| | | | |  | | By Joshua Posaner | Follow Josh on Twitter | Send tips and insights to jposaner@politico.eu Hi, it’s Josh Posaner here, POLITICO’s senior policy reporter in Berlin. The German government has just adopted a new national security strategy that focuses in on the rivalry with China. Not only is Beijing increasingly a political challenge, but it’s automakers are also coming for Germany’s prized industrial invention — the car. More on that below.
| | | | GERMANY’S NATIONAL SECURITY STRATEGY: The German government today finally adopted and published its first National Security Strategy. The 76-page document (there’s a more comprehensive version in English and a summary in French) deals with everything from perennial threat Russia (energy) to migration and cyber attacks, but the paragraphs on China will grab most of the international attention — especially since they are meant as a foretaste for Berlin’s upcoming China Strategy, which the government aims to release on July 5. Playing nice, and also not: China is a partner without whom many global challenges like the fight against climate change can’t be resolved, the strategy notes, before adding that “the elements of rivalry and competition have increased in recent years.“ Verbatim: “China is trying in various ways to reshape the existing rules-based international order, is increasingly aggressively claiming regional supremacy, and is repeatedly acting in contradiction to our interests and values,” the document states. “Regional stability and international security are increasingly being put under pressure, and human rights are being disregarded. China is deliberately using its economic power to achieve political goals.“ In summary: That’s a somewhat critical roundup of China’s policy, but also nothing especially new for those who have followed speeches by German Chancellor Olaf Scholz and his foreign minister, the Greens’ Annalena Baerbock, over recent months. Awkward date: Scholz is meeting Chinese Premier Li Qiang in Berlin on June 20, but his government is keen to keep the German-Chinese summit smaller than it used to be. You got company: Scholz has a mantra: the global order won’t be dominated by a bipolar struggle between the U.S. and China. “We are living in an age of growing multipolarity,” the strategy notes accordingly. Pakistan’s foreign minister will be pleased to hear that (read below). Promises, promises: The strategy also promises that Germany will “allocate two percent of our GDP, as an average over a multi-year period, to reaching NATO capability goals.” However, there’s no timeframe mentioned by when this should happen.
| | | | LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today. | | | | | | | | | CHINA COMING FOR DAS AUTO. When it comes to Germany’s hulking car industry, China — the world’s undisputed battery superpower — has already launched an electric vehicle invasion. That’s why Scholz and Bill Ford, the executive chairman of American car giant Ford, met on the banks of the Rhine River this week to launch a $2 billion plan to fight back. “The whole world is saying goodbye to the internal combustion engine right now,” Scholz said, effectively signaling the end for the country’s long-standing dependence on its flagship industrial product. Ford’s investment plan to retool the massive, near century-old car plant in Cologne to produce all-electric models is at least partly aimed at fending off Chinese upstarts shifting their electric vehicles, or EVs, to Europe. This is a big deal since by some estimates a fifth of Germany’s GDP rests on the fortunes of its auto industry. Second mover syndrome: Many big car brands in both Europe and America are comparative laggards in EV tech. But green legislation, especially in Europe, is forcing them to move. The EU’s 2035 zero emission sales mandate for cars and vans pushes carmakers from Renault to Volkswagen to ditch their profitable combustion engine models and move to electric. They are reluctantly now doing so. Welcome to our world: The EV market is where China wins hands down. Not only is it dispelling old fears that its cars were uncool and poorly made, but Chinese companies have a chokehold on the technology needed to build both anodes and cathodes, the two components of a modern battery cell. For example, China’s BYD — which makes mass market cars, and is the world’s second largest cell producer — sold nearly 2 million finished vehicles worldwide last year. Tesla shifted 1.3 million. Leaner and cleaner: Since the Cologne factory complex opened in 1931, Ford’s production lines have made some 18 million vehicles. But building EVs is less labor intensive than combustion engine models. That’s why Ford bosses have already said that 2,300 of 14,000 jobs in Cologne will be cut as part of a plan to scale back their operations. When all is said and done, Ford says production will be at least 250,000 cars a year in Cologne, down from 400,000 engine units previously. Ease off the gas: In the U.S, the Biden administration has announced a softer plan to have half of all sales electric by 2030 and is way more restrictive to Chinese imports. That leaves Europe as the primary target for some of the big Chinese EV brands, like BYD, Great Wall, Nio and Xpeng. Role reversal: European carmakers have long reaped the benefits of selling their premium models in China. But now that trend is reversing and things could soon get worse. BYD is in the running to take on a Ford engine factory in Saarlouis, right near Germany’s border with France. That would allow it to supply locally and skirt a 10 percent import tariff for China-made vehicles. Ford’s Europe boss Martin Sander told me that staff at the Saarlouis plant will be informed of the plans next week, and wouldn’t rule out a BYD takeover as Ford withdraws. Cautionary tale: “Europe offers a warning of what could happen here,” said John Bozzella, the U.S. auto industry’s chief lobbyist at the Alliance for Automotive Innovation. “The EU has prioritized the reduction of carbon emissions at the expense of almost everything else – including its industrial base.” With the EU’s 2035 target for phasing out new gasoline car sales “looming”, he says, Chinese manufacturers have gained a foothold that sets them on track to win a fifth of the European market by 2025. That will mean big losses for the likes of Volkswagen and Mercedes Benz.
