Digital changes the balance of power

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The road to hell is known to be paved with good intentions. Although digitalisation isn’t devil’s work, it does remind one of this idiom. Not too many years ago the digital world was celebrated. The internet, many believed, would be the key to a brighter future. Technology companies from California became the world’s problem-solvers.

The initial euphoria has passed. Indeed, digital technologies have opened up completely new possibilities. But at the same time their darker sides came to the fore: cyberattacks, fake news, manipulated elections, filter bubbles, a polarised and aggressive public discourse, a collapse in the privacy sphere, massive upheavals in the economy and world of work. The list goes on.

And what about politics? Authoritarian regimes used the digital revolution to advance their interest while in Europe and America, the political arena didn’t do much about. The digital world was, at least in the early years, treated as a mere technological question, a non-political issue. But it ain’t merely a technical matter. Digitalisation is a question of power and is thus deeply political.

Who controls whom? This Leninist Leitmotiv is at the heart of digitalisation ranging from individual users to geopolitics. It runs through all levels, because the digital revolution leaves no stone unturned.

Russia’s President Putin already declared — he who dominates artificial intelligence, controls the world. He’s not wrong. Geopolitical domination was also always based on the control of a significant informational infrastructure. Knowledge is power. The Roman Empire controlled the streets, Great Britain the naval routes. Whoever controls the digital technologies and data flows, can shape the world order. Data is king.

We are already finding ourselves in a technological cold war. The US and China are competing over technological leadership. Numerous nation-states are walling off their digital markets in order to secure their data sovereignty. Laws are enacted to prevent the flow of data into other countries. The Internet is becoming a Splinternet.

Economically, digitalisation is challenging the old, analogue economic order. Especially Europe is affected. Europe is strong in the industries of the 20th century. It’s not certain, whether they will survive. In the 21st century, software dominates hardware. European companies could quickly be degraded to mere hardware parts suppliers for technology companies.

And the world’s biggest companies are young technology players from the US and China. Data is their fuel. And with their platform economies and network effects, they are expanding. China’s Tencent is not only a social media platform, it’s also a travel agency, a search engine, a computer games developer, a music company, an insurance company, and so on. The technology titans are conquering new markets, creating new dependencies and shaping powerful monopoly structures. If Europe does not develop its own strong digital industry, then it will have to decide whether to be a cyber colony of Silicon Valley or Shenzhen, says Germany’s former Foreign Minister Joschka Fischer.

The digital world is also changing the balance of power in the labour market. The pressure on the qualifications of workers is increasing. Digitalisation puts traditional jobs into question. To what extent new jobs will be created is still unclear. Employees are also put under pressure with any rise in wage costs possibly leading to a substitution via robots. Some studies already highlight that a rise in the minimum wage can lead to increased automation. New forms of precarious work are increasing. Risks are being dumped on digital subcontractors. The digital world of work also challenges the modern social state. If workers are replaced by robots, who will finance the social security system?

And of course digitalisation is having a pronounced societal effect. Similar to the invention of the printing press in the 15th century it is radically changing the information landscape. The printing press made information more accessible creating a new public sphere. This promoted reflection, doubt and criticism. This, so Henry Kissinger, provided the base for the age of Enlightenment. Digitalisation, however, puts this into the extreme. Information spreads at breath-taking speed. There is no time for reflection. Everything can be put into doubt. Fake news sweeps through the internet and ever more people are living in a digital echo chamber only being confronted with their very own views and opinions. Artificial intelligence can also lead to more advanced deep fakes, with fake videos and imitated voices. Manipulated information is then spread via bots and reaches millions of people.

This threatens the most basic essential element of society: trust. Trust is the invincible glue that keeps a society together. But trust is dwindling if you can’t trust anything anymore. And Facebook and Cambridge Analytica have shown how some actors are trying to undermine elections and other forms of participation. This creates power. Because power isn’t just the “storm of the Bastille”. It is, according to Gramscis understanding of hegemony, also the battle over ideas and narratives that define a society.

Digitalisation brings us into a systemic conflict. China uses digital technologies to strengthen its authoritarian regime. Beijing has the best facial recognition software and employs a social credit system that rates people according to their actions. Total surveillance and social credit system — Big Brother meets Pavlov’s dog.

In the United States on the other hand, there is a largely unregulated hyper data capitalism. The private sphere is sold on the marketplace. This allows anyone — also unknown entities from Russia — to buy and use data. That’s how democratic elections get influenced.

Several years ago the digital world threatened autocratic regimes. Digital technologies seemed to be a tool for greater democratisation. Social Media accelerated the Arab Spring. But the tables have turned. Now it seems the digital world is threatening democracy.

Digital technologies give power and take power away. They empower and disempower. That’s how it is with many technologies. They contain germs of freedom and of suppression. Digital prophets such as Mark Zuckerberg only saw the potential for freedom. They were, in the words of Reinhold Niebuhr, the “stupid children of light” who were all naïve about the power of self-interest and domination, which made them “inept at defending democracy”.

