who are dragging their feet on joining a coalition in the regional government until “certain parts” of the Protocol are addressed. Whether Johnson is doing this as a negotiation tactic or really plans on overriding the international agreement remains a mystery. In Brussels, the latter opinion has been accepted as fact, since in addition to the legal proceedings, stern words came from the EU Parliament and Commission calling the UK’s credibility into question. Even US members of Congress got involved, criticizing Johnson for endangering peace in Northern Ireland. Whether all this fuss is worth it, and whether your milk will have to be checked by one or two customs offices remains to be seen, but we’ll be sure to keep you updated. 


NUPED in the Bud? Macron’s Majority in Trouble 

Emmanuel Macron faces a severe stress test in this Sunday’s run-off parliamentary vote (the “third round’s” second round, for whoever’s counting), and as per our usual arrangement, French politics is full of surprises. Whereas the April presidential vote featured a strengthened right and a pitiful left, Macron now faces a formidable foe in Jean-Luc Mélenchon, a far-left Eurosceptic firebrand (and we did warn you). His coalition NUPES – New Ecologic and Social People’s Union – came an extremely close second place to Macron’s Ensemble and has the potential to deprive him of a National Assembly majority in tomorrow’s run-off. Performance aside, the mere existence of NUPES is a bit of a political miracle. Mélenchon has somehow managed to unite the humiliated Socialists, Greens, and Communists with his La France Insoumise (France Unbowed), all parties that typically spend more time fighting each other than the political right. Punsters have already declared the left’s soumission (submission) by Insoumise, though how long this alliance lasts is anyone’s guess. 

NUPES has a simple political goal: win a majority in France’s National Assembly or deprive the president of his. Either outcome would force Macron into a cohabitation, whereby the president is forced to appoint an opposition leader as prime minister. This has happened before (three times, in fact), but incumbent presidents do their best to avoid them. For his part, Mélenchon has already called on the French to “elect” him Prime Minister, betraying either ignorance of the Fifth Republic’s Constitution or a good dose of ambition (or possibly both). And while a NUPES majority may be a long shot, canceling Macron’s is certainly possible: a recent Ipsos/Sopra Steria poll puts Ensemble anywhere between 255 and 295 seats, and Macron will need at least 289 to govern effectively. So where do we go from here? The French pundit Chloe Morin has called Mélenchon his party’s “greatest weapon and its greatest handicap”. Should NUPES upset the political system this Sunday, he must learn to unite rather than divide a troubled French nation. 


As mentioned above, the Kyiv visit of the heads of government was also processed in memes (the new form of political communication, definitely). A compilation of the best of them, can be found here. So, today the memes replace the graphics for once. Enjoy!

THE HOUSE’S VIEW: Interview Edition 

This week, we bring you an interview with NEIL WILLOUGHBY, HEAD OF EU AFFAIRS for the Irish Business and Employer’s Confederation (IBEC) in Brussels. Essentially, IBEC represents Irish business interests in the European capital. Mats sat down to chat with Neil Willoughby about a host of interesting topics including EU-UK-Ireland relations, Irish/Northern Irish politics, and the importance of all these topics for the US.

Last November, Irish Foreign Minister Simon Coveney said that the survival of the entire Trade and Cooperation Agreement (TCA) is dependent on UK adherence to the Northern Ireland Protocol. Boris Johnson has since threatened unilateral action once again. How do you assess the likelihood of the EU scrapping all or part of the TCA if the UK Government drops the protocol? And what might that entail?

Neil Willoughby
Good timing. The UK has announced that it presented legislation to Parliament that would undo parts of this agreement. We are obviously quite concerned about it. Citizens’ rights and money are two major parts of this, but also topics like Gibraltar need to be dealt with before trade. The EU Commission has been abundantly clear that if these aspects aren’t respected, the trading operational agreements would be suspended or withdrawn. The bad news for business is that can be done very quickly, it can be suspended in nine months and terminated in twelve without giving any reason. And in the absence of the protocol in Ireland and Northern Ireland there’s definitely a disruption to business on the island of Ireland, but more so a disruption to peace.


Looking at the 2022 Northern Ireland Assembly elections. Sinn Féin’s victory really made headlines across Europe, but they will still need to cooperate with the Democratic Unionist Party. How do you assess the dynamic in Northern Ireland and its implication for Ireland itself? 

Neil Willoughby
Yeah, that’s a very interesting election. I think maybe the biggest takeaway, at least for me, is that Sinn Féin may be the biggest party, but they didn’t gain any seats compared to the last election. It’s other parties that have lost seats. But Unionism overall is still the largest political force in Northern Ireland even though the dynamics of political parties have changed. Nationalism is not stronger, and unionism is not weaker. Also, a big takeaway is the non-aligned part has really grown, so that’s represented in Northern Ireland by the Alliance party, who are neither nationalist nor unionist. Yet they more than doubled their seats. So, the biggest story is that people are not voting along their religion or their national identity. And a big piece of that is I think there’s a growing sense in Northern Ireland about being Northern Irish and that can mean being Northern Irish and Irish, Northern Irish and British. All three.


Historically, Sinn Féin has been portrayed as a dividing rather than unifying force. According to polls and election results it’s the largest party in the North and Ireland proper. Can the party move towards being a unifying force? 

Neil Willoughby
I think that’s what they’re trying to do. They’re concentrating on issues that are very politically popular. As a party in the opposition they talk about cost-of-living issues, housing and different things that I’m not sure they could deliver in government. But that really speaks to young people, and they’re the most popular party by far among people from 20 to 35. I don’t think you can perceive the rise in support as a rise in support for a united Ireland, but they’re speaking about the issues that really matter to the people. So, I think if they can deliver all that they’ve said, they will be a very unifying force. I’m just not so sure that’s realistic.