| | NATO MINISTERS MEET: Defense ministers from the security alliance are gathering Thursday and Friday (see the agenda here), while there’s also a coming together of the U.S.-led Ukraine defense contact group where Kyiv’s partners are set to discuss the latest on weapons and ammunition deliveries for Ukraine. The talks will include the issue of fighter jets, my colleague Lili Bayer writes in to say. The timing is critical, with Ukrainian forces seeking to make early gains in their counteroffensive against Russian invaders, who are offering stiff resistance in many areas. EU’S RUSSIA SANCTIONS HAGGLING: Diplomats are still not quite there on a fresh (eleventh) package of sanctions against Russia over its war on Ukraine. Negotiations between EU countries are continuing in Brussels today. This time, the discussion is on how to make sure there can be no workaround in the rules. Greece and Hungary are the big holdouts after Ukraine listed some of their companies as “war sponsors.” Out of ammo: During a meeting with Russian war-friendly bloggers on Tuesday, Vladimir Putin conceded his stocks of weapons are running low. “During the course of the special military operation, it has become clear there are shortages of many things — precision-guided munitions, communications equipment, aircraft, drones and so on,” he said.
| | DON’T MAKE US CHOOSE BETWEEN CHINA AND THE WEST: Pakistan doesn’t want a world cut down the middle between two big power blocs, Secretary of State for Foreign Affairs Hina Rabbani Khar told POLITICO’s Christian Oliver. “We are highly threatened by this notion of splitting the world into two blocs,” Khar said during a visit to Brussels. “We are very concerned about this decoupling … Anything that splits the world further.” The nuclear-armed country of 250 million is critically placed between Europe and China, with Beijing helping to fund a massive port project at Gwadar. Christian’s full story is here.
| | BANNING THE BOTS: The EU’s milestone artificial intelligence law cleared a crucial hurdle with a vote by lawmakers in the European Parliament today. Facial recognition technology has generated the most heated debate so far. But center-right politicians failed in their push to get exemptions to an outright ban on facial recognition technology in public places. They had wanted a carve out for police to use the tech.
| | | | EU CHIEF IN LAT-AM: European Commission President Ursula von der Leyen continues her trip through South America, meeting Chile’s President Gabriel Boric. The country is a serious supplier of lithium needed for batteries, so the trade relationship is pretty important for Europe’s EV ambitions. The two will hold a press conference at 6:15 p.m CET. today, which will be streamed here. As part of the trip, aimed at talking up the EU’s Global Gateway initiative and the pending Mercosur trade pact, von der Leyen has already been in Brasilia and Buenos Aries this week, and heads for Mexico next. MBS IN PARIS: Saudi Arabia’s Crown Prince Mohammed bin Salman is traveling to Paris to meet French President Emmanuel Macron once again on Friday, according to the Elysée Palace. An earlier meeting was contentious because it was the first time the de facto Saudi leader had visited Europe since the killing of journalist Jamal Khashoggi in Istanbul, a murder reportedly ordered by the crown prince. This time around MBS will meet with Macron and participate in the Summit for a New Global Financial Pact held in Paris next week. He’s also due to attend a reception in the French capital next Monday supporting Saudi Arabia’s candidacy to host the Expo 2030 world’s fair. MOVES — Boris Johnson, the ex-British prime minister, has said he's giving up his parliamentary seat in the leafy suburbs of London in anticipation of the result of an investigation into whether he lied to MPs. — Dylan White will be promoted to NATO spokesperson in August. He’ll be taking over in an acting capacity from Oana Lungescu. — Former Swedish PM Stefan Löfven — and current President of the Party of European Socialists (PES) — is joining lobby firm Rud Pedersen as an adviser. — Ex-Italian Prime Minister Silvio Berlusconi’s funeral is being held in Milan today. Thanks to editor Tim Ross, along with Sarah Wheaton, Clea Caulcutt, Hans von der Burchard and producer Sophie Gardner. SUBSCRIBE to the POLITICO newsletter family: D.C. Playbook | Brussels Playbook | London Playbook | Paris Playbook | Ottawa Playbook | EU Confidential | | Digital Bridge | China Watcher | Berlin Bulletin | D.C. Influence | EU Influence | London Influence | Paris Influence
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