Digital technologies aren’t created in a vacuum and they aren’t neutral. They are what you make of them. In this context, liberal democracies have to actively shape and regulate the digital world. Lest others do it for us.

US, China and a new economic order

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The trade war between the United States and China isn’t about trade. It’s about global economic dominance. Both are locked in a struggle over the international economic order. This has been a long time coming. In three fundamental economic areas, China is challenging US economic hegemony.

First, in terms of trade. A rapidly growing consumer class with rising demands has turned China into a massive market. Companies are falling over backwards to get a piece of that action. Over the past decade, China has displaced the US in many economies as the top export destination, shifting the centre of world trade.

Second, with regards to economic relations. Its grand infrastructure plan – the Belt and Road Initiative – aims to connect more than 60 countries across three continents to China. This flagship project intensifies China’s economic reach from Asia into Europe and Africa, deepening economic ties thereby carving out a new Chinese-dominated economic space. Joe Kaeser, CEO of Europe’s largest industrial manufacturing company Siemens, has warned that “China’s One Belt, One Road, is going to be the new WTO – like it or not.”

Third, technology. Washington was content with its deep economic ties to Beijing as long as China was playing the subservient role of mere supplier of lower-value goods. But those times are over. The world’s workshop is becoming the world’s innovation hub. We are bearing witness to China’s technological return to the world stage. By 2035, China wants to become the world’s most important force for innovation. Consequently it’s massively investing in key technologies ranging from artificial intelligence to quantum computing. China wants to dominate the industries of the future, the very area where the United States derives its future economic competitiveness from. Hence the economic relationship between the US and China is changing. And the US is unwilling to let it change without a fight.

In all three areas, China is creating economic dependencies, which translate into political influence. It has leverage over foreign companies that depend on its market. Daimler’s CEO Dieter Zetsche had to apologize profusely after the company published an Instagram post showing one of its luxury cars along with a quote from the Dalai Lama. Shortly thereafter, Chinese billionaire Li Shufu bought a sizable share in the company.

It has leverage over many developing countries. The Belt and Road initiative is giving China not only control over strategic infrastructure but is also forcing the recipient countries into a Chinese-fuelled debt-trap.

And lastly, China’s technological ascendancy is giving it an increasing amount of sway in the digital world as well as in future markets, affecting developed economies. China manufactures an estimated 90 per cent of the world’s IT hardware. This doesn’t come without problems. A case in point is the Bloomberg “Big Hack” story, which illustrated that the Chinese secret service had managed to add a tiny chip in the production of servers. These servers had then been used by US companies such as Apple and Amazon and therefore gave China secret access to their data. The world is increasingly finding itself in a Chinese IT chokehold.

Especially Europe seems to be naively letting China build its future digital infrastructure. Europe, and particularly Germany, are all building their 5G networks based on hardware from the Chinese company Huawei. In Germany, there hasn’t even been any public debate on this issue and whether or not it constitutes a security risk if the critical digital infrastructure is based on Chinese hardware. After all, the US, Australia and India have already banned Huawei from participating in their 5G networks and others, such as Japan and South Korea are investigating whether to follow suit.

We are witnessing how China is expanding its economic zone to build influence in Europe, Africa and Asia and the United States pushing back. This isn’t a short-term trade war, this is a fundamental shift in the economic order. The international economic order is breaking down and a scramble for its replacement is underway. In its element, this is about power. Because economic dependencies translate into political influence. And in the end it is also about the supremacy of political systems. Will China’s digital authoritarianism – a kind of gamified 1984 that mixes Big Brother surveillance with a social credit system akin to Pavlov’s dog – fuel future technological revolutions, drive innovation and promote economic modernization and competitiveness, or will free market liberal democracies?

China’s Policy of Influence-Seeking in Europe

Russia is not the only country strongly seeking to influence liberal democracies. A new report from the Global Public Policy Institute (GPPi) and the Mercator Institute for China Studies (MERICS) warns that China is increasingly pursuing a policy of influence seeking. The Communist Party of China is intensifying its efforts to influence European states for political and economic reasons, and also in order to promote its own authoritarian political model. We talked to Kristin Shi-Kupfer, co-author of the report, about increasing Chinese influence, the country’s goals, and what Europe’s response should be. This interview first appeared in the Green European Journal.

Roderick Kefferpütz: After the Cold War, the “end of history” was proclaimed – the liberal democratic model had won the day and no alternative was present. Is this still the case, or are we currently in competition with China over socio-political models?

Kristin Shi-Kupfer: We can certainly see that liberal democracies are in crisis. This can be very clearly observed in the core countries of this societal model: the US and parts of Europe. These countries are being challenged to re-explain themselves, to offer a new perspective. Due to this crisis in the West, the Chinese system and its developmental path are, of course, subject to greater attention. At the last party congress, the Chinese leadership itself under Xi Jinping hinted that the Chinese path to development could be superior to that of the West. Beijing also actively promotes this alternative developmental path through investments and involvement in developing countries, with little regard for good governance principles such as the rule of law and transparency.

