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Politico Europe – April 26, 2018

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US-FRANCE
Behind
the hugs
and kisses
POLITICO.EU
Trump offers few
actual tradeoffs
to Macron’s policy
agenda. PAGE 10
APRIL 26 - MAY 2, 2018
VOLUME 4, NUMBER 16
ILLUSTRATION BY ROB DOBI FOR POLITICO
ON YOUR MARKS
Nobody’s officially in the running, but the race for the
European Commission presidency has already begun
BY MATTHEW KARNITSCHNIG IN BERLIN
Boosting trust in the bloc’s AI applications
will help the Continent catch up to its
competitors, Brussels believes. PAGE 5
likely to ever materialize.
The next election for the European Parliament may be more than a year away, but
Europe’s capitals have already given up hope
of installing a dream team to run the Commission. Instead, there’s growing resignation
SEE PRESIDENCY ON PAGE 22
Three top choices who
don’t stand a chance
Barnier’s barriers to
Berlaymont are in Paris
How they line up,
favorites to longshots
PAGE 18
PAGE 19
PAGE 20
FORUM
What Russian poker
says about Putin
“Serfs” for many years, Russians are still
more likely to blindly respect authority
than challenge the status quo. PAGE 24
ISSN 2406-5250
ARTIFICIAL INTELLIGENCE
EU hopes ethics
will give it an edge
She’s an under-60 polyglot, a political centrist who enjoys power, but isn’t intoxicated
by it. Behind closed doors, her demeanor is
polite and calm, yet forceful. Most important,
she’s discreet.
Meet France and Germany’s dream candidate for the next president of the European
Commission. Like most fantasies, she’s un-
2
POLITICO
EU CONFIDENTIAL
APRIL 26, 2018
PRESENTED BY
BY RYAN HEATH
Welcome
to the dead-tree
version of EU
Confidential, the
No. 1 EU news and
politics podcast.
Your guide to the
good, the bad
and the absurd in
European politics.
Talk of the town
1-ON-1
Spencer Dale’s
energetic battle
Insta grandpa: European Council
President Donald Tusk spent his birthday
weekend setting up an Instagram account
with help from his grandsons.
Ghost train: An unoccupied train started
moving from Brussels North station toward
Schaarbeek on Tuesday, colliding with
another moving train. SNCB, the national
train operator, has not yet said why the
empty train started moving.
Bonkers read — ‘My Dearest Fidel’:
An ABC journalist’s secret liaison with
Cuba’s Fidel Castro,” by Peter Kornbluh
in POLITICO Magazine. “Today, almost
no one remembers Lisa Howard. But in
the early 1960s, she was one of the most
famous female TV journalists in the United
States — a glamorous former soap opera
star who reinvented herself as a reporter
and then climbed to the top of the malemonopolized world of television news. She
became ABC’s first female correspondent
and the first woman to anchor her own
network news show. Her influential role in
the media empowered her efforts on Cuba,
even as it worried White House officials
who were the targets of her ceaseless
pressure to change U.S. policy.
“In top-secret reports from the era, those
officials speculated about ‘a physical
relationship between’ Howard and [Fidel]
Castro and feared she would use her
position at ABC News to break the story of
Washington’s secret talks with the Cuban
comandante. But both she and Castro
took the secret of their intimate diplomacy
to their graves. Only now, thanks to
declassified official documents and, most
important, Howard’s own unpublished
diaries and letters, can the story finally
be told of how one tenacious journalist
earned the trust of the legendary leader
of the Cuban revolution, and cajoled two
U.S presidents into considering peaceful
coexistence with him.”
We spy ...
Ready to depart: The Eurostar terminal in
London’s St. Pancras station is getting a duty-free
shop. That’s taking Brexit readiness seriously!
Fast facts
Age: 51
Home turf:
Wimbledon
Want to be
Bank of England
governor? ”No,
thank you very
much.”
PHOTO OF SPENCER
DALE BY BP
Ryan Heath
rheath@politico.eu
@POLITICORyan
Spencer Dale knows all about the
dangers of groupthink. A longtime
employee of the Bank of England,
he rose to the heights of chief
economist and was in the eye of
the storm during the 2008 financial crisis.
“I think at the roots of that financial crisis was a collective intellectual failure,” said Dale, who
is now chief economist at energy
giant BP.
“That was a very sort of humbling process and I think you …
recognize that you actually knew
an awful lot less than you thought
you did and those types of lessons
stay with you,” he told EU Confidential.
Dale, who switched to BP in
2014, was in Brussels this week
to present the company’s annual Energy Outlook — an attempt
to sketch out the global energy
landscape until 2040. Making the
report public, Dale said, was an effort to avoid more groupthink.
“If you stand up around the
world and say ‘this is what I think’s
going to happen,’ guess what? People love telling you you’re wrong
and you come away smarter,” he
said.
Dale’s report brings good and
bad news for EU policymakers. It
suggests that by 2040, the Continent’s energy use will fall back to
the level of the mid-1970s — even
though GDP will be more than
Listen to the podcast
three times greater.
Dale also believes Europe will
have greater choice in energy suppliers thanks to the growing global
market in liquefied natural gas,
making the Continent less dependent on cheap gas from Russia.
The bad news for Brussels, Dale
said, is that the Continent is not
doing enough to meet the goals in
the Paris accord for cutting carbon
emissions. Investing more in renewables doesn’t do much good,
he said, if you’re not serious about
cutting back on the use of coal
in power generation. That’s like
somebody on a diet “having a lovely salad and feeling very virtuous
but then they have a bowl of ice
cream at the end of it,” he said.
To push companies — including his own — to invest more in
clean technology, Dale said, the EU
should reform its emissions trading system so that the price of pollution is higher.
Dale is enthusiastic about the
rise of shale gas and believes policymakers should invest more in
carbon capture technology, dismissing concerns about its viability. But even though gas is cleaner
than other fossil fuels, he acknowledged that energy companies need
to reduce the methane produced
as part of the process.
“People should hold us to account to make sure we hit those
targets,” he said.
EU WTF?!
The U.K.’s Home Office keeps messing up. It was forced to hold a briefing for EU diplomats,
admit to more immigration failures and promise EU27 citizens would not be the next victims.
First there was the Windrush scandal, in which Caribbean migrants who’ve lived in the U.K. for
decades were threatened with deportation because they lacked paperwork that the Home
Office itself has destroyed. Then Home Secretary Amber Rudd, above, was reported to have
said the system for EU27 migrants registering with U.K. authorities after Brexit would be as
simple as signing up to a fashion store’s customer club. That’s likely untrue: The Home Office
admitted that the app for registering residence wouldn’t be available on Apple iPhones, which
make up just over half of the U.K. smartphone market.
Separated at birth
Scottish First Minister Nicola Sturgeon’s mother Joan and music legend Elton John.
New episode every Friday | Soundcloud: soundcloud.com/politicoeuconfidential | Apple devices: Search podcasts for EU Confidential
4
POLITICO
Agenda
Thursday:
European
Commission
President JeanClaude Juncker
to address Greek
parliament.
ThursdayFriday: Final days
of the Hannover
Messe.
FridaySaturday:
Informal meeting
of economic and
financial affairs
ministers, Sofia.
BRUSSELS BEAT
CORRUPTION
APRIL 26, 2018
AROUND TOWN
LOBBYING
A step closer to
protection for
whistleblowers
Task force to
fight sexual
harassment
The European Commission published its proposals for an EU-wide
whistleblower protection directive on Monday, with campaigners
claiming the move as EU recognition that those who uncover bad
practices deserve protection. “Most
EU Member States fail to offer decent protection for those who wish
to come forward with the truth
when they encounter corruption or
wrongdoing,” said Alex Johnson of
Transparency International. “Both
potential whistleblowers and employers face a legal jigsaw puzzle
depending on which part of Europe
they’re in. That’s why it’s both essential and welcome for the EU to
act and provide solid, legal protections for whistleblowers.” In 2016,
Eurocadres, the European trade
union voice of professionals and
managers, set up whistleblowerprotection.EU, and almost 90 organizations have signed up.
In what could be a sign of things
to come in Brussels, the United
States’ National Institute for Lobbying and Ethics is starting up a new
task force to fight sexual harassment in the influence industry. The
task force is set to meet for the first
time next week and is supposed to
come up with “extensive recommendations” for lobbying firms to
help prevent harassment, according to Paul Miller, a lobbyist at Miller/Wenhold Capitol Strategies and
the institute’s president. While sexual harassment allegations have led
several members of Congress to resign or not run for reelection, lobbying has seemed less shaken up
than other industries by the flurry
of stories that followed the Harvey
Weinstein scandal. “I’m honestly
surprised we haven’t heard a story
from our community,” Miller said.
An installation by Save The Children outside the European Commission headquarters
in Brussels, depicting the tragic reality of a typical classroom in Syria. CRAIG WINNEKER
Corrections
POLITICO is committed to correcting errors. To contact the newsroom regarding a correction request,
please email editorial@politico.eu or call (+32) 02 540 9090.
— Ryan Heath
Career track
EPACA PICK: Isabelle De Vinck, managing
partner at Political Intelligence, was elected
new president of EPACA, the European
Public Affairs Consultancies’ Association.
TEAM MERKEL: Martina Fietz has
left her role as chief correspondent for
FOCUS Online to become the German
goverment’s deputy spokeswoman.
VULCAN ADVICE: Justine Korwek is now
Brussels director at government relations
firm Vulcan Consulting.
CAPITOL ACQUISITION: Anne
MacGregor is the first Brussels bureau
chief for Capitol Forum, and will lead their
EU mergers and acquisitions analysis and
reporting. MacGregor was previously a
partner at Dechert in Brussels.
STRATEGIC MOVE: Miriam Sapiro joined
the global team at Sard Verbinnen & Co.
FT SWITCH: Delphine Strauss has swapped
roles at the Financial Times, to become
economics correspondent, replacing
Gemma Tetlow, who joined the Institute for
Government this month.
CEPS RESEARCH: Martha Düker has
joined the Centre for European Policy
Studies as a researcher.
P OL I T IC O SPR L
A JOINT VENTURE BETWEEN
POLITICO AND AXEL SPRINGER
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NEWS
APRIL 26, 2018
POLITICO
5
Big farms set to pay the price as EU eyes subsidy cuts
Oettinger
expects
farm
spending
will fall
in new
budget
cycle
BY HANS VON DER BURCHARD
IN HANNOVER, GERMANY
European Commissioner for Budget
Günther Oettinger said Monday that
Brussels plans to cut its payments to
Europe’s biggest farms in the next
budget cycle in order to reduce the
bloc’s lavish agricultural subsidies by
6 percent.
Brussels is due to make a proposal
for the EU’s 2021-2027 budget framework on May 2, and cutbacks are seen
as inevitable because Britain will no
longer be contributing funds. Agricultural spending is one of the most obvious targets for cost-cutting because
the Common Agricultural Policy represents almost 40 percent of the EU
budget, or some €59 billion each year.
When asked by POLITICO about
CAP cuts on the sidelines of a trade
conference in Hannover, Oettinger
said: “We cannot fully exempt the existing programs from cutbacks. And
in comparison to 2020, as the last
year of the existing financial framework, my proposal will focus on approximately 6 percent, a moderate
6 percent, reductions.”
One of the biggest criticisms of the
CAP is that it has prioritized big landowners with direct payments based
on acreage. Some 80 percent of CAP
funds go to 20 percent of farms,
owned by the likes of British royalty
and major multinational companies.
Oettinger said the new budget
model would aim to balance that
slightly.
“What we have in mind is degressive funding: That means a very big
business receives for its hectares a
little bit less money than a small enterprise. And that’s exactly what we
still have to discuss within the next
days. On Wednesday, we will have
a discussion between [Agriculture
Commissioner Phil] Hogan and me
on this.”
Hogan has already told farmers to
prepare for belt-tightening.
“We need to be realistic: In the
absence of more money from member states, there will be a cut to the
CAP budget. My job as I see it is to
build the strongest possible coalition
to resist the worst of these cuts, and
achieve the best outcome in a difficult
scenario,” he said last week.
Still, Oettinger said that he would
also be calling on EU member countries to dig deeper into their coffers
to help take the edge off the hole created by Brexit.
“We don’t want to fully compensate the Brexit gap through shortages.
We want slightly higher payments by
the member states. But a part of the
Brexit gap — about 50 percent, as well
as a part of the new tasks — should be
financed through cutbacks.”
Much of the political discussion
on slicing CAP funds has focused
on whether the Commission should
propose an internal structural shift
between the program’s two “pillars.” The current CAP is divided between direct subsidies from Brussels
to farmers — so-called Pillar 1 payments — and rural development
funds, or Pillar 2.
Oettinger, however, cautioned that
both would feel the squeeze.
“All the money goes to the operators, thus the farmers. One part goes
into the second pillar, in the rural
area,” he said. “We will make reductions in both pillars.”
Simon Marks and Emmet Livingstone
contributed reporting from Brussels.
Europe
hopes ethical
approach will
be its edge in
global AI race
Boosting trust in the bloc’s AI
applications will help Continent catch
up to competitors, Brussels believes
BY JANOSCH DELCKER
Europe’s secret weapon in the race
against the U.S. and China on artificial intelligence is … ethics.
That was the message at the core of
the EU’s AI strategy unveiled Wednesday and developed by a team of European commissioners under the
supervision of Commission Vice President Andrus Ansip. In its “Charter
on AI Ethics,” the Commission wants
to spell out how to preserve fundamental rights along with the rise of
AI. This, the bloc believes, will boost
consumer trust in European AI applications and help the Continent —
which lags far behind the U.S. and
China in building a state-of-the-art AI
industry — catch up with competitors.
The strategy includes a boost to
the bloc’s annual spending on AI research and development of about 70
percent, to around €500 million, effective immediately. And the Commission said it will name a high-level
group of experts by this July who will
release a broad ethical framework on
how to legislate AI in Europe by the
end of the year.
The ambitious plan, however, faces two major hurdles, according to a
Commission official speaking on the
condition of anonymity: Once the
current seven-year budget expires
at the end of 2020, the Commission
Right across Europe, task forces in national governments are working on their individual AI strategies, as well.
suggests that the bloc’s overall investment in AI, including money from
national and regional governments as
well as the private sector, should be
brought up to at least €20 billion per
year. It’s far from certain that enough
money will be put aside in the upcoming budget talks to reach this target,
the official cautioned.
And officials are well-aware that if
the Commission doesn’t get member
countries on board with their ethicsfirst strategy, it could lead nowhere.
AIMING FOR EU-WIDE HARMONY
In fact, some countries are already
forging ahead with their own national
plans. Last month, France released
its own AI strategy — which Commission officials said helped set the tone
for the EU’s strategy. From Berlin to
Rome to Helsinki, task forces in other
governments are working on their individual strategies, as well.
