Russian gas price cap + Lobby register + • Table.Briefings

Dear reader,

After months of hesitation in Europe, the price cap on Russian gas is coming after all – and quickly. Yesterday, ahead of Friday’s meeting of energy ministers, Commission president Ursula von der Leyen outlined the contingency plan against high energy costs. “We must reduce Russia’s revenues, which Putin is using to finance his cruel war against Ukraine,” she said. Vladimir Putin then threatened to cut off supplies completely, as Manuel Berkel reports from Brussels.

Speaking of Brussels: No city in the world, except Washington, D.C., has more lobbyists. According to Transparency International, at least 48,000 people in the EU capital work in organizations that try to influence EU institutions and decisions. The European Transparency Register is supposed to make this lobbying more transparent. A lobby register has also been mandatory in Germany since March. Read how both systems work, what their shortcomings are and how they are going to change in today’s Feature by Falk Steiner.

Christof Roche anticipates the informal meeting of EU finance ministers in Prague at the end of the week: They are making a renewed attempt to align on debt sustainability and safeguarding sound budgets. The goal is to finally agree on reform proposals for EU fiscal policy. Will they now reach a compromise after years of failure?

Have a great day!

Your
Leonie Düngefeld

Price cap plans exacerbate gas conflict with Russia

By

Manuel Berkel

For months, Europe had hesitated, but now there is to be a price cap for Russian gas after all. “We must reduce Russia’s revenues, which Putin is using to finance his cruel war against Ukraine,” Commission President Ursula von der Leyen said yesterday in Brussels.

After the plan had already become known in the past few days, von der Leyen now wants to set the pace. The price cap will be one of the items discussed by the energy ministers at their meeting on Friday. Next Tuesday, the Commission plans to present a package of legislative initiatives, after which the proposals would again have to be rubber-stamped by the Council. One Brussels office already believes that energy ministers will meet monthly in the future.

The Russian president had previously threatened to stop supplying gas to Europe in the event of a price cap. “If any political decisions are made that contradict the contracts, we just won’t fulfill them,” Vladimir Putin said in Vladivostok.

‘Even without a price limit, significant disruption occurs’

“We should not be impressed by this announcement. It would have come at some point anyway,” von der Leyen said. But why does the Commission want to introduce the gas price cap now of all times? According to von der Leyen, only nine percent of gas imports now come from Russia, compared with 40 percent before the war. But this is precisely one reason for the late initiative. The Commission believes that Europe is now better armed against a complete supply freeze. Other exporters have increased their deliveries, and storage facilities are currently 82 percent full.

But the Commission now also seems to be acting on the principle that things can hardly get any worse. “Even without a price cap, there is already considerable disruption,” according to a Berlaymont paper circulated yesterday. This probably refers, on the one hand, to the production declines in companies but also to the high price swings on the energy markets, which now threaten the entire trade.

“We have seen for months that Putin is manipulating the market,” von der Leyen said. Meanwhile, the Commission appears to view Putin’s influence on the energy exchanges as more threatening than the physical shutdown of remaining supplies.

Norway also to reduce gas price

Thus, the entire package is supposed to push prices for gas and electricity at least back toward pre-war levels. In doing so, the Commission is also addressing countries that are currently bailing out the EU with their additional pipeline supplies. The energy platform for joint gas purchases is to be given a mandate to negotiate lower purchase prices with reliable suppliers such as Norway – as well as for the purchase of liquefied gas.

With regard to the revenue cap for non-price-setting power plants, the Commission has made it clear that there is to be a uniform cap for all affected technologies – especially renewables. According to various media reports, a draft provides for a cap of €200 per megawatt hour of electricity, but the exact value is to be the subject of discussions on Friday.

Oil and gas companies with solidarity contribution

The Commission now wants to leave it largely up to governments to decide how windfall profits are collected. An earlier draft still said that member states that have already introduced excess profits taxes would have to change their measures. Some states will likely modify the rules for price discovery on energy exchanges to do so, while others will skim excess profits instead, a senior Commission official explained. What’s new is that oil, coal and gas companies will also be asked to make a so-called solidarity contribution.

However, two measures that have received less attention so far are just as important as the price cap: mandatory electricity savings and changes in energy trading. For peak times with particularly high consumption, there is to be a mandatory savings target – stimulated, for example, by auctions such as those already in place in Germany for so-called switchable loads in industry. However, the Commission still wants to make it compulsory for consumers who do not have the necessary prerequisites, such as smart meters, to set a general electricity savings target.

New trade rules to complement price cap

The biggest acute burden currently facing energy traders is the astronomical increase in collateral requirements (margins) on their transactions. The Commission is therefore looking for ways to accept a broader range of assets as collateral. An amendment to the Temporary Crisis Framework is intended to enable government liquidity support to flow more quickly.

However, the Commission is also negotiating with derivatives exchanges to directly limit the high price swings within trading days. The increased volatility, which makes security demands grow even further than the high prices alone, is supposed to be contained by so-called circuit breakers.

The Commission wants to develop a separate LNG index for over-the-counter futures trading because the previous benchmark index, TTF, has moved too far away from the world market price for liquefied natural gas. The exchanges are also to develop new forward products based on the new LNG index. The Commission also hopes this will dampen the power exchanges, where gas-fired power plants mostly set the price.

Lobby register: EU and Germany want more

By

Falk Steiner

Interest representation is often subject to general suspicion: Do economic actors have undue sway over those with political responsibility? Does business have politics eat out of their hand? The reality is of course more complex – transparency registers have also been introduced in recent years to counteract prejudices: Who talks to whom and on whose behalf is to be made transparent. A look at the EU transparency register and the federal government’s lobby register shows the progress that has been made – and some gaps.

