Build Back Dirtier

Apr 29, 2022

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Happening Today

PIVOT FROM CHINA: German Chancellor Olaf Scholz is making his first visit as leader to an Asian country, and he chose Japan. Japan's ruling party is proposing to double the defense budget to about $110 billion , breaking restrictions imposed after the Second World War as fears grow of threats from China and Russia.

German Chancellor Oraf Scholz, left, delivers a speech before Japanesae and German business leaders while Japanese Prime Minister Fumio Kishida looks on, after Japan-Germany summit talks at the prime minister's official residence in Tokyo, Thursday, April 28, 2022. Scholz arrived here on April 28 on a two-day official visit as the first leg of his Asian tour. (Yoshikazu Tsuno/Pool Photo via AP)

German Chancellor Olaf Scholz, with Japanese Prime Minister Fumio Kishida, April 28. | AP

NEW PODCAST EPISODE — IN SEARCH OF VERY BAD PEOPLE

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Where on earth can you combine interests in arms trafficking, blood diamonds and expensive cars? Global Witness is one such place. The nonprofit's co-founder Patrick Alley — who's made a career out of scrutinizing "very bad people" — shares timely lessons about what works and what doesn't in exposing corruption, as the world puts Russian interests under the microscope.

GLOBAL RISKS AND TRENDS

UKRAINE FRONTS

BIDEN AND CONGRESS REVIVE LEND-LEASE — $33 BILLION REQUESTED FOR UKRAINE: The U.S House of Representatives has approved a White House request to revive a World War II loans system that allows larger-scale weapons transfer to Ukraine — by a vote of 417-10. The measure passed the Senate unanimously earlier this month.

Biden wants to see $33 billion in weapons sent to Ukraine under the program. In parallel, U.K. Foreign Secretary Liz Truss is now promising to "push Russia out of the whole of Ukraine."

Reality check: Lend Lease really did help Britain and the Soviet Union to defeat Nazi Germany in the 1940s. It also took the U.K. until 2006 to pay the loans back.

SPECIAL FOOD AID DEAL: As the World Bank warns of elevated food and energy prices through 2024, the Biden administration announced $670 million in food aid to deal with the terrible effects of Russia invading Ukraine. USAID and U.S. Department of Agriculture will take $282 million from a humanitarian trust to procure U.S. food commodities for Ethiopia, Kenya, Somalia, Sudan, South Sudan and Yemen. USDA will provide another $388 million in funding through the Commodity Credit Corporation — also to deal with the food crisis.

EU FIRMS TOY WITH BREAKING SANCTIONS TO KEEP RECEIVING RUSSIAN GAS: The European Commission says this isn't allowed under its sanctions regime — but some of Europe's largest energy companies have been preparing to use a ruble-based payment system for Russian gas as demanded by the Kremlin. The groups include "two of the single largest importers of Russian gas: Düsseldorf-based Uniper and Vienna-based OMV," the Financial Times reported.

EU — IN CUTTING OFF HUNGARY CASH, WHAT ELSE IS BRUSSELS JEOPARDIZING? On Wednesday, the European Commission took its most serious step to try and change Hungarian Prime Minister Viktor Orbán's behavior, formally triggering a powerful new mechanism that could result in Hungary losing EU funds over rule-of-law violations.

The EU executive claims "systemic irregularities, deficiencies and weaknesses in public procurement procedures" and an "unusually high percentage of contracts" awarded in single-bidder competitions. It flagged "possible irregular auctioning of state-owned agricultural land" and pointed to "limitations to effective investigation and prosecution of alleged criminal activity."

Side effects: It's hardly surprising that the EU executive has finally moved to cut Hungary's access to some of its cash. Officials have spent years preparing the legal instruments and working to achieve political agreement to allow these actions. What's confusing is why Brussels is choosing this moment. One argument is that the best time to stop democratic backsliding is yesterday. On the other hand, there's been 12 years of yesterdays of the Orbán government bending democratic norms; isolating Budapest in this way will now make it harder for the EU to achieve an oil or gas embargo against Russia, for example; or a carbon border tax; or completely barrier-free trade with Ukraine. That's because — on issues like sanctions and trade deals and tax — the EU requires consensus.

