The story of Germany in the years after the First World War is a striking reminder of how price stability and democracy go hand in hand.

The historian Gerald Feldman famously called those troubled years “the Great Disorder”. And although the relative contributions of the hyperinflation of the 1920s and the deflation of the 1930s are still debated, there is little doubt that wild swings in prices eroded the economic foundations of democracy.

One of the ways in which price instability does this is by triggering large distributional effects, which often hurt the poorest in society the most. For example, ECB analysis finds that the spike in inflation over the last 18 months has disproportionately affected low-income households as they spend more of their income on necessities like energy and food, which saw surging prices.

These are fundamental reasons why, in most liberal democracies, central banks have been entrusted with mandates to preserve price stability. And at the ECB, we will never compromise on our mandate. That is why, in response to rising inflation, we raised interest rates at the fastest pace in our history, by 450 basis points in just over a year. And we will return inflation to our medium-term target in a timely manner.

However, having made such a large and fast adjustment, we are in a phase of our policy cycle which I would characterise as being “attentive and focused”.

We need to be attentive to the different forces affecting inflation: the unwinding of past energy shocks, the strength of monetary policy transmission, the dynamics of wages and the evolution of inflation expectations. And we need to remain focused on bringing inflation back to our target, and not rush to premature conclusions based on short-term developments.

The forces pushing down inflation

There are two main forces pushing down inflation today.

First, the energy and supply chain shocks which played a substantial role in last year’s inflation surge are now unwinding.

At its peak, energy and food accounted for more than two-thirds of headline inflation in the euro area, despite representing less than one-third of the consumption basket. And together with supply chain disruptions, this also had a sizeable effect on core inflation – inflation excluding food and energy – as input costs rose for firms across the economy.

So, it is not surprising that as supply chains heal and energy prices fall, we are seeing the reverse effect, and both headline and core inflation are coming down.

We expect headline inflation to rise again slightly in the coming months, mainly owing to some base effects. This reflects the sizeable drops in energy costs observed around the turn of last year, and the reversal of some of the fiscal measures that were put in place to fight the energy crisis. But we should see a further weakening of overall inflationary pressures.

The second force is the impact of our monetary policy tightening.

We had to tighten monetary policy forcefully to bring demand into line with supply and keep inflation expectations anchored while inflation surged. And this policy adjustment has fed quickly into financing conditions. But its peak impact on inflation will only materialise with a lag – and given the unprecedented scale and speed of our tightening, there is some uncertainty about how strong this effect will be.

So, we need to be attentive to how these forces are working through the economy. But given the scale of our policy adjustment, we can now allow some time for them to unfold.

That is why, at our last meeting, we held interest rates at their present levels. And based on our current assessment, we consider that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to returning inflation to our medium-term target in a timely manner.

Avoiding persistent inflation

But this is not the time to start declaring victory. The nature of the inflation process in the euro area means that we will need to remain attentive to the risks of persistent inflation as well.

As wage-setting in the euro area is multi-annual and staggered, the high inflation rates that are now behind us are still having a significant influence on wage agreements today. For example, the annual growth rate of compensation per employee was 5.6% in the second quarter of 2023, a 1.2 percentage point increase compared with the average for 2022.

And the ability of workers to obtain higher wages is being supported by a tight labour market and strong demand for labour, which has proven surprisingly resilient to a slowing economy since the end of 2022.

For now, our assessment is that strong wage growth mainly reflects “catch-up” effects related to past inflation, rather than a self-fulfilling dynamic where people expect higher inflation in the future. But to assess how wages are evolving and whether they pose a risk to price stability, we will be closely monitoring a number of developments.

First, whether firms absorb rising wages in their profit margins, which would allow real wages to recover some of their past losses without the increase being fully passed through to inflation.

Second, whether there is some easing of labour market tightness, which would prevent excess demand for labour from becoming a driver of persistently high wage demands.