The federal government’s lobby register, which is open to public scrutiny, has been mandatory since the beginning of March. If lobbyists approach members of the Bundestag or senior ministry officials from sub-department head level upwards, most of them must make an entry in the lobby register of the Bundestag and the federal government from this point on: The association or company on whose behalf they are speaking must be listed, along with details of the expenses incurred in representing political interests.

28,000 entries in the German lobby register

Individuals and agencies representing interests must also follow the rules. This is linked to a code of conduct – and there are now over 28,000 representatives registered in the lobby register. The high number is somewhat deceptive because all legal representatives of a legal entity must be listed. The actual number of lobbyists is about half that. A good 450 represent interests on behalf of third parties, for example, as public affairs agencies, whose entries must contain lists of clients.

The fact that the lobby register came into being at all was also linked to various scandals – mask deals, the Azerbaijan affair and other incidents. The European counterpart is ten years older: It is called the Transparency Register – and there are ongoing disputes about it. The register currently contains 12,600 entries, and here, too, agencies have to provide information about their customers.

Political scientist Ronny Patz says: “What has changed over the years: The register is now linked to other EU databases, meetings of EU commissioners, consultation processes, membership of Commission expert committees. The transparency level has increased by linking it to activities.”

This is new to the German Lobby Register Act. However, the coalition government now wants to reform it. The coalition agreement stipulates that in the future the so-called legislative footprint will also be regulated, and that contacts with ministries will be subject to registration up to the level of a speaker – and that the exceptions will be reduced.

Introduction of legislative footprint in Germany

The parliamentary director of the FDP, Stephan Thomae, describes the lobby register as an “important instrument for making relations between the federal government, the Bundestag and non-governmental organizations transparent”. Exemptions from the obligation to register should be more clearly differentiated in the future, he demands: “Because churches, unions and employers’ associations are currently exempt not only in their area protected by fundamental rights but also when they engage in classic lobbying.” This is not comprehensible. The scope of application should be expanded overall, says Johannes Fechner (SPD): “It is also important that we tighten the current disclosure requirements.”

The European transparency register, says Green MEP Daniel Freund, is fundamentally far ahead of what exists at the federal level. This is mainly due to the transparency obligation for meetings of the EU Commission, which have to be disclosed – 35,000 in the meantime. Parliamentarians are also supposed to disclose their contacts, but not every MEP handles this according to the rules. Sanctions, on the other hand, are only imposed on lobbyists – and whether they are effective is disputed: The Parliament can impose a ban on entering its premises, and the EU Commission can no longer invite representatives to hearings.

But Freund sees the main problem with the third European institution: At the Council, “intransparency accumulates,” says the Green MEP: “If you don’t want anyone to notice, you go to the Council.” Even after the last reform, he says, member states are only required to participate in the EU transparency register six months before and during the six months in which they hold the Council presidency.

And here, too, the European rules are full of holes: Only the permanent representatives are covered by the European regulation – but in the case of the German Council Presidency, 400 employees were involved, according to Freund. Anyone who worked for the Council Presidency and was not at least a sub-department head was not covered by either the European or the German rules.

Revisions start now

The German regulation is now to be changed, according to the coalition agreement. Talks on this are already underway between the coalition parties. It is not yet clear whether the current procedure, whereby entries only have to be made if the contact originates from the stakeholder, will be changed. In the future, however, all contacts starting at the officer level are to lead to mandatory entry. “With the introduction of a legislative footprint, we will counteract even where the limited spatial scope of German law would lead to any regulatory gaps,” says Stephan Thomae (FDP).

This could also bring strong changes to EU lobbying. “All national regulations are superior to the EU transparency register in terms of enforcement if they are well done,” says researcher Ronny Patz. That’s because EU institutions lack formal enforcement powers. The German Lobby Register Act already provides that incorrect or missing entries can be prosecuted as administrative offenses – with up to €50,000 as a threatened fine.

At the same time, consultations are starting today in Brussels on further tightening of the rules at EU level as well: Daniel Freund is hoping for further improvements both in the lobby register and in other lobbying and transparency issues, such as the approval of activities of departed Commissioners.

However, with the increasing requirements of different lobby and transparency registers also come new challenges: There are 14 different such registers in the EU alone, and in Germany new ones are constantly being added at the level of the federal states as well – so it may well be that lobbyists will soon be entering the debates with a wish of their own: A standardization and synchronization of the various lobby registers – in order to keep the effort manageable.

EU finance ministers: When is the kick-off for fiscal reforms?

At their informal meeting this Saturday in Prague, the finance ministers of the 27 EU states are taking another stab at reaching a unified line on debt sustainability and safeguarding sound budgets. The goal of the debate is to provide the European Commission with guideposts for appropriate reform proposals of EU fiscal rules. The Commission intends to present its ideas for a future stability- and growth-oriented EU fiscal policy in the coming weeks. The topic is also again on the agenda of the regular Ecofin meeting on October 4.

It remains to be seen, however, whether the Brussels authority will already submit a concrete legislative proposal after the discussion in Prague or whether it will first rely on further discussion based on a communication. The finance ministers have failed to reach consensus on future fiscal policy in several rounds of talks since 2020. Due to the still strongly divergent positions among the states, observers consider a breakthrough in Prague to be rather unlikely. They are therefore relying on the Brussels authority for guidance on how to proceed.

Commissioner Gentiloni believes in ‘orientations’ only

At an event in Brussels, EU Economic Commissioner Paolo Gentiloni spoke only of orientations that the European Commission intends to present in the coming weeks on the revision of the EU’s budget rules; he did not give any details on the instrument. The goal of the reform, he said, is to simplify the fiscal rulebook and increase its clout. Further, it is supposed to reduce public debt and strengthen economic growth in the long term.