Foreign powers have increasing influence within liberal democracies; all eyes are on Russia in particular. Your report paints China as an undervalued player in influence terms. How so?

Russian influence-seeking policy is relatively easy to grasp. It is rather destructive in its approach and has the aim of infiltrating and subverting democracies. The Chinese approach is much more long-term and subtle. It’s not just about infiltration or disinformation, as is the case with Russia’s influence policy. China uses a range of open and hidden channels. They offer investments, conclude cooperation agreements, build networks, and organise joint conferences with think tanks. It’s a very subtle way of networking. But this network can then also be mobilised when it comes to its own interests.

A cynic would say that the Europeans also do this.  

Yes, that’s a very important point. But the question of the difference between legitimate public diplomacy and illegitimate influence is not the primary issue. The crucial difference is the political system. In China, there is no pluralistic competition and no transparency. National interests are, in principle, party interests. China has a different political system that generates completely different processes and interests. Therefore, any action by the Chinese state towards Europe is potentially problematic and needs to be closely scrutinised.

What are these Chinese networks used for? What are Chinese interests as far as Europe is concerned?

There are different levels. First, there are clear economic interests, for instance gaining access to technology by buying into high-tech companies, or by creating new markets such as the Belt and Road Initiative. There are also political interests. When it comes to the South China Sea or human rights issues, it is certainly useful for China if there are actors within Europe who support the Chinese position. And, of course, disrupting European unity is also a goal. On the one hand Europe is a necessary counterbalance to the US; on the other, from a Chinese viewpoint it is less than desirable to deal with a united Europe speaking with one voice.

Finally, it is also a matter of increasing legitimacy for the Chinese system and its developmental path. International collaboration and interdependence bring recognition and increased cooperation. This in turn has an effect within China itself.

Are there any EU member states that are particularly susceptible to Chinese influence?

In the study, we felt that it was important to emphasise that the whole of Europe is affected. Due to their size and economic strength, countries such as Germany and France are less susceptible than southern or eastern European countries, but we do warn against a certain western European complacency. China also invests in western Europe and tries to influence public opinion in these countries.

Eastern and southern European countries are certainly more vulnerable, however, because of their much weaker position. They are more dependent on economic cooperation and investment and have fewer opportunities to speak directly to, and on an equal footing with, China. It is for this reason that the eastern European member states are so enthusiastic about the 16 + 1 mechanism: it offers them the opportunity of direct, face-to-face communication with the Chinese authorities.

However, it must also be said that these countries, such as Hungary for example, at least partly sympathise with authoritarian tendencies within their own countries. For this reason, it may be easier for them to cooperate with China.

You describe the subtle nature of China’s current influence-seeking policy. How might this evolve in the future?

In our report, we use Australia as a blueprint to show the direction this could take. Up to 80 percent of foreign donations to Australian political parties come from China. Numerous politicians work for Chinese companies after their political careers have ended, and the Australian intelligence service has identified ten regional and local politicians who allegedly have close ties to the Chinese secret service. Chinese influence runs deep within the political elite. Even in the media, certain decision-making processes may well have been deliberately influenced using financial means.

We don’t yet see this in Europe, but it could happen here too. This is what we are warning against. This is why we want to draw attention to Chinese political influencing efforts. We advocate for appropriate disclosure requirements for political parties – or simply for banning certain types of political donations.

What further recommendations do you make, especially with regard to investment policy?

There has already been some movement in this area. France, Italy, and Germany are pushing for a European investment screening mechanism to better control foreign investment in critical strategic areas, for example in power supply or in companies with key technologies. We go one step further, however, and say that the definitions of these critical areas should be broadened. It is important, for example, that the media and academia are included. At the same time, our societies must avoid exposing research and media institutions to such commercial pressures that they forced to rely on third-party funding, including Chinese money.

To what extent does digitalisation offer new opportunities for gaining influence? Europe is always looking in the USA’s direction and criticising Apple, Facebook, and Google, while in the East the tech titans Tencent, Alibaba, and Baidu are striding ahead. Will they not eventually arrive on the European market and potentially present us with challenges?

This has already begun. Wechat and Alipay offer cashless payment methods in Germany and other European countries – German drugstore chain Rossmann offers Alipay for Chinese tourists in Germany, and Huawei wants to participate in the 5G expansion in Europe. Chinese digital companies are already on the rise in Europe, and this also has significance for data flows. Europe has been asleep at the wheel for too long; the fact that we have so few digital players in Europe, for instance, is problematic.

Of course, the new EU Data Protection Regulation will set certain limits. Adjustments are also being made on the Chinese side in order to secure these transnational data streams – for instance, we are seeing the adaptation of Chinese standards to conform at least partially to European data standards.

Europe should stand up for its values and interests when dealing with China. Europe needs more self-confidence – then it will gain more respect. Otherwise other countries will think of Europe as a pushover.

Liberal Democracy’s War With Itself 

In many countries, authoritarian populism is on the rise and liberal democracy is in decline. Citizens are turning away from their political systems and increasingly heeding the siren song of the populists. In his new book, The People vs. Democracy: Why Our Freedom Is in Danger & How to Save It, Yascha Mounk analyses the reasons behind these developments and the key challenges posed to liberal democracy in our time. This interview first appeared in the Green European Journal.

Roderick Kefferpütz: In your latest book you describe the demise of liberal democracy and how liberalism and democracy are actually at war with each other. Can you explain that?

Yascha Mounk: I believe that liberalism and democracy are two fundamental elements that go together; in some ways they need each other. But my fear is that they are falling apart, creating two malformed systems. On the one hand we have ‘rights without democracy’: political systems that are strong on individual rights, with independent institutions and a very effective separation of powers, but which are insufficiently responsive to the popular will and actually pursue policies contrary to this.

And on the other, partly in reaction to this, we are seeing the emergence of political systems in which populist politicians claim that they alone represent the popular will, in which minorities are victimised, and independent institutions such as courts are undermined. Here we have ‘democracy without rights’.

Liberal democracy means maintaining individual rights while also being able to respond to the popular will. The question at the heart of the challenge we are currently facing is how to maintain this balance.

What are the reasons behind this?

It’s partially a product of elite capture. Over the years we have seen money becoming increasingly important in politics, and the development of a revolving door between lobbying and legislating. Special interests have become too powerful, and politicians have become too disconnected from ordinary citizens.

This disconnection is, in part, a consequence of the way we deal with the numerous challenges we face. Just think about climate change. To tackle this issue, you obviously need cooperation between hundreds of countries around the world; you need international agreements and international institutions. But this takes a lot of decisions out of the hands of ordinary people.

The result is that people feel alienated because their interests aren’t being taken into account. And then come the populists who want to abolish institutions such as central banks, international organisations, trade treaties, and so on.

That’s what elections are for, so that citizens can make their views heard.

Sure, and they can elect politicians who are more responsive to their views. The issue, however, is that the challenges we are facing are so complex that we need expertise in decision-making and cooperation between multiple stakeholders on an international level. But at the same time, this level is too far removed from ordinary people.

The author Parag Khanna argues that there is actually too much democracy and that in fact what we need is more experts and technocracy.

This is what I call the ‘technocratic dilemma’. Parag Khanna is partially right. The world has become much more complicated and therefore we need expertise and technical institutions. There are certainly some areas in which a more technocratic approach might lead to better results, but there are many others in which technocracy is delivering poor results. Why? Because the actors involved, expert as they may be, do not necessarily have the interests of ordinary people at heart. This means that the people’s views are not taken into consideration when public policy is shaped, breaking the core promise of our political system — to respond to the popular will. People won’t stand for that for too long.

We’re now finding ourselves in a situation in which people have also changed their views on certain issues. That’s one of the points in your book, that people have become less liberal.

Yes, that’s part of both the rise and the danger of a democracy without rights. If you want to uphold the democratic and the liberal elements of the political system then a majority of people have to vote for liberal rights. Otherwise you can’t solve the riddle. The fact is that the views of a lot of people in Europe have become less tolerant. Let’s take Switzerland as an example. When the majority of the Swiss people vote to ban the construction of minarets on mosques, then you are forced to either violate the liberal element of our political system, which is the right to worship, or the democratic element, which keeps the system responsive to what people want.

The only way to solve this problem is to convince a majority of the electorate to actually embrace and vote for liberal policies.

But how does this work for forced migration, for example? In his latest book, Ivan Krastev argues that the refugee movement is the biggest existential threat faced by the EU.

I wouldn’t necessarily say it’s the biggest. There are too many to choose from. But I agree that Europe needs to develop a clear vision of the nature of its refugee system. It needs to show that it’s in control of the process. The public would feel more comfortable knowing there’s a system in place that works.

We have both a humanitarian commitment and the responsibility to reassure citizens that there is an orderly, functioning process in operation. That’s the challenge. If politicians give their citizens the impression that there’s an open door and that no-one is controlling who comes into their country, then this will also put pressure on liberal attitudes within the EU.

But how do you convince voters to vote for liberal policies? Is it a question of leadership, or of arguments, or of an emotional connection?

It’s a question of leadership, and of policy. The gap between politicians and ordinary citizens is too wide, and their policies are failing to deliver in key areas such as the aspiration for a better material future. During the Cold War period, living standards increased rapidly. Now we find ourselves in a situation in which that type of material future can no longer be guaranteed.

Emmanuel Macron is one of the few politicians who has put forth an optimistic vision for his country. This has allowed him to persuade people — to some extent at least — that politicians can actually deliver for them. You can only fight populism with an optimistic vision of how the future is going to be better. If all you can offer is the status quo, or if voters remain pessimistic, then you aren’t going to win. Whether or not Macron is actually going to deliver on some of his promises, however, is a different question.

