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Allies to take action against US government incentives

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The European Union’s (EU) strong opposition to the US Inflation Reduction Act (IRA) persists.

Germany and France, the two largest economies in the European Union, decided to collaborate to formulate a strategy against the IRA. The two countries’ economy ministers, Robert Habeck and Bruno Le Maire, took action to bolster Europe’s renewable energy sector.

The ministers argued that the agreement would benefit the EU and the US, and they called on the US to “amend” the IRA.

According to Berlin and Paris, the IRA encourages state incentives for electric vehicles produced in North America, and its fixing will protect Europe’s industrial base. They have stated that North America is important for Europe in the transition to zero carbon.

The ministers announced that the European Union (EU) should be eligible for the same exemptions granted to Canada and Mexico by the IRA.

EU to loosen state aid regulations

Hoping to gain backing for their proposals from the other EU countries, Germany and France fear that the industry might otherwise leave the EU in favor of lower energy costs and government incentives in North America.

Besides obtaining exemptions from North America, Berlin and Paris are planning on granting incentives to EU-based businesses. It is said, for instance, that government contracts to be given to private companies can only be arranged in ways that European companies can adapt to.

Habeck and Le Maire also urge changes in state aid regulations, tax rebates, and the release of EU aid money for climate-friendly investments.

Caveats from the capital

On the other hand, the business world keeps sounding the alarm that the European Union will fall behind the United States in the transition to clean energy.

Lastly, Björn Rosengren, CEO of ABB, a Swiss monopoly in automation and robotics technologies, said that drive toward sustainability should do it in a way that does not destroy Europe.

Rosengren was quoted as saying, “Make the legislations right, don’t over-administrate things,” in Financial Times, highlighting the complex EU legislation and recalling the challenges in the green transformation.

Europe should take note of the US approach that offered “carrots” to bring about change, added the ABB CEO.

Rosengren said that the US would get a lot of investments in the next five years due to the IRA and Europe needs to do something.

Unsatisfied South Korea

Having car manufacturing behemoths, South Korea and Japan are also worried about the IRA.

Last week, Yonhap, a news outlet with ties to the Seoul government, published an article with expert commentary claiming that government incentives offered by the United States would hurt America’s ability to compete with China.

In the article, it has been reported that South Korean battery manufacturers are now thinking about “unwinding” their investments in Argentina and Indonesia to secure critical materials and minerals for electric vehicle (EV) batteries designed to be sold in the US.

However, it is also stated that Korean battery manufacturers, which have already invested billions of dollars in North America, have taken action to accelerate these investments together with the IRA. In the past three years, South Korean battery makers have invested in eleven new factories in the North American region.

The United States Department of Energy has recently announced the closing of a $2.5 billion loan to Ultium Cells to finance the construction of manufacturing facilities in three different states in the United States. Ultium Cells is a joint venture between American General Motors and Korean LG Energy Solution.

The interest rate on the loan is the same as the US Treasury rate, which is about 3.6 percent. LG will have to pay an additional two percent in interest if it tries to secure this loan through the South Korean bond market.

Ultium Cells expects an overall production capacity of 145 gigawatts with the three plants by 2025. This figure ensures to power 2 million all-electric vehicles per year.

In cooperation with SK On of South Korea and Ford of the United States, the largest battery factory in the United States is being constructed.

Hyundai in trouble

The IRA, however, is having an effect in other fields. Hyundai, a South Korean automaker giant, lost its second place in the US EV market to Ford this year.

Ford sold 53,752 EVs in the United States from January to November this year, surpassing the combined sales of 53,663 units of Hyundai and Kia.

As of the first half of this year, Hyundai stood second after Tesla.

In 2023, Hyundai is bound to face even bigger challenges because its IONIQ 5 and EV6 models have been excluded from tax credits since they are produced in Korea and exported to the United States.

For this reason, Hyundai plans to build an electric car factory with an annual capacity of 300,000 units in Georgia. Still, its operation is only to start in 2025.

Robert Hood, a senior executive at Hyundai Motor, threatened that if the damage from the IRA to their company increases, they will reassess whether the investment in Georgia is viable. Hood further emphasized that labor and production are substantially cheaper in Mexico.

“We ask the US government for a chance to compete fairly for the next few years,” the executive said, stating there needs to be time to adjust to the IRA.

Europe

Gibraltar and Spain to dismantle land border as UK signs post-Brexit treaty

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The decade of uncertainty following the United Kingdom’s decision to leave the European Union is set to end on Wednesday as the 118-year-old physical border between Gibraltar and Spain is dismantled.

Although the British Mediterranean territory voted by 95.9% to remain in the EU during the 2016 referendum, it was forced to leave the bloc as a consequence of the UK’s wider decision.

Following the departure, passport controls became more stringent and the transit of commercial goods grew increasingly complex for the thousands of people who cross the border daily, including 15,000 Spanish citizens who work in the territory.

In an effort to resolve these complications, administrations in Brussels, London, Gibraltar, and Madrid have spent ten years negotiating the removal of physical checks at the Spanish border.

Two-tier checks to be implemented at the airport

Under the terms of the agreement, Gibraltar will remain fully under British sovereignty and territory, but the land border will effectively become nothing more than a line on a map.

The technical details of the implementation mirror the procedures used for the Eurostar train line operating beneath the English Channel. Similar to the system at London’s St Pancras station, passengers arriving at Gibraltar Airport will clear both Gibraltar and EU passport controls in succession.

Passengers who receive clearance from both authorities will be permitted to travel freely within Gibraltar and the Schengen zone.

Through this mechanism, physical checks at the land border between Gibraltar and Spain will be completely eliminated.

Gibraltar will also align with specific aspects of the EU single market and customs regulations to facilitate the flow of goods, the supply of which had become difficult following Brexit.

While the Gibraltar administration emphasizes that it is not legally part of the Schengen zone and will retain the authority to determine its own visa policy, the arrangement will in practice offer a level of convenience similar to the Schengen regime, as there will be no passport control upon entering Spain.

Agreement to be formalized in Brussels

The UK Minister for Europe, Stephen Doughty, and the European Commission Executive Vice-President, Maroš Šefčovič, are formally signing the agreement in Brussels on Tuesday.

The process has been a cross-party effort in the UK, with former Foreign Secretary David Cameron also working extensively during his term to finalize the accord.

The agreement reached the signature stage in the spring of 2024, but the decision of then-British Prime Minister Rishi Sunak to call a snap general election, followed by the subsequent change of government, delayed the process by a year.

While Eurosceptics within the British Conservative Party argue that the agreement compromises Gibraltar’s sovereignty, the Gibraltar government supports the implementation of the plan.

Speaking to the Telegraph newspaper ahead of the removal of the border controls, Gibraltar’s Chief Minister, Fabian Picardo, strongly criticized Brexit.

“Brexit was the greatest self-inflicted wound the United Kingdom has delivered to itself since the Second World War,” Picardo said. “Brexit was sold to the British public on false promises. The United Kingdom should seriously re-evaluate its relationship with the European Union, including returning to membership or establishing a much closer partnership.”

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Mutual accusations of blackmail and assault overshadow AfD state election congress in Germany

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The Alternative for Germany (AfD) state congress in North Rhine-Westphalia ended in chaos on Sunday.

During the selection of the 22nd position on the candidate list for next year’s state elections, delegates aligned with the far-right Bundestag member Matthias Helferich proposed more than 100 candidates. This move was reportedly designed to block the vote in the town of Marl, halting progress on the list to force negotiations for subsequent positions.

Earlier in the candidate selection process, supporters of State Co-Chairman and lead candidate Martin Vincentz, who represents the moderate wing of the party, had prevailed. The defeat of Zacharias Schalley—a figure close to Helferich—by a candidate from the Vincentz camp triggered significant discontent within the radical wing of the party. Representing approximately 40% of the delegates, Helferich’s supporters reportedly demanded strong representation in the next state parliamentary group.

During the congress, Helferich claimed that Bundestag member Knuth Meyer-Soltau, a member of the Vincentz camp, physically assaulted him. Speaking to the newspaper WELT on Sunday, the 37-year-old Helferich described the incident:

“Meyer-Soltau was passing by the row where I was sitting. He was arguing with another member. When he turned back, while I was sitting in my chair, he shouldered me and shouted, ‘Shut up, you idiot!'”

Helferich added: “I do not know if he wanted to knock me out of my chair. However, because he insulted me in anger, I cannot rule out the possibility that this was a deliberate attack.”

An email exchange sent to the federal executive board and state management revealed that Helferich filed a criminal complaint on Monday.

“Meyer-Soltau hit my chair and my body, either intentionally or through negligence”

In the complaint filed by Helferich, he stated: “Meyer-Soltau hit my chair and my upper body hard, either intentionally or through negligence; I was only able to avoid falling by holding onto the edge of the table.” The complaint also named two witnesses.

In his letter to the party leadership, Helferich wrote: “Since numerous similar incidents of electoral law significance occurred at the state election congress, I believe the duty to maintain party order falls to the Federal Executive Board.”

Meyer-Soltau, a 61-year-old lawyer like Helferich, denied the allegations. Speaking to WELT on Sunday, the lawmaker said: “I reject the accusation being made.”

Meyer-Soltau suggested that Helferich viewed him as a powerful opponent because he had previously acted as the negotiator for the state executive board in the party’s expulsion proceedings against Helferich before the Federal Arbitration Court. The party court recently rejected the expulsion request.

“It is clear that this situation has not had a positive impact on our relationship,” Meyer-Soltau said. “Mr. Helferich, having suffered a heavy defeat at the nomination meeting, is clearly seeking satisfaction through other means. I will hand the matter over to my lawyer and take legal action.”

A letter sent to Helferich by Meyer-Soltau’s lawyer, which was leaked to the press, stated: “My client has never insulted you or physically assaulted you.” The letter demanded that Helferich cease repeating the claim and sign a cease-and-desist declaration carrying a contractual penalty.

Additionally, Meyer-Soltau’s lawyer filed a criminal complaint with the Dortmund Prosecutor’s Office for defamation. The petition submitted to the prosecutor’s office stated: “The accusation of physical assault is highly defamatory, calculated to permanently damage my client’s public reputation, and socially discredit him.”

Allegations of blackmail made against delegates at the congress

Allegations of threats against delegates also emerged at the state congress in Marl. Helferich ran against Klaus Esser, a close associate of Vincentz, for the 13th position on the candidate list. Esser, who needed just one vote to be elected in the first round, only secured a majority in the second round of voting.

Following the announcement of the results, a delegate took the stage to claim that before the second round, a state executive board member from the Vincentz camp went to the rows of the Wuppertal district association and threatened that a state lawmaker from Wuppertal would be expelled from the parliamentary group if the necessary votes for Esser were not delivered. The delegate announced that a complaint would be filed regarding the matter.

A spokesperson for AfD Co-Leader Alice Weidel told the media outlet “The Pioneer”: “Weidel does not approve of this situation. Such things must not happen.”

Other allegations of threats were voiced through the hall microphones during the congress. One delegate claimed that a candidate had been threatened by a district councilor and a district chairman.

“He was told that if he did not withdraw his candidacy, he would have no future in this party. There are numerous witnesses who can confirm this,” the delegate asserted.

Another delegate reported that a young woman was pressured by a district chairman who asked whether she would “lend herself to this game and submit to blackmail,” warning her that the situation would have “consequences for her in the district association.”

Marco Vogt, the Deputy Chairman of the Düsseldorf AfD and an ally of Helferich, said during his candidacy speech that young members who participated in the list disruptions had been threatened by their employers present in the hall.

Another candidate, a municipal councilor from Würselen, stated that a district administrator from the Aachen region had issued an implicit threat, telling him he would make many enemies in his own association if he did not withdraw his candidacy.

Candidate Leon Biallawons directly targeted lawmaker Knuth Meyer-Soltau, saying: “I tell you clearly, dear Knuth, I will not allow myself to be threatened by you. Because, dear Knuth, it is not you but the grassroots who will decide who succeeds in this party, and the grassroots will assert their will in the long term.”

Meyer-Soltau declined to comment on these allegations, stating: “I do not wish to comment on such baseless claims.”

Other tactics were used to slow down the proceedings at Sunday’s congress. One delegate requested a 30-minute recess because “there is an ice cream truck outside,” though this request was rejected. The convention manager, Julian Flak, was heard calling out to a delegate: “Take that garden furniture outside immediately!”

A message shared on Saturday in a chat group close to Vincentz stated that the “self-proclaimed patriotic group” had threatened to completely block the congress. It was alleged that the core group led by Helferich planned to deliberately disrupt the flow of the congress to force their opponents to the negotiating table.

Weidel accused of undermining efforts in chat group

On Sunday, in the same chat group, it was written that the sabotage action was being coordinated by Federal Deputy Chairman Sven Tritschler and Helferich. The message claimed that Tritschler had discussed the move with “his boss Alice Merkel”—a reference to AfD leader Alice Weidel. “This is a clear operation of attrition. We will not bow to an Alice Merkel,” the message read.

By Monday night, the ballot for the 22nd list position contained the names of 81 candidates. Some individuals who announced their candidacies withdrew before speaking. The results are expected to be announced next weekend.

The North Rhine-Westphalia AfD association has allocated a total of four weekends for candidate selection meetings. With the party projected by public opinion polls to win between 30 and 40 seats in the state parliament, competition for the top spots on the list remains intense.

An article titled “AfD-NRW Grassroots Resist Cartel Partyization,” published Monday on a Telegram channel close to Helferich, described the events as a “heroic act” and an “impressive reaction of an alert, idealistic grassroots.” The mass candidacy process was characterized as a “combination of Carl Schmitt’s partisan theory with a democratic liberation move unprecedented in AfD history.”

The article argued that if lead candidate Vincentz wants to translate polling success into a strong election result, he must unify the party by granting Helferich’s supporters viable, electable positions on the list.

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EIB to unveil 15 billion euro tech initiative to scale European startups

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The European Investment Bank (EIB) will announce a €15 billion initiative today, in collaboration with EU capitals and private investors, aimed at supporting the growth of European technology companies.

For decades, startups on the continent have struggled to raise the large-scale funding rounds necessary to scale on this side of the Atlantic, frequently turning to US investors or relocating abroad as they expand.

“We are catching up. Now we need to accelerate,” EIB President Nadia Calviño said.

Under the existing European Tech Champions Initiative, the EIB had already pooled resources with six EU governments to establish funds that invest in high-growth companies across the EU.

Calviño described the initiative as “very successful,” noting that it has supported 12 European “unicorn” companies valued at over $1 billion, including the German artificial intelligence translation firm DeepL.

The bank is now expanding the program with a new phase nearly four times the size of the original.

Twenty-five EU governments, alongside private investors such as Santander and Danske Bank, are expected to participate in the program.

This initial €15 billion aims to mobilize up to €80 billion in total investment. Calviño stated that this estimate is based on the multiplier effects achieved under previous programs.

As part of these efforts, the EIB also aims to attract European pension funds, which manage immense pools of capital but have historically allocated fewer resources to technology investments compared to their US counterparts.

In addition to the new funding, Calviño noted that the EIB will create a platform providing a single point of access for existing European scale-up initiatives, including the European Commission’s Scaleup Europe Fund, France’s Tibi initiative, and Germany’s Win initiative.

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