“Simplification of rules, greater national ownership and better enforcement will be the defining features of the reform, with the overarching goal of supporting debt sustainability and sustainable growth,” Gentiloni said.

One way to achieve this, he said, would be for governments to prepare spending plans for several years in advance that would be consistent with reducing public debt to sustainable levels. Such plans could also include investment and reform commitments similar to those used for the EU Recovery Fund.

States could also move to a single spending indicator instead of using a variety of indicators that are often not directly measurable, Gentiloni stressed. They could also be given more leeway in setting budgets by linking them more closely to national ownership, but without undermining common EU principles such as debt sustainability.

IMF also increasing pressure

Prior to the Prague meeting, the German government signaled its willingness in principle to grant member states more leeway in reducing their debt in the short term in the non-paper “Principles of the German government for the reform discussion on EU fiscal rules.”

In return, however, this would have to be linked to stricter compliance with medium-term budget commitments, based on better “enforcement of the rules, including rule-based initiation and implementation of deficit procedures”. In the non-paper, however, Berlin gave a clear rejection to considerations of negotiating fiscal policy between states and the European Commission on an individual basis: “A bilaterally negotiated individual application of the rules is not a suitable way to further develop the common fiscal framework in the sense of greater transparency, higher bindingness and effectiveness,” the document states.

The International Monetary Fund (IMF) has urged the EU to quickly reform its fiscal rules ahead of the informal meeting in Prague. Currently, the debt rules are suspended until the end of 2023 due to Covid – a good moment for change. “This opportunity should not be wasted,” the IMF stressed. In this context, the Monetary Fund suggests maintaining the numerical targets of the EU Stability and Growth Pact. These provide for a limit of three percent on new borrowing by EU states and a limit of 60 percent on total debt of the respective national economic output.

Appropriate moment for fiscal reform

However, the IMF wants to make the pace of convergence toward these benchmarks dependent on the risk that the debt represents for the respective country. To this end, an independent body – the European Fiscal Council – is to contribute analyses of debt sustainability. Countries with higher risk would have to move more quickly toward balanced budgets or even surpluses within three to five years. Other countries should be given more flexibility. The IMF is also calling for medium-term fiscal plans, including spending ceilings.

Other topics at the two-day informal Ecofin meeting in Prague on September 9 and 10 include potential short- and long-term financial aid to Ukraine and the economic consequences of Russian aggression in Ukraine for the European Union. Additionally, finance ministers plan to discuss further harmonization of direct taxes in the EU. As the meeting is informal, no concrete decisions are expected. In addition to the finance ministers, the meeting will be attended by high-ranking representatives of the EU Commission, the European Central Bank and the national central banks. by Christof Roche/rtr

Energy prices: Industry demands help from the EU

According to a survey by the Federation of German Industries (BDI), almost one in ten medium-sized industrial companies has suspended or curtailed its production in Germany due to high prices. The extreme energy price increase poses fundamental problems for industry, as BDI President Siegfried Russwurm explained on Wednesday. In an industry survey, more than 90 percent of the nearly 600 companies declared that higher energy and raw material costs were an existential or severe challenge for them.

Because of the price increases, one in five of the companies surveyed is considering relocating parts of or their entire business abroad. Back in February, before the start of the Russian war of aggression against Ukraine, the BDI already warned of an industry exodus. At that time, the share of companies that were thinking about switching or partially relocating abroad was even higher, at 26.5 percent. According to the survey, the price increases also have a clear impact on investments. For example, around 40 percent of companies said they were postponing investments in ecological transformation. One fifth, on the other hand, are accelerating them.

Over forty European companies in the non-ferrous metals industry and their association Eurometaux published a joint letter to the European Commission, Parliament and Council at the same time yesterday. In it, they warn of an “existential threat” to their industry. According to the letter, 50 percent of aluminum and zinc capacities in the EU have already had to be shut down due to the electricity crisis.

There have been significant cutbacks in silicon and ferroalloy production, and the copper and nickel sectors have also been affected. Several companies have announced indefinite closures, and for many more it will be a matter of “life and death” in the coming winter. Electricity and gas costs are more than ten times higher than last year and exceed the selling price of products, he said. The companies ask the EU to take measures against the high costs for companies and to provide additional relief.

Other industry associations from the cement, chemical and steel sectors, have also sent a letter to Commission President von der Leyen in view of the emergency plans and the meeting of energy ministers on Friday. Among other things, they called for measures to cap the price of natural gas, cut the link between the gas and electricity markets, and temporarily adjust the framework for state aid in the EU. leo/ dpa

Forest fires in Europe: highest emissions since 2007

This summer’s large number of forest fires in Europe has led to a 15-year high in emissions of air pollutants contained in smoke. According to the EU’s Copernicus atmospheric monitoring service Cams on Tuesday, the amount of carbon emitted between early June and late August in the European Union and the United Kingdom is estimated at 6.4 megatons – the largest amount since 2007.

“The combination of the August heat wave and extended dry conditions in western Europe resulted in increased number, intensity and duration of wildfires,” the Copernicus statement said. Further, the source of the emissions was primarily devastating fires in southwestern France and on the Iberian Peninsula. There, the release was even at its highest level in two decades.

“Most of the fires occurred in places where climate change has increased the flammability of vegetation, like in southwestern Europe, and as we’ve seen in other regions in other years,” explained Copernicus forest fire expert Mark Parrington.

In other regions in the northern hemisphere, however, where there are usually a high number of forest fires, emissions this year were relatively low, the report added. For example, although there were several devastating fires in eastern Russia, they were not as severe as in previous years, it said. In the US, too, emissions of air pollutants from wildfires were lower than in the previous two years. By contrast, the fires in Brazil were worse than in recent years. In the state of Amazonas, for example, emissions in July and August were well above average.