In Hungary and Poland we see the rise of illiberal democracies, and institutions such as the European Commission are struggling to rein this in. How does your answer work there?

If illiberal actions are without consequence, the populists will just carry on. If Europe wants to be an example to the world and uphold liberal democracy, it needs to make it very clear that Hungary cannot remain a member of the EU if it maintains its current government. At present, Hungary would never meet the criteria for EU membership. So why is there no attempt to suspend its membership, or to limit the generous payments it gets from the EU? Most shameful of all is how Chancellor Angela Merkel, a member of the European People’s Party alongside Hungarian Prime Minister Viktor Orbán, has remained silent on Orbán’s openly anti-semitic campaign.

Orbán cites Putin as a role model, and we see how liberal democracy is increasingly coming under pressure from outside actors such as Russia. How can we defend liberal democracy in the world? Do we need to reconsider John McCain’s proposal of an international ‘League of Democratic States’?

The problem with the League of Democratic States is that it’s impossible to say how many countries would be left in 50 years’ time.

What’s clear is that liberal democratic countries and governments need to be much more willing to fight for their values and to develop long-term strategies. Take Germany, for example. In response to the Skripal poisoning in the United Kingdom, the Germans joined the UK and others in expelling Russian diplomats. A couple of days later, however, they approved the construction of the Nord Stream 2 gas pipeline, which will make Western Europe even more dependent on Russian gas for many decades to come. This will allow Putin to continue to bully Russia’s Western neighbours. Germany effectively kicked out a few diplomats but helped the Russian regime to build its geopolitical dominance. That’s not a coherent strategy.

This interview was published in the Green European Journal — https://www.greeneuropeanjournal.eu/liberal-democracys-war-with-itself/

Car Wars: The Future of Europe’s Car Industry

The automotive industry is experiencing the biggest disruption in its history. The car will undergo more changes in the next 10 years than it has over the last 10 decades put together. Several trends are pushing forward this massive transformation, accompanied by the emergence of new companies and competitors. Europe’s automotive industry urgently needs to address these challenges if it wants to stay successful.

This article was first published with the Green European Journal.

Europe is the cradle of the car industry. The first automobile, invented in Europe around 130 years ago, was a niche product. Few understood its broader implications. As Germany’s last Kaiser Wilhelm II infamously quipped, “The automobile is only a temporary phenomenon. I believe in the horse”.

Since then, Europe has put the world on wheels. Its cars and automotive technologies are sold and used all over the globe. Europe’s automotive industry has grown and flourished, becoming an essential part of the continent’s industrial fabric, providing millions of jobs, contributing substantially to GDP, creating value and moving people and goods. Overall, it’s an economic success story.

But as founder of tech giant Intel Andy Grove noted, success breeds complacency and complacency breeds failure.

And failure is looming. Emissions-cheating scandals have seriously damaged the industry’s reputation and finances. What’s more, they have highlighted a smug disregard when it comes to eco-innovation. Cheating rather than beating environmental standards is not a sustainable strategy. This lack of innovation and future-oriented approach is endangering Europe’s car industry.

A perfect storm is brewing in the automotive world. The car is practically being reinvented. And Europe’s automotive industry is failing to keep pace.

The car of the future is sustainable, smart and shared, and each of these characteristics brings both new challenges and new challengers.

The first is climate change. The automotive sector is a major contributor to greenhouse gas emissions. The transport sector is responsible for roughly 22 per cent of overall emissions in the European Union. And while the EU was able to cut its emissions by 23 per cent since 1990, the emissions in the transport sector actually grew by 20 per cent during this timeframe. If the EU wants to achieve its climate targets, every sector must play its role, including the car industry. This is a matter of climate stability, but it is also an economic matter.

Sustainability is becoming a market factor. An increasing number of countries are introducing new regulations and frameworks limiting fossil fuel powered combustion engines and promoting electric cars. France and the UK have put forward a ban on combustion engines by 2040, Norway has plans to have all new cars be zero-emission by 2025, Austria, Denmark, Ireland, the Netherlands, Portugal and Spain all have set official targets for electric car sales and even the world’s largest car market, China, has put in place quotas for electric vehicles and is considering a similar end date to France and the UK. In addition a number of cities such as Paris and Copenhagen are planning to ban diesel cars from entering the city centre.

But the market is irreversibly changing in favour of more environmentally friendly cars. If Europe’s automotive industry doesn’t adapt to these changes quickly enough, it will lose out. Those who come too late will be punished by the market. This particular trend towards greater sustainability is also accompanied by advances in battery storage technology. The mileage of electric cars is increasing and the costs are coming down. Questions around the sustainability of their supply chains notwithstanding, electric cars are in the midst of a break-out moment.

The second trend is autonomous driving. Artificial intelligence is giving the car a brain. The car of the future is not only sustainable, it’s also smart. Fitted with sensors, cameras and high-tech electronics, the car is becoming a computer on wheels. Rather than relying on a human driver, cars will drive themselves, reducing traffic deaths, avoiding congestion and freeing up their passengers’ time for other things. In the future, prospective car buyers might be more interested in on-board entertainment systems and other similar features than any other aspect.

And last but not least, the car of the future is becoming connected and shared. Rather than being an isolated, personal transport solution, it is becoming part of a mixed mobility network together with public transport and bicycles. New mobility platforms and business models are emerging, with numerous ride-hailing and car-sharing apps conquering the world of mobility. Instead of selling cars, these new players are selling kilometres. This, too, could be a great challenge to traditional car manufacturers, with the competition only one smartphone-click away.

Cultural and demographic changes are also fuelling this trend. Young people and urban dwellers no longer have a strong desire to own a car, and worry about the availability of parking spaces, insurance, and other inconveniences associated with car ownership. They want instant, on-demand access to mobility solutions. Car-sharing and ride-hailing could therefore also displace car ownership in certain areas, particularly in big cities. It is also a more efficient mobility system, given that the average car is parked 95 per cent of the time and therefore is only in use for the remaining 5 per cent.

In the context of these three transformative developments, international competition in the automotive world is heating up, challenging Europe’s traditionally strong position. Many new competitors have emerged. US-based Tesla, for one, has become a leader in the luxury electric vehicle market, and is now entering the mass market for electric vehicles with the new, more affordable Model 3. Simultaneously, a whole new type of competitor is joining the fray. Traditional car companies may find themselves increasingly side-lined in a ‘parasitic’ relationship with tech titans such as Google, Apple and Baidu: the former provide the basic car structures, while the latter kit them out with the latest design, technology (such as automated driving, voice-assistants like Siri, cloud-based solutions, cyber-protection, etc.) and infotainment systems, therefore getting a greater share of the value-added. Besides the data protection issues that arise when data monopolists enter the car industry, a crucial question actually is whether car companies can manage to diversify their offer into the technology sector rather than vice versa. And last but not least, a whole range of start-ups and service providers with new business models, such as Uber, Lyft and Didi Chuxing, have penetrated the automotive world. These forces could spell veritable ‘carmaggedon’ for some of Europe’s car manufacturers.

Europe is finding itself in a two-front war. In the West, it is facing companies such as Tesla, Google and Uber, which together represent the three trends that are defining the car of the future. Tesla is electrifying the car fleet, Google is working on autonomous cars and Uber, Lyft and others are providing new mobility concepts.

The situation in the East is no different. Chinese tech titans such as Baidu and Alibaba are developing driverless cars. Ride-hailing players such as Didi Chuxing — China’s Uber — are expanding abroad. And China is a market and industry leader in electric mobility. It has witnessed a rapid increase in electric vehicle production capacity, as well as sales. According to McKinsey research, Chinese manufacturers produced 43 per cent of the 873 000 electric vehicles built worldwide in 2016, and the country is home to the largest fleet of electric vehicles. In addition, China is a booming place for start-ups in the automotive sector.

Furthermore, China, South Korea and Japan are leaders in battery technologies and dominate the battery market. China in particular is building up its battery production capacity in order to gain a strategic stranglehold over this key sector. Not having a single battery production plant itself, Europe might come to regret relying on countries such as China for electric car batteries, given that China will increasingly require those batteries for its own electric car production.

It is an open secret that Europe has been asleep at the wheel when it comes to these technological developments. Electric cars have been belittled for too long, and by too many of Europe’s major car companies. According to the European Commission, the Chinese market already features 400 different types of electric vehicles, compared to Europe’s six. There’s a veritable race for low-emissions vehicles and Europe is being forced to play catch-up.

Europe’s policymakers have long been too lax towards the automotive industry. EU emissions targets have been watered down, and regulators have kept regulatory loopholes open and their eyes closed when it comes to emissions cheating, while providing subsidies to the car industry. Thinking that this would protect the car industry and strengthen it against the global competition, in fact the opposite has been the case. Keeping the status quo and lowering ambitions in the midst of a great transformation is never a successful strategy. It is reminiscent of the iPhone moment when Apple’s new smartphone quickly destroyed Nokia’s leadership of the mobile phone market.

Europe’s car companies have incredible know-how, expertise, R&D, and formidable skilled workers. But they need to change gear. And governments need to push them too. The European Commission, for instance, is now energetically working towards a European battery alliance with the aim of building a European battery supply chain for electric vehicles. It should be commended for that. However, more scepticism is warranted when it comes to its newly proposed CO2-emission targets for cars. Under the Commission proposal, which is still to be negotiated with the European Council and European Parliament, new cars would have to reduce their CO2 emissions by 15 per cent on average by 2025, and 30 per cent by 2030 (compared to 2021). These reduction targets are flanked by a crediting system for zero- (electric vehicles or fuel cell vehicles) and low-emissions vehicles (less than 50g CO2 per km, mostly plug-in hybrids). Manufacturers that have a share of zero- and low-emission vehicles that is higher than 15 per cent in 2025 and 30 per cent in 2030 will be rewarded with a less strict CO2 target.

While the car industry has complained that the targets are overly ambitious, a variety of NGOs have criticised them for not being ambitious enough.

The crediting system, which would allow companies to underperform the emissions target depending on the number of their zero-emissions cars, also seems somewhat misplaced. Such a system should act as an incentive for companies to be even more ambitious. But a whole range of European car manufacturers have already announced that they will boost the sale of electric cars. Volvo will electrify its entire vehicle line by 2019, Aston Martin will go completely hybrid by 2025, and BMW too has said that it aims to have 25 per cent EV sales by 2025.

What was supposed to be a reward for ambition is looking more like an emissions target loophole. Where’s the drive in this crediting system? Given these circumstances, and the fact that a number of EU Member States has already announced an end date for fossil fuel-powered cars (France, Netherlands), it is possible that some Member States might want to move ahead of the pack and put forward more ambitious national plans, knowing that ambition is needed to drive this great transformation in the automotive world.

Greens have a lot to gain from the fundamental trends reshaping the car industry. They are recognised as being one of the only political parties with strong credibility on mobility and transport issues. And unlike other political parties, the Greens have not been tainted by the emissions-cheating scandal.

The Greens could make use of this situation to strengthen their position as a credible, respected actor on transport and mobility issues. This does not mean finger wagging in the direction of the car industry, but rather an earnest, pragmatic dialogue. Unlike the socialists and the conservatives, with their strong focuses on jobs and competitiveness respectively, the Greens are in a good position to take a comprehensive view of the issues facing the car industry and their likely impacts, and to engage with the different stakeholders in this industry. The fact that the Greens hold the chair of the European Parliament’s Transport Committee is also helpful in this context.

There has traditionally been some bad blood between the car industry and the Greens. There is, however, little point in continually looking back into the rear-view mirror. Now is the time to discuss the future, and to make the European car industry fit for it. Indeed, this is the approach taken by Germany’s only Green Minister-President — in the state of Baden-Württemberg, home to Daimler, Porsche and Audi — who has launched a strategic dialogue with the automobile industry to discuss the multitude of challenges it faces, and to come up with proposals on how Baden-Württemberg can retain its leadership position in the sector. Participants include car manufacturers and original-equipment manufacturers, energy companies, public transport entities, city representatives and policymakers, academics, trade unions and environmental NGOs.

Europe was the birthplace of the car, but the car isn’t what it used to be. It is being reinvented, and the birth pangs are shaking the European car industry to the core. Greens can play an important role in ensuring the ongoing success of the European car industry by mixing ambition with pragmatism, and idealism with governing experience. They are in the perfect position to integrate emerging models and best practices, to make new alliances, and to strike the right balance to make the car industry more sustainable and simultaneously more competitive for the future.

Trumping Trump: A Gulliver Strategy

Trump is a commercial tycoon turned political typhoon. He’s taken a sledgehammer to the political establishment, steamrolling through the Republican primary and then snatching victory from the jaws of defeat in the US presidential election. Since then, there’s been no break from this dizzying roller-coaster ride. Core foundations and political tenets have been shaken. The transatlantic alliance, NATO’s collective defense, free trade, a free press, rule of law, all have been challenged. It’s been bunker, not beacon America.

Yet, looking beyond the fog of Trump’s tweets, it’s becoming clear that, in spite of Republican control of both houses, his Presidency isn’t going to be all smooth sailing. What seems to be effective in countering Trump is a “Gulliver strategy” – a convergence of many different smaller actors to contain him, as in Jonathan Swift’s novel Gulliver’s Travels. In this classic, the protagonist Gulliver is washed ashore after a shipwreck and awakes to find himself pinned down by a multitude of tiny people, inhabitants of the island country of Lilliput.

What we are seeing is a multitude of smaller actors outside of Washington D.C. restraining Trump. Lawyers, judges, attorneys and citizens all rallied against Trump’s immigration order back in January. At least 44 US states are so far resisting the voter data request from the Trump Commission. And an army of mayors are countering Trump’s withdrawal from the Paris climate accord.

The last in particular is an example of how he can be side-lined. Trump may proclaim that he’s withdrawing the US from the Paris deal, but US climate ambition can continue without him. Just recently, 1.400 US mayors, Republicans and Democrats, pledged to support cities’ adoption of 100 per cent renewable energy by 2035. Governors and US states have also pushed ahead. And they can make a huge impact. According to an analysis by Carbon Brief, these states have enough power to reduce their own emissions to such an extent that the US could still meet the CO2 reduction target committed to under the Paris Agreement.

These actors need strengthening! That means it’s time to dust-off the old city partnerships, build bridges between European regions and American states, and bring different players together. For example, the German region of Baden-Wuerttemberg has together with California launched the Under2MoU climate initiative in 2015. It includes a total of 176 jurisdictions representing 1.2 billion people and Trump’s Paris withdrawal is the perfect opportunity to now bring more US states and cities to join this initiative.

There’s been too much hoping that individuals in the administration like McMaster, Tillerson, Kushner or House and Senate Republicans might have a stabilising, tempering influence on Trump. They don’t. Trump is a one-way train. And as Dietrich Bonhoeffer, the German anti-Nazi dissident and pastor, once said “if you board the wrong train, it is no use running along the corridor in the opposite direction”.

House and Senate Republicans are likely to discontinue their support of Trump once their voter base starts to shrink. But in the meantime, the checks and balances on Trump’s Presidency are the many local and regional actors, the brave men and women doing their jobs working in the media, judiciary, law enforcement, and so many other places.

Russia and Germany’s SPD: Energy ties that bind

Respect! This week the US Senate voted to fortify US sanctions against Russia. The new amendments on the Iran sanctions bill would require the President to seek congressional approval before lifting any of the Russia sanctions. Trump’s elbow room on Russia is closing. This is a big deal. Not only because it was a bipartisan agreement between Republicans and Democrats, but also because Republicans went against the wishes of the US administration.

Additionally, the Senate went even further, expanding the sanction measures against those supplying arms to Syria and those conducting cyberattacks. Most prominently for Europe, the US Senate launched a broadside against Gazprom’s Nord Stream 2 pipeline, a project that would bypass Ukraine as a transit country and expand Russian gas supplies directly to Germany.  The Senate clearly stated its opposition to the gas line “given its detrimental impacts on the European Union’s energy security” and put in a provision that would allow the administration to sanction EU companies involved in any Russian export pipeline (read: Nord Stream 2).

This is a milestone development. It strengthens US resolve on the Russia sanctions and should somewhat ease European worries about Trump going soft on Russia. And it puts further pressure on Nord Stream 2, a pipeline that the majority of EU Member States and the European Commission oppose for obvious geopolitical reasons.

Yet, the tone from Berlin is hysterical. Foreign Minister Gabriel has sharply criticised the proposal. Chancellor Merkel is backing Gabriel on this, albeit via a statement from her press spokesperson. And German Economy Minister Zypries has even speculatively floated the idea of countermeasures against the US in this regard. They consider the US Senate act an offense to the German energy companies in bed with Gazprom and claim the US is shamelessly promoting its own energy interests given its potential for shale gas exports to Europe

What nonsense!

The arguments don’t stand up to any scrutiny. First, US gas export infrastructure ain’t sufficient to make any relevant dent in the EU’s gas imports from Russia any time soon. And second, Asian markets would economically be more profitable for US gas exporters. Europe’s energy security isn’t strengthened by increasing dependence on Russia via yet another pipeline.

What’s actually at play is a kind of Schroederisation of the election campaign.

Gerhard Schroeder, the Socialist former Chancellor of Germany, successfully used anti-American rhetoric in his opposition to the Iraq War to win re-election in 2002.

Having crashed down in the opinion polls, the SPD is desperately clutching at straws, hoping that strong rhetoric against the US will bring them back some dynamic. Chancellor Merkel is aware of that threat and tried to pre-empt it with her speech in Trudering, where she highlighted that Europe can no longer rely on the US. But she too is aware of the pitfalls of going overboard. Hence, why her statement came from the press spokesperson.

The Socialist criticism of the US Senate is comical. It puts the SPD in the same camp as Trump, since his administration had been against these Senate amendments as well. So the SPD is actually supporting Trump now on Russia. You couldn’t make this stuff up.

In a declaration against the US Senate amendments, German Foreign Minister Gabriel and the Austrian Chancellor Kern state that “we decide upon who delivers us energy according to the rules of openness and market competition”, and that geopolitical interests shouldn’t interfere with economic interests. If that’s the case then what’s up with the EU sanctions regime? Aren’t geopolitical interests at play here that interfere with economic interests? Should the sanctions now also be sacrificed on the altar of economic interests?

This whole episode clearly shows again the deep ties that bind the German Socialists to the Russian regime and its energy exports. Gerhard Schroeder, now on the payroll of Gazprom as one of its chief lobbyists, is obviously doing a good job inside his party.

The SPD is known to pursue a traditional Russia policy of Wandel durch Annäherung (‘change through rapprochement’), stating that Russia can be changed through close ties. The problem is that it’s not Russia that’s changing, it’s the SPD akin to Nietzsche who said “when you gaze long into the abyss. The abyss gazes also into you”.

Putin and his regime are masters at network diplomacy, penetrating deep into all kinds of social, economic and political structures. The intermingling of economic, political and private ties, as so highlighted by Gerhard Schroeder is dangerous. It pits personal against national/European interests. Even the Notorious B.I.G. understood this point, when he said in his 10 rap commandments that rule 7 is crucial but “so underrated: keep your family and business completely separated”.

EU Member States opposing the Nord Stream 2 pipeline need to come out swinging in favour of the US Senate, lobby the US Congress and administration in favour of the legislation, and criticise Germany for its position. Pressure on Germany needs to increase in order to deep-six the Nord Stream 2 pipeline.