While it is “laudable” that French
President Emmanuel Macron and
German Chancellor Angela Merkel
are rolling out their own national
plans to boost the development of
AI, “those [initiatives] make most
sense if a strong impulse from Paris
and Berlin gets bundled in Brussels
as an offer to all member states,” EU
Budget Commissioner Günther Oettinger said Monday during a speech
at the Hannover trade fair.
Industry officials echoed this call,
stressing that from a business point of
view, it’s crucial to make sure there
are similar rules across the Continent.
“It’s understandable that every
country wants to have its own AI
strategy,” said Liam Benham, vice
president for government and regulatory affairs in Europe at IBM, “but
the minimum businesses can expect
is that there is a harmonized legal
framework at EU level, governing
rules around things such as liability.”
Nothing illustrates that better than
the development of self-driving cars,
which could start to appear on European streets as early as 2021, and
for which member country after
member country is starting to pass
its own rules.
IMAGE VIA ISTOCK
In January 2017, the European
Parliament’s Legal Affairs Committee stressed in its report on how to
update EU civil law on robotics that
it is important to come up with European legal guidelines as soon as
possible to prevent a hodgepodge
of regulation across the Continent.
The warning fizzled. Although Parliament passed a resolution based on
the report the following month, not
much has happened since.
Committee Vice Chair Mady Delvaux said last month she now sees
“that different member states are
introducing their own regulations.”
This, she added, is “just what we
wanted to prevent.”
A THREE-PART PLAN
The strategy has three distinct pieces: The EU will facilitate access to
data for companies, boost development and set up centers to improve the communication between
researchers and entrepreneurs. It
SEE AI STRATEGY ON PAGE 10
6
POLITICO
NEWS
APRIL 26, 2018
City spouses block Brexodus
London
high life
entices
banking
families
not to
leave UK
For City of
London spouses,
the prospect of
Brexit is gloomy.
CHRIS J RATCLIFFE/
AFP VIA GETTY
IMAGES
BY SILVIA SCIORILLI BORRELLI
IN LONDON
London may have an unexpected
group to thank for preventing a Brexit
exodus from the financial district —
the well-heeled spouses of top bankers.
Before the Brexit vote, many bank
CEOs, including Goldman Sachs’
Lloyd Blankfein and JPMorgan’s Jamie Dimon, warned that thousands
of jobs might have to move if the
U.K. were to leave the EU. Rivals
like Frankfurt and Paris turned on
the charm to attract as many Brexit
finance refugees as possible.
Two years on, the bankers’ diaspora hasn’t (yet) happened and top
executives have dialled back their
rhetoric.
In an interview with POLITICO earlier this month, Blankfein said the
U.K. economy remains surprisingly
healthy despite the vote and Brexit
will require “more distribution of
[the bank’s staff ] than otherwise we
would have.”
Last week, Chancellor Philip Hammond claimed to have “dammed the
flow” of jobs from the City, while
Trade Secretary Liam Fox told a business forum this week that the U.K.’s
“professional infrastructure in financial services cannot be replicated anywhere else in Europe.”
But if London is to retain most of
its finance industry, it may depend
on more than Hammond, Fox or the
U.K. negotiators.
One reason for the banking Brexodus not materializing may be more
prosaic: The “other halves” of the
financial elite enjoy their London
lifestyle too much to leave. This
phenomenon suggests the capital’s pre-eminence (it was voted the
world’s top global finance center last
week in a survey of finance professionals) may be more resilient than
its European rivals hope.
From the get-go, the City’s army
of “yummy mummies” — there are
yummy City daddies and partners
too, but top jobs in banking are still
dominated by men (who pay themselves significantly more than women
in the sector) — have made it clear to
their other halves that they have no
intention of moving.
Several City wives and one City
husband who spoke with POLITICO
(withholding their full names at the
request, in some cases, of their partners’ employers) said they were simply not willing to give up London’s
advantages because of Brexit.
One City wife who blogs under
the pseudonym “Notting Hill Yummy
Mummy” has taken the temperature
of other spouses in a similar situation.
“Dark, grey, cold Frankfurt is a bit
of a nightmare … people that have
a choice of any sort aren’t going to
willingly move there,” she said, offering no verdict on London’s weather.
She cited the case of an American
family that had been offered relocation to Europe from New York. After
traveling to London and Frankfurt
to check the comparative advantages, including schools and housing,
they concluded the German financial
capital was not for them. “They put
together an Excel sheet with all the
information they had collected and
the two cities just couldn’t compare,”
said Yummy Mummy.
One very senior banker in Canary
Wharf said he took his wife and two
Press freedom under threat in Europe
Hostility
toward
reporters
spurred
by leaders
BY ZACH SAYER
Press freedom has deteriorated significantly in Europe over the past
year, as hostility toward the press
grows globally, according to the 2018
World Press Freedom Index released
Wednesday.
Four out of five of the index’s biggest falls in press freedom took place
in European countries: Malta (down
18 at 65th), Czech Republic (down 11
at 34th), Serbia (down 10 at 76th) and
Slovakia (down 10 at 27th).
The index, which surveys press
freedom in 180 countries and is com-
piled by Reporters Without Borders,
found that more and more democratically elected leaders are engaging
in media bashing, a phenomenon
it said is no longer confined to authoritarian regimes such as Turkey
and Egypt.
The United States, where President Donald Trump has called reporters “enemies of the people,” fell
two places this year to 45th, while
Canada rose by four places to enter
the top 20.
Norway topped the list for the second year in a row, with Sweden in
second place.
daughters to check out Frankfurt —
the leading candidate to rival London
as Europe’s financial hub after Brexit
— at the end of 2016. When they got
back to London, his wife informed
him that “there was no way in hell
the family was moving.”
WHAT, NO HURLINGHAM?
As part of their contingency planning,
a number of City firms organized trips
for top executives and their families
to scope out Frankfurt. The feedback:
Real estate and schooling options are
limited and the language barrier is
discouraging.
“No, I would not be willing to relocate to Germany, absolutely no way,”
said Tara, the 30-year-old wife of a
City trader.
The families in question felt suitably upmarket housing options were
limited in Frankfurt; there were few
sports clubs offering adult and children’s activities in English; and there
were no private members’ clubs to
compete with exclusive London
haunts like the Hurlingham Club,
the Arts Club and 5 Hertford Street.
The international schools in Frankfurt follow the International Baccalaureate rather than the English curriculum, making it difficult for bankers’
children to pick up where they left
off if they returned to London.
Meanwhile, London’s posh private
schools are a major draw for bankers. Top primary schools like Kensington Prep, Falkner House, Glendower
Preparatory and Wetherby — costing
upwards of £20,000 a year — are the
schools of choice. Securing a place is
a major endeavor: Registration closes at least one year before the start
of kindergarten, the yearly intake is
about 20 percent of the demand, and
if the child drops out, readmission a
few years later is unlikely.
“I signed up my daughter for nursery before she was born; on the form
I had to write ‘to be confirmed’ in the
space where it asked for the child’s
sex and date of birth. It’s just too
important to improvise,” said Olivia, sipping a “liquid gold latte” — a
concoction of turmeric, cinnamon,
astragalus, honey and coconut milk
— on a bright green velvet couch at
Farmgirl, a café just off Fulham Road
in southwest London.
Olivia, and many other banker
families, use the services of consultancies offering expensive advice on
where to send their kids to school.
They are adamant that securing a
place at the right school trumps a
Brexit-related relocation.
Marina Fogle, an English socialite who runs an antenatal class in
South Kensington and is wife of TV
personality Ben Fogle, said London is
simply “unbeatable in terms of what
it offers wealthy people.”
“When Brexit happened, a lot of
my friends thought ‘OK, that’s it,
we’re moving.’ And in the finance
sector some people did, but by and
large things seem to have worked
out,” she said.
FRANKFURT’S A BORE
According to Notting Hill Yummy
Mummy, locations like Barcelona and
Paris would be more appealing socially, but the Catalan city doesn’t have
enough top finance jobs and French
taxes are a turnoff.
Another consideration is the
spouses’ own jobs, which some
would have to give up if they move.
“I don’t speak German and I
couldn’t work in Frankfurt, plus
there’s a quality-of-life factor: London
is an interesting city, lots of stuff to do
— Frankfurt isn’t,” said Rebecca, who
organizes fundraisers for charities
and is married to an Italian banker.
A 52-year-old professor, who teaches at one of London’s most prestigious universities and is married to a
senior female banker, said he would
find it difficult to leave London.
“I wouldn’t have a problem moving per se, the challenge is finding
a city that replicates London’s main
qualities: good jobs, great schools,
plenty of real estate options, unrivalled public transport,” he said.
Firms’ best bet, if a hard Brexit
forces them to move staff, is to expand local offices and send some
bankers back to their home countries, as Goldman Sachs’ Blankfein
suggested.
Whatever route the banks decide
to take, they will not be able to dictate to their staff — and perhaps more
importantly their families.
“Bankers are a bit like soccer players — they decide where they’ll play
based on where their wives want to
live,” said Rebecca.
EU, UN want to restart Syria talks
BY DAVID M. HERSZENHORN
EU and U.N. officials used a conference on international aid for Syria
in Brussels on Tuesday to call for a
resumption of political negotiations
to end the country’s long civil war.
“Real, meaningful political negotiations,” Federica Mogherini, the EU’s
high representative for foreign policy,
said at a news conference, “are clearly
the only way forward for the country.”
Standing by Mogherini’s side, the
U.N. special envoy for Syria, Staffan
de Mistura, said the situation on the
ground in Syria has only worsened
in recent weeks, including a suspected chemical attack, which Western
countries have blamed on the Syrian
regime, and retaliatory missile strikes
by France, the U.S. and the U.K.
“We have seen in the last few
weeks, days, we have seen it with
our eyes that military gains, territorial gains, and military escalation
does not bring a political solution, has
not brought any change,” de Mistura
said. “On the contrary we are going
through a very difficult moment.”
Mogherini said a cessation of hostilities is needed, particularly to allow the delivery of humanitarian aid.
“Our biggest dream for
the future is that we stop
wasting food entirely.”
Mette Lykke, CEO of Too Good To Go, Denmark
Shocked at seeing good food being thrown away, a group of friends
decided to create an app called Too Good To Go where stores can sell
their surplus food. Developing on Android’s open-source operating system
allowed them to launch their app quickly and make improvements to the
service as it grows. Too Good To Go’s mission is to reduce food waste
worldwide. So far they have saved an incredible 3 million meals.
Watch the mini-documentary about the app that
reduces food waste: g.co/androidstories
10 POLITICO
NEWS
AI STRATEGY
CONTINUED FROM PAGE 5
aims to ensure that advances in automation will not leave parts of its
population without jobs, for example
by implementing advanced training
measures. And it wants to set ethical
standards that could one day also
serve as a blueprint for other regions
of the world.
Business officials said they generally welcome the EU’s ambitions to
become a stronghold of data protection in a world that could soon be
dominated by AI-powered technologies but said they want a balanced
approach.
“We see an opportunity here for
the EU,” said IBM’s Benham. “At the
same time, however, the EU should
also not think that it can just tighten
every screw on data policy and AI
can still be successful.”
Europe — despite being home to
strong AI basic research — has been
APRIL 26, 2018
watching from the sidelines as American and Chinese tech firms battle over
who will dominate artificial intelligence in the decades to come.
The U.S. remains the world leader
in the field, with much of the cuttingedge expertise held by a handful of its
private tech companies. China, which
wants to become the world leader in
AI by 2030, has caught up by boosting
research, granting subsidies to companies and providing its AI industry
with access to data about more than
1.4 billion citizens protected only by
scant privacy laws.
The answer, however, is not copying the U.S. or Chinese approach —
but making the algorithmic decision-making process at the core of
AI technologies transparent to customers, the Commission argues.
SHEDDING LIGHT ON ‘BLACK BOX’
TECHNOLOGIES
Although research on AI — technologies enabling machines to do jobs that
previously required human thinking
— dates back to the 1950s, only in re-
cent years have computers become
fast and stable enough, with sufficient
data available, to make it applicable
to many aspects of life.
At the core of artificial intelligence
is technology that allows computers
to learn and make their own decisions
by mimicking and proliferating human brain patterns.
In both military and civilian contexts, such “deep learning” opens
vast potential across sectors, from
driverless cars to medical microscopes identifying cancer cells. But
it also turns some computers into
“black boxes,” making it increasingly difficult or even impossible to understand why certain decisions were
made. And many AI systems mirror
biases from “the real world,” where
their data was collected.
One of the central goals in the
EU strategy is to provide customers
with insight into the systems, but that
could be easier said than done.
“Algorithmic transparency doesn’t
mean [platforms] have to publish their
algorithms,” Ansip said, “but ‘explain-
ability’ is something we want to get.”
AI experts say that to achieve
such explainability, companies will,
indeed, have to disclose the codes
they’re using — and more.
Virginia Dignum, an AI researcher
at the Delft University of Technology,
said “transparency of AI is more than
just making the algorithm transparent,” adding that companies should
also have to disclose details such as
which data was used to train their
algorithms, which data are used to
make decisions, how this data was
collected, or at which point in the
process humans were involved in the
decision-making process.
In purely technical terms, this is
not difficult to achieve, Dignum said.
“But it’s more a governance challenge, and it will imply a mind shift
when it comes to how we do business and how we interact between
businesses and consumers.”
Joanna Plucinska, Laurens Cerulus and
Hans von der Burchard contributed
reporting.
Trump-Macron bromance conceals
minimal movement on French demands
Behind
the hugs
and
kisses,
Trump
offers few
actual
tradeoffs to
France’s
policy
agenda
BY NICHOLAS VINOCUR
IN WASHINGTON
Donald Trump and Emmanuel Macron brought their public friendship
to new heights during a Washington
encounter this week — embracing,
touching hands and even sharing a
fraternal kiss.
The shows of affection culminated
Tuesday, half-way through Macron’s
three-day state visit to the United States, when the U.S. president
clasped the French leader’s hand and
planted a kiss on his cheek, announcing to the world’s press corps that he
“really likes this guy.”
But behind the displays of warmth,
Trump offered few actual concessions
to his guest’s policy agenda, leaving
him and Europe at large in a state of
uncertainty on a range of hot-button
strategic and commercial matters.
NEW IRAN DEAL, OR NO IRAN DEAL?
On the Iran nuclear accord, which
Trump has threatened to tear up; on
the future security situation in Syria,
where Trump has said he wants to
quickly withdraw all U.S. troops; on
the threat of trade tariffs, where an
exemption for the European Union
is due to expire next month — Trump
moved little off his initial positions.
That’s despite Macron’s announcement Tuesday of a “new deal” with
Iran that would replace one that
Trump has threatened to abandon
by May 12.
As for the Trump-Macron friendship, the Washington encounter
made it look more like a one-way
street than one founded on common views.
“We made proposals, we advanced
arguments,” said a senior adviser to
the French president on the condition
of anonymity, summing up more than
two hours of discussions between the
French and U.S. leaders Tuesday. “I
think they had a discussion that went
in the right direction.”