For their estimates, the scientists of the Copernicus service evaluate satellite images of active fires. The heat output is measured, from which conclusions can be drawn about the emissions. dpa

Putin questions grain export agreement with Ukraine

Russia is once again questioning the negotiated compromise on exporting Ukrainian grain across the Black Sea. The staple food, which is actually intended for poor countries, will be delivered to Turkey and the European Union, President Vladimir Putin said Wednesday in Vladivostok in eastern Russia. He said it may be necessary to think about how to limit exports across the Black Sea. “I will definitely discuss the issue with Turkish President Tayyip Erdogan.” After all, he said, the poorest countries, in particular, should be helped.

Ukraine rejected the accusations. The agreement with Russia is strictly respected, said presidential adviser Mykhailo Podolyak. “Such (…) statements rather indicate an attempt to find new arguments to influence public opinion in the world and, above all, to put pressure on the United Nations.”

The agreement between the two warring countries does not specify where the grain will be delivered. According to the Istanbul-based coordination group that oversees the agreement, 30 percent of the cargo went to poorer countries.

Ukraine and Russia had agreed on the exports under UN and Turkish mediation on July 22. Russia subsequently lifted its blockade of Ukraine’s Black Sea ports to grain freighters. The UN and many international countries had pushed for the agreement to curb the global grain price rise due to supply shortages. Along with Russia, Ukraine is one of the world’s largest grain exporters. Ukraine can only export larger quantities by sea. Many poorer countries rely on grain imports but are unable to weather increased prices. rtr

Beware of Führer states

By Wolfgang Ischinger and Sebastian Turner

Wolfgang Ischinger (l.) is the President of the Board of Trustees of the Munich Security Conference Foundation. Sebastian Turner (r.) is the founder of Table.Media and publisher of Europe.Table.

Spies are not supposed to betray their own power apparatus. But precisely exactly what the head of Russian foreign espionage Sergei Naryshkin has done on February 23, unintentionally and conspicuously. At a meeting of the Russian Security Council, his answers not only revealed how the pretexts of Russian imperialism change on a whim. As Vladimir Putin humiliated his top spy in front of the world, he revealed: the Russian Federation has become a Führer state.

The autocrat has absolute power. He is not controlled by any public, any party, any parliament, any judiciary, any cabinet, or even any officials or secret service clique – on the contrary, he controls them all. One day after Naryshkin’s embarrassing revelation, the world witnessed what Führer states are capable of: Russia invaded Ukraine and has been killing thousands and terrorizing millions ever since.

From dysfunctional Yeltsin years to Putin’s arbitrary rule

Those familiar with Russia saw the metamorphosis from the dysfunctional post-Soviet Yeltsin years to Putin’s Führer state coming. Of course, there is no longer a Politburo, which in the old USSR appointed or removed the General Secretary of the CPSU as a controlling body. The Duma and the Federation Council are claqueurs, and the diversity of the press has almost completely disappeared.

The business community is also subservient, from the show trial of Mikhail Khodorkovsky in 2005 to the sudden deaths of business representatives who opposed the Ukraine invasion. Even Putin’s aggressive rejection of the democratic world during his historic appearance at the 2007 Munich Security Conference was not taken seriously enough in Washington, Brussels or Berlin.

Parallels between Russia and China

Anyone who looks from the declining superpower Russia to the rising superpower China will find disturbing similarities. China’s strongman Xi Jinping has eliminated almost all opposing forces in his one-party state to ensure his election for life at the next CP congress starting on October 16. He has replaced the top intelligence officers several times and holds a firm grip on the military. He personally rules all organizations of the state, party and society. Anyone who disagrees with him ends up in the interrogation rooms of the Central Commission for Discipline Inspection.

The economy is also kept on a short leash, from Jack Ma’s house arrest to laws that turn data collection into a state monopoly. In this, Xi far outdoes his ally Putin. With social credit points and facial recognition, Xi holds totalitarian power over everyone: Citizens, institutions, and hierarchies.

Führer states are to be feared because even the country’s staunchest fundamental interests can be overruled by the personal priorities, visions, whims and sicknesses of its leader. The yes-men also create a false reality for the autocrat, allowing him to decide irrationally despite many years of political experience – and no one to stop him.

Nuclear powers as Führer states particularly dangerous

There have always been autocrats who were able to subjugate an entire society. Nuclear powers as one-Führer states, however, are a new geostrategic challenge to which the world needs to adapt to. They represent a new type of risk, especially for democracies, and should therefore be categorized and treated as such.

Germany relied on “change through trade” – from the European Coal and Steel Community and Ostpolitik to its current approach to Xi Jinping’s China. Reducing political risks through mutual economic dependencies, however, has proven to be completely ineffective with Führer states. Any form of dependence on a Führer state is counterproductive by definition – it can even tempt the autocrat to unpredictable behavior and thus exacerbate strategic vulnerabilities.

Accordingly, the G7 and the EU should classify countries according to whether they are approaching the Führer state form of government, similar to credit ratings. With each step toward autocracy, measures should be taken to reduce strategic vulnerabilities and influence the autocrat’s deliberations.

Sanctions have a medium-term effect at best

We can learn from the Russian attack on Ukraine and the effect of the current sanctions against Russia, as they change the strategic behavior of the opposing side at best in the medium and long term and harm everyone.

We must rely on prevention through credible deterrence instead of punishment ex-post vis-à-vis Führer states. NATO is rightly switching over to the Baltic States: Rather than thinking along the lines of a possible retaking of occupied territory, the strategy is to put itself in a military position where no one in Moscow can even think of implementing attack plans. Similar questions now arise about Taiwan – a possible test of strength for the democracies!

Democracies require independence from Führer states and credible deterrence. Consequences need to be declared in advance, as was the case with rearmament in the 1980s, so that they ideally do not have to be applied at all. But they are only believable if the democracies truly stand behind them. To this end, they must be aware that they are dealing with particularly dangerous countries – the Führer states.