And third, that inflation expectations remain anchored, which ensures that, when the current shock passes, wage and price-setting will be guided by our 2% inflation target.

In other words, we will need to remain attentive until we have firm evidence that the conditions are in place for inflation to return sustainably to our goal.

That is why we have said our future decisions will ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. And we have made those future decisions conditional on the incoming data, meaning that we can act again if we see rising risks of missing our inflation target.

Source : ECB

The post Monetary Policy in the Euro Area: Attentive and Focused appeared first on Policy Print.

Germany and France are the most populous countries in the EU and also the bloc’s largest energy consumers. The neighbours therefore wield enormous influence over EU energy policy and are pivotal to implementing a sustainable transformation of the European energy system. This factsheet provides an overview of both’ countries’ national energy systems and their approaches to meet joint European policy landmarks.

Contents

1. Geography, Politics, Economy: Different Landscapes Along the Rhine River
2. How Energy Systems Compare: Primary Energy & Electricity Production
3. Energy Consumption Declines in Both Countries
4. Renewables set to grow fast across Europe
5. Heating
6. Electric mobility
7. Energy storage
8. Power grid
9. Nuclear power: Phase-Out for Germany, Renaissance for France 
10. Fossil fuels: Germany Leads Consumption with Gas as Key Driver

Germany and France are the two largest economies in the European Union and both play a key role in the bloc’s goal to become greenhouse gas neutral by 2050. France also aims to achieve net zero emissions in that year, while Germany plans to reach the target five years earlier, in 2045. Whether or not these ambitious goals can be met will for the most part rely on their governments’ policy decisions in various sectors, especially the most energy-intensive, and subsequently on their swift implementation. But with roughly 25 years left to radically change their energy systems, meeting those targets also depends on the current reality in energy policy prevailing in each country.

Highlighting the two countries’ structural similarities and discrepancies allows a better understanding of where both of them stand as of 2023 and where they are headed given current trends. A caveat is that an entirely accurate comparison of available  datasets is not always feasible between the two countries. This is due to the intrinsic complexities of counting emissions, investments and other developments in climate and energy policy, as well as the countries using different definitions, framings and accounting procedures to quantify their efforts. However, comparing available data can still offer an overview of the state of affairs in each country, where this can lead to contradictions, but also where synergies exist in the two approaches. 

Geography, Politics, Economy: Different Landscapes Along the Rhine River

Situated on either side of western Europe’s central waterway the Rhine River, France and Germany constitute the European Union’s core region – not only geographically and historically, but also in terms of population, economic size and diplomatic weight. The two EU founding members share a wide range of cultural, institutional and political characteristics, and superficially may look quite alike on many accounts. However, they often are further apart on policy issues  than their similarities suggest, in particular regarding organisational practices and ideological approaches.

France is the EU’s largest state by area. Its European territory (metropolitan France) covers some 544.000 km2. By contrast, Germany’s area is roughly 358.000 km2, only about two thirds the size of its neighbour. In terms of population, the picture is reversed: with about 83 million people registered in the country, Germany is the EU’s most populous member state. France comes second, with nearly 66 million inhabitants. Consequently, Germany has almost twice its population density.

France is a highly centralised state with the capital Paris as its unrivaled economic, cultural and political centre. Consequently, the French president is endowed with a high degree of direct decisional power that is compounded by the fact that coalition governments are uncommon in France. Germany, on the other hand, has a strong federal political structure for its 16 states. Several cultural and economic centres are scattered across the country and state governments enjoy relative autonomy vis-à-vis with the federal government Berlin. Moreover, coalition governments have been the norm for decades, meaning the German chancellor regularly has to rely on negotiating compromises before taking a decision.

Germany boasts the EU’s largest gross domestic product (GDP) ahead of France by a considerable margin – it is estimated at some 4.3 trillion dollars against 2.9 trillion dollars for its western neighbour (IMF, 2023). For income per capita, Germany leads France with about 51,000 to 44,000 dollars per year. Together, the two countries account for about one third of the EU population and for more than 42 percent of the bloc’s total GDP.

