The Era of Rearmament

The Ukraine war reshapes European politics and priorities. From being hopefully protected under a largely US financed and equipped NATO umbrella, the EU is adopting to a situation where they are afraid of being left alone if attacked by Russia.

Two alternatives exist for a way forward. Try to develop an all-European security structure which includes Russia, or rearmament against Russia. 

Nothing indicates the EU and their partners are interested in the first alternative. Peace and negotiation efforts during the Ukraine war have been attempted by Belarus, Israel an Turkey. The west has obstructed the efforts. Now the US has started a peace process, and the europeans are not happy with that. 

The strongly preferred alternative is bolstering the defence as much and as soon as possible. Albeit the possibility of a Russian attac seems unrealistic. Why should Russia attac other European countries,  most of them NATO-members. Ukraine is special, Russia has warned for many years that the country has to be neutral. Of course that can not be used as an excuse for the invasion, but it can explain it.

President of the EU Commission, Ursula von der Leyen, presented last week a defence package. It is based on the assumption that Europe is threthened in a very real way. Europe have to massively boost it`s defence spending. We are in the era of rearmament.

The ReArm Europe plan consists of 5 parts, together they are meant to mobilise close to EUR 800 billion for a safe and resilient Europe.

It is unclear how much weapons and defence systems Europe can produce and how much must be delivered from others.  According to EU`s Compass of Competitiveness is the unions defence industry suffering from a combination of structural weaknesses and decades of underinvestment.

     

 

Time for rent-seeking - EU introduces Clean Industrial Act

Not competitive globally, the EU has presented a plan for competitiveness and decarbonisation - the Clean Industrial Deal.

As prescribed by  Mario Draghi in his report last year, the union will use decarbonisation efforts to catch up with the US, China and others. 

Main elements of the Clean Industrial Deal are

• Affordable energy. To day energy prices are much higher in the EU than in US and China. An affordable Energy Action Plan shall lower the energy bills for industries, businesses and households. 

• Boosting demand for clean products. A Industrial Decarbonisation Accelerator Act is meant to increase demand for EU-made products. The Commission will also review the Public Procurement Framework in 2026 to introduce sustainability, resilience and European preference criteria in public procurement for strategic sectors.

• Financing the clean transition. The EU will mobilise over €100 billion to support EU-made clean manufacturing. Among the measures are adoption of a new Clean Industrial Deal State Aid Framework, decarbonise industry and ensure sufficient manufacturing capacities of clean tech and strengthening the Innovation Fund.

• Promoting circularity in EUs decarbonisation strategy and achieving access to critical raw materials.

• Acquire reliable global partners.

• Actions to get the necessary skills to support the transition to a low-carbon economy, including skills in clkean technologies, digitalisation and entrepreneurship.

This is what the industry has been waiting for! When US (Inflatian Reduction Act) and China are subsidising their industries, its difficult to compete. 

Although EU is implementing Draghis advise, he also warned that using the green agenda to get competitive is risky. If unseccessful it can make the situation worse. 

Keeping the unions extremely ambitious climate policies while fighting for competitiveness prioritising clean tech industry seems like a fantasy. The US has abandoned the climate change strategy, now it is "Drill baby, drill!". And if the EU  can come up with successful and interesting renewables, it will probably be met with US tariffs. 

Versus China the challenge will be to produce better products than the asiatic country. Not an easy task, Chinas electric car and battery industries are highly competitive. 

Perhaps the new big investment in defence industry can strengthen industry and economy, but the color will not be green.

A new Norwegian review of the AAE-agreement - alternatives still taboo

 

Twelve years ago, in 2012, a government appointed committee delivered the first comprehensive review og the EEA and other agreements between Norway and the EU. They concluded that the EEA had been a useful instrument for Norwegian participation in the single market without beeing a member of the union. But the construction suffered from major democratic shortcomings ("fax-democracy"). The evaluation did not discuss alternatives to the EEA.

A new committee was established in 2022. The mandate was to evaluate the development and experiences with the EEA and other Norway-EU agreements since 2012. They delivered their report in april this year. 

The main conclusion prevails: EEA is useful, but in several ways undemocratic for Norway. Ans still no discussion of possible alternatives to the EEA. This is taboo because Norways relationship with the EU is a difficult political question, and the EEA works as a compromise.

Sort of a compensation for the missing discussion of alternatives, the review describes cooperation models between the EU and Switzerkand, the UK and Canada. The committee shows how several assessments indicate that the EEA is a better solution for businesses and economy. But these assessments are uncertain, and the committee does not evaluate to what extent Switzerland, the UK and Canada have preserved democracy and independence compared to Norway.

EU interfering in Norwegian decision making

The Norwegian Parliamnet

The Norwegian government has just ended a public consultation concerning the EUs Revised Renewable Energy Directive. The response was a overwhelming 7 500 answers, most of them from private citizens negative to implementing the directive.