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

After months of hesitation in Europe, the price cap on Russian gas is coming after all – and quickly. Yesterday, ahead of Friday’s meeting of energy ministers, Commission president Ursula von der Leyen outlined the contingency plan against high energy costs. “We must reduce Russia’s revenues, which Putin is using to finance his cruel war against Ukraine,” she said. Vladimir Putin then threatened to cut off supplies completely, as Manuel Berkel reports from Brussels.

Speaking of Brussels: No city in the world, except Washington, D.C., has more lobbyists. According to Transparency International, at least 48,000 people in the EU capital work in organizations that try to influence EU institutions and decisions. The European Transparency Register is supposed to make this lobbying more transparent. A lobby register has also been mandatory in Germany since March. Read how both systems work, what their shortcomings are and how they are going to change in today’s Feature by Falk Steiner.

Christof Roche anticipates the informal meeting of EU finance ministers in Prague at the end of the week: They are making a renewed attempt to align on debt sustainability and safeguarding sound budgets. The goal is to finally agree on reform proposals for EU fiscal policy. Will they now reach a compromise after years of failure?

Have a great day!

Your
Leonie Düngefeld

Price cap plans exacerbate gas conflict with Russia

By

Manuel Berkel

For months, Europe had hesitated, but now there is to be a price cap for Russian gas after all. “We must reduce Russia’s revenues, which Putin is using to finance his cruel war against Ukraine,” Commission President Ursula von der Leyen said yesterday in Brussels.

After the plan had already become known in the past few days, von der Leyen now wants to set the pace. The price cap will be one of the items discussed by the energy ministers at their meeting on Friday. Next Tuesday, the Commission plans to present a package of legislative initiatives, after which the proposals would again have to be rubber-stamped by the Council. One Brussels office already believes that energy ministers will meet monthly in the future.

The Russian president had previously threatened to stop supplying gas to Europe in the event of a price cap. “If any political decisions are made that contradict the contracts, we just won’t fulfill them,” Vladimir Putin said in Vladivostok.

‘Even without a price limit, significant disruption occurs’

“We should not be impressed by this announcement. It would have come at some point anyway,” von der Leyen said. But why does the Commission want to introduce the gas price cap now of all times? According to von der Leyen, only nine percent of gas imports now come from Russia, compared with 40 percent before the war. But this is precisely one reason for the late initiative. The Commission believes that Europe is now better armed against a complete supply freeze. Other exporters have increased their deliveries, and storage facilities are currently 82 percent full.

But the Commission now also seems to be acting on the principle that things can hardly get any worse. “Even without a price cap, there is already considerable disruption,” according to a Berlaymont paper circulated yesterday. This probably refers, on the one hand, to the production declines in companies but also to the high price swings on the energy markets, which now threaten the entire trade.

“We have seen for months that Putin is manipulating the market,” von der Leyen said. Meanwhile, the Commission appears to view Putin’s influence on the energy exchanges as more threatening than the physical shutdown of remaining supplies.

Norway also to reduce gas price

Thus, the entire package is supposed to push prices for gas and electricity at least back toward pre-war levels. In doing so, the Commission is also addressing countries that are currently bailing out the EU with their additional pipeline supplies. The energy platform for joint gas purchases is to be given a mandate to negotiate lower purchase prices with reliable suppliers such as Norway – as well as for the purchase of liquefied gas.

With regard to the revenue cap for non-price-setting power plants, the Commission has made it clear that there is to be a uniform cap for all affected technologies – especially renewables. According to various media reports, a draft provides for a cap of €200 per megawatt hour of electricity, but the exact value is to be the subject of discussions on Friday.

Oil and gas companies with solidarity contribution

The Commission now wants to leave it largely up to governments to decide how windfall profits are collected. An earlier draft still said that member states that have already introduced excess profits taxes would have to change their measures. Some states will likely modify the rules for price discovery on energy exchanges to do so, while others will skim excess profits instead, a senior Commission official explained. What’s new is that oil, coal and gas companies will also be asked to make a so-called solidarity contribution.

However, two measures that have received less attention so far are just as important as the price cap: mandatory electricity savings and changes in energy trading. For peak times with particularly high consumption, there is to be a mandatory savings target – stimulated, for example, by auctions such as those already in place in Germany for so-called switchable loads in industry. However, the Commission still wants to make it compulsory for consumers who do not have the necessary prerequisites, such as smart meters, to set a general electricity savings target.

New trade rules to complement price cap

The biggest acute burden currently facing energy traders is the astronomical increase in collateral requirements (margins) on their transactions. The Commission is therefore looking for ways to accept a broader range of assets as collateral. An amendment to the Temporary Crisis Framework is intended to enable government liquidity support to flow more quickly.

However, the Commission is also negotiating with derivatives exchanges to directly limit the high price swings within trading days. The increased volatility, which makes security demands grow even further than the high prices alone, is supposed to be contained by so-called circuit breakers.

The Commission wants to develop a separate LNG index for over-the-counter futures trading because the previous benchmark index, TTF, has moved too far away from the world market price for liquefied natural gas. The exchanges are also to develop new forward products based on the new LNG index. The Commission also hopes this will dampen the power exchanges, where gas-fired power plants mostly set the price.

Lobby register: EU and Germany want more

By

Falk Steiner

Interest representation is often subject to general suspicion: Do economic actors have undue sway over those with political responsibility? Does business have politics eat out of their hand? The reality is of course more complex – transparency registers have also been introduced in recent years to counteract prejudices: Who talks to whom and on whose behalf is to be made transparent. A look at the EU transparency register and the federal government’s lobby register shows the progress that has been made – and some gaps.