The official declined to say how
Trump had responded to Macron’s
arguments on trade tariffs, Iran or
Syria, adding only that Trump had
agreed to the need for a global solution concerning Iran’s involvement
in various regional conflicts.
tal. He said that while he wanted to
“get them out,” he recognized that removing all military assets would leave
a window open to other countries,
particularly Iran, to deepen their influence in Syria, and that U.S. troops
would not leave “right away.”
TRADE TENSIONS INTACT
In a light-hearted moment, Donald Trump brushes some dandruff off Emmanuel
Macron’s shoulder prior to a meeting in the Oval Office. LUDOVIC MARIN/AFP VIA GETTY IMAGES
That cautious tone contrasted with
Macron’s enthusiasm from the stump
during his joint press conference with
Trump.
Hailing “major advancements” on
strategic issues, Macron announced
a “new deal” on Iran that would
complement the one that Trump
had savaged minutes earlier in comments that seemed to take the French
president by surprise.
Macron said that France had presented a new framework for a deal
that would address U.S. concerns on
four points: the development of ballistic missiles, “sunset clauses” covering the expiration of certain sanctions
against Iran, verification of Iran’s nuclear and weapons programs and its
role in neighboring countries, namely
Syria and Yemen.
Such a “new deal” would not replace the current one, but expand
on it. “We’re not going to tear up an
accord to go nowhere, we’re going
to build a new accord that’s broader,” said Macron, adding that he still
saw no “Plan B” to the Obama-era
deal with Iran. Trump welcomed
the proposals and said he had taken
on the French leader’s idea that any
accord would have to address Iran’s
regional role.
But Trump stopped short of saying that the United States had signed
on to the new deal, or that he would
keep Washington in the current one
before a May 12 deadline. “I’m not
going to say what I’ll do, even if you
have an inkling,” he said, turning to
the French president.
Instead Trump attacked a deal
that “should never have been done,”
blasting “previous administrations’”
efforts to resolve the standoff with
Iran. The lack of commitment left
open the possibility that Trump
will pull the United States out the
current deal on May 12 — a scenario
that French diplomats previously
warned could endanger regional
security, and invite other powers,
namely Israel, to act preemptively
against Tehran.
Asked whether other European
states had signed on to the French
proposal, the senior aide said that Macron had spoken to British and German leaders about it before coming
to the United States. “We advanced a
proposal that would avoid us ending
up with nothing,” said the aide, who
added that Iran was not favorable to
overhauling the accord, or renegotiating any of its parts.
On Syria, where the French president said that he had “convinced”
Trump to keep American troops on
the ground for a longer period, the
U.S. leader was similarly noncommit-
Another major issue in focus for the
trip was Trump’s trade tariffs, and an
exemption for the European Union
set to expire in May. While both leaders underscored the need for “reciprocity” in trade, the U.S. president
made no commitment to extend the
exemption or make it permanent.
During their discussions, an aide
said that Macron had pressed the
point that “we cannot conceive of
a trade war among allies,” and that
France would only speak “in concert
with Europe” on trade.
“We put across the point that the
exemptions should be extended,”
added the aide, who sat in on discussions with senior U.S. officials following Macron’s bilateral talks with
Trump.
Underscoring “progress” on commercial issues, French officials pointed to U.S. commitments to delay the
implementation of sanctions targeting Russian oligarchs by six months
as a direct response to French concerns that such measures would hurt
their companies. “There was a desire
to understand our concerns, to take
them into account,” said the aide.
But on trade, the officials got no
firm commitment from Trump that
Europe would be exempt from the
tariffs. As Macron rounded out his
visit to the United States — with an
address to Congress planned for
Wednesday in which he would emphasize “democratic values” — issues
opposing the EU to the United States
will be left for German Chancellor
Angela Merkel to address when she
travels to the United States on Friday.
The Trump-Merkel encounter is
unlikely to bring the same display
of affection as with Macron. But the
German leader faces the same underlying challenge with the American president: lifting the cloud of
uncertainty that hangs over U.S.-EU
relations.
POLITICO went to Sofia APRIL 18
HIGHLIGHTS
„ 121 interview with Bulgarian Energy Minister
„ 1 hour panel debate with top level policy makers and industry representativef
„ 114 high-level participants
Watch the video again on politico.eu/cleanenergyb
12
POLITICO
NEWS
APRIL 26, 2018
Italy’s Democratic Party open to coalition negotiations with 5Stars
Center-left
party says
it could
be willing
to hold
talks, with
conditions
BY ALEKSANDRA WRÓBEL
Italy’s center-left Democratic Party
(PD) said Tuesday it may be open to
coalition talks with the 5Star Movement, if the anti-establishment party breaks off contact with the center
right.
After meeting Roberto Fico, the
president of the Chamber of Deputies
— Italy’s lower house of parliament —
the PD’s acting leader Maurizio Martina said he would consider discussions
with the 5Stars if “there is no lon-
ger any possibility of an agreement
between the 5Stars, League and the
center right,” according to Reuters.
The 5Stars have previously indicated
they could consider the PD as a coalition partner.
The statement comes after weeks
of impasse since March 4’s inconclusive national election, in which a center-right alliance including the League
and Silvio Berlusconi’s Forza Italia
won the most votes, but the 5Stars
emerged as the largest single party.
Since then, the parties have been
unable to form a government. President Sergio Mattarella first appointed
the Senate speaker to try to see if the
5Stars and center right could form a
government, but these talks failed last
week because the 5Stars refused to
work with Forza Italia under Berlusconi, whom they consider a symbol
of the political establishment they
were founded to fight against. The
League, in turn, refused to abandon
their long-time partner to team up
with the 5Stars.
Berlusconi denounced the 5Stars
as “a danger for the country” and said
the PD would be a better government
ally, but the League’s leader Matteo
Salvini ruled this out.
Mattarella then asked Fico, a member of the 5Star Movement, to see
if the PD might agree to work with
his party.
5Star leader Luigi Di Maio also on
Monday indicated that he had given
up on Salvini. “Let it not be said that
I didn’t try right up to the end, now
good luck to him [Salvini],” he wrote
on Facebook.
Irish abortion vote tests Facebook and campaign data
the digital information on up to 87
million Facebook users without their
consent. Cambridge Analytica denies
those accusations.
Measures rolled out
during Irish campaign to
see what happens when
all users can see political
advertising
FOCUS ON DIGITAL POLITICAL
ADVERTISING
BY SARAH WHEATON
AND MARK SCOTT
IN DUBLIN
Despite
the recent
furor about
online
political
advertising,
many in
Ireland still
doubt such
tactics
will sway
the one in
five voters
who are
undecided.
PHOTO OF SAVE
THE 8TH BADGES
BY BRIAN LAWLESS/
BELGA IMAGES
Ireland’s soul-searching debate over
whether to change its constitution
and allow women to terminate their
pregnancies coincides with a ballooning transatlantic scandal surrounding Facebook and the use of personal
data in political advertising.
Irish voters go to the polls May 25
to decide whether to repeal the country’s abortion ban. With the campaign
heating up, lawmakers hauled Facebook executives before parliament to
grill them about how to prevent people’s personal information from being used to manipulate them online.
“I have serious concerns as do
many people out there given the recent revelations of Cambridge Analytica,” parliamentarian Bríd Smith
said at an April 17 hearing. Cambridge
Analytica, the U.K.-based firm accused of influencing the Brexit vote,
is also accused of wrongly obtaining
millions of individuals’ Facebook data
to sway the 2016 U.S. election in favor
of Donald Trump. A vocal abortion
rights supporter, Smith worries about
a “whole cohort of the electorate out
there who are vulnerable to that type
of advertising.”
Facebook agreed to put new safeguards in practice, starting Wednesday.
The politicians’ fears, however,
aren’t likely to be realized: Though
one Irish campaign group considered
using sophisticated data tools that
possibly influenced other votes, the
anti-abortion organization ultimately
decided it wasn’t of much use.
Canadian data mining company
Aggregate IQ sought to carry out
work for Save the 8th ahead of the
country’s referendum on May 25, according to online records reviewed
by POLITICO. AIQ has ties to Cambridge Analytica.
The company built a trial website
in early March that would have allowed Save the 8th to send digital
get-out-the-vote messages to potential voters, according to an online
data repository containing AIQ information discovered by UpGuard,
a cybersecurity firm. The site was
never published, but AIQ’s attempted involvement in Ireland’s upcoming referendum has not previously
been reported.
Save the 8th spokesman John McGuirk confirmed that AIQ, which also
helped analyze voter data during the
U.K.’s Brexit vote, offered to work for
the campaign.
He said the organization declined
the pitch because it believed such
complex data mining techniques
would have limited success in convincing Ireland’s roughly 3 million
eligible voters to opt against overturning the 8th Amendment of the
country’s constitution, which bans
abortion in almost all circumstances.
The continued high consumption
of traditional media, ongoing reliance
on non-tech savvy older voters to win
elections and lack of success in micro-targeting Facebook users in such
a small country could ward off the
worst types of digital manipulation
and outright online lies, which have
become the norm ahead of other
countries’ elections.
“A lot of these firms come to Ireland and they show you this massive portfolio of stuff they’ve done
in the U.S., in the U.K.,” McGuirk said.
“Spending a lot of money segmenting and chopping up the electorate
really wasn’t for us.”
FACEBOOK’S IRISH TEST
The interest of such international
data analytics companies in next
month’s hotly contested Irish referendum comes as politicians and the
general public across the EU, United
States and beyond grow increasingly
alarmed about how political organizations use targeted digital advertising to woo potential voters. Facebook
remains in hot water worldwide for
its role in allowing such data mining techniques to take place on its
social network of more than 2.2 billion global users. The tech giant acknowledged a “breach of trust” in
failing to protect data and promised
to do more. Facebook also denies
any wrongdoing.
As part of its efforts to clamp down
on harmful political advertising, starting Wednesday, Facebook will allow
Irish users to review all advertising —
whether it’s explicitly targeted at
them or not — that campaigns and
companies buy on its network in the
country. This means that all users will
potentially see political advertising
that might have been designed to influence another group, in an effort to
boost transparency.
The transparency push ahead of
Ireland’s upcoming referendum is
only the second time the company
has offered local users access to such
information, after a similar project
in Canada, and it comes ahead of a
global rollout of the program planned
for June.
“We made the decision only in recent days to accelerate and include
Ireland in the pilot program,” Joel
Kaplan, Facebook’s vice president
for global policy, told Irish lawmakers on April 17. “We are working hard
to build out these transparency tools
and roll them out globally, but it takes
time.”
McGuirk added that Save the 8th
hired Kanto, a digital analytics firm
whose founder, Thomas Borwick,
was chief technology officer on the
Vote Leave campaign during the
United Kingdom’s 2016 referendum
to leave the European Union. That
data firm, McGuirk added, analyzes
how potential voters interacted with
the group’s online advertising but was
not doing more sophisticated online
work for the anti-abortion organization.
AIQ and Kanto did not respond to
requests for comment. AIQ has previously denied allegations that it has
ties to Cambridge Analytica, which
has also been accused of harvesting
The ability to track Facebook advertising is aimed at calming concerns
over Ireland’s relatively lax campaign
financing laws. Under the country’s
Electoral Acts, for instance, campaigning groups must register with
the Standards in Public Office Commission, a local regulator, if they receive political donations. They do not
have to provide evidence about how
money is raised or spent.
“It’s a trust-based regulatory environment,” said Liz Carolan, cofounder of the Transparent Referendum Initiative, a volunteer group
tracking digital political advertising
on Facebook ahead of next month’s
vote. “There’s a potential here for bad
things to happen.”
So far, her initiative, which is based
on volunteers downloading an online
widget that tracks which ads they are
shown on Facebook, has revealed
more than 350 political ads on the
social network, including several paid
for by international groups such as Radiance Foundation and Rachel’s Vineyard, U.S. anti-abortion organizations. Despite the recent furor about online political advertising, many in Ireland still doubt such tactics will sway
the one in five voters who are undecided. According to the latest polls,
nearly half of voters plan to vote for
repealing the ban.
“People in general aren’t taking
to Twitter or Facebook in order to
form an opinion in relation to this,”
said Stephen O’Leary, founder of the
Dublin-based social media analysis
firm Olytico, which is neutral in the
race. “They’re going to see what people who share their opinion are talking about.”
When falsehoods do appear online,
according to pollsters, it often reinforces people’s existing preconditions
and does not convince undecided voters to switch their political allegiances. And the reality is that Irish regulators are largely powerless to contain
even lies in full view: As city councils
field complaints about graphic images
and inaccurate information on posters
plastered across the country, they can
be removed only if not hung correctly
or if they lack the publishers’ name.
Both sides emphasize canvassing
and heart-to-heart chats to change
minds.
“From this point forward,” Health
Minister Simon Harris, a supporter
of repealing the ban, said earlier this
month, “it will be the conversations
people have with friends and family
that will decide this crucial referendum.”
Europe’s Crop Apartheid
Here are the facts about the EU’s proposed
Ban on Palm Oil under the Renewable Energy Directive:
1.
The European Parliament has voted to Ban Palm Oil biofuels.
2.
The EU Commission claims “excluding biofuels produced from Palm Oil from being accounted” under
RED is not a Ban.
3.
The EU Commission wants you to think the Ban is a “Subsidy Cap” post-2021. This is patronising.
Malaysia’s small farmers are not foolish — we know a Ban when we see one.
4.
The “Subsidy Cap” means exclusion for Malaysia’s Palm Oil farmers. European oilseeds will not be
excluded. This is the very definition of discrimination.
5.
EU leaders attack American tariffs but now seek to impose discriminatory tariff-like measures on
Malaysian exports.
6.
Approving a Ban on Palm Oil biofuels will signal Europe is abandoning its WTO commitments and
withdrawing from Asia.
7.
The Malaysian Government considers the Ban and any discrimination on Palm Oil biofuels as modernday Crop Apartheid imposed by Europe.
A Ban is a Ban. Malaysian Small Farmers Reject
All Unequal Treatment for Palm Oil.
PAID FOR BY:
FacesofPalmOil.org
14 POLITICO
NEWS
APRIL 26, 2018
Big Pharma’s
battle for the
benchmark
This article is part
of a series on drug
pricing, Pharma’s
Market.
to wait while drug makers negotiate
opening gambits with high-rollers like
Germany and Sweden.
The pharmaceutical industry
acknowledges that ERP can sometimes make medicines less available
in some countries. “It impedes the
ability to differentiate price between
countries based on local conditions
such as prevalence, economics and
health care delivery,” said Andrew
Powrie-Smith, spokesperson for the
European Federation of Pharmaceutical Industries and Associations (EFPIA), the branded drug industry trade
group.
“Moving away from ERP to a more
outcomes-focused system would deliver greater value to health care systems,” he added.
Tactics focus on locking
in a reference price in
rich northern countries
BY SHIRLEY S. WANG
In Europe
some
countries
have begun
to strike
pacts with
other
nations
to share
what would
otherwise
be
confidential
drug pricing
information.
PHOTO OF MEDICINES
AT A PHARMACY IN
ATHENS BY LOUISA
GOULIAMAKI/AFP VIA
GETTY IMAGES
If you want to conquer Europe, start
from the north. That’s the winning
strategy many pharmaceutical companies are using to lock in the highest prices for new medications across
the Continent.
Governments across the European Union use a negotiating strategy called external reference pricing
(ERP), in which prices paid by other
countries serve as a starting point for
negotiations or a limit on what they
are willing to pay for drugs.
In theory, the practice is intended to keep health care costs down,
helping governments make sure they
don’t pay a higher price than their
neighbors.
In practice, however, ERP provides companies with an incentive
to strike deals with richer northern
countries, in order to lock in a high
reference point in talks with other
governments.
Perversely, for many poorer southern or eastern countries this can result in higher prices than they might
otherwise have gunned for.
The result can also be fewer drugs
available to low-price (most often
poorer) countries, as pharmaceutical companies wait to enter markets
like Greece and Portugal for fear of
cutting into profits elsewhere.
“It simply is not worth risking undermining a potentially higher price
elsewhere in the EU,” said Patricia
Danzon, a professor emeritus at the
Wharton School at the University of
Pennsylvania, who has studied drug
pricing in Europe.
ERP is the most widely used pricing strategy in the EU, with 25 of 28
nations employing it, according to the
European Commission.
TEXTBOOK CASE
A negotiation between the pharmaceutical company Janssen Biotech
and the government of Sweden offers a textbook example — literally
— of the lengths companies go to in
order to secure a high opening price.
Swedish economists Ulf Persson
and Bengt Jönsson studied how the
subsidiary of U.S. health conglomerate Johnson & Johnson sought to
FAIR PRICING
bring a prostate cancer treatment to
market in 2012, documenting the effort to keep the published list price
high.
After its drug Zytiga was approved
by the European Medicines Agency
in 2011, Janssen Biotech approached
Sweden’s TLV, the health technology
assessment body that decides whether a drug or medical device should
be reimbursed by the state.
The TLV decided not to include
Zytiga on its drug reimbursement
scheme in 2012, on the grounds that
the price for the treatment was too
high.
Janssen could have chosen to
lower the price offered to the TLV,
but that would have locked in a lower benchmark when the company
looked to negotiate deals in other
countries.
Instead, the company took an alternative and more laborious route
to getting onto the Swedish market:
negotiating with a group representing the country’s 21 county councils.
Sweden allows county councils to
negotiate directly with drug makers,
as long as the price they agree to is
lower than that offered to the TLV.
In 2013, the Janssen signed an agreement with the councils in which it
agreed to “pay for performance” and
offer rebates to the government if the
treatment wasn’t effective.
This agreement made Zytiga more
cost-effective within the Swedish
health care system, according to
Janssen. But, crucially, it locked in
the price originally offered to the TLV
as the Swedish benchmark. In effect,
this pushed up the starting price in
negotiations with other countries
based on the ERP.
Persson and Jönsson, the economists who studied the case, say these
types of negotiations mask the true
price countries pay and “erode” the
ERP process.
Janssen Biotech says deals like the
one it struck in Sweden help ensure
that patients have access to affordable medication, while enabling the
country to continue investing in R&D.
“While the agreement is not traditional under the national model, this
risk-sharing approach is an example
of how innovative agreements are being developed to avail speedier access
to innovative medicines for patients
in need that better meet local needs,”
said a spokesperson.
LIMITED BENEFIT
The price a country is able to secure
using ERP depends on the benchmarks set in early negotiations. For
instance, a €1 reduction in drug price
in Germany leads to a cascade effect
of a €0.09 cut in price in Austria, plus
a further reduction of €0.15-€0.19 due
to an indirect effect, studies have
shown.
The benefits of ERP for health
systems can be limited if not implemented wisely. Even if a country does
achieve a lower price through ERP,
the effect is temporary, according
to recent research by London School
of Economics researchers. In a thorough review of the literature, the
economists found that countries often received a lower price in the short
term, but evidence over the long term
showed that frequent price revisions
could increase and destabilize prices
across countries.
When governments include prices
set in all EU member states as the
benchmarks, lower-income countries
tend to pay more than they can afford
based on income level and higher-income countries pay less, given variations in the reference price calculation, said the researchers.
The Dutch health ministry last year
also said it was “unacceptable” that
there was not a uniform system for
bringing drugs to market across the
EU. The implication was clear: Bulgarians and Romanians should not have
Despite the criticism by both governments and pharmaceutical companies, ERP is unlikely to disappear
anytime soon.
The practice provides a simple
way to set the opening prices for
negotiations, and many countries
don’t have the expertise for more
detailed cost analyses. “Countries
find it convenient,” said Wharton’s
Danzon. “Countries would like to use
it more but because of the difficulty
of observing actual prices, in practice
they’re having to come up with other
mechanisms as well.”
The Commission looked into ERP
pricing strategies and published a set
of principles for an ideal ERP system.
Among them is including a smaller
number of comparison countries in
one’s basket, especially if those countries are of a similar income level.
That rarely happens, according to
EFPIA.
In Europe some countries have
begun to strike pacts with other nations to share what would otherwise
be confidential drug pricing information, in hopes that the insight and the
pooled patient population will help
them negotiate better prices with
companies.
Danzon and many other economists argue the fairest pricing strategy is differential pricing, when countries just agree that those who can
pay more do. “Overall we raise the
revenue to pay for R&D and it allows
for greater access than if we charge everyone the same price now,” she said.
On this point drug makers agree:
“Several of the problems created by
ERP could be addressed if governments, in particular in the richer
countries, are refrained from referencing to lower income countries and
would accept that enhancing affordability and accessibility for patients
in poorer countries requires solidarity of the wealthier nations with
the poor countries,” said the EFPIA
spokesperson.
But it’s unclear that there’s much
appetite for such an approach in the
north.
Iran to Trump: Keep nuke deal or face ‘severe consequences’
‘Iran is prepared for
all possible situations,’
president says
BY LOUIS NELSON
Iranian President Hassan Rouhani
warned Tuesday of “severe consequences” for the U.S. should it withdraw from the Iran nuclear deal, a
step President Donald Trump has indicated he will take if certain changes
to the agreement are not made.
“I am telling those in the White
House that if they do not live up to
their commitments … the Iranian government will firmly react,” Rouhani
said in a speech, according to a Reuters report.
The Iranian president’s warning
coincides with the visit of French
President Emmanuel Macron to
Washington, where he is expected
to urge Trump to keep the U.S. in
the deal, which was negotiated under former President Barack Obama
and agreed to by the five permanent
members of the United Nations Secu-
rity Council, plus Germany and Iran.
Complaints about the Iran deal
were among Trump’s most frequent
talking points on the 2016 campaign
trail, including a pledge to pull the
U.S. from it. The president has yet
to follow through on that promise,
opting instead to continue extending the deal while demanding that it
be altered to address other behavior
by the Iranian government, including its funding of groups deemed by
the U.S. to be terrorist organizations,
that currently falls outside the scope
of the nuclear deal.
Iranian Foreign Minister Javad Zarif wrote on Twitter that his nation’s
compliance with the deal is “either
all or nothing,” indicating that Iran
would not remain party to the deal if
the U.S. withdraws, even if the other
nations do not. Rouhani, delivering
a speech in the city of Tabriz, said
Iran is prepared for whatever move
Trump makes.
“If anyone betrays the deal, they
should know that they would face
severe consequences,” the Iranian
president said. “Iran is prepared for
all possible situations.”
SPONSORED CONTENT
Presented by EFPIA
The consequences of a cure
Finding a cure can have a significant impact on patients, clinicians, and our healthcare system,
as a whole
BY THOMAS ALLVIN,
EXECUTIVE DIRECTOR,
STRATEGY AND HEALTHCARE
SYSTEMS, EFPIA
pressure from an aging population.
We also recognize concerns about
the affordability of introducing new
technologies.
For patients, it means to live disease-free, pain-free, and to be
able to get to back to work and reconnect with friends. For clinicians,
WKH PDLQ EHQHƓW LV EHLQJ DEOH WR
tackle the root cause of a disease
rather than simply managing the
symptoms.
New Alzheimer’s therapies would
require diagnosis and treatment
at a much earlier stage than usually occurs today — but how do we
identify the right patients at the
right time?
Cell and gene therapies might replace a continuous or even life-long
treatment with one single intervention using very high-tech and highcost health technology — but how
can we change both healthcare deOLYHU\DQGƓQDQFLQJPRGHOVWRGHDO
with that?
But for our healthcare systems,
there are often dramatic consequences. Access to a new treatment, particularly a cure, is a
shared goal. It can mean a one-off
cycle of therapy replacing a lifetime
of treatment. The costs are borne
upfront, often solely by the medicines bill and in year one. But the
savings — the real value — is delivered over the lifetime of the patient, often across the whole health
and social care system, and society
as a whole.
Therapies for smaller patient populations — such as orphan drugs and
gene therapies — often come with
less data on their effectiveness,
GXHWRWKHGLIƓFXOW\RIFRQGXFWLQJ
large-scale clinical trials — so how
can we build systems for collecting and monitoring the health outcomes for patients in real life, and
for use in value-assessments and
improving clinical practice?
We are in the middle of an unprecedented boom for the research and
development of new medicines and
health technologies that have the
potential to reshape healthcare.
This is the result of rapid developments in biology, biotechnology,
and medicine, the advent of big
data and predictive analytics, advances in genomics and patient-tailored treatment solutions, but also
increased expenditure on research
and development. We are now
starting to see the fruits of these
developments make their way out
of the laboratories over to patients
across Europe.
When cancer drugs are used in
combination — how do we assess
the value of each component for
pricing and reimbursement, and
how do health systems pay for the
combination of two or several already high-cost treatments?
Antibacterial antibodies and other
innovative antibiotics that work
against multi-resistant bacteria
should be reserved for cases where
there are no other options. How can
you build a model that rewards the
innovation of a drug that is seldom
used?
We are in the middle of an unprecedented boom for the research and
development of new medicines and
health technologies that have the
potential to reshape healthcare.
These are just a few examples of
the advancements made:
Cell therapies involve using living
cells to replace or repair damaged
cells in the human body. Cell therapy could be used to help patients
with Type 1 Diabetes to control
their blood-glucose levels, where
implanting healthy pancreatic cell
could replace the need to inject
insulin.
“We are in
the middle
of an unprecedented
boom for
the research
and development of new
medicines
and health
Recent research into Alzheimer’s technologies
disease has been subject to small that have
YLFWRULHV DQG VLJQLƓFDQW VHWEDFNV the potential
But now, disease-modifying thera- to reshape
pies are showing some promise in healthcare.”
Gene therapy takes it even further,
introducing healthy genes (DNA)
to correct or modify abnormal or
mutated genes in a patient. Gene
therapy holds the promise to treat
genetic diseases, such as Haemophilia.
actually slowing down the progression of the disease, rather than just
temporarily alleviating some of the
symptoms, as is the case today.
via EFPIA
Cancer treatment is making rapid
advancements by combining different therapies, thereby increasing
the effectiveness and/or durability
of the treatment. For example, targeted therapies that attack tumor
cells can be combined with immunotherapies that reactivate the patient’s own immune system against
cancer.
The threat of antibiotic-resistant
bacteria — seen as one of the major
health threats facing the world today — could be alleviated partially
using new Antibacterial Monoclonal Antibodies. These therapies
KDYHDPRUHVSHFLƓFPHFKDQLVPRI
action than normal antibiotics and
are less likely to lead to bacteria
developing resistance against the
treatment.
These innovative therapies have the
potential to dramatically change
the outlook for many patients and
their families in Europe and to bring
value to European healthcare systems and societies.
+RZHYHU GHVSLWH WKLV VLJQLƓFDQW
potential for patients, healthcare
systems, and society, recent experience tells us that the introduction
of these high impact, high-value
treatments runs the risk of descending into a polarized discussion on
price, value, and cost containment
policies. As an industry, we recognize the affordability challenges
faced by our healthcare systems
that are under pressure from an aging population. We also recognize
concerns about the affordability of
introducing new technologies.
Some new therapies will change
the way healthcare is delivered,
and this, therefore, requires changes to the organization of care and
raises many questions.
As an industry, we recognize the affordability challenges faced by our
healthcare systems that are under
Far from polarizing the debate, it’s
clear that no one sector will have
all the answers. It is shared knowledge, planning, and partnership
that will be key. Healthcare policymakers, authorities, clinicians, patients, and the industry must work
together to look at the medical
innovations that will become reality in the coming years, and try to
DVVHVV WKHLU SRWHQWLDO EHQHƓW DQG
impact.
Healthcare systems are in a constant state of change, but change
often takes time and it is, therefore,
necessary to start the dialogue long
before new treatments are ready
for wider use in clinics and hospitals
all over Europe.
The industry is ready to help policymakers and healthcare planners
with this forward-looking planning,
starting with providing information
about the 7,000 medicines currently
under development. For their part,
policymakers should communicate
their health policy priorities and
determine where resources should
be focused to address unmet health
needs. It is time to leave the silos
and start working together to deliver a healthier future for Europe’s
patients.
16 POLITICO
PRO BRIEFING
APRIL 26, 2018
FINANCIAL SERVICES
AGRICULTURE & FOOD
Basel Committee calls for full
implementation of reforms
Greenpeace scrutinizes EU’s
farm-linked pollution
The Basel Committee on Banking
Supervision urged its member jurisdictions
to implement Basel III standards in a
“full, timely and consistent” manner after
it found many are lagging behind key
deadlines. Although jurisdictions have
taken steps to implement some standards,
“limited progress has been made” in some
key areas, a progress report said April 23.
This includes the standardized approach
for measuring counter-party credit risk
exposures and capital requirements for
bank exposures to clearing houses.
An investigation by environmental NGO
Greenpeace released April 24 said the
EU has poor reporting standards for
agricultural pollution, most often caused
by livestock. This is despite Brussels
massively subsidizing livestock production.
“The researchers came to the conclusion
that the information the European Union
uses to shape its Common Agricultural
Policy, and in particular the data related
to agricultural pollution, are so scattered
and incomplete that they could not be
relied upon to properly address agricultural
pollution,” the study said.
HEALTH CARE
TRANSPORT
Brussels clears Ireland’s
soda tax
Commission probes Alitalia
rescue loans
The European Commission determined
Ireland’s sugary drinks tax is admissible
under the bloc’s free-market rules in a
decision April 24. European law dictates
governments cannot levy taxes that
distort competition or hinder trade, but
the Commission’s competition department
said “soft drinks can be treated differently
to other sugary products in view of health
objectives.” Dublin will tax drinks with a
total sugar content of 5-8 grams per 100
milliliters at €0.1626 per liter, and drinks
with sugar content above 8 grams at
€0.2439 per liter, from May 1.