The Renewable Energy Directive is part of the Fourth Energy Package, which is considered relevant for the EEA-agreement, and therefore should be incorperated in the agreement. But many think that building more wind generators and photovoltaic installations will damage valuable Norwegian nature and should be avoided.

This is a highly sensitive political issue, and the commissioner for energy, Kadri, has threatened the Norwegian government with punishment if the directive is not implemented before mid-August.

Inspired by this EU-involvement in the Norwegian decisionmaking process, 23 Norwegian businesses and organisations have asked the EU Commission to set a deadline also for the Energy Efficiency Directive.

This development is very worrying. When the EEA-agreement law was adopted back in 1992, it was a prerequisite that the Norwegian decisionmaking process should not be affected. Now we are in a situation where the process might be altered by the Renewable Energy Directive, where the EU commissioner is interfering and where Norwegian businesses and organisations ask for even more interfering by the Commission.

This is not acceptable.

EU future - added value is key

EU has always been about added value. Its predecessor The European Coal and Steel Community was established in 1951 as a way to prevent further war between France and Germany. These two countries had time after time ended in war when they acted separately. By placing French and German production of coal and steel - vital resources for a country to wage a war - under a supranational common High Authority, peace was preserved and France and Germany got added value. The idea of using regional integration to achieve more than the participants are able to do separately was developed further, and when the flag of The European Coal and Steel Community was lowered for the final time outside the European Commission building in Brussels in 2002, it was replaced with the EU flag - symbolizing how an innovative idea had prevailed.

But no tree grows into heaven. The EU integration project has met obstacles and crisis. People in Europe want to keep the EU, but they want changes. And the EU establishment should listen. What they call populism is democratic feedback. People react because they don´t feel the European Union gives added value - or more precise: they recognize and appreciate some important aspects of the integration, like a common market, but the project has gone to far. Especially when it comes to democracy many oppose the development and say "this is not added value, this is less democracy."

So instead of an ever closer union, the leading star must be a supranational cooperation which gives added value to everyone. This means a less ambitious integration with respect to "volume", but a more ambitious integration when it comes to identifying areas and tasks where the EU can give added value for a diverse Europe.

 

EU 60 years - shaky, but important

The EUs 60th anniversary will be celebrated in many ways, with a special European Council summit in Rome on 25 March as the most symbolic. It was on this date Belgium, France, Italy, Luxembourg, the Netherlands and West Germany signed the Treaty of Rome in 1957.

EU summarizes the developments on its website

Sixty years ago in Rome, the foundations were laid for the Europe that we know today, ushering in the longest period of peace in written history in Europe. The Treaties of Rome established a common market where people, goods, services and capital can move freely and created the conditions for prosperity and stability for European citizens.

On this anniversary, Europe looks back with pride and looks forward with hope. For 60 years we have built a Union that promotes peaceful cooperation, respect of human dignity, liberty, democracy, equality and solidarity among European nations and peoples. Now, Europe's shared and better future is ours to design.

The description points to important positive contributions, but does not reflect the European Union´s current crisis. However, it is necessary to deal with this in a good way for the EU to survive and provide added value in the future.

And it should not be impossible to achieve a workable compromise between europhiles and -sceptics. The common vision must be an appropriate mix of decentralization and supranational power. "An ever closer union" is a dead end street.

Even if the UK don´t want to be part of the single market and is heading for a "hard" Brexit, other sceptics are less radical. E.g. said one of the participants in todays Dutch elections, Geert Wilders, a few days ago to Norwegian journalists that he wanted the national sovereignty back, but that he might accept a Norway-model with EEA-membership. So the EEA, which includes the single market and some other cooperation areas, might give some ideas for development of a new EU vision.

EU future - everything in play

While the European Council today is preparing the EU´s 60th anniversary declaration without PM May attending, the growing lack of European unity makes it hard to deliver anything other than general phrases about the future EU.

At the summit yesterday Poland refused to accept a continuation for Donald Tusk as European Council President. The traditional consenus was stalled. “We know now that it [the EU] is a union under Berlin’s diktat,” the Polish foreign minister, Witold Waszczykowski, told Polish media.

Earlier this week France, Germany, Italy and Spain - "the big 4" - backed multispeed Europe (Juncker´s scenario 3), a future which the Visegrad group - Poland, Hungary, Slovakia and Czech Republic - does not like.

The leaders participating in the summit yesterday agreed to let a group of willing go ahead with plans to set up a European public prosecutor to probe financial crimes against the EU budget. EU Observer writes: "The move is largely procedural but also symbolic for an EU currently debating the possibility of a so-called multi-speed Europe, where some countries can forge ahead with deeper integration."

The multi-speed strategy is an old idea. When the frontrunners successfully achive added value, the slow ones will be tempted to follow. And integration will be strengthened. 

But the consequences of multi-speed seems more likely to be confusion and disintegration. What matters most is the tasks unifying all the 27 member states. They are the basis and the core of the Union. So instead of escalating multi-speed, the strategy should be to democratize, concentrate and streamline a one-speed European Union.