The federal government’s lobby register, which is open to public scrutiny, has been mandatory since the beginning of March. If lobbyists approach members of the Bundestag or senior ministry officials from sub-department head level upwards, most of them must make an entry in the lobby register of the Bundestag and the federal government from this point on: The association or company on whose behalf they are speaking must be listed, along with details of the expenses incurred in representing political interests.

28,000 entries in the German lobby register

Individuals and agencies representing interests must also follow the rules. This is linked to a code of conduct – and there are now over 28,000 representatives registered in the lobby register. The high number is somewhat deceptive because all legal representatives of a legal entity must be listed. The actual number of lobbyists is about half that. A good 450 represent interests on behalf of third parties, for example, as public affairs agencies, whose entries must contain lists of clients.

The fact that the lobby register came into being at all was also linked to various scandals – mask deals, the Azerbaijan affair and other incidents. The European counterpart is ten years older: It is called the Transparency Register – and there are ongoing disputes about it. The register currently contains 12,600 entries, and here, too, agencies have to provide information about their customers.

Political scientist Ronny Patz says: “What has changed over the years: The register is now linked to other EU databases, meetings of EU commissioners, consultation processes, membership of Commission expert committees. The transparency level has increased by linking it to activities.”

This is new to the German Lobby Register Act. However, the coalition government now wants to reform it. The coalition agreement stipulates that in the future the so-called legislative footprint will also be regulated, and that contacts with ministries will be subject to registration up to the level of a speaker – and that the exceptions will be reduced.

Introduction of legislative footprint in Germany

The parliamentary director of the FDP, Stephan Thomae, describes the lobby register as an “important instrument for making relations between the federal government, the Bundestag and non-governmental organizations transparent”. Exemptions from the obligation to register should be more clearly differentiated in the future, he demands: “Because churches, unions and employers’ associations are currently exempt not only in their area protected by fundamental rights but also when they engage in classic lobbying.” This is not comprehensible. The scope of application should be expanded overall, says Johannes Fechner (SPD): “It is also important that we tighten the current disclosure requirements.”

The European transparency register, says Green MEP Daniel Freund, is fundamentally far ahead of what exists at the federal level. This is mainly due to the transparency obligation for meetings of the EU Commission, which have to be disclosed – 35,000 in the meantime. Parliamentarians are also supposed to disclose their contacts, but not every MEP handles this according to the rules. Sanctions, on the other hand, are only imposed on lobbyists – and whether they are effective is disputed: The Parliament can impose a ban on entering its premises, and the EU Commission can no longer invite representatives to hearings.

But Freund sees the main problem with the third European institution: At the Council, “intransparency accumulates,” says the Green MEP: “If you don’t want anyone to notice, you go to the Council.” Even after the last reform, he says, member states are only required to participate in the EU transparency register six months before and during the six months in which they hold the Council presidency.

And here, too, the European rules are full of holes: Only the permanent representatives are covered by the European regulation – but in the case of the German Council Presidency, 400 employees were involved, according to Freund. Anyone who worked for the Council Presidency and was not at least a sub-department head was not covered by either the European or the German rules.

Revisions start now

The German regulation is now to be changed, according to the coalition agreement. Talks on this are already underway between the coalition parties. It is not yet clear whether the current procedure, whereby entries only have to be made if the contact originates from the stakeholder, will be changed. In the future, however, all contacts starting at the officer level are to lead to mandatory entry. “With the introduction of a legislative footprint, we will counteract even where the limited spatial scope of German law would lead to any regulatory gaps,” says Stephan Thomae (FDP).

This could also bring strong changes to EU lobbying. “All national regulations are superior to the EU transparency register in terms of enforcement if they are well done,” says researcher Ronny Patz. That’s because EU institutions lack formal enforcement powers. The German Lobby Register Act already provides that incorrect or missing entries can be prosecuted as administrative offenses – with up to €50,000 as a threatened fine.

At the same time, consultations are starting today in Brussels on further tightening of the rules at EU level as well: Daniel Freund is hoping for further improvements both in the lobby register and in other lobbying and transparency issues, such as the approval of activities of departed Commissioners.

However, with the increasing requirements of different lobby and transparency registers also come new challenges: There are 14 different such registers in the EU alone, and in Germany new ones are constantly being added at the level of the federal states as well – so it may well be that lobbyists will soon be entering the debates with a wish of their own: A standardization and synchronization of the various lobby registers – in order to keep the effort manageable.

EU finance ministers: When is the kick-off for fiscal reforms?

At their informal meeting this Saturday in Prague, the finance ministers of the 27 EU states are taking another stab at reaching a unified line on debt sustainability and safeguarding sound budgets. The goal of the debate is to provide the European Commission with guideposts for appropriate reform proposals of EU fiscal rules. The Commission intends to present its ideas for a future stability- and growth-oriented EU fiscal policy in the coming weeks. The topic is also again on the agenda of the regular Ecofin meeting on October 4.

It remains to be seen, however, whether the Brussels authority will already submit a concrete legislative proposal after the discussion in Prague or whether it will first rely on further discussion based on a communication. The finance ministers have failed to reach consensus on future fiscal policy in several rounds of talks since 2020. Due to the still strongly divergent positions among the states, observers consider a breakthrough in Prague to be rather unlikely. They are therefore relying on the Brussels authority for guidance on how to proceed.

Commissioner Gentiloni believes in ‘orientations’ only

At an event in Brussels, EU Economic Commissioner Paolo Gentiloni spoke only of orientations that the European Commission intends to present in the coming weeks on the revision of the EU’s budget rules; he did not give any details on the instrument. The goal of the reform, he said, is to simplify the fiscal rulebook and increase its clout. Further, it is supposed to reduce public debt and strengthen economic growth in the long term.

“Simplification of rules, greater national ownership and better enforcement will be the defining features of the reform, with the overarching goal of supporting debt sustainability and sustainable growth,” Gentiloni said.

One way to achieve this, he said, would be for governments to prepare spending plans for several years in advance that would be consistent with reducing public debt to sustainable levels. Such plans could also include investment and reform commitments similar to those used for the EU Recovery Fund.

States could also move to a single spending indicator instead of using a variety of indicators that are often not directly measurable, Gentiloni stressed. They could also be given more leeway in setting budgets by linking them more closely to national ownership, but without undermining common EU principles such as debt sustainability.

IMF also increasing pressure

Prior to the Prague meeting, the German government signaled its willingness in principle to grant member states more leeway in reducing their debt in the short term in the non-paper “Principles of the German government for the reform discussion on EU fiscal rules.”

In return, however, this would have to be linked to stricter compliance with medium-term budget commitments, based on better “enforcement of the rules, including rule-based initiation and implementation of deficit procedures”. In the non-paper, however, Berlin gave a clear rejection to considerations of negotiating fiscal policy between states and the European Commission on an individual basis: “A bilaterally negotiated individual application of the rules is not a suitable way to further develop the common fiscal framework in the sense of greater transparency, higher bindingness and effectiveness,” the document states.

The International Monetary Fund (IMF) has urged the EU to quickly reform its fiscal rules ahead of the informal meeting in Prague. Currently, the debt rules are suspended until the end of 2023 due to Covid – a good moment for change. “This opportunity should not be wasted,” the IMF stressed. In this context, the Monetary Fund suggests maintaining the numerical targets of the EU Stability and Growth Pact. These provide for a limit of three percent on new borrowing by EU states and a limit of 60 percent on total debt of the respective national economic output.

Appropriate moment for fiscal reform

However, the IMF wants to make the pace of convergence toward these benchmarks dependent on the risk that the debt represents for the respective country. To this end, an independent body – the European Fiscal Council – is to contribute analyses of debt sustainability. Countries with higher risk would have to move more quickly toward balanced budgets or even surpluses within three to five years. Other countries should be given more flexibility. The IMF is also calling for medium-term fiscal plans, including spending ceilings.

Other topics at the two-day informal Ecofin meeting in Prague on September 9 and 10 include potential short- and long-term financial aid to Ukraine and the economic consequences of Russian aggression in Ukraine for the European Union. Additionally, finance ministers plan to discuss further harmonization of direct taxes in the EU. As the meeting is informal, no concrete decisions are expected. In addition to the finance ministers, the meeting will be attended by high-ranking representatives of the EU Commission, the European Central Bank and the national central banks. by Christof Roche/rtr

Energy prices: Industry demands help from the EU

According to a survey by the Federation of German Industries (BDI), almost one in ten medium-sized industrial companies has suspended or curtailed its production in Germany due to high prices. The extreme energy price increase poses fundamental problems for industry, as BDI President Siegfried Russwurm explained on Wednesday. In an industry survey, more than 90 percent of the nearly 600 companies declared that higher energy and raw material costs were an existential or severe challenge for them.

Because of the price increases, one in five of the companies surveyed is considering relocating parts of or their entire business abroad. Back in February, before the start of the Russian war of aggression against Ukraine, the BDI already warned of an industry exodus. At that time, the share of companies that were thinking about switching or partially relocating abroad was even higher, at 26.5 percent. According to the survey, the price increases also have a clear impact on investments. For example, around 40 percent of companies said they were postponing investments in ecological transformation. One fifth, on the other hand, are accelerating them.

Over forty European companies in the non-ferrous metals industry and their association Eurometaux published a joint letter to the European Commission, Parliament and Council at the same time yesterday. In it, they warn of an “existential threat” to their industry. According to the letter, 50 percent of aluminum and zinc capacities in the EU have already had to be shut down due to the electricity crisis.

There have been significant cutbacks in silicon and ferroalloy production, and the copper and nickel sectors have also been affected. Several companies have announced indefinite closures, and for many more it will be a matter of “life and death” in the coming winter. Electricity and gas costs are more than ten times higher than last year and exceed the selling price of products, he said. The companies ask the EU to take measures against the high costs for companies and to provide additional relief.

Other industry associations from the cement, chemical and steel sectors, have also sent a letter to Commission President von der Leyen in view of the emergency plans and the meeting of energy ministers on Friday. Among other things, they called for measures to cap the price of natural gas, cut the link between the gas and electricity markets, and temporarily adjust the framework for state aid in the EU. leo/ dpa

Forest fires in Europe: highest emissions since 2007

This summer’s large number of forest fires in Europe has led to a 15-year high in emissions of air pollutants contained in smoke. According to the EU’s Copernicus atmospheric monitoring service Cams on Tuesday, the amount of carbon emitted between early June and late August in the European Union and the United Kingdom is estimated at 6.4 megatons – the largest amount since 2007.

“The combination of the August heat wave and extended dry conditions in western Europe resulted in increased number, intensity and duration of wildfires,” the Copernicus statement said. Further, the source of the emissions was primarily devastating fires in southwestern France and on the Iberian Peninsula. There, the release was even at its highest level in two decades.

“Most of the fires occurred in places where climate change has increased the flammability of vegetation, like in southwestern Europe, and as we’ve seen in other regions in other years,” explained Copernicus forest fire expert Mark Parrington.

In other regions in the northern hemisphere, however, where there are usually a high number of forest fires, emissions this year were relatively low, the report added. For example, although there were several devastating fires in eastern Russia, they were not as severe as in previous years, it said. In the US, too, emissions of air pollutants from wildfires were lower than in the previous two years. By contrast, the fires in Brazil were worse than in recent years. In the state of Amazonas, for example, emissions in July and August were well above average.

For their estimates, the scientists of the Copernicus service evaluate satellite images of active fires. The heat output is measured, from which conclusions can be drawn about the emissions. dpa

Putin questions grain export agreement with Ukraine

Russia is once again questioning the negotiated compromise on exporting Ukrainian grain across the Black Sea. The staple food, which is actually intended for poor countries, will be delivered to Turkey and the European Union, President Vladimir Putin said Wednesday in Vladivostok in eastern Russia. He said it may be necessary to think about how to limit exports across the Black Sea. “I will definitely discuss the issue with Turkish President Tayyip Erdogan.” After all, he said, the poorest countries, in particular, should be helped.

Ukraine rejected the accusations. The agreement with Russia is strictly respected, said presidential adviser Mykhailo Podolyak. “Such (…) statements rather indicate an attempt to find new arguments to influence public opinion in the world and, above all, to put pressure on the United Nations.”

The agreement between the two warring countries does not specify where the grain will be delivered. According to the Istanbul-based coordination group that oversees the agreement, 30 percent of the cargo went to poorer countries.

Ukraine and Russia had agreed on the exports under UN and Turkish mediation on July 22. Russia subsequently lifted its blockade of Ukraine’s Black Sea ports to grain freighters. The UN and many international countries had pushed for the agreement to curb the global grain price rise due to supply shortages. Along with Russia, Ukraine is one of the world’s largest grain exporters. Ukraine can only export larger quantities by sea. Many poorer countries rely on grain imports but are unable to weather increased prices. rtr

Beware of Führer states

By Wolfgang Ischinger and Sebastian Turner

Spies are not supposed to betray their own power apparatus. But precisely exactly what the head of Russian foreign espionage Sergei Naryshkin has done on February 23, unintentionally and conspicuously. At a meeting of the Russian Security Council, his answers not only revealed how the pretexts of Russian imperialism change on a whim. As Vladimir Putin humiliated his top spy in front of the world, he revealed: the Russian Federation has become a Führer state.

The autocrat has absolute power. He is not controlled by any public, any party, any parliament, any judiciary, any cabinet, or even any officials or secret service clique – on the contrary, he controls them all. One day after Naryshkin’s embarrassing revelation, the world witnessed what Führer states are capable of: Russia invaded Ukraine and has been killing thousands and terrorizing millions ever since.

From dysfunctional Yeltsin years to Putin’s arbitrary rule

Those familiar with Russia saw the metamorphosis from the dysfunctional post-Soviet Yeltsin years to Putin’s Führer state coming. Of course, there is no longer a Politburo, which in the old USSR appointed or removed the General Secretary of the CPSU as a controlling body. The Duma and the Federation Council are claqueurs, and the diversity of the press has almost completely disappeared.

The business community is also subservient, from the show trial of Mikhail Khodorkovsky in 2005 to the sudden deaths of business representatives who opposed the Ukraine invasion. Even Putin’s aggressive rejection of the democratic world during his historic appearance at the 2007 Munich Security Conference was not taken seriously enough in Washington, Brussels or Berlin.

Parallels between Russia and China

Anyone who looks from the declining superpower Russia to the rising superpower China will find disturbing similarities. China’s strongman Xi Jinping has eliminated almost all opposing forces in his one-party state to ensure his election for life at the next CP congress starting on October 16. He has replaced the top intelligence officers several times and holds a firm grip on the military. He personally rules all organizations of the state, party and society. Anyone who disagrees with him ends up in the interrogation rooms of the Central Commission for Discipline Inspection.

The economy is also kept on a short leash, from Jack Ma’s house arrest to laws that turn data collection into a state monopoly. In this, Xi far outdoes his ally Putin. With social credit points and facial recognition, Xi holds totalitarian power over everyone: Citizens, institutions, and hierarchies.

Führer states are to be feared because even the country’s staunchest fundamental interests can be overruled by the personal priorities, visions, whims and sicknesses of its leader. The yes-men also create a false reality for the autocrat, allowing him to decide irrationally despite many years of political experience – and no one to stop him.

Nuclear powers as Führer states particularly dangerous

There have always been autocrats who were able to subjugate an entire society. Nuclear powers as one-Führer states, however, are a new geostrategic challenge to which the world needs to adapt to. They represent a new type of risk, especially for democracies, and should therefore be categorized and treated as such.

Germany relied on “change through trade” – from the European Coal and Steel Community and Ostpolitik to its current approach to Xi Jinping’s China. Reducing political risks through mutual economic dependencies, however, has proven to be completely ineffective with Führer states. Any form of dependence on a Führer state is counterproductive by definition – it can even tempt the autocrat to unpredictable behavior and thus exacerbate strategic vulnerabilities.

Accordingly, the G7 and the EU should classify countries according to whether they are approaching the Führer state form of government, similar to credit ratings. With each step toward autocracy, measures should be taken to reduce strategic vulnerabilities and influence the autocrat’s deliberations.

Sanctions have a medium-term effect at best

We can learn from the Russian attack on Ukraine and the effect of the current sanctions against Russia, as they change the strategic behavior of the opposing side at best in the medium and long term and harm everyone.

We must rely on prevention through credible deterrence instead of punishment ex-post vis-à-vis Führer states. NATO is rightly switching over to the Baltic States: Rather than thinking along the lines of a possible retaking of occupied territory, the strategy is to put itself in a military position where no one in Moscow can even think of implementing attack plans. Similar questions now arise about Taiwan – a possible test of strength for the democracies!

Democracies require independence from Führer states and credible deterrence. Consequences need to be declared in advance, as was the case with rearmament in the 1980s, so that they ideally do not have to be applied at all. But they are only believable if the democracies truly stand behind them. To this end, they must be aware that they are dealing with particularly dangerous countries – the Führer states.