I know this might seem like a simple question, but why should Americans care about all these questions in relation to the Northern Ireland Protocol or EU-UK-Ireland relations? What is the impact of these developments on American companies and the American people? 

Neil Willoughby
The most basic reason is that under President Clinton, the US was a big contributor to peace in Northern Ireland. They were seen as an honest broker in those discussions and are a co-guarantor of the peace agreement. I think the second point is probably more a very fundamental question of rules for working with your international partners. The Northern Ireland Protocol is an international agreement. The possibility of that being torn apart unilaterally sends a worrying signal for international relations. Third, from a business perspective, the UK taking unilateral action can lead to very serious complications for trading goods. Particularly if you’re moving products from the US to the EU, then to the UK, it could be a double set of tariffs.

Many American companies, particularly tech companies, have laid down the roots for their European operations in Ireland, partially due to the advantageous taxation regime. How would planned cross-border taxation impact American companies in Ireland and what is the overall Irish position on this sort of sweeping cross-EU tax? 

Neil Willoughby
I think Ireland as a country, not IBEC itself, was one of the biggest supporters of doing something at the OECD level. The US is obviously a hugely important part of that. The proposal was 15%, and in Ireland we currently have 12.5% corporation tax rates so it would be an increase of 2.5%. I think the main thing that businesses get is predictability. But tax is not the only reason businesses come to Ireland – after Brexit we are one of two English-speaking countries in the EU, we have common law and we consistently score very high in terms of skills of workers in OECD rankings. But back to taxation, it’s important we don’t end up with an EU-only agreement with substantial loopholes that would work to the EU’s disadvantage.


The past few years, especially under Trump, have arguably resulted in a somewhat cautious view in Europe towards American interests, particularly business ones. Given the American companies operating in Ireland and IBEC’s representation of their interests, how are IBEC’s positions perceived by other EU countries and their business associations? 

Neil Willoughby
We represent domestic as well as multination companies based in Ireland, and SMEs form the largest proportion of our members. 70% of all businesses in Ireland are members. When we develop a position we don’t represent any one member’s interests. Of course, we have U.S. companies domiciled in Ireland that are part of that membership and contribute their positions like any other member, but we don’t represent their individual interests. I think we’ve got a good reputation here in Brussels as being quite easy to work with. Our economy is a different make up to a lot of other countries, much more services-orientated to the digital economy. As for the large tech companies: Obviously in Brussels the largest lobbying companies and organizations are technology companies who do a lot of work in their own right, but my job is to represent Irish business interests, so it can be on a broad range of policy areas, from digital to climate, and whatever pops up on a day-to-day basis.


Are there often conflicts between representing more traditionally Irish businesses versus foreign businesses, American or otherwise? If so, how do you reconcile those differences? 

Neil Willoughby
For the most part, no. There seems to be a sort of understanding among companies in Ireland, be they multinationals or local SMEs, that being an open and export-orientated country has served us very well. We joined the EU together with the UK and our economy exploded starting in the 90s, and a lot of that was to do with being open and being able to trade goods, services and move workers across borders very easily. So I think there’s quite a clear consensus that what is good for the international community is good for us, and a lot of businesses share that vision. There may be individual cases of disagreement. But fundamentally, we only represent something we can get consensus on.


  •  Drivin’ up the Salaries: Not that you asked, but we’ll tell you: this week, drivers for Members of the German Bundestag reached an agreement on collective wages as well as a substantial pay raise. Apparently this was monumental, as the story was all over German political news this week. Drivers have the SPD to thank for advancing negotiations.  
  • One Mansion, Please: Apparently the EU External Action Service (our equivalent of the State Department) is planning on purchasing a 5-floor, 11-room Manhattan town house/mansion on the Upper East Side to set up operations in New York. The whole property would cost more than 20 million euros, with another roughly 7 million euros in renovations. Go big or go home, am I right? 
  • Who Wants to be a Candidate? This week, with his visit to Ukraine, French President Emmanuel Macron expressed his support for EU candidate status for Ukraine and Moldova. Another country, Georgia, applied on the same day as Moldova, but Macron has been eerily silent about its membership chances. Major blow for the government in Tbilisi.  


By Anna, Senior Consultant

On Birds and Stones 


A few weeks ago, I was most pleased with the summer having FINALLY started, and I am telling you, summers in Berlin are just the best. 


Now it’s only mid-June and we are expecting a heatwave with around 40 degrees Celsius (for your convenience, that’s 104 Fahrenheit) for the weekend. I know, for the Texans among you, that is nothing. For Germany, and in June, that is NOT NORMAL. Honestly, it’s not even normal in August, at least it wasn’t until some years ago. 


The heat wave already hit Spain pretty badly and resulted in some wildfires (which, at least for now, seem to be under control), water restrictions in Italy, and is currently making France sweat. Pretty bad, isn’t it? 



But, looking for a silver lining, as always: France plans to invest 500 million euros in greener inner cities, and an energy and fossil fuel shortage caused by Russia all of a sudden seems like something we should be thankful for. Suggestions that were heavily criticized even two days ago, such as a time-restricted ban of cars* (with the goal of saving said fossil fuels) would kill two birds with one stone. 



Still, for this week, escaping with the whole team to Barcelona for our annual business retreat, where surprisingly enough the temperature is expected to hover in the high 20s (75-85 Fahrenheit) after the heatwave continues its way towards Berlin, seems like the wisest move. 



*(we tried that 50 years ago already, in the midst of the 70s oil crises)