"The costs of the US initiative": how Berlin and Paris intend to respond to the American law to reduce inflation

France and Germany have agreed on a "European proper response" to the US inflation reduction law, French President Emmanuel Macron said at a press conference in Paris following a meeting with German Chancellor Olaf Scholz.

“Our aspiration is also to move forward with a European proper response, using simple, fast, visible tools for our industrialists, which will allow us to consolidate and develop more projects in the field of batteries, their components, hydrogen ... and also (in fact .

) creating production capacities for the introduction of renewable energy sources, ”said Macron.

As the French leader noted, Paris seeks to “contribute to the efforts of Europe” to start discussions with American partners “to create favorable conditions for access to the US market under the inflation reduction law” and to ensure that the EU countries “are treated as key partners ".

In a joint statement by the Franco-German Council of Ministers, Paris and Berlin indicated specific measures regarding, among other things, the financing of innovations and the creation of a "talent attraction" program.

“Recognizing that there are common challenges to launching and stimulating sustainable innovation in the economic and environmental sectors to move towards green and digital technologies, create skilled jobs and increase EU competitiveness, we are committed to supporting innovation financing.

In addition, we call for the speedy implementation of the European Technology Champions Initiative (ETCI), in which France and Germany will invest €1 billion each ... We will work to implement an ambitious European talent attraction program, ”the document says.

It is also emphasized that, relying on the "strengths" of the single market, Paris and Berlin will strengthen Europe's "strategic sovereignty" and make its economic, industrial and technological base more durable, competitive and efficient.

Last week, Macron said that the law to reduce inflation in the United States threatens to de-industrialize Europe.

He also noted that there is a difficult period in the life of the region, including because of the trade decisions taken by Washington.

Earlier, the French leader, during a December visit to Washington at a closed meeting in the US Congress, called this innovation of the American authorities "super-aggressive" in relation to French business, since the initiative "will kill many jobs."

This was reported by the Financial Times, citing sources.

According to the publication, Macron also expressed concern that the US inflation reduction bill would split the West.

• French President Emmanuel Macron and White House President Joe Biden

• AP

• © Patrick Semansky

"Limited Solution"

Recall that in August 2022, US President Joe Biden signed the Inflation Reduction Act (IRA), which, in particular, involves the allocation of investments to protect the climate and energy security of the country.

He, in particular, involves subsidies for American manufacturers of electric vehicles.

The IRA was criticized in Europe.

Thus, in November, the Executive Vice President of the European Commission, Valdis Dombrovskis, said that issues related to this American law cause serious concerns for the EU. 

After that, in early December, the head of the European Commission, Ursula von der Leyen, promised in an “adequate and carefully balanced manner” to respond to the American law to reduce inflation.

As von der Leyen explained on January 17, "certain elements" of the initiative "raised a number of questions about targeted incentives for companies."

To minimize the negative consequences of the measures of the American authorities, the head of the EC announced the provision of state targeted assistance for producers in the field of environmental technologies "to combat the risks of relocation of production due to foreign subsidies."

“We also understand that state support is a limited solution that only some member states can take advantage of.

To avoid fragmentation of the single market and support the transition to green technologies throughout the union, we must increase funding from the EU,” she said.

We are talking about the creation of a European sovereign fund, which, as planned by Brussels, should become a “structural solution to increase available resources for research” in various fields, including the field of innovation.

However, von der Leyen admitted that this will take "some time", in connection with which the EU leadership will "look for an interim solution."

"Counterbalance to the initiatives of the European Commission"

According to experts, the agreement between Paris and Berlin regarding a synchronized response to the US law on lowering inflation suggests that Germany and France do not rely heavily on the support of Brussels in this matter, in particular on the head of the European Commission, who promised to create an economy support fund, but herself acknowledged that this would take time.

“The achievement of this German-French agreement demonstrates the weakness of the European Commission, which cannot cope with the challenges that have emerged since Biden signed the law to reduce inflation.

And the joint planned measures of Paris and Berlin in this case should be considered as a kind of counterbalance to the initiatives of the EC, which is unclear when they will be implemented, ”Vladimir Olenchenko, senior researcher at the Center for European Studies at IMEMO RAS, said in an interview with RT.

• European Commission

• Gettyimages.ru

• © Alberto Pezzali/NurPhoto

However, according to him, despite the fact that the plans of Paris and Berlin "look more optimistic", there are still many questions regarding their practical implementation.

“In particular, it is not clear how France and Germany hope to provide serious funding for innovation and talent attraction, if in both countries there is an energy crisis, high inflation, demands from the population for higher wages, as well as obligations to Kyiv regarding financial and military assistance.

Paris and Berlin do not have enough money even to close these issues, not to mention new initiatives,” Olenchenko explained.

He also noted that against the backdrop of emerging difficulties in the EU due to the negative impact of American law, contacts between Germany and France, which previously often opposed each other, are being improved.

“For a long time there have been no personal ties between Scholz and Macron, as both European leaders claim a leading role in the EU.

But the costs of the US initiative brought them together somewhat.

Politicians have once again become convinced that the Americans in their relations with Europe think only about their own benefit and least of all pursue the interests of the EU countries, ”stated Olenchenko.

A similar opinion is shared by Konstantin Blokhin, a researcher at the Center for Security Studies of the Russian Academy of Sciences.

According to him, many EU countries, including France and Germany, are tired of "American unilateral actions" that seriously harm their economies.

“European leaders see how Washington is already making it clear that it wants to completely put Europe under its control, deprive it of sovereignty.

Under these conditions, the synchronization of the actions of France and Germany, the two main economic and military powers of the EU, is a kind of response to US measures, ”the analyst said in a conversation with RT.

Blokhin also believes that the United States law to reduce inflation has created "another big crack" in Euro-Atlantic solidarity.

“This is the second such large-scale incident in recent times after the story around the AUKUS defense partnership.

Moreover, the Europeans have been watching for years how Washington weakens the EU economy, practically wiping its feet on most of the countries of the association.

But what is happening now looks like the climax of the crisis in the Euro-Atlantic community," the expert concluded.