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By JAKOB HANKE VELA
with ZOYA SHEFTALOVICH
EU PUSHES EMERGENCY BUTTON TO SAVE INDUSTRY: Bells are ringing in Europe’s power centers — alas, they’re not sleigh bells, but alarm bells. Leaders in Brussels, Berlin and Paris now believe Europe’s economy stands before a precipice, faced with an exodus of industrial investment across the Atlantic to the U.S. — which they fear will start as soon as January.
To prevent European industry from being wiped out by American rivals, the EU is now readying a big subsidy push, two senior EU officials told POLITICO.
Transatlantic shakedown: Indeed, Europe is facing a double hammer blow from across the icy Atlantic, where its supposed partner, the U.S., has adopted policies that — whether intentional or not — amount to a full-on shakedown of EU industry.
‘Buy American’: It wasn’t enough that Europe’s energy prices look set to remain permanently far higher than those in the U.S. thanks to Russia’s war on Ukraine (more on that here). Now, U.S. President Joe Biden is also rolling out a $369-billion industrial subsidy scheme to support green industries under his Inflation Reduction Act, key provisions of which enter into force next year. Crucially, those subsidies will be linked to “Buy American” provisions that mean only cars, batteries and solar cells manufactured in the U.S. can benefit.
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Existential threat: EU officials fear that businesses will now face almost irresistible pressure to shift investments to the U.S. rather than Europe. At a meeting with EU industry leaders Monday, European Commissioner Thierry Breton warned that the U.S. subsidy package was an “existential challenge” for the bloc’s economy, according to people in the room.
In other words: Rather than bringing presents, the imminent risk is that Santa Claus will this year be snatching up Europe’s most-prized economic assets — from its aerospace to its renewables industries, painfully built up over decades but now suddenly at risk of becoming industrial wastelands.
‘It’s like drowning’: Unlike with COVID, the fear is not so much of a sudden economic crash, but a long-term, much more pernicious and permanent loss in competitiveness. “It’s a bit like drowning. It’s happening quietly,” BusinessEurope President Fredrik Persson said.
New data today hammers that point home: Persson’s bleak assessment is being echoed by industry leaders across the board: Chief executives’ confidence in Europe has reached an all-time low, according to a survey by the European Round Table for Industry, a C-suite business lobby, published today.
Emergency measures: According to the two senior officials, the EU is now working on an emergency scheme to funnel money into key high-tech industries. This would happen via the “European Sovereignty Fund,” which Commission President Ursula von der Leyen mentioned in her State of the Union speech.
On the agenda: One official said European leaders will discuss Washington’s subsidies and the EU reaction on the margins of the Western Balkan summit on December 6 and at the European Council mid-December.
‘Last of the Mohicans’: Liberal-minded diplomats are warning of a subsidy race, pointing to evidence that such industrial incentives are often wasteful and favor established companies that are better at lobbying than innovating, redistribute money from taxpayers to shareholders and risk further driving inflation. But several diplomats and senior officials also stressed that it might be too late to avoid a subsidy race, given the U.S. and China have already started running. Or, as French Economy Minister Bruno Le Maire put it Tuesday: “Europe must not be the last of the Mohicans.”
Further reading … From Playbook and Barbara Moens here.
COMMISSION PROPOSES HOMEOPATHIC GAS PRICE CAP: After months of waiting, the European Commission finally unveiled its formal proposal for a gas price cap to help the EU avoid exorbitant energy prices next year — but it’s clear Brussels doesn’t want to use it.
EU’s deep state: The Commission’s technocrats were always opposed to the gas price cap, which they saw as a high-risk market intervention. It was only after months of immense pressure from 16 EU countries, who form a qualified majority, and several EU leaders’ statements, that the Commission reluctantly proposed a cap. But, as a diplomat told my colleague Charlie Cooper, “the cap isn’t really designed to be triggered. And I mean triggered at all.”
Never say never (hahaha): It’s clear that the Commission’s experts aren’t fans of the cap, and they’ve crafted it to make it practically useless. Under the Commission’s proposal, the “market correction mechanism” would only kick in if the month-ahead gas price on the EU’s main benchmark, the TTF, exceeded €275 per megawatt hour for two weeks straight, and if at the same time the TTF price in Europe was €58 higher than the global LNG price for 10 consecutive days. That didn’t happen even at the height of the August spike, when prices briefly hit €350 per MWh but only stayed above the magic figure of €275 for a week.
Commission comedy moment: The Brussels Times’ comedy account Le Chou had an apt description of the proposal: The cap will be triggered “if it’s the fourth Sunday of the month while Jupiter is in ascension and it’s a full moon.”
TOP SANCTIONS READ: European authorities have repeatedly imposed asset freezes on Russian oligarchs they accuse of supporting the country’s war on Ukraine. The oligarchs often sue — and win — in court … but that doesn’t mean they will get their stuff back anytime soon, reports POLITICO’s Leonie Kijewski.
COUNCIL CRUNCH TIME FOR CHIPS ACT, PLATFORM WORK: The Czech Council presidency will try to hash out a political deal among EU member countries today on two major digital files: the bloc’s semiconductor plans and a proposal to reclassify millions of gig workers, our colleague Pieter Haeck writes in to report.
Details: EU deputy ambassadors will convene at 10:30 a.m. to decide whether they can agree to a so-called general approach pitched by the Czech Council presidency. If they do, it’s up to ministers to give the final green light — industry ministers can do that for the Chips Act next Thursday, while employment ministers can do it for the Platform Work Directive on Thursday, December 8.
Unsettled business: A deal is not set in stone, and today’s Morning Tech newsletter has the lowdown of where things can go south in both files. In short …
Not cheap as Chips: The EU budget underpinning the Chips Act is the most controversial point, with some countries up in arms over the Commission’s proposal to source some of the budget by redirecting funds from the existing Horizon Europe and Digital Europe programs.
Platform Work: The Czechs stuck close to the Commission’s approach in its handling of the Platform Work Directive, laying down criteria to determine the job status of gig workers like Uber drivers and Deliveroo couriers. But while the Commission said that two out of five criteria needed to be fulfilled for a gig worker to become employee, the Czechs go for three out of seven criteria, with an extra exemption that a criterion is not fulfilled when a platform is just complying with national law.
PUTIN IN YEREVAN TODAY: Russian President Vladimir Putin will visit Yerevan, Armenia today for a session of the Collective Security Council, the main body of the Collective Security Treaty Organization made up of Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. Also expected to attend are Armenian Prime Minister Nikol Pashinyan, Belarusian President Alexander Lukashenko, Kyrgyz President Sadyr Zhaparov and Tajik President Emomali Rahmon. Russia’s state-run TASS agency reports that it’s not known whether Kazakh President Kassym-Jomart Tokayev will attend.
BERLIN ANNOUNCES MALI RETREAT: Germany on Tuesday said it will end its military presence in Mali as part of the U.N.’s peacekeeping mission in the country, with a gradual withdrawal that’s scheduled to start next summer and terminate in May 2024 — marking the end to the Bundeswehr’s largest current foreign deployment. The decision comes as Mali’s ruling junta has turned to Russian Wagner Group mercenaries and is increasingly hostile to the international peacekeeping missions, which were originally established at Mali’s request to fight rising Islamist activity in the country.
BREXIT HYPOCRISY ALERT: Owen Paterson, a former Conservative MP who repeatedly criticized the European Court of Human Rights, is taking the U.K. government to … the European Court of Human Rights. Details here.
BOLSONARO TRUMPS IT: Defeated Brazilian President Jair Bolsonaro is contesting the results of the October election and calling on the electoral authority to annul votes cast on most electronic voting machines, citing a software bug that independent experts have said didn’t affect the results. If he succeeds, Bolsonaro would win 51 percent of the remaining valid votes, according to his lawyer. More from AP here.
MONKEYPOX GETS A NEW NAME: The World Health Organization is planning to rename monkeypox, designating it as “MPOX” in an effort to destigmatize the virus, three people with knowledge of the matter told POLITICO.
**On December 7, POLITICO will unveil its POLITICO 28 list during its annual gala dinner. Our award-winning event and publication will recognize the 28 most powerful players driving change and solving problems in European politics, policy and business for the year 2023. The event will also feature an exclusive interview with European Parliament President, Roberta Metsola.Register here.**
— European Parliament plenary continues in Strasbourg. Highlights: Debate on the need for a European solution on asylum and migration 9 a.m. … Parliament President Roberta Metsola holds press conference on a new initiative to assist Ukraine at 1 p.m.; followed by debate at 3 p.m. Full agenda. Watch.
— Conference on “The way forward in opposing abortion in the U.S. and Europe” at the European Parliament in Strasbourg at 6 p.m. Watch.
— European Economic Area Council. Roundtable at 2:35 p.m.
— Commissioner Mariya Gabriel in Munich for official visit.
— Commissioner Olivér Várhelyi participates in the Israeli Ambassadors’ Conference.
— Commissioner Jutta Urpilainen visits Port Vila, Vanuatu; attends 12th Conference of the Pacific Community.
— Russian President Vladimir Putin visits Yerevan, Armenia for meeting of Collective Security Treaty Organization.
COMMISSION COMEDY MOMENT, PART 2: The Commission on Tuesday sent out a press alert to all journalists on a truly breathtaking development: “The European Commission decided to register a European Citizens’ Initiative (ECI) entitled ‘European Day of ‘Whatever it Takes’” — which, the Commission explains, would celebrate the statement from former European Central Bank President Mario Draghi, who famously calmed markets during the sovereign debt crisis by vowing to do “whatever it takes” to save the common currency. The day should be a “symbolic act of pan Europeanism,” the Commission says in its press note, quoting the initiative.
MORE EU LAUGHS: Brussels’ favorite Eurocentric comedy show, the Schuman Show, is back on Thursday, December 1 and Friday, December 2. Tickets here.
BIRTHDAYS: Les Echos’ Karl De Meyer; Former MEP Jordi Sebastià; POLITICO’s Virginie Dandoy; BBC’s Suzanne Kianpour; Walt Disney Company’s Geoff Morrell.
THANKS to Barbara Moens, Pieter Haeck and our producer Grace Stranger.
**A message from EPPA: Last week, a new scientific study shed light on sustainable takeaway packaging. The study, peer-reviewed by a panel of international specialists, confirms that across a wide range of impact categories paper-based packaging scores better, and it is by far the most effective packaging solution overall. The European Commission must think again about its approach to reusable systems in the Packaging and Packaging Waste Regulation. Learn more here.**
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