Bitter friends — trans-Atlantic rifts pile up

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Dec 05, 2022 View in browser   By Ryan Heath Presented by Follow Ryan on Twitter | Send tips and insights to rheath@politico.com Top trans-Atlantic officials are meeting today outside Washington, D.C., for the third edition of the Transatlantic Trade and Technology Council, led by Secretary of State Antony Blinken and European Commission Executive Vice President Margrethe Vestager. But if President Joe Biden is open to a "tweak" of the Inflation Reduction Act to calm European nerves about the plan's green subsidies for American products, the EU is getting ready to do some tweaking of its own rules. European Commission President Ursula von der Leyen declared in a Sunday speech that it's time to start allowing more subsidies (the EU's baseline position is to ban all subsidies, with some limited environmental and defense exceptions) because of the "risk that the IRA can lead to unfair competition, could close markets and fragment the very same critical supply chains that have already been tested by Covid." POLITICO's write-up here . "The transatlantic reset between Brussels and Washington is on life support," write Mark Scott, Barbara Moens and Doug Palmer in this preview to today's TTC meeting . Another reason for the gloomy mood: There are semiconductor subsidies coming down the line in both the U.S. and Europe, increasing the risk that the allies end up in a costly subsidy war with effects that spill beyond simply shoring up their strategic manufacturing capacity. The progress: At TTC there will likely be an announcement of a roadmap ensuring trustworthy artificial intelligence that meets the standards and values of democratic countries. BIG PICTURE TAKEAWAYS It's the investment, stupid: In most of the media coverage about this trans-Atlantic rift, the focus has been on whether American EV subsidies are fair or not. But it's the investment affected by all the subsidies in the IRA that will matter more in the long run. For example, if you're a European battery or solar company, you might now do your mining or build your plant in America instead of Europe, as a way to benefit from the subsidies. The effect of that could be two-fold: It could be one more factor tanking Europe's economy during its immediate energy crisis; it could leave Europe structurally weaker in the medium-term. In that scenario, what looks like a win for the U.S. economy could become a case of Washington shooting itself in the foot, if Europe becomes more reliant on China than it would otherwise choose. What could fix this? One option: broadening the IRA's subsidies either to companies owned by or based in certain democratic countries, or via a blanket inclusion of democratic allies. But simply extending the subsidies to Europe might cause other problems with, say, Japan, South Korea and Australia. MIKHEIL SAAKASHVILI ALLEGEDLY POISONED IN PRISON: Georgia's jailed ex-president is said by his doctors to have been poisoned by heavy metals. U.S.-based toxicologist David Smith said " testing has revealed the presence of heavy metals " in Saakashvili's body, in mercury and arsenic, AFP reported. Mariam Jishkariani, who headed a council of medics that had examined Saakashvili, said he has been "diagnosed with brain damage and neuro-intoxication." Moldova President Maia Sandu is worried and demanding official action: " The gravity of the situation requires immediate transfer of Saakashvili to an appropriate hospital to save his life," she tweeted. Georgian authorities insist Saakashvili is being given adequate medical care. PRESIDENTIAL POSSIBILITIES  TRUMP'S NEW IDEA — TERMINATE THE CONSTITUTION : Apparently, it wasn't enough to eat with a source of virulently antisemitic comments (Kanye West) and a white nationalist (Nick Fuentes ) in the opening weeks of his 2024 presidential bid. Former president Donald Trump, the Republican frontrunner, on the weekend called for the suspension of the Constitution to overturn the 2020 election, based on his false claims that the results were marred by fraud. Rep. Liz Cheney (R-Wyo.) tweeted "No honest person can now deny that Trump is an enemy of the Constitution ." Some other Republicans remain afraid to comment on Trump , even when it would involve the basic action of saying one supports the constitution. But instead of diverting your energy to the chaotic return of candidate Trump, Global Insider is reminded that there are other ways to rebuild a career after a failed presidential bid. Climate is a common theme. There's the obvious case study of John Kerry, and billionaire Tom Steyer is building an investment firm focused on decarbonisation: Galvanized Climate Solutions — and then there's John Delaney. You may not remember