The European Commission on April 23
launched an in-depth investigation into
loans provided by the Italian state to keep
insolvent flag carrier Alitalia flying. The
Italian government provided €900 million
in bridge loans during 2017 while the
carrier was put under administration. The
Italian government maintains the loans
do not break EU state aid rules but the
Commission said it has received a number
of complaints, including allegations the
financing exceeds the minimum needed
to keep the airline operational and that the
repayment timetable is too generous.
ISIS has used Facebook to promote its ideology.
AHMAD AL-RUBAYE/AFP VIA GETTY IMAGES
TRADE
TECHNOLOGY
ENERGY & CLIMATE
FINANCIAL SERVICES
EU takes flak from partners
over steel safeguards
Big Tech release data on
extremist content removal
Regions join forces against
nuclear power
FSB publishes toolkit to
tackle misconduct risk
Eight countries have criticized the EU’s
safeguard investigation on steel imports,
warning Brussels’ move contributes to
“growing protectionism worldwide.” Brussels
launched an investigation in late March to
examine 26 steel products that might be
diverted into Europe, after U.S. President
Donald Trump decided to shut down the
U.S. market for many steel and aluminum
exporters by imposing high tariffs. Argentina,
Chile, China, Egypt, India, South Korea,
Turkey and Vietnam raised the complaint at
a meeting of the World Trade Organization’s
safeguards committee April 23.
Facebook removed or added warnings
to 1.9 million pieces of content related to
terror groups Islamic State and al-Qaeda
in the first quarter of 2018, nearly double
the number for the previous quarter, it
said April 23. The social media platform
has beefed up its counterterrorism team
to 200 people from 150 last June and built
specialized techniques to find content,
according to its statement. YouTube also
announced it had removed over 8 million
“violative” videos between October and
December 2017.
An alliance between German, Austrian and
Belgian policymakers and campaigners
pushing for a Europe-wide exit from
nuclear energy met April 23 in Germany to
discuss risks stemming from old reactors
in border regions. “A years-long series of
disruptions in the Tihange and Cattenom
[in France] nuclear power plants calls
for determined action,” the alliance of 15
regions said in a statement, adding the
continued decline in the share of nuclear
power in the EU makes the case to drop
the technology stronger.
The Financial Stability Board published
19 tools to help firms and supervisors
tackle the causes and consequences of
misconduct risk. The recommendations,
delivered to the G20 finance ministers and
central bank governors on April 20 ahead
of a meeting in Washington, aim to address
widespread misconduct in the financial
sector, which can create mistrust and
weaken the ability of markets to provide
capital to the real economy, the FSB said.
Examples of misconduct include collusion
in the manipulation of wholesale markets
and retail misselling schemes.
DATA & DIGITIZATION
HEALTH CARE
Major telecom firms slam
new EU rules
ECJ backs EU on
anti-abortion petition
Reform of the EU’s Electronic
Communications Code will likely fail in its
ambition to raise investment in high-speed
broadband and create a single market
for spectrum, 35 CEOs of big telecom
companies said April 23. As new EU rules
are hammered out, “there has been little
progress on vital measures to facilitate
5G roll-out,” the CEOs said. The latest
documents show EU countries are willing to
negotiate on issues including how telecom
companies invest in 5G to ensure the EU
institutions can agree on the final reforms.
The European Commission provided
enough evidence to dismiss a European
Citizens’ Initiative calling for a ban on
EU financing of activities that lead to
the destruction of human embryos, the
European Court of Justice ruled April 23.
Organizers of the One of Us petition filed
a legal challenge against the Commission’s
2014 decision not to engage with its calls
for action. The Commission took into
account the right to life and the need for
human embryonic stem cell research to
treat fatal diseases, the ECJ said.
After years of steady decline, car emissions rose again in 2017 across the EU.
LUKAS SCHULZE/GETTY IMAGES
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POLICY PRO?
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exclusive access
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AGRICULTURE & FOOD
TRANSPORT
SUSTAINABILITY
ENERGY & CLIMATE
Dairy co-op Arla to trim costs
by €400M, citing Brexit
EU environment agency
warns of rising car emissions
France announces circular
economy strategy
Air pollution infringement
cases postponed to May
Dairy group Arla Foods said April 20 it
would seek €400 million in savings by
2020 because of low commodity prices
and the company’s exposure to the weak
pound. The company is one the world’s
largest dairy groups and is owned by
around 11,200 farmers spanning Denmark,
Sweden, the U.K., Germany, Belgium,
Luxembourg and the Netherlands. The
pound’s value has dropped since the
Brexit vote, while prices for some dairy
commodities are at historic lows.
Efforts to boost the fuel efficiency of
new cars sold in the EU “stalled” in 2017,
according to provisional data from the
European Environment Agency published
April 23. While past years saw steady
decline, “new passenger cars registered
in 2017 emitted on average 0.4 grams of
carbon dioxide per kilometer more than in
2016,” the EEA said, based on EU country
reporting. A total of 17 countries registered
higher average carbon dioxide emissions
compared to 2016. Sales of new passenger
cars increased by 3 percent.
France presented its circular economy
roadmap on April 23, including increased
recycling targets, a stricter cap on
landfilling and new measures to cut
waste generation. France plans to halve
its landfilling rate compared to 2010 and
recycle all of its plastics by 2025. The
French goal is more ambitious than EUwide objectives signed off last week by the
European Parliament, which cap landfilling
at 10 percent by 2035, and aim for 55
percent of plastic packaging to be recycled
by 2030.
The European Commission postponed
its infringement package on EU law
breaches from April 26 to May. The move
defers a widely anticipated decision to
escalate cases against some of the nine
countries — Germany, the U.K., France,
Spain, Italy, Hungary, Romania, the Czech
Republic and Slovakia — that breached EU
limits for nitrogen dioxide and particulate
matter to the European Court of Justice.
A Commission spokesperson said the
decision to postpone was due to the EU’s
seven-year budget proposal due May 2.
SPONSORED CONTENT
3UHVHQWHGE\(XURSD%LR
E\$QHN6DQJNDPDQHHYLD6KXWWHUVWRFNFRP
A new age is dawning, where people and
Europe benefit
Recognizing the power of biotechnology
BY JOHN BRENNON, SECRETARY
GENERAL OF EUROPABIO
A new age is dawning in Europe, one
that offers an opportunity to fully realize the power of biotechnology to
EHQHƓWERWKSHRSOHDQGSODQHW
The change is incremental, yet powHUIXO $OUHDG\ WRGD\ ZH EHQHƓW
greatly from the use of biotechnology to produce the clothes we wear,
the foods we eat, and the medicines
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to produce a range of consumer
products, from laundry detergents
to biodegradable bioplastics that
can reduce energy consumption and
XVH UHVRXUFHV PRUH HIƓFLHQWO\ <HW
the full potential of biotechnology
to unleash transformational change
is still ahead of us, albeit within arm’s
UHDFK
“We hope
that efforts
to improve
public trust
will go hand
in hand
with more
sciencebased and
HIÀFLHQW
decisionWhat will tomorrow bring? From cur- making,
LQJGLVHDVHVOLNHFDQFHUDQGF\VWLFƓ which would
brosis, to tackling plastic waste in our remove
oceans and addressing food security, unfounded
innovation in biotechnology offers roadblocks to
OLPLWOHVV RSSRUWXQLWLHV *UDVSLQJ innovation.”
them requires legal certainty and,
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public should be engaged on the
global importance of biotechnology
to people and the planet; they need
to see how we approach culturally
important or sensitive sectors like
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tunately, the opportunities for communication and better harnessing
the many different applications of
biotechnology in Europe are growLQJ
LEGAL CLARITY
After over ten years of discussion in
the EU, the Court of Justice of the EU
LVVRRQH[SHFWHGWRSXEOLVKLWVƓQDO
decision on organisms obtained by
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the regulatory status of some products that have been developed using
the latest biotechnological tools and
applications, including advanced
PHWKRGVRIJHQRPHHGLWLQJ,QGRLQJ
so, it should provide increased legal
certainty and predictability for scientists, researchers, and the producers
and developers of innovative products, like gene-edited seed traits and
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in history has our food ever been so
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enhanced nutrition or reduced waste,
improved crops produced through
the latest gene editing methods can
help meet the EU’s farming challenges, from securing additional sources
of protein and adapting to climate
change, to contributing to global
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such as “zero poverty” and “no hunJHUŐ(XURSD%LRZHOFRPHVDQ\VWHS
towards improving legal certainty
and hopes Europe will choose to
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so is public trust and science-based
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Commission has published a legislative proposal this month (April
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of the most heavily regulated food
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nism, “the precision and control (of
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safe new products is the most obvious and linear generator of innovation in Europe; it would also allow the
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age of biotechnology for Europe and
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ing innovation providers and linked
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IDFWXDOJURXQGV
18 POLITICO
NEWS
APRIL 26, 2018
The Cinderella
Spitzenkandidaten
For Europhiles, many of
their dream candidates
will be just that: A dream
DAVID M. HERSZENHORN
The
obstacles
they face
illustrate
how even
being
qualified,
charismatic
and
capable
is not
necessarily
enough.
For some European politicians, the
runway to a campaign for European Commission president is clear.
Others might need a bit of help
from a fairy godmother.
The mix of qualities and qualifications needed to become a viable candidate for the EU’s top
job is far more complex than in a
national election. Support on the
European Council, especially from
the most influential leaders like
German Chancellor Angela Merkel,
is politically and legally essential.
But many more stars in the EU
firmament must also align. Prior
experience in leadership, party affiliation, language ability, age, and
geographic balance with other top
EU posts are all critical factors. As
is support from home.
Here’s a look at some prospects
who, for the proponents of the
European project, just might be
the perfect fit to lead the Commission, but who may need — for
political, personal or practical
reasons tied to the EU’s complex
nominating and election system —
some powerful magic pixie dust to
overcome long odds. The obstacles
they face illustrate how even being
qualified, charismatic and capable
is not necessarily enough.
ALEXANDER STUBB
Stubb, a former prime minister of
Finland, is more likely to be found
sporting cross-trainers than glass
slippers. But for some fans he is
the closest the EU might get to a
euro-integrationist Prince Charming. Stubb is a triathlete, who completed the 2016 Ironman World
Championships in Hawaii in 11
hours, 13 minutes and 45 seconds
and then wrote about it for the Financial Times.
But while Stubb may have the
perfect pedigree — he is now a vice
president of European Investment
Bank, and previously served as finance minister, trade and Europe
minister and foreign minister, as
well as a member of the Finnish
Parliament and of the European
Parliament — so does his friend and
predecessor as prime minister, current Commission Vice President
Jyrki Katainen.
Katainen and Stubb are both
members of the National Coalition Party, which is part of the
dominant, center-right European
People’s Party family — and only
one can be the nominee. And
while Stubb is both ambitious and
a passionate advocate for the EU, it
is widely understood that he would
not mount a campaign unless Katainen first makes clear that he
doesn’t want to run.
For federalists who believe the
EU urgently needs to do more
self-promotion, Stubb is an ideal,
musclebound poster-boy. He
speaks five languages including,
crucially, German. He has degrees
from the College of Europe, the
Sorbonne, the London School of
Economics and even Furman University in South Carolina. He has
written numerous books and has
an active social media and internet
presence.
DALIA GRYBAUSKAITĖ
Grybauskaitė, now in her ninth
year as president of Lithuania, is
sometimes called the Iron Lady,
and for those who view the EU as a
beacon of democracy and freedom
(and a counterweight to Russian
revanchism), she embodies the Baltics’ passionate pursuit of Western
liberalism since the collapse of the
Soviet Union.
She also doesn’t mince words.
Asked about Russian President
Vladimir Putin’s reelection victory, Grybauskaitė noted the nerve
agent attack in the U.K. on “European soil” and said she would not
congratulate him. “There is no
space at all for baroque diplomacy,” she told reporters in English
at the March European Council
summit. Repeating the point later
on Twitter, she added: “Speak your
mind.”
Grybauskaitė is a lifelong public servant and former European
commissioner, and the first Lithuanian president to be reelected
to consecutive terms. As one of
the most outspoken leaders of the
EU, she is unafraid to confront or
criticize, especially when it comes
to strongmen like Putin or former
Ukrainian President Viktor Yanukovych. Grybauskaitė can be quick
with a great quote, or a snappy
tweet, including one in February
where she needled supporters of
the Spitzenkandidat process, one of
the obstacles standing in her way
of becoming Commission president.
Grybauskaitė also has a black
belt in karate. But what she doesn’t
have is a political party, which is a
problem given that the European
Parliament has declared it will only
vote for a new Commission president who has been nominated by
one of the major political families.
For this reason, Grybauskaitė is
seen as a more likely contender
to succeed Donald Tusk as president of the European Council,
which directly chooses its own
leader. That job will also become
vacant in 2019, conveniently just
as Grybauskaitė’s five-year term as
president is coming to a close.
MARGRETHE VESTAGER
Vestager, the European commissioner for competition who has
gained fame and notoriety for taking on huge tech giants, including Apple and Google, has one of
the highest profiles at the Berlaymont — and is seen by many as a
hero for demanding that the digital
behemoths obey the laws and pay
their fair share of taxes. Like Stubb,
Vestager is considered part of a
new wave of European leaders,
Gen X’ers, who seem ready to take
the helm and could offer fresh perspective in Brussels.
But while Vestager has been
teasingly called a technophobe,
she is a savvy user of new technologies (unlike current Commission President Jean-Claude Juncker
who still uses a flip phone), and
also smartly careful about safeguarding her digital footprint. In
other words, she has a good sense
of what’s on the minds of Netflixwatching voters.
And yet, while Vestager may
show there is such a thing as proEU populism, her chances of winning the top job are slim. A Dane,
the competition commissioner is a
member and former leader of the
Social Liberal Party, part of the Alliance of Liberals and Democrats
for Europe (ALDE), which has
made gains in many recent national elections but still controls a relatively small number of seats in the
European Parliament. And in next
year’s balloting, the Liberals are
still not expected to win enough to
catapult their Spitzenkandidat to
victory.
An alliance with French President Emmanuel Macron could
change that, and at one point Macron was said to favor Vestager for
the Commission presidency. While
Vestager has said she would like to
stay on in Brussels and has even
reacted favorably to speculation
about her as a Spitzenkandidat, her
own prime minister, Lars Løkke
Rasmussen, has said he does not
even want to reappoint her for another term as commissioner. And
while technically not impossible,
it is difficult to win the nomination for such a major post without
strong support at home.
Also, Vestager has never served
as prime minister, which is increasingly seen as a prerequisite for
holding one of the two major EU
presidencies.
POLITICO 19
Barnier’s French obstacle course
Even
though
his views
on Europe
are wellaligned
with
Macron’s,
Barnier
does not
represent
the type
of change
the French
president
has in
mind.
FERGS
ILLUSTRATIONS
FOR POLITICO
The EU’s chief Brexit
negotiator can’t
succeed Juncker if his
countrymen can’t agree
BY PIERRE BRIANÇON
IN PARIS
As the EU’s chief Brexit negotiator,
Michel Barnier might seem as well
positioned as anyone to become the
first French president of the European Commission since Jacques Delors.
The pro-European former foreign
minister and two-term commissioner belongs to the powerful European
People’s Party parliamentary group.
He narrowly lost out to Jean-Claude
Juncker for its nomination in 2014. This
time around, he has a job championing Europe that includes a campaignstyle tour of the 27 countries that will
choose the next Commission chief. It’s
little wonder he’s been widely considered a front-runner for the position
when it comes up for grabs in 2019.
And yet, as he plots his path to the
Berlaymont, Barnier finds two serious
obstacles standing in his way — and
they’re both French.
To secure the EPP’s nomination,
Barnier needs to run as the choice of
his French conservative party back
home, which is unlikely to happen.
And his ascent to the presidency
would be nearly impossible without the support of French President
Emmanuel Macron. And that’s less
than a sure bet.
Barnier ran in 2014 against Juncker
to become the EPP’s Spitzenkandidat
— the party’s “lead candidate” in the
European Parliament election and its
potential nominee for the Commission presidency. The Frenchman lost
gracefully, and it has seemed in recent years that Juncker wants to pay
him back.
The current Commission president
pulled his former rival out of retirement to become the top EU Brexit
negotiator. And he seems to have
anointed him as his preferred successor. But it doesn’t look like this tacit
endorsement will be quite enough.
When asked about his 2019 plans,
Barnier says he’s focused on Brexit,
but his ambition is an open secret in
Brussels. He has the credentials for
the job, with two stints in Brussels
and four stints as a French Cabinet
member. He is lauded throughout
Europe for his his so-far successful
negotiating tactics and his talent at
keeping the EU27 united throughout
the Brexit talks. And yet, it will take
more than encouragements from
Brussels and the rest of the bloc to
secure the Commission presidency.
Laurent Wauquiez, the arch-conservative head of Barnier’s French
party, Les Républicains, is the deadliest difficulty. The youthful leader of
the former moderately conservative
party has steered it on a hard-right
course, with little patience for anything that looks like European integration. In a 2014 book titled “Europe:
Everything must change,” Wauquiez
even suggests the EU go back to its six
original founding members.
As the center of gravity of Les Républicains has moved to the right,
Barnier finds himself at odds with the
party he joined as a teenager. Indeed,
on a scale running from dreamy European integrationist to rabid Euroskeptic, Barnier and Wauquiez stand
on opposite ends.
Since Macron’s election, many
moderate conservative personalities
have left Les Républicains to work
with or support the French president.
Prime Minister Edouard Philippe, Finance Minister Bruno Le Maire and
Budget Minister Gérald Darmanin all
hail from Les Républicains.
On most issues, Barnier is closer to
Macron’s La République En Marche
than he is to his own party. In the
Les Républicains’ presidential primary, Barnier supported his friend
Le Maire, who recently joined Macron’s party.
And yet, the French president —
who has vowed to destroy his country’s center-left and center-right parties — isn’t keen to champion Barnier
as head of the Commission, opined a
government official who refused to be
quoted because “it’s much too soon”
in the process.
Barnier doesn’t look like Macron’s
ideal candidate. He will be 68 when
the time comes to take on the job, and
he’s representative of the “old world”
that Macron has vowed to sweep away.
He first became a government minister in 1993, when Macron was 15, and
even though his views on Europe are
well aligned with Macron’s, he does
not represent the type of change the
French president has in mind.
Still, some think that even taking
into account other, non-French obstacles (the man will still have a day
job as Brexit negotiator throughout
next year, and little time for campaigning), Barnier stands a chance.
As could anybody. “Who imagined
Macron would become French president a year before the election?” said
French conservative MEP Alain Lamassoure. “I wouldn’t speculate now
on Juncker’s successor.”
It is conceivable in theory that
Macron could push for a Barnier
presidency. The French president
has stated that he doesn’t favor the
Spitzenkandidat system, which he
thinks robs national leaders of their
treaty-enshrined responsibilities, and
EU leaders said at a summit in February that they would not treat the
process as “automatic” next year.
But “the idea that Macron absolutely wants a French president for
the Commission is debatable at least,”
said a top European Commission official. It would not be in Macron’s interest to have a French Commission
president who would be suspected
to be his puppet, the official speculated. Or, if the opposite proved true,
it would give rise to speculations that
“the French are divided.”
And then, he added, there’s the
ego thing: “For Macron, one French
president is enough …”
Maïa de La Baume contributed reporting.
20 POLITICO
NEWS
APRIL 26, 2018
COMMISSION PRESIDENT DERBY
Aaaaaaand, the race is on. In just over a year, European voters will elect a new European Parliament — and in
the process help select the next president of the European Commission, the top job in Brussels. The field for now is
wide open. There are favorites — but nothing close to a shoo-in. After all, at this point in the race the last time around,
— Ryan Heath
few would have predicted that Jean-Claude Juncker would be the next Commission president.
HOW DOES
IT WORK?
RIGHT, BUT HOW DOES
IT REALLY WORK?
The holder of
the EU’s most
powerful office
is not directly
elected. By
treaty, the bloc’s
national leaders
meet in the
European Council
to propose a
candidate to
Parliament “taking
into account”
the results of
the European
election.
In practice, it’s a bit more
complicated. To inject the selection
with a jolt of democracy, the
Parliament has introduced what
they call the Spitzenkandidat
process, using the long German
word for “lead candidate.”
Under this system, each party
in Parliament puts forward a
nominee who campaigns alongside
its candidates in the European
Parliament election. The contender
belonging to the party that gets
the most votes is recommended
to Parliament for confirmation as
Commission president.
YES, OK, BUT HOW
DOES IT REALLY,
REALLY WORK?
Who knows? There’s
nothing legally binding
about the Spitzenkandidat
process, and many national
governments are no fans
of it, feeling it robs them
of their say. That could
put the two institutions
on a collision course. The
Council has said it will not
be bound by the process.
The Parliament has insisted
it will reject any candidate
not nominated by a party
as its Spitzenkandidat.
WHAT MAKES A
GOOD CANDIDATE?
“Multilingualism provides a clear
advantage, and knowledge of the
three working languages of the
EU institutions can be considered
quasi prerequisites,” according to
the Commission’s inhouse think
tank, the European Political Strategy
Centre. A Commission president
need not be a former leader of a
country, but “executive experience
is necessary given the scope of
the tasks at hand. And finally, the
credibility and effectiveness of the
candidate will be bolstered if they
are considered by the European
Council as ‘one of their peers.’”
SO, WHO’S IT GOING TO BE?
If the Spitzenkandidat process is followed to the
letter, the candidate of the center-right European
People’s Party (EPP) is almost certain to take
the top job. But given that the next Commission
president will be chosen by a new Parliament
with a new balance of power, anything is possible.
French President Emmanuel Macron is another
wild card. He has not yet aligned his La République
En Marche party with an existing European political
party and could emerge as kingmaker, in particular
if the EPP and Socialists fail to win 50 percent of
MEP seats. (They currently hold 53 percent.)
AND THE CANDIDATES ARE?
Glad you asked. There are no formal candidates
at this stage, but POLITICO has compiled the
following list of contenders:
MICHEL BARNIER
ANTONIO TAJANI
ENDA KENNY
JYRKI KATAINEN
Who? A French politician who’s done
everything except lead France. Currently
the EU’s chief Brexit negotiator, Barnier
has at different times served as France’s
foreign, Europe, environment and
agriculture minister. He’s put on the Winter
Olympics, been a two-time European
commissioner and narrowly lost the EPP
nomination for European Commission
president to Jean-Claude Juncker in 2014.
Who? A former journalist and Italian
government spokesperson, Tajani’s is a
monarchist (Italy is a republic) whose first
European role dates back to his election
as MEP in 1994. Currently president of the
European Parliament, Tajani served as a
commissioner during both terms of the
Barroso Commission (2008-2014).
Who? Kenny has been an Irish MP since
the age of 24, serving for 43 consecutive
years. He led Ireland from 2011 to 2017,
after a string of ministerial posts dating
back to 1986.
Age at time of European election: 68
Pros: Leads the institution that confirms
the Commission president. An old-school
retail politician who knows which palms to
press and which egos to stroke.
Who? An alumnus of the EU’s Erasmus
exchange program (he studied in Leicester,
U.K.), Katainen is one of two canny former
Finnish prime ministers in the running.
Unusually for a European commissioner,
Katainen doggedly pursued just a few
flagship projects, most notably the
European Fund for Strategic Investment
(which he pushed through Parliament and
national governments in record time in
2015), proving his ability to wade through
the red tape of Brussels.
Pros: Broad experience at local, national
and EU level politics. Man of the moment
(if Brexit negotiations succeed). A proven
steady hand, able to work with talents as
diverse as Margrethe Vestager and Martin
Selmayr.
Cons: Not from France’s ruling La
République En Marche party. Doesn’t speak
German or represent a new approach
to politics. He could struggle to secure
support from his party in France.
Will he run? Few in Brussels doubt Barnier
is running. His grueling schedule of multiple
visits to nearly all European capitals over
the past 18 months and his repeated
appearances at foreign and security policy
events have done nothing to dispel the
idea.
Age at time of European election: 65
Cons: Widely perceived to be lacking
detailed policy vision. Reputed to have
been something less than a hard worker
during his two stints in the Commission.
While he speaks English, French and
Spanish, Tajani is much more comfortable
in his native Italian.
Will he run? Tajani has a track record of
running for the highest office available
to him at a given moment, from mayor
of Rome (2001) to Italian prime minister
(2018). Opponents have a track record of
underestimating Tajani.
Chances at securing European
Parliament support: High
Pros: Has served as Ireland’s head of
government, leading the country through
and out of economic and financial crises.
Having retired from national government,
Kenny (like Jean-Claude Juncker in 2014)
would be free to campaign full-time. Ireland
has not held a top European political office
since Pat Cox led the Parliament from
2002 to 2004.
Cons: Like Barnier, represents an older
generation, in marked contrast to the
leader of his country.
Will he run? Kenny has kept his cards close
to his chest.
Age at time of European election: 47
Pros: The youngest viable candidate, a
former prime minister, effective current
European commissioner, and from a Nordic
eurozone country (none of which has held
the Commission presidency).
Cons: Viewed as reserved, which may be
problematic when compared to Finland’s
other viable EPP candidate, the charismatic
Alexander Stubb. Does not speak German.
Chances at EPP nomination: Slim
Chances at election victory: High
Chances at securing European
Parliament support: High
Will he run? Katainen has promised to
make his decision by summer.
Chances at EPP nomination: Moderate
Chances at EPP nomination: Moderate
Chances at election victory: High
Chances at election victory: High
Chances at securing European
Parliament support: High
Chances at EPP nomination: Low
Chances at election victory: High
Age at time of European election: 68
Chances at securing European
Parliament support: High
POLITICO 21
ALEXANDER STUBB
FEDERICA MOGHERINI
MARGRETHE VESTAGER
Who? A former Finish prime minister,
he replaced Jyrki Katainen. Now vice
president at the European Investment
Bank, Stubb is known for playing
against type: An outgoing, sporty,
glamorous Finn who seems more
at home among a cosmopolitan crowd than among his
quiet compatriots.
Who? The EU’s chief diplomat,
Mogherini could be the youngest
candidate from a major party if
proposed by the Party of European
Socialists. Like Katainen, Mogherini
was young enough to have enjoyed
the EU’s Erasmus student exchange program.
Who? The most globally visible
European commissioner (for
competition policy), Vestager has
graced a thousand power lists thanks
to her bold use of her portfolio’s
executive powers. She comes from a
small Danish left-leaning liberal party and is admired, feared
and loathed in equal measure.
Age at time of European election: 51
Age at time of European election: 45
Pros: From a eurozone Nordic country, speaks five
languages, and has worked for four EU institutions,
including as an MEP.
Pros: Already holds one of the EU’s four highest offices,
from a large founding EU country.
Cons: He’s not the only qualified Finn. POLITICO’s Finnish
sources suggest Stubb will not try to elbow past Katainen
— his compatriot, party colleague, and fellow marathon
sports enthusiast.
Will he run? “If someone was asking if I’ll go back to
national politics, the answer is no. But European politics is
always an appealing affair to me,” he told POLITICO’s EU
Confidential podcast in February.
Cons: Socialists are unlikely to win the European election,
and as chief diplomat, Mogherini would either need to
step down to run or would be severely limited in her
campaigning.
Will she run? There are few viable or visible Socialist
contenders. Of the current Socialist European
commissioners Frans Timmermans’ star has waned, Maroš
Šefčovič’s star has only ever flickered, and Pierre Moscovici
is from the wrong French party to win his government’s
support.
Chances at EPP nomination: Moderate
Will she run? Vestager is too smart to reveal her plans
at this point. Her best chance is as a post-election
compromise candidate.
Chances at election victory: Slim
Chances at election victory: None
Chances at securing
European Parliament support: High
Chances of securing
European Parliament support: High
CHRISTINE LAGARDE
Who? A highly regarded serving
German defense minister, von der
Leyen looks like a dream candidate
on paper.
Who? A French lawyer by training,
Lagarde was brought into the French
government in 2005 as a nonpartisan
expert outsider to serve as minister
for trade. She went on to become a
highly regarded finance minister under
President Nicolas Sarkozy and managing director of the
International Monetary Fund since 2011. She is consistently
ranked as one of the world’s most powerful women.
Pros: From a big country (Germany), the biggest party
(EPP), is the face of an important new EU initiative
(the so-called PESCO common defense policy), speaks
English, French and German fluently, was born and
raised in Brussels, would be the first female Commission
president.
Cons: Not supported by her own government, not from
a eurozone country, and stuck in a party — the Alliance of
Liberals and Democrats in Europe (ALDE) that holds less
than 70 of the European Parliament’s 751 seats.
Chances of ALDE or En Marche nomination: High
URSULA VON DER LEYEN
Age at time of European
election: 60
Pros: Charismatic, accomplished, stylish and down-toearth. Vestager is the sort of excellent communicator that
campaign managers dream of, and speechwriters fear
writing for. Having Emmanuel Macron as a fan doesn’t hurt.
Chances at Socialist nomination: Moderate
Chances at election victory: High
Chances at securing
European Parliament support: High
Age at time of European election: 51
Age at time of European election: 63
Pros: The ultimate globalist insider, adept at achieving
consensus in difficult situations.
Cons: Has not been a national leader or held
another high-level European post, and other national
governments will be suspicious of having both a German
commission president and a German Commission
secretary-general (Martin Selmayr).
Cons: The ultimate globalist insider, found guilty of
negligence in her handling of a government payout to
a businessman while finance minister. Lagarde is not a
member of the EPP and would be better suited as Mario
Draghi’s replacement at the European Central Bank.
Will she run? Von der Leyen may not want to stand
down from frontline national politics and give up her shot
at replacing Angela Merkel as chancellor of Germany. On
the other hand, she is not Merkel’s preferred successor,
and Merkel may find having her in Brussels is a useful way
to keep her hands off the domestic crown.
Will she run? No. Lagarde has a full-time global role and is
not a member of any of the parties. Her best shot at the job
is as a post-election compromise candidate.
Chances at nomination: None
Chances at victory: N/A
Chances at EPP nomination: Slim
Chances at securing European Parliament support: High
Chances at election victory: High
Chances at securing European Parliament support:
High
DALIA GRYBAUSKAITĖ
Who? President of Lithuania and a
former commissioner, Grybauskaitė
has gone from Soviet-era Communist
Party member to steely center-right
leader.
Age at time of European election: 63
Pros: Would be the first Baltic, post-Soviet and female
Commission president. A highly regarded member of the
European Council.
Cons: Is required by the Lithuanian constitution to not
be a member of a political party, seemingly preventing
her from running for the EPP nomination. Would need
to be put forward as a compromise candidate after the
election, in order to secure the post.
Chances at EPP nomination: None, due to internal EPP
rules.
Chances at election victory: N/A
Chances at securing European Parliament support:
High
GUY VERHOFSTADT
Who? A former Belgian prime
minister, he was a candidate for the
Commission presidency in 2004, until
he was vetoed by Britain’s Tony Blair.
Verhofstadt leads the liberal ALDE
group in the European Parliament and
serves as the institution’s Brexit coordinator.
Age at time of European election: 66
MATTEO RENZI
Who? After a dizzying spell as a social democrat prime
minister of Italy, Renzi crashed out of his country’s top job
before he turned 43, then led the PD to a terrible result in
Italy’s 2018 election.
Pros: Speaks all major European languages, has held high
office for more than 30 years at both national and EU level.
Age at time of European election: 44
Cons: Verhofstadt’s Alliance of Liberals and Democrats
in Europe (ALDE) is only the fourth-biggest party in the
European Parliament, and Verhofstadt is a divisive figure.
Pros: Dynamic centrist who refuses to take no for an
answer. The sort of socialist Macron could bring into his
tent.
Will he run? Verhofstadt is both ALDE’s greatest strength
and weakness. If Macron does not form an alliance with
ALDE before the election, his chances of running are high. If
the French president weighs in with a preferred candidate
or offers Verhofstadt another prize in exchange for dropping
out, he may stay out of the race.
Cons: Unfocused hyperactivity rarely leads to success in
the EU’s complicated bureaucracy.
Chances at ALDE nomination: High
Chances at election victory: None
Chances at securing European Parliament support: High
Will he run? A wildcard candidate. Few expected Renzi to
seize control of Italy as quickly or brutally as he did in 2014.
Chances at Socialist or En Marche nomination: Slim
Chances at election victory: Slim
Chances at securing European Parliament support:
Moderate
22 POLITICO
Jean-Claude
Juncker speaks
to the press
following his
State of the
Union address
to the European
Parliament last
year. The race
is on — sort
of — for his
replacement.
FRED MARVAUX/
EUROPEAN UNION
NEWS
PRESIDENCY
CONTINUED FROM PAGE 1
that selecting the EU’s new leadership
will be (like most important European
decisions) a slog.
“There’s not much we can do but
wait and see what happens,” said a
senior French diplomat involved in
the deliberations.
The difficulty is that the path to
next year’s election, scheduled for
the end of May, is strewn with political hurdles — from the FrancoGerman discussion on EU reform,
to Brexit, to the budget.
The top job at the Commission will
also inevitably be part of the horsetrading for other big posts that become open next year — the presidency of the European Council (the club
of the then-to-be 27 EU countries), the
bloc’s foreign policy chief and, arguably the biggest of them all, who’ll
lead the European Central Bank in
Frankfurt.
More fundamentally, there are still
competing visions within the EU27
over the role of the Commission.
While French President Emmanuel
Macron favors a more activist executive (at least publicly), others, including several Eastern European
countries and Germany, are wary of
vesting the Commission with more
political clout.
In their view, allowing Brussels
more influence means losing it at
the national level. They long for a
return to the pre-Juncker era, when
the president saw himself as more
of a bridge-builder than an enforcer
and agitator who oversees (in incumbent Jean-Claude Juncker’s words) a
“political Commission.” That’s especially true in countries such as Poland
and Hungary, which have borne the
brunt of the Commission’s activism
in recent years.
“There is no overall vision for Europe at the moment,” said Jan Techau,
director of the Europe program at
the German Marshall Fund of the
United States, a think tank. “No one
APRIL 26, 2018
has one.”
That’s unlikely to change. France
and Germany are nowhere close to
agreeing to the kind of sweeping European reforms Macron has put on
the table, and it looks increasingly
unlikely the Juncker Commission will
even manage to usher the new multiyear budget through by the end of
its term.
WINDING ROAD
Against that backdrop, selecting a
new person to run the Commission
will be particularly fraught. All the
more so, given that the question of
the so-called Spitzenkandidat has yet
to be settled.
To review: The Lisbon Treaty
granted Parliament a larger role in
approving the Commission president,
but it’s still up to the Council to nominate a candidate.
Even if that sounds straightforward, it’s far from it.
The key parties in Parliament insist
they won’t approve a nominee who
wasn’t a Spitzenkandidat — a candidate selected by his or her party to
lead the ticket in the upcoming election. According to the Parliament, the
next Commission president must be
a Spitzenkandidat.
Parliament argues that electing
the Commission president in this
way provides the office with more
democratic legitimacy, which is exactly why many member countries
oppose the process.
Those forces also played out in
2014, when the European People’s
Party selected Juncker as its lead
candidate, and the Party of European Socialists Martin Schulz. Though
many conservatives, including German Chancellor Angela Merkel and
U.K. Prime Minister David Cameron,
were uncomfortable with Juncker, he
ended up getting the job anyway, in
part because the EPP, which received
the most votes, couldn’t settle on another candidate.
A number of parameters will be
different this time around. The biggest change is the absence of the U.K.,
which will trigger a complete recali-
bration of the Parliament.
The body has been dominated by
an effective grand coalition between
the center right and center left for
decades. But with the British Labour
Party exiting and the center right under increasing pressure from populist parties, it’s unclear what kind of
result will emerge next year.
Even if the EPP remains the leading force, as is widely expected, it’s
unlikely to enjoy the same sway it
does now.
That’s one reason why whomever
the EPP selects as its Spitzenkandidat
won’t be a shoo-in for the presidency.
BREXIT MAN IN FRONT
So far, most attention has focused
on Michel Barnier, the chief Brexit
negotiator. A former French foreign
minister, Barnier tried to edge out
Juncker in 2014 for the EPP nomination but fell short.
This time, if he manages to negotiate a Brexit deal that both limits the
damage to Europe and puts the future
EU-U.K. relationship on solid footing,
he could be hard to stop. His position as chief negotiator has helped
him build relationships with leaders across the EU27, an advantage
no other candidate is likely to have.
But being an early favorite can
be dangerous and there are still big
questions about what support, if any,
Barnier would get from his party and
government. Not having the backing
of his party and President Emmanuel
Macron in Paris could sink his chances before he gets started.
Also, at 67, Barnier is older than
Juncker. For those who want Europe
to project an image of modernity and
vitality, a white man in his late sixties
might not be the best answer.
And then there’s the age-old question of Franco-German balance. If a
Frenchman gets the Commission
presidency, will Paris give Germany
the presidency of the European Central Bank next year? Berlin has long
coveted this job.
FOCUS ON MACRON
Other viable candidates include Ma-
cron-favorite Margrethe Vestager, the
competition commissioner.
Vestager, a Danish liberal, checks
many boxes for the ideal candidate
in both Paris and Berlin. But Merkel
is unlikely to support a candidate
from outside the center-right family. Some in Germany also perceive
Vestager as too strong-willed and as
someone who would pursue a more
activist agenda.
Much will depend on what course
Macron steers with his En Marche
party. En Marche, which didn’t exist at the last European election, has
been flirting with the liberal ALDE
group and other centrist forces in
Parliament.
If Macron succeeds in galvanizing
support for his European ideas beyond France, En Marche could become a force to be reckoned with in
Parliament. But that’s still a big if.
Federica Mogherini, the EU’s foreign policy chief, is often named as
a potential lead candidate for the social democrats. But given the party’s
desolate state, it’s doubtful her star
would lift it from the doldrums.
The more contentious the process of settling on a nominee via the
Spitzenkandidat process becomes, the
more likely it is a dark horse candidate could emerge.
Topping that list is Christine Lagarde, who currently heads the International Monetary Fund.
A former conservative French finance minister, Lagarde is widely respected in Germany and has a strong
personal relationship with Merkel.
She also knows how Europe works,
is multilingual and credited with diplomatic skills that even charmed Wolfgang Schäuble, Germany’s curmudgeonly former finance minister.
At just over 60, Lagarde might be
older than the ideal candidate. But
then in European politics, no one is
perfect.
“In the end it will be a big European mishmash,” Techau said of the
process. “But that’s normal.”
Given the challenges Europe faces
in the coming months, “normal” may
be little more than another fantasy.
As scores of
photographers lined
the street across
from the entrance
to the private Lindo
Wing of St. Mary’s
Hospital, it was an
anaesthetist perched
several floors above
them who captured
Monday’s most
unique angle. As
Duchess Kate of
Cambridge prepared
to give birth to her
second son, Dr. Helgi
Johannsson — armed
with an iPhone X —
snapped this photo
of Prince William
holding hands with
the couple’s first two
children, George and
Charlotte.
A BIRD’SEYE VIEW
APRIL 26, 2018
OPTICS
POLITICO 23
24 POLITICO
FORUM
APRIL 26, 2018
WHAT PLAYING
RUSSIAN POKER
TAUGHT ME
ABOUT PUTIN
BY VIJAI MAHESHWARI IN MINSK
The Western media often likens Vladimir Putin’s governing style of brinkmanship, covert aggression
and blatant deceit to those of a brilliant poker player. The poker-faced Russian president rarely shows
his hand, enjoys bluffing his more powerful opponents and doesn’t hesitate to go all-in when he senses
an opening. He’s the player at the table with nothing to lose; the one who upsets the dynamics, instills
fear in tighter players and only stops when he’s cleaned out the table — or gone bust himself.
But do real Russian poker professionals play by the same fearless, calculating rulebook? I was curious
what sitting across from them at the poker table might reveal about Russian-style gambling and jumped
at the chance to attend the Russian Poker Tour in Minsk, Belarus over the Orthodox Easter weekend.
Although I lived in Russia for over five years during the turbulent 1990s and speak fluent Russian,
my recent impressions have inevitably been filtered through the lens of the West’s Russophobic culture.
I’ve lost touch with ordinary Russians and wanted nothing more than to get back
in their orbit — while trying my damnedest to empty their wallets at the same time.
POLITICO 25
The Russian
Poker Tour’s
stop in Kiev in
2014 coincided
with the height
of the Maidan
uprising. Rioters,
pictured at right,
lobbed Molotov
cocktails at
police just a few
blocks from the
casino where
poker players
were locked
inside.
SERGEY
DOLZHENKO/EPA
What I discovered was that most
Russian pros are a lot more docile
at the poker table than Westerners might expect. I’ve been playing
poker for most of my life, and the
poker tables at the Venetian or the
Wynn in Las Vegas are a shark tank
compared to the convivial games
in Minsk. The Russians folded easily, rarely check-raised or threebet, and don’t suck you out like the
pros in Las Vegas. I was up more
than $500 on my first day, without
even breaking a sweat.
Unlike their leader, the Russians
are the opposite of poker-faced,
smiling when they have a great
hand, puckering their lips in disgust
when the cards go against them.
In their defense, Texas Hold’em
is a relatively new game in Russia
and only gained in popularity in
the last decade. The Russian players had three to five years of experience behind them at best. But
their deference to authority was
striking.
Where American players will
shout, chuck their cards in anger
or even fling their poker chips at
the dealer, the Russians were paragons of good behavior. When the
dealer made a mistake, or a player
broke the rules, hardly anyone
argued with the manager when he
was called over. I didn’t see a single
fight or loud argument break out
during my entire time at the tournament.
And maybe that’s the real secret
to the hold Putin and his corrupt
cabal maintain over the vast Russian nation: The Russian people
were “serfs” for hundreds of years
under the czars and are still more
likely to blindly respect authority
than challenge the status quo.
It’s the goodness of Russians and
their unquestioning respect for his
judgment that gives Putin the freedom to act the way he does around
the world. Without the consent of
the governed, he’d never be able
to get away with his shenanigans in
Ukraine and elsewhere.
And yet Putin’s aggressive style
may also be the reason behind
poker’s increasing popularity in
modern Russia. Gambling is illegal
in Moscow and St. Petersburg, but
players talked of underground poker rooms in kitchens, or the basements of bars and restaurants.
Russia’s Black Sea resort of
Sochi, which hosted the Winter
Olympics in 2014, lies in one of
the few regions in Russia where
gambling is permitted. It is now the
country’s poker capital and is fast
turning into a Russian Las Vegas.
The Russian Poker Tour usually
hosts its tournaments there, as do
PokerStars and the World Series of
Poker.
Sensing my interest in playing
poker in Sochi, Russian players
recommended checking for upcoming tournaments on Vkontakte, the Russian Facebook. When I
mentioned the platform was now
banned in Ukraine, where I live,
there was a collective sigh around
the table.
“Really,” said one, with a groan.
“I heard something but thought it
was just a rumor.”
It was clear from conversations
that Russians are more sad than
angry that Ukraine has, as they see
it, turned against them. As the only
visitor from Kiev, I was asked again
and again whether I had brought
Ukrainian friends along, and my
answer in the negative wrecked
their poker high. A player reminisced about a Russian Poker Tour
in Kiev just over four years ago during the height of the Maidan uprising; games had continued apace
even as protestors lobbed Molotov
cocktails at the riot police a few
blocks from the venue.
Just four years later, the break
between the once-brotherly nations of Russia and Ukraine is complete: I didn’t spot a single Ukrainian during my entire time there.
There were plenty of other
foreign players instead — mostly
Syrians, Turks and Iranians living
in Russia or Belarus. They acted
more like poker sharks in Vegas,
betting constantly and going all-in
simply for the sheer pleasure of
intimidation. I expected their aggressive antics to amp up the tension at the poker table and elicit
some trash talking by nationalist
Russians.
But these saintly Russian poker
dudes seemed uninterested in
voicing any resentment: One,
who had been downing shots of
vodka all evening, hugged a Syrian
player after he lost a hand to him.
“We’re brothers,” he said, slurring
his words. “Your fight is also our
fight.”
But while Syrians and Iranians
might be Russia’s allies in the fight
against the West — and at the poker
table — America still looms large
everywhere. For all Russia’s bluster against Washington, the games
at the Russian Poker Tour were
denominated in U.S. currency,
and players exchanged their chips
for U.S. dollars when their tables
broke up later in the evening.
On my last day in Minsk, I took
part in a fast-paced poker tournament with a $450 buy-in. I played a
tight but aggressive game and, after
a few lucky flops, made it to the final 20 players late that evening.
The chip leader, Aslan, was a
heavyset and bald, fast-talking guy
from Yaroslavl, an ancient town
on the Volga River with Orthodox
churches and medieval towers.
When I had visited the town in
the chaotic ’90s, it was a hellhole,
with ruined churches and potholed
roads. Aslan insisted it has now
transformed into a modern town,
with gastro pubs, shopping centers, decent roads, even a Lexus
dealership.
Despite Putin’s reckless international brinkmanship and dubious
domestic policies, as president, he
has clearly brought a measure of
prosperity to the far-flung provinces of his country. Most of the
players at the tournament were not
from Moscow or St. Petersburg.
They were from smaller towns all
across Russia, and they all had cash
to burn.
Aslan had driven to Minsk with
friends, and while they were clearly ethnic Russians, he was from the
Tatar ethnic minority, moon-faced,
with a high forehead and slanted
eyes. Seated to my left, he kept
messing up my game, calling my
bluffs and pushing me to the brink
when he had a better hand. Unlike
the others, he had the aggression
and fearlessness of a natural poker
player — perhaps no surprise in a
descendant of Genghis Khan and
the fearsome Golden Horde that
pillaged and ruled Russia for centuries during the Middle Ages.
When I finally went all-in against
him, he called, his measly pair of
nines beating my ace-king. I was
out of the tournament. He gave
me a sly smile goodbye as I left, his
high forehead furrowing as he did
so, and for a brief second there, he
reminded me of Putin himself.
“Come visit us during the Football World Cup this summer,” he
called after me. “And bring your
American friends.”
“But most of my friends are
afraid of Russia,” I shot back.
He cocked his head in shock and
flashed another smile.
“Afraid of us? Why? We’re
friendly and hospitable people,
and would never harm anyone.”
The entire poker table erupted in
applause.
I would later read that he had
indeed won the tournament and
claimed its $25,000 cash prize. In
Russia, it seems, the strongest and
wiliest always win out in the end.
Vijai Maheshwari is a writer and
entrepreneur based in Kiev. He tweets at @Vijaimaheshwari.
26 POLITICO
OPINION
APRIL 26, 2018
HOW EUROPE
CAN PUNCH
BACK AT
BEIJING AND
WASHINGTON
Only by investing in
innovation can the EU compete
economically with the US and China
TOM
ENDERS
is CEO of Airbus.
T
here’s a fight going on — for
global technological and economic leadership. In one corner, the U.S. is aggressively defending its position as the traditional
business superpower. In the other,
China is transforming itself from
imitator to innovator. Where’s Europe? We look like a passive spectator at risk of becoming a punching bag between Washington and
Beijing.
Europe once had ambition. The
2000 Lisbon strategy laid out the
goal of making the EU “the most
competitive and knowledge-based
economy in the world” by 2010.
Eight years have passed since
that goal was to be attained — and
where are we now? The “Old Continent” is looking, well, frankly,
just old.
Europe is being squeezed by the
U.S. and China. Despite the U.S. administration’s retrogressive trade
policies, it remains the world’s
technological and digital powerhouse. The GAFAs (Google, Apple,
Facebook, Amazon) dominate not
just the way we live and communicate, but also how we conduct
business. And there are no European competitors in sight.
At the same time, China is
speeding up and increasing investments. Beijing’s “Made in China
2025 Strategy” aims to build global
industry champions in energy,
robotics and aviation. And China
is accelerating its transformation
by taking over strategic industries
abroad — if you can’t build it yourself, just go shopping!
Europeans are champions in
observing — but not acting on —
trends like these. But there’s much
the EU can do to break free of the
clinch.
To begin with, Europe must nurture its innovation ecosystem. That
starts with education. Hidden from
the headlines, a silent revolution in
third-level education is consolidat-
Silicon Valley dominates the way we live and communicate — and it’s China snapping at the U.S.’s heels.
ing China’s future tech dominance.
Did you know that in recent years
China has been building one new
university a week? Predictions for
2030 see Chinese graduates increasing by 300 percent. Europe
and the U.S. are at 30 percent.
It’s not just about numbers; it’s
also about what young people are
studying. STEM graduates — science, technology, engineering,
mathematics — are future entrepreneurs. China and India are
expected to account for more than
60 percent of STEM graduates in
major economies in 2030, and
Europe will only have 8 percent.
One reason: A persistent gender
gap is causing Europe to miss out
on nearly 50 percent of its population.
Europe also has to select, scale
up and speed up key innovative
sectors in the upcoming EU budget. Ask a simple question — where
should Europe be innovating? —
and you get 28 (sadly soon to be 27)
different answers.
We have to change our approach and implement a topdown focus on a limited number
of strategic projects. Rather than a
watering can sprinkling resources
across a myriad of priorities, we
need lighthouse projects spotlighting tomorrow’s disruptive technologies such as artificial intelligence,
digitalization and space. Europe
must urgently scale up investments in these strategic domains,
both from the public and private
sector.
As the EU’s national governments discuss the EU budget for
the next seven-year period, we
need less cohesion funds and agricultural subsidies and more incentives for research and innovation.
The first two still account for more
than two-thirds of the EU budget.
Can Europe live up to today’s increasing societal challenges with
such ill-defined priorities? We must
at least double the funding for the
Horizon 2020 research and innovation program to €160 billion to not
be left behind in disruptive breakthrough innovation.
Recently, the EU put forward
its idea of an “Innovation Union.”
This is a promising idea but it will
need sufficient funding to not end
up as political window dressing. In
recent years, European businesses
attracted just one-tenth of what
U.S. startups received in venture
capital. What jet fuel is for aircraft,
venture capital is for business: It’s
DAVID RAMOS/GETTY IMAGES
time to fill up our tanks.
Finally, faced with the Damocles
sword of U.S. tariffs hanging over
Europe, we should refrain from
instinctively toughening up. After
all, in some sectors, there is indeed
an imbalance of tariffs. American
cars imported to Europe encounter
four times higher tariffs than vice
versa. I don’t think we have to be
afraid of American cars. Instead,
Europe should propose zero tariffs
on industrial products. This would
reflect how closely connected our
industries are. Here, of course, let’s
not be naïve: Opening up depends
on reciprocity.
Europe doesn’t have to be a
punching bag for the U.S. and
China. If it works to boost innovation, it can instead start landing
a few blows of its own. Let’s be
more conscious of our strengths.
Europe is still the largest economy and trading block worldwide.
Germany and France both have
pro-European governments and
parliaments. If Europe succeeds
in standing together, we will remain bigger and stronger than the
U.S. and China. The time of being
passive spectators is over. Europe
can’t afford another Lisbon standstill.
POLITICO 27
HOW MACRON GOT PLAYED BY TRUMP
The French president
leaves Washington with
little to show for all the
hand-holding
MUJTABA
RAHMAN
is the head of
Eurasia Group’s
Europe practice.
“I
like him a lot!” This week’s
state visit provides ample
proof that French President Emmanuel Macron has found
a special place in his American
counterpart Donald Trump’s heart.
Their hand-crushing contest from
last year has even been superseded
by a few man-to-man cheek kisses
— an unusual sight on U.S. television news.
Trump may be hugely unpopular in France but this will be a net
positive for Macron at home, at
least in the short term. The French
like to see their president strutting
on the world stage, especially if
his strutting brokers compromises
between global powers. But like
many spring trysts, the encounter
is one Macron may soon come to
regret — especially if his progress
in Washington proves illusory or
puts him at odds with his allies in
Europe.
The French president heads
home claiming at least three
achievements. First, having demonstrated Europe is becoming
tougher on Chinese trade and
deserves a permanent exemption
from the new U.S. tariffs on steel
and aluminum. Second, having
persuaded Trump to be less rushed
in his withdrawal of U.S. troops
from Syria.
His third achievement concerns
the Iran deal. The details of yesterday’s apparent compromise have
been kept secret but Macron claims
there is now room for a “new deal”
which could satisfy the U.S.
This may be enough to satisfy
French public opinion but EU capi-
The French
like to
see their
president
strutting on
the world
stage.
tals are less likely to be convinced.
Much has been made of Macron
the “Trump whisperer,” but the
French president had to prioritize among the many multilateral
processes the U.S. president has
shunned. He didn’t even attempt
to lure the U.S. back into the Paris
climate agreement, and his successes in other areas already feel a
bit shaky.
Macron hasn’t secured a clear
commitment on anything, including the tariff exemption. What the
U.S. president promises to someone he personally likes may not
endure when he is talking to someone he dislikes.
A revealing moment from the
footage before the talks will alarm
EU leaders. Unprompted, Trump
bemoaned the fact he couldn’t use
the meeting to launch talks on a
trade deal with France because the
unacceptable demands of other EU
member countries got in the way.
On Friday, German Chancellor
Angela Merkel will be in Washington for a working visit. Trump has
a visibly poor relationship with
Merkel and regularly grumbles
about Germany’s trade surplus.
Next to her, it would be no surprise if he suddenly brings up new
“tests” for the EU’s strategy against
Chinese trade practices before a
permanent exemption from tariffs
can be secured.
Macron’s other successes also
feel too bilateral. It isn’t clear how
other EU member countries will
feel about a “new” Iran deal and
the additional demands the U.S.
will make. At the press conference,
Trump cheekily said that he’d keep
his decision secret until the May 12
deadline but that he’d already told
Macron. This would suggest other
EU members haven’t even been
consulted.
The overall impression Macron’s
EU partners will get from the state
Donald Trump, left, and Emmanuel Macron outside the White House during the French
president’s state visit to Washington. POOL PHOTO BY CHRIS KLEPONIS/GETTY IMAGES
visit is that France still considers its
EU membership and its partnership
with the U.S. as two separate levers
it can use to defend its own interests. Since the visit hasn’t unlocked
a permanent tariff exemption,
and instead confirmed that Trump
merely prefers dealing with Paris
bilaterally, it is hard to imagine how
Macron will use his good relationship with Trump to boost his beleaguered EU reform ambitions.
During Macron and Merkel’s
own bilateral talks in Berlin last
week, they agreed on their strategy for their meetings with Trump
and — revealingly — not much else.
Even at the press conference held
before the talks, their diverging
views on eurozone reform were
clear, although they did reiterate
their promise to produce a com-
mon road map by the June European Council.
Macron’s advantage in Washington is unlikely to help him in his
struggle with Berlin over the coming weeks. The fact that France is
doing its homework on a domestic
level by removing regulatory rigidities and cutting the deficit is more
relevant but it will take at least
two years for the reforms to yield
benefits.
An immediate crisis in U.S.-EU
relations would give Macron more
bargaining power within the EU
but the bloc’s tariff exemption is
likely to be extended. A crisis affecting European markets could
also force Berlin to give Macron a
better hearing, eventually. Once
again, Europe is idly waiting for the
next crisis.
NO BAILOUT FUND WITHOUT REPRESENTATION
Emmanuel Macron’s
proposal for a
European Monetary
Fund doesn’t include
enough checks and
balances
BERLIN
he next month will be a crucial one for the future of the
eurozone. In May, the EU has
to decide whether it goes ahead
with the ambitious set of proposals
French President Emmanuel Macron laid out a year ago, or whether it faces the next economic crisis
with its current tools.
There is a great deal at stake.
Macron’s credibility rests on his
ability to make good on his reform
agenda, and gaining support for
his proposed European Monetary
Fund — a European version of the
International Monetary Fund — is
his first real test. If this proposal
sinks, the chances of more ambitious changes — to the EU’s budget
or tax system, for example — are
likely to sink with it.
Angela Merkel, too, faces a crucial decision: She spent much of
T
MARK
DAWSON
is professor of
European law and
governance at
the Hertie School
of Governance in
Berlin. He heads
the LEVIATHAN
project on
accountability in
the eurozone,
funded by
the European
Research Council.
her election campaign last year
arguing that only she could be a
reliable partner for Macron on
the European stage and now has
to wrestle with how to align their
competing visions for the future of
the monetary union.
As the EU faces down a “civil
war” against illiberal democracy in
its own ranks, the fight over the future of the eurozone could further
exacerbate tensions between members. The chances Europe will fail
to meet the challenge are high.
Macron’s EMF proposal faces
plenty of resistance within Merkel’s
Christian Democratic Party (CDU),
where members fear that a beefedup European fiscal backstop would
extend Germany’s future liabilities to a breaking point. But the
chancellor has also been accused
of “hiding behind the Bundestag”
and using her shaky parliamentary
majority as an excuse not to go
forward.
To be sure, there are plenty
of problems with the proposal.
While Germany is the most highprofile detractor, the populations
of previous — and possible future
— “bailout” states are unlikely to
be impressed by the institution’s
proposed setup. It does little to
challenge the basic structure of its
predecessor, the European Stability Mechanism, both enshrining
austerity as a central principle and
including few mechanisms to allow
parliaments or citizens to challenge
its decisions.
For a body that is likely to have
far-reaching powers, its apparent
lack of accountability mechanisms
is understandably a source of serious concern. The EMF would duplicate many of the international
body’s features, without considering whether such a structure is appropriate for a political community
like the EU.
But the current impasse also
presents an opportunity. There is
still room for a grand bargain: If
the biggest roadblock is the German Bundestag’s fear of losing
parliamentary sovereignty, the
solution is not to abandon the
proposal, but to create a different
EMF — one with proper political accountability.
An amended proposal would
need to strike a balance between
two risks: First, that cumbersome
procedures mean the EMF is unable to respond to pressing fiscal or
financial crises; and second, that
centralized decision-making leads
to the abandonment of democratic
scrutiny.
France and Germany need to
find a new way to walk that line.
Where the current proposal stipulates the EMF has only a limited
duty to report to the European
Parliament, a more ambitious proposal should give the Parliament
full veto rights over lending or recapitalization programs.
Alternatively, national parliaments could be given a “yellow
card” that allows them to delay
decisions when enough are concerned that key principles of fiscal
responsibility or social solidarity
may be breached.
Both solutions would allow the
EMF to give the eurozone the fiscal tools it badly needs to survive,
while also addressing the concerns
of parliamentarians in Strasbourg
and in national capitals who currently hold the keys to advancing
or sinking the proposal.
It would be a happy day for
Europe if an impasse between
Paris and Berlin doesn’t just yield a
messy compromise that pleases no
one, but resulted in a more democratic and legitimate eurozone.
Macron has insisted that such
a eurozone is a central goal of his
proposals for European reform.
Now the EU has the chance to come
up with something even better.
Political wheeling and dealing is in high gear as the EU begins the most
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