| | | | |  | | By Hans von der Burchard | Follow Hans on Twitter | Send tips and insights to hvdburchard@politico.eu Guten Tag and welcome to Global Insider, coming to you today from Berlin. I’m Hans von der Burchard, POLITICO’s senior politics reporter for Germany, and I’ll be taking a close look at the political wobbles in Europe’s biggest economy today.
| | | COALITION BICKERING: After more than 30 hours of intense negotiations — stretched over three days — Chancellor Olaf Scholz’s three-party coalition reached a deal on Tuesday evening on how to move forward with climate protection measures and infrastructure improvements. That’s the good news. DAMP SQUIB? Yet the agreement between Scholz’s Social Democrats, the Greens of Vice Chancellor Robert Habeck and Foreign Minister Annalena Baerbock, as well as the Free Democratic Party of Finance Minister Christian Lindner appears not so spectacular, considering how long it took to get there. The main items in the package are more money for trains, an extension of the German Autobahn network, a softening of annual emission targets (which Germany has been constantly missing for years in the transport sector), a mandatory shift to climate-friendly heat pumps for new heating systems, as well as a boost for synthetic fuels (more on that below). ALL’S NOT WELL: Nevertheless, the parties remain in disagreement over key financial questions like Germany’s budget for 2024, where the SPD wants more money for defense and child care and the Greens the same for facilitating the green transition, while the FDP pushes to rein in spending. The Greens especially feel increasingly isolated in the coalition with their demands. The bottom line is that the nasty fights among Germany’s coalition partners — like last week — could erupt again at any moment. How real that risk is became obvious on Wednesday morning when Green Party leader Ricarda Lang questioned the outcome of Tuesday’s deal, saying that it doesn’t go “far enough.” The consequence is that such fights risk derailing the leadership role that Chancellor Scholz claims at the European level. That was very much on display during recent weeks, when the German government — on the FDP’s insistence — held up the EU’s crucial 2035 zero-emissions car legislation to get a loophole in, allowing synthetic fuels, a greener alternative to gasoline that does emit CO2 from the tailpipe. FULL THROTTLE: The FDP loves these e-fuels because they open up the possibility to sell not just electric vehicles (where China is currently leading innovation) in Europe beyond 2035, but perhaps also traditional combustion-engine cars — as long as they can only be operated with the climate-friendlier e-fuels. The car legislation was finally adopted on Tuesday after Brussels promised to take legal steps to include the e-fuels. Whether that will work in practice, however, is a different question, as our story explains.
| | | | NEW PRODUCT UPDATE - POLITICO's China Watcher now hits inboxes twice weekly (Tuesday & Thursday). POLITICO's EU-China Correspondent Stuart Lau will be writing this expanded newsletter together with our colleague Phelim Kine from across the Atlantic in Washington. We’re living in a world where geopolitics are shaped and reshaped in Brussels, Washington, and Beijing — China Watcher will attempt to decode these global relationships to give our readers a full picture of the world’s diplomatic relations with China. Sign up to China Watcher | | | | | | | | CHILE’S GREEN PUSH MEETS GERMANY: While many EU partners view Germany’s e-fuels push critically, South American trading partner Chile has every reason to be happy: Global Insider sat down with Chilean Energy Minister Diego Pardow, who was in Berlin on Tuesday to push his country’s plans to become a key provider of e-fuels and green hydrogen. Although Pardow was diplomatic enough to say he doesn’t want to comment on EU legislation, he made clear that his government sees e-fuels as a “win-win” solution under Chile’s bigger green energy push. Why is Chile so dedicated to e-fuels? Hydrogen and batteries are also green technologies that we like, but e-fuels have the particular advantage that they capture carbon dioxide that is being emitted in Chile … You take an industry that is a high polluter, like cement or the manufacturing of paper, and then you capture the CO2 that is being emitted from those plants to create e-fuels. That’s of interest to us because it helps us to de-pollute cities or regions. Critics say the process of manufacturing e-fuels is way too costly… With all technologies, when you deploy them on a larger scale, the costs tend to reduce. There’s a saying: Technological changes are first impossible, then unaffordable, and then they suddenly become part of our daily lives. I see that all the time, and I’m sure that it will also happen with e-fuels. So you see an economic development opportunity here for Chile? Yes, it’s a win-win scenario. We get rid of the carbon emissions … and at the same time we can create new jobs in the production of the e-fuels. There’s currently only one e-fuels production site in Chile, which is run by Porsche, a luxury carmaker. Critics say that e-fuels are mostly for the high-end car sector … These technological changes normally start with high-value products, because there is no other way of financing. But that doesn’t mean that e-fuels will only be used by Porsche. Probably at some point they will be used by other brands that are more accessible to regular citizens. SPEAKING OF E-FUELS: POLITICO’s Chief Europe Correspondent Matthew Karnitschnig has this fascinating read about how Germany’s push to save the traditional car engine via synthetic fuels relies on a similar technique that Adolf Hitler used to keep his tanks and planes operating during World War II.
| | | ZELENSKYY WANTS XI TO VISIT UKRAINE: Ukrainian President Volodymyr Zelenskyy on Wednesday invited his Chinese counterpart Xi Jinping to Ukraine, for what would be the first direct communication between the two leaders since the beginning of Russia’s all-out war. “We are ready to see [Xi] here,” Zelenskyy said, adding, “I want to speak with him.” Read more. CHOOSE YOUR SIDE: China and the U.S. are in a race to build up their world power blocs, and both are using the same pressure point: the war in Ukraine, report POLITICO’s Philem Kine and Stuart Lau. THE TANKS HAVE ARRIVED: Germany and Portugal said this week that they’ve jointly delivered 21 Leopard 2 A6 battle tanks to Ukraine, following up on earlier deliveries of 14 Polish Leopard 2 A4 tanks to the war-torn country. Meanwhile, the U.K. delivered 14 Challenger 2 tanks. On the move: The heavy armored gear — which comes on top of deliveries of U.S. Stryker armored fighting vehicles and 40 German Marder infantry fighting vehicles — is supposed to build the backbone of a Ukrainian spring offensive that is expected to be launched in the coming weeks. “They have arrived!” the Ukrainian defense ministry celebrated on Twitter. DON’T UNDERESTIMATE UKRAINE’S ABILITIES: British Foreign Secretary James Cleverly told German daily Welt on Wednesday that Western allies shouldn’t underestimate Ukraine’s abilities to reconquer occupied territories from Russian forces. “We have seen that the Ukrainian Armed Forces are performing far beyond expectations,” Cleverly said, adding: “We also saw a level of professionalism that certainly surprised the Russian Armed Forces. Therefore, we should not underestimate Ukraine's capabilities.” ALLIES QUESTION ESTONIA OVER WEAPONS: Estonia’s EU allies are questioning the Baltic country’s calculations for the reimbursement of weapons it is sending to Ukraine, suggesting Tallinn’s bill way outstrips its peers as it is using EU funds to significantly upgrade its military through the pay-back scheme. More from POLITICO’s Jakob Hanke and Nicolas Camut. SCOTLAND’S NEW LEADER: Elected leader of the Scottish National Party on Monday, Humza Yousaf formally replaced Nicola Sturgeon as Scotland’s first minister Wednesday. It won’t be an easy ride.
| | | KLEPTOWATCH EU TRANSPORT CHIEF SET TO QUIT OVER FREE QATAR FLIGHTS: Top EU official Henrik Hololei, the director general of the European Commission’s transport department, is set to leave his role in charge of transport policy, following POLITICO’s revelations that he accepted free flights on Qatar Airways while his team negotiated a major aviation deal with the Gulf state. More from POLITICO’s Brussels team here. MOVES NEW OFFICE: Companies Glen Echo Group, BerlinRosen and Derris are opening a joint European office in Amsterdam, focusing on media relations, public affairs and strategic communications. It'll be led by Colin Bortner, who was previously Netflix’s director of global public policy for EMEA, as well as Caroline Behringer, former spokesperson for U.S. House Democratic Leader Nancy Pelosi, and Michael Rabinowitz-Gold from BerlinRosen. HIRE: Patomak Global Partners announced that former Assistant Secretary of the Treasury for Investment Security Thomas Feddo has joined the firm as a senior adviser. HUMAN RIGHTS HEAD: Tirana Hassan, a lawyer and veteran human rights investigator who has documented human rights abuses throughout crises and conflicts globally, has been named the next executive director of Human Rights Watch.
| | | — Britain secures agreement to join Indo-Pacific trade bloc: London will be welcomed into the bloc late Thursday as ministers from the soon-to-be 12-nation trade pact meet in a virtual ceremony across multiple time zones. — Biden’s favorite Middle East ally is spoiling his democracy party: Israeli Prime Minister Benjamin Netanyahu’s now-paused plan to defang the judiciary of one of America’s staunchest democratic allies has injected an inconvenient set of circumstances into Joe Biden’s democracy summit. — Russian father jailed after daughter made anti-war drawing flees: A man sentenced to two years in prison in a case launched against him after his daughter drew an anti-war picture at school is on the run from the authorities. THANKS TO editor Sanya Khetani-Shah and producer Sophie Gardner. 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
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