Delaney's 2020 campaign — but like Trump he began campaigning years in advance of the election, and today he's running Forbright Bank , which aims to be the first green "full service bank." Delaney defines that as 50 percent of assets directly financing decarbonisation, or sustainability. He told Global Insider Forbright is a retail bank "that can not only finance a community solar project and other types of sustainable infrastructure, but a bank where a restaurant can actually go and do its banking business, or you could get a mortgage on your home, because it actually cares" about the planet's future. Incidentally, while other Democrats might have been in love with Sam Bankman-Fried's crypto money, Delaney doesn't want to be anywhere near that space. "I just wasn't comfortable with crypto from an environmental perspective," he said. WHERE TO JOIN GLOBAL INSIDER  Get your Davos party invite: POLITICO is headed back to the Schatzalp during the World Economic Forum. If you'd like to join us Thursday, Jan. 19, for sizzling debate inside , followed by our freezing annual sled run down the mountain, RSVP here .   What are you expecting from travel this holiday season? Hit and miss; highs with and some expensive lows? POLITICO invites you to debate the Travel Experience Redefined, with Sen. Jacky Rosen (D-Nev.), and a host of consumer and industry voices, Dec. 7, 8:30 a.m. ET. You can join online or at the Madison Hotel in D.C. Register here . POLITICO will unveil its European POLITICO 28 power list at an annual gala dinner in Brussels, also Dec. 7. The event will feature three exclusive interviews with European Parliament President Roberta Metsola, U.S. Ambassador to NATO Julianne Smith and European Commissioner for internal market Thierry Breton. You can watch online by registering here .   POLITICO AT CES 2023 : We are bringing a special edition of our Digital Future Daily newsletter to Las Vegas to cover CES 2023. The newsletter will take you inside the largest and most influential technology event on the planet, featuring every major and emerging industry in the technology ecosystem gathered in one place. The newsletter runs from Jan. 5-7 and will focus on the public policy related aspects of the event. Sign up today to receive exclusive coverage of CES 2023.     GLOBAL RISKS AND TRENDS DEFUNDING RUSSIA'S WAR AMID WINTER ENERGY CHAOS New oil price cap : The G-7 nations will today attempt to implement a price cap on Russian oil exports — $60 a barrel — in an attempt to starve Russia's treasury without tipping the G-7 into recession. Russian Deputy Prime Minister Alexander Novak on Sunday vowed to evade the price cap . He vowed Russia would sell only under market conditions, and he went on to say Russia would forbid its companies to sell oil priced below the cap . Ukraine President Volodymyr Zelensky says the price cap is inadequate (some European hawks wanted a $30 price cap) claiming it will ensure Russia is guaranteed around $100 billion a year to fight Ukraine. "This money will also be used to further destabilize precisely those countries that are now trying to avoid big decisions," Zelenskyy said. Reality check: There could be much bigger problems than the mechanics of oil prices. Europe has benefited from cheap Russian natural gas for several decades — with those low prices correlated with lower death rates in winter . As European energy bills have skyrocketed in 2022 (gas is roughly six times its pre-2022 long-term average price), it's reasonable to assume death rates will rise this winter. While the onset of that problem may be delayed because relatively warm weather and planning have allowed Europe to fully stock its gas reserves, process this: If the historical links between energy prices and winter deaths is maintained, come February or March more civilians may die from lack of heating than through Russian bombs since Russian President Vladimir Putin invaded Crimea in 2014. And most of them will die outside of Ukraine. U.S. AND EUROPE HAVE WILDLY DIVERGENT APPROACHES TO PLASTICS POLLUTION  An effort to end plastic pollution by 2040 is dividing the United States and the European Union, POLITICO's Jordan Wolman writes Global Insider. The U.S. has been working to get countries to join its "End Plastic Pollution International Coalition by 2040," but so far they aren't biting. According to a document seen by POLITICO, the U.S. State Department favors allowing nations to set their own action plans, dismissing the notion that there can be a "one-size-fits-all approach" to the issue. While the U.S. chemical lobby loves the idea, many other countries don't. More than 50 countries now support a rival grouping — the High Ambition Coalition , chaired by Norway and Rwanda, including U.S. like Australia, Canada, the United Arab Emirates, France, Germany, the U.K. — and now the EU, which joined Thursday . The split comes ahead of an international summit this week in Uruguay — the first opportunity for diplomats to make progress on a legally binding global plastics treaty by 2024. It follows a landmark agreement by more than 150 countries earlier this year on a global framework aimed at ending plastic pollution. More for POLITICO Pro subscribers . BRAZIL TRANSITION: National security adviser Jake Sullivan heads a U.S. delegation to Brasilia today, for meetings with officials from the outgoing Bolsonaro administration and members of President-elect Lula da Silva 's team. "Sullivan will discuss how the United States and Brazil can continue to work together to address common challenges, including combating climate change, safeguarding food security, promoting inclusion and democracy, and managing regional migration," per the State Department. AFRICA SUMMIT — NO BIDEN BILATS SCHEDULED, YET: There may be 46 African leaders headed to D.C. next week, the biggest ever gathering of that group outside Africa. But they shouldn't count on one-to-one meetings . One deputy ambassador from Africa Global Insider spoke to, who asked to remain anonymous because he wasn't authorized to speak to media, was realistic: "We can speak to him in the margins of dinner," the diplomat said, adding that if Biden does even one bilateral meeting with anyone other than an African Union official representing all the leaders, then the floodgates would open. TECH — META FACES RECORD EU PRIVACY FINES: Meta faces record EU privacy fines — announcements on up to $2 billion in fines are expected before the end of the year   A message from Qualcomm:   GLOBETROTTERS KLEPTOWATCH HOW SAM BANKMAN-FRIED PLAYED D.C.: A month ago, acolytes of SBF — as the crypto prince was universally known — "were planning on having a party of the century," recalls Miller Whitehouse-Levine, the policy director of the DeFi Education Fund, a crypto nonprofit. "The talk on the town was it's going to be the craziest D.C. Christmas party ever." The inside story of SBF's D.C. rise and fall , from POLITICO's sister publication Insider. RUSSIAN BILLIONAIRE DETAINED: Mikhail Fridman was detained in London on money-laundering suspicions , and later released on bail. The U.K. National Crime Agency said in a statement on Saturday only that a "wealthy Russian businessman" had been arrested and that the person was suspected of conspiracy to defraud the Home Office and commit perjury. Fridman is on an EU sanctions list over Putin's invasion of Ukraine, described by the EU as an "enabler of Putin's inner circle." PASSED Former Congressman Jim Kolbe , 80, an Arizona Republican, died Saturday. Kolbe served on the International Republican Institute board and championed freedom and gay rights . MOVES Paschal Donohoe is today expected to be reelected for a second term as president of the Eurogroup — the eurozone finance ministers body, which would leave him at the helm until 2025. Jamal Simmons , communications director for Vice President Kamala Harris, is leaving his role after only a year. Jenny Brusgul has joined CohnReznick's Global Consulting Solutions practice in Washington, D.C., in the newly created role of ESG Practice Leader.   JOIN WEDNESDAY FOR A POLITICO DISCUSSION ON THE NEW TRAVEL EXPERIENCE : Americans are now traveling in record numbers — but the travel experience has changed drastically in recent years, not always for the better. What lessons can we learn from the pandemic and different responses around the globe? And in the face of a possible recession, what will help the travel industry remain vibrant and deliver jobs? Join POLITICO on Dec. 7 for "The Travel Experience Redefined" to discuss these questions and more. Breakfast and coffee will be provided. REGISTER HERE .     BRAIN FOOD "The Global Zeitenwende" by German Chancellor Olaf Scholz in Foreign Affairs who writes on how to avoid a new Cold War adjusting to a multipolar era. The U.N. and multilateralism muddled through, again . International Crisis Group's Richard Gowan breathes a sigh of relief about 2022. How the Dobbs Supreme Court decision triggered a vasectomy revolution: "So, that little, tiny —" Baum catches herself. "I mean, OK, so when I say little, tiny, yours aren't any tinier than others," from Jesús A. Rodríguez . Thanks to editor Heidi Vogt and producer Hannah Farrow. SUBSCRIBE to the POLITICO newsletter family: D.C. Playbook | Brussels Playbook | London Playbook | Paris Playbook | Ottawa Playbook | EU Confidential | D.C. Influence | EU Influence | London Influence | Digital Bridge | China Direct | Berlin Bulletin | Living Cities   Follow us on Twitter Ryan Heath @PoliticoRyan   Follow us

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