Regarding economic composition, the share of industry is much higher in Germany than it is in France: 23.5 percent (2021) and 13 percent (2022), respectively. This difference in part results from how both the countries navigated the fallout of the 2008 financial crisis, as well as the ensuing sovereign debt and Euro crisis, culminating in 2012. While French industrial production took a deep hit and remained significantly lower throughout the following decade, Germany’s economy emerged strengthened from the crisis not least thanks to its strong export-driven industrial sector.  

France had some 259,300 companies in the industry sector in 2020, with 1,1 trillion euros of total revenue. The sector employed more than 3 million people in 2021. In Germany, the around 217,100 industrial companies registered as of 2021 generated a turnover of about 2.1 trillion euros and employed roughly 7 million people. 

How Energy Systems Compare

Together, the two countries accounted for roughly 38 percent of total EU energy consumption in 2021. Of the roughly 1,300 million tons of oil equivalent used in the EU in 2021, Germany consumed 267 million tons and France some 224 million tons.

Apart from a heavy reliance on oil, the countries boast two rather different usage patterns with other energy carriers, especially regarding nuclear and coal power. Germany was the biggest coal producer in Europe in 2022 and accounted for 45 percent of its brown coal (lignite) and 25 percent of hard coal use. France, on the other hand, is by far the largest nuclear power producer in the bloc and accounted for 52 percent of total production in 2021.

Conversely, Germany opted to phase out nuclear power already in the year 2000 and completed its ‘nuclear exit‘ in April 2023, after a short delay caused by the energy crisis. In France, coal-fired power generation also has been reduced greatly in the past decades and as of 2023, only four plants were in operation in the country.

Primary Energy Production

In Germany, renewable energy accounted for some 17 percent of primary energy consumption in 2022. Total renewable energy use was 489 TWh, of which a little over half came in the form of electricity, some 40 percent in renewable heating and 7 percent in the transport sector, the Federal Environment Agency (UBA) said. The three last operating nuclear plants provided roughly 3 percent to the mix while the remaining 80 percent were mostly composed of fossil fuels, clearly led by oil (35%), followed by natural gas (24%), and coal (20%).

In France, the primary energy mix was composed mainly of nuclear power (40%) Primary production of renewable energies in 2022 in France amounted to 345 TWh, the ministry said, including biomass (38%), hydropower (17%), heat pumps (12%), wind power (11%) and biofuels (6%). Fossil fuels accounted for 46 percent of primary production, mainly with oil (28%) as well, followed by gas (15%) and a marginal share of coal (3%).

Electricity Production

Both countries covered roughly a quarter of their final 2021 energy consumption with electricity, which is supposed to replace the bulk of fossil fuel use: About 23 percent in Germany and 25 percent in France.

Regarding electricity generation, nuclear power dominated in France with a share of 63 percent, the highest share of any country in the world. Nuclear was followed by renewable power installations, with a combined share of about 26 percent. Hydro power accounted for the bulk of that share (11%) – followed by onshore wind power (8.5%), solar PV (4%), and biomass and waste (2.4%). Gas (10%) was far ahead of oil and coal (<1% each) in electricity production. Offshore wind still lurked at a share of 0.1 percent.

In Germany, renewables accounted for 44 percent of electricity production in 2022, dominated by onshore wind power (17.5%), followed by solar PV (10.5%), biomass (7.5%), offshore wind (4.5%) and hydro power (3%). The remainder was overwhelmingly composed of fossil fuels: Coal (hard coal & lignite) still accounted for over 31 percent and gas for nearly 14 percent, followed by nuclear (6%) and oil (<1%).

Energy Consumption Declines in Both Countries

Consumption has generally been declining in both France and Germany since 1990, at a somewhat faster pace than in the then re-unified Germany, where many industrial sites in the formerly communist eastern states were shuttered in the decade following reunification – while its strong recovery in the wake of the 2008 financial crisis delayed further cuts.