EGYPT — ARMY ASSET SELL-OFF TO LESSEN EFFECTS OF RUSSIA'S WAR: Egypt's President Abdel Fattah el-Sisi wants army-owned companies listed on the stock exchange in 2022, and wants greater private sector participation in state-owned companies, as part of efforts to reduce the economic fallout Russia's invasion of Ukraine.

SRI LANKA — THE POWERFUL RAJAPAKSA DYNASTY THAT BANKRUPTED THE COUNTRY: The country's financial collapse was predicted by opposition politicians, and took just 30 months. Now the country's leaders are racing to secure IMF funds, as protesters seek to remove them from power, including via a national strike.

MYANMAR — AUNG SAN SUU KYI SENTENCED TO FIVE MORE YEARS IN PRISON: A military-run court convicted her of corruption — for accepting around $1.3 million in gold bars and cash from a close political ally. This comes on top of a previous conviction bringing a six-year prison sentence. Suu Kyi denies the claims, but her lawyers are forbidden from talking to journalists. Her defenders say her prosecution is unfair.

NIGERIA — COURT MANDATES GENDER ACTION: Nigeria's Federal High Court has ordered the government to implement the National Gender Policy , which requires that 35 percent of appointed public offices go to female candidates.

TURKEY — WHAT'S UP WITH SURPRISE KURDISH, GREEK AND SAUDI MOVES? President Tayyip Erdoğan is in Saudi Arabia to mend ties, four years after after Turkey led the charge in exposing Saudi responsibility for the murder of journalist Jamal Khashoggi. Meanwhile, Athens issued its second diplomatic protest this year against Ankara after Turkish jets made 140 illegal flights over dozens of Greek islands this week. The move comes just days after a new offensive against Kurdish rebels operating out of northern Iraq, and a Turkish court sentenced philanthropist Osman Kavala to life in prison for what it claims was an attempt to overthrow the government.

INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED: Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.

CANADA — OTTAWA BRACES FOR A MOTORCYCLE BLOCKADE: It's probably not going to end as loudly or badly as the Freedom Convoy of trucks, but it might, reports Nick Taylor-Vaisey.

CLIMATE — EU TO FUND 112 CLIMATE NEUTRAL CITIES: 100 EU cities, where 75 million people call home, will receive support from Brussels to achieve climate neutrality by 2030. The winners include Sofia, Rome, Bratislava and Limassol. In addition, 12 non-EU cities including Sarajevo and Istanbul will be supported.

Matthew Baldwin, the EU official in charge of the plan, told POLITICO's Aitor Hernández-Morales the city administrations will have "access to a consortium of 34 climate change organizations and experts that will help them decide how they will achieve this goal." Mayors will work with the European Commission to develop strategies and investment plans that will be formalized as "climate city contracts"

The risk: These are not legally binding targets and contracts.

The excluded: 265 cities — accounting for 18 percent of the EU's population — applied to be a part of the program but were not accepted.

REALITY CHECK — BUILD BACK DIRTIER: "Despite our vows to build a better world, pandemic-related stimulus packages totaling $17.2 trillion provided more support for dirty industries than green ones in 15 of the G-20 countries." That's the prognosis of Corporate Knights, a green transition campaign group from Canada that bills itself as "the voice of clean capitalism." The organization's Toby Heaps isn't a pessimist though, insisting: "We have the cash to put the solutions to work , with households, corporations and governments holding $510 trillion in financial assets. That's triple the amount of 20 years ago, and more than five times global GDP."

PERSPECTIVE — WHY MULTINATIONALS SHOULD FIGHT FOR FEDERAL CLIMATE FUNDING: Bill Weihl — formerly Google's "green energy czar" and Facebook director of sustainability — left Big Tech in order to push the world's biggest companies to engage on broader climate policy. He founded ClimateVoice, a nonprofit that engages with corporate employees to get them to agitate for climate-friendly practices and policy advocacy. His latest effort: a letter to the CEOs of Walmart, Amazon and 10 other companies , asking them to speak up for the $555 billion in climate spending being considered in Congress and to distance themselves from trade groups that have opposed federal climate policies. He spoke to POLITICO's Debra Kahn.

TECH CORNER

A POSITIVE, UNIFIED FUTURE OF THE INTERNET? The United States, with 60 partners from around the globe, launched a Declaration for the Future of the Internet on Thursday. Countries from Australia to the Maldives to Hungary have signed on. It's a coalition of (notional) democracies pushing back against Chinese and Russia attempts to create what amounts to regional internets and "recommits its partners to a single global Internet — one that is truly open and fosters competition, privacy, and respect for human rights."

The text has been under negotiation for a year, the White House said, though the announcement landed without notice at 7:12 a.m. on Thursday, which is unusual for a document negotiated between 60 governments.

The back story: Tech regulation insiders had a few days notice that this was coming. The original idea was to launch the declaration around last December's Summit for Democracy, but Global Insider's sources say the administration had to drop that idea — because of "a lot of pushback" in words of one friend of the administration.

TECH — A METAVERSE FOR YOU, OR FOR BILLIONAIRES? "A lot of metaverse idealists want to see virtual worlds built more like the original internet — not controlled by any one company, and with value firmly resting in the hands of the users, rather than the world-builders. These people view blockchain technology as a necessary backbone of the metaverse. Blockchains are decentralized ledgers that exist outside of any one company, so anything of value stored on the blockchain will be really yours, not Mark Zuckerberg's or Bill Gates's." More from POLITICO's Derek Robertson on how crypto and the metaverse are linked.

Question: There's at least one billionaire who subscribes to Global Insider. If you're our second (or third!) billionaire reader, get in touch via rheath@politico.com.

EU TO OPEN UP SILICON VALLEY OFFICE: The European Union is planning to open a San Francisco office in coming months to engage with Silicon Valley tech giants under close scrutiny from new digital rules governing internet content. One Brussels bureaucrat in the running for a West Coast top job is Gerard de Graaf. The veteran EU official leads the "digital economy and coordination" team in the European Commission's digital department and previously served as trade counselor at the Commission's delegation to the U.S. in Washington, D.C., from 1997 to 2001.

DON'T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO's new platform that delivers the latest exclusives, twists and much more in real time. Get it on your desktop or download the POLITICO mobile app for iOS or Android. CHECK OUT CONGRESS MINUTES HERE.

GLOBETROTTERS

PRO TIPS — FOR THE WHITE HOUSE CORRESPONDENTS DINNER: Ryan Lizza collected the best advice in Playbook's Deep Dive podcast.

HEATWAVE: India is grappling with a record heatwave before summer has even arrived, with temperatures likely to reach 118 degrees this weekend. Taps running dry and soaring demand for electricity to power air conditioners has caused long and regular power cuts.

COLD FRONT: Mayors from around the world have suspended or severed their sister-city partnerships with Russian cities following Moscow's invasion of Ukraine, but Berlin's governing mayor Franziska Giffey is rejecting calls to do the same. A spokesperson for the Berlin Senate Chancellery told POLITICO's Aitor Hernández-Morales that the city is determined to support Ukrainian refugees arriving in Berlin and send humanitarian aid to Ukraine but decided against ending its 31-year-old friendship and cooperation partnership with Moscow because doing so would ultimately "hit civil society stakeholders." City diplomacy will be "crucial to building bridges after the war in Ukraine," the spokesperson added.

NO THANKS, NORMAN: Celebrity architect Norman Foster raised eyebrows last week when he published a manifesto outlining his plans to create a "city of the future" in Kharkiv, one of the Ukrainian cities that has been hardest-hit in Russia's assault on the country. Kharkiv School of Architecture's Oleg Drozdov sharply criticized Foster's decision to appoint himself to oversee reconstruction, calling it an example of "intellectual colonization." Iryna Matsevko , the institution's vice-chancellor, added that Ukraine needed to be rebuilt by the architects that "understand the local context, the political situation, the cultural background."

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PELTED: Freshly reelected French President Emmanuel Macron needed protection from being pelted with tomatoes by a Kevlar umbrella, in a working-class suburb, while on unity tour this week.

OVER IT: Greta Thunberg doesn't want you to talk about her anymore.

BRAIN FOOD

SHORT READ: The populist strongmen who are strangely keen on globalization, by Alan Beattie.

LONG READ: In Lockdown With Their Rapists, by Damilola Banjo

Thanks to editor John Yearwood, producer Hannah Farrow, Aitor Hernández-Morales and Stuart Lau