The German government has set itself the goal of reducing primary energy consumption by 30 percent by 2030 and by 50 percent by 2050 compared to 2008 levels. (Govt’ Energy Efficiency Strategy 2050). In 2022, it had achieved slightly over 18 percent reduction, less than the 20 percent-target envisaged already for 2020.

The latest addition to the French government’s sufficiency plan was announced in mid-2023, by the Ministry of Energy Transition. It called for a long-term sufficiency approach among the largest companies and across sectors. Alongside efficiency efforts, the current national low-carbon strategy calls for a 40 percent reduction in energy consumption by 2050.

While total energy demand is set to fall in each country, the demand for electricity will increase as industrial processes, heat generation and transport become more and more electrified. By 2030, Germany estimates a demand of 600 terawatt hours (TWh) of electricity from renewable energies – based on higher gross electricity consumption of about 750 TWh.
French grid operator RTE estimates a demand of about 645 TWh of  decarbonised electricity demand in 2050, pointing out it already stood at some 500 TWh in 2021.

Renewables Set to Grow Fast Across Europe

On a European scale, EU states agreed to increase the share of renewables in the overall energy mix to 42.5 percent by 2030, leaving an option open to possibly reach 45 percent – which would almost double the 2023 share of renewable energy in the bloc.

In 2022, total renewable capacity in Germany stood at roughly 148 GW (139 GW in 2021). About 58 GW of onshore wind capacity was installed, roughly 8 GW of offshore turbines, about 67 GW of solar PV arrays, 5 GW renewable hydro power and nearly 10 GW bioenergy (IRENA 2023). Together they produced about 244 TWh of net electricity, some 7.4 percent more than in the previous year, according to research institute Fraunhofer ISE.

In order to achieve the national goal of 30 percent renewable energy in gross final energy consumption formulated in its energy concept (from 20.4% in 2022) – and of 80 percent in electricity production fixed in the latest reform of its Renewable Energy Act – the government in Berlin plans to implement an expansion of wind power to 115 GW by 2030. According to the government, this translates to a fast scale-up and ultimately the construction of four to five new onshore turbines per day. Offshore wind capacity is supposed to increase more than threefold to 30 GW by the end of the decade, while the projected 2030 capacity for solar PV is 215 GW.  

Total installed renewable power capacity in France was 65 GW in 2022 (60 GW in 2021), composed of 25 GW hydro power, roughly 21 GW onshore wind,  17 GW solar PV, 0.5 GW offshore wind (with a further  8 GW already projected). In total, they contributed about 136 TWh to gross power consumption, also around 7 percent more than in the previous year, the French Energy Transition Ministry informed.

Paris wishes to develop its capacity gradually to reach a 33 percent share of renewable energy in gross final energy consumption until 2030  (it had reached 20.7% in gross final consumption in 2022), as fixed by the French Climate and Energy Law of November 2019. The long-term goal up to 2050 is to significantly increase installed renewable energy capacity, as set by French President Emmanuel Macron in his Belfort speech on energy policy in early 2022. He stated that solar PV production should be increased tenfold to over 100 gigawatts (GW), with 50 offshore wind farms to be deployed to reach a capacity of 40 GW, and that onshore wind power should be doubled to 40 GW.  

While electricity generation with renewable power installations in France thus lagged  behind that of its neighbours in 2021, the renewable energy share in energy consumption was closer to the European average.

Nuclear Power: Phase-Out for Germany, Renaissance for France

As far as nuclear power is concerned, Germany closed its last plant in April 2023, following a short delay caused by the energy crisis, while France plans to invest significantly in the sector. France and other European neighbours had appealed to Germany to further postpone the shutdown of its remaining three reactors to serve as a backup-capacity in the energy crisis. However, the German government ultimately completed the phase-out that had been prepared for more than 20 years, arguing the additional capacity provided by the reactors is of little use in stabilising the system. The shutdown did not impact power prices negatively in the immediate aftermath, as critics had warned. There is no agreement on building a nuclear waste repository for the radioactive legacy of Germany’s nuclear power era and the deadline for an ongoing search that was planned for 2031 was has been postponed in 2022. 

In France, by contrast, 61 GW of nuclear capacity was installed in the same year (SGPL) in 56 reactors, and one novel EPR (European Pressurised Reactor) was under construction (Flamanville). However, twenty-six of the 56 French nuclear reactors will reach the end of their fifty-year operating life in 2035. They then will have to pass an in-depth safety inspection in order to receive a runtime extension for another ten years. President Macron also announced his plan to not only extend the operation of existing plants but launch a “nucelar renaissance” with the construction of a series (at list six and possibly eight more by 2050) of new second-generation EPR. 

Even without a renaissance, France dominates the EU’s nuclear power industry, boasting 52 percent of the bloc’s total capacity in 2021, when Germany still had several reactors operating. France also boasts the second largest nuclear power capacity in the world, ranking behind the U.S. and slightly ahead of China af of 2023.

Different nuclear scenarios exist for France, with more or less renewable energy, considering that at least 20 to 60 percent more electricity (compared with 2020) shall have to be generated by 2050 to meet growing electrification needs, according to France’s Transmission System Operator (RTE) 2021 report.

Difficulties in the French reactor fleet led to a sharp reversal in Franco-German electricity trading. While France had been Germany’s most important foreign supplier in 2021, exports decreased 62 percent in the following year – marking the first year since 1990 when France had a negative export balance with its neighbour, according to Germany’s statistical office Destatis. 

Fossil Fuels: Germany Leads Consumption with Gas as Key Driver

As of 2022, fossil fuels still cover over three quarters of Germany’s gross energy consumption – with oil providing about 35 percent, coal 20 percent and gas nearly 24 percent. However despite redeploying some of its already retired coal plants during the energy crisis, so far the country seems prepared to achieve its 2038 deadline to complete the phase-out of coal – or perhaps even faster, if eastern coal regions can be made to follow their western counterpart’s example and attempt an exit as early as 2030. However, to replace gas, coal in 2022 fed almost 8.5 percent more electricity into the grid than in the previous year.

While the use of oil (-24%) and coal (lignite -63%, hard coal -50%) has shrunk between 1990 and 2022, that of natural gas has increased markedly. In 2022, due to the supply cut from Russia, consumption was only 21 percent higher than 1990 – while in 2021 it was 41 percent higher.  There currently is no exit date in Germany, although the 2045 climate neutrality target greatly limits the extent to which it can be used until then. The government currently plans to even expand gas-fired power production but aims to make new facilities ready to work on hydrogen as well, to supply industry processes and other sectors that are difficult to decarbonise otherwise.

Regarding oil consumption, mainly for transport and heating, there are no phase-out plans and neither any concrete proposals to exit combustion engines. However, a mix of carbon pricing in transport and heating and subsidies for electric cars and renewable heating are supposed to deliver a gradual transition away from oil.

Germany’s energy import dependency, mainly consisting of fossil fuels, was higher than the EU average in 2020, with 63.7 percent of all energy consumed, compared to 57.5 percent on average for member states. The figure for France was 44.5 percent. 

Since 1990 France’s consumption of coal and oil has decreased by 72 percent and 27 percent, respectively. Conversely, natural gas use increased by 44 percent. With nuclear and hydroelectric production declining in 2022, gas-fired power plants were also called upon at an unprecedented level (+34% in metropolitan France). 

France in 2021 affirmed that it would end all funding for oil projects by 2025 and gas projects by 2035. According to all the transition scenarios studied, fossil fuel investments will have to be halved before 2030, and disappear almost entirely by 2040, the I4CE think tank underlines.

Source: Clean Energy Wire

The post How Energy Systems and Policies of Germany and France Compare appeared first on Policy Print.

The ceremony was attended by the Deputy Minister of Investment, Industry and Trade Sarvar Khamidov, Ambassador Extraordinary and Plenipotentiary of Germany to Uzbekistan Tilo Klinner and the UN Resident Coordinator in Uzbekistan Consuelo Vidal.

The document provides for the allocation of 700 thousand dollars of the German government to the trust fund for the Aral Sea region. The funds will be contributed to targeted support to reduce the negative impact of the difficult environmental situation on the inhabitants of the region.

The German Ambassador emphasized that achievements in this priority area will benefit not only the citizens of Uzbekistan, but also the population of other Central Asian countries, and will have a positive impact on minimizing the consequences of the Aral Sea tragedy on a global scale.

In total, within the priority areas of the trust fund, more than $16 million was mobilized, 7 projects were implemented in Beruni, Takhtakupyr, Bozatau, Kungrad and Muynak districts of Karakalpakstan and the city of Nukus.

The post German Government To Provide $700 Thousand to Aral Sea Trust Fund appeared first on Policy Print.

The German diplomat was met at the airport by the Deputy Minister of Foreign Affairs, Khatuna Totladze.

As part of her visit to the country, the chief diplomat of Germany will meet with the head of government Irakli Garibashvili and President Salome Zurabishvili. Baerbok will also go to the contact line.

The post German FM Arrives in Georgia appeared first on Policy Print.

Young people ages 18 to 29 in British, French and German focus groups have few positive things to say about the United States or China as major players on the world stage. The U.S. is seen as the “world’s policeman” with a self-interested history of interventionism that is disappointing to Western allies, while China is labeled the “world’s factory,” respected for its economic dominance but strongly criticized for its expansionism and record of human rights violations.

“China is stronger in industry; the U.S. is stronger militarily.”Man, France, 27

In November 2022, Pew Research Center conducted focus group sessions among four distinct ideological groups in the capital cities of France, Germany and the United Kingdom. The groups, which were convened to better understand how young people want their countries to engage with the world, revealed a series of nuanced and conflicting opinions about international engagement, the nature of that engagement, history and foreign policy priorities. But, when groups were asked to discuss the roles the U.S. and China play in global affairs and the international impact of their actions, the young participants expressed strong critiques of both major powers, regardless of country or ideological group.

China has received increasingly negative ratings in Pew Research Center surveys in Europe over the past few years, and the focus groups shed light on the deep concerns young people have about Beijing’s human rights record, China’s growing economic might and its policies in Taiwan, Hong Kong and elsewhere. Focus group participants are largely pessimistic about future relations with China. But there is also a strong sense of pragmatism among these young adults who have largely resigned themselves to China’s economic power and see few, if any, ways to disentangle relations with China without collapsing their own economies. 

America’s image in Europe has, in contrast, improved markedly in recent years, following the election of President Joe Biden. He is much more popular than his predecessor, former President Donald Trump, and Biden’s more multilateralist approach to foreign policy is welcomed by most Europeans. And on a variety of survey questions we’ve asked in Europe over time – such as questions about human rights and which country should be the world’s leading power – the U.S. gets significantly higher marks than China.

However, the focus groups reveal ongoing concerns about the way America has used its power in world affairs, often discussing U.S. actions abroad as a point of comparison with their own countries. Focus group participants echo a criticism of the U.S. we’ve regularly seen in our surveys: Most believe the U.S. does not take allies’ interests into account when making foreign policy decisions. And participants are especially critical of U.S. military interventions, such as Iraq and Afghanistan. Again, echoing themes from survey research, some participants also express concerns about the state of American politics and society. Many suggest the U.S. has been hypocritical in the past, arguing for human rights and democracy abroad without fixing its problems at home.

Regardless of these criticisms, however, young Europeans want to engage and cooperate with the U.S., and they remain cautiously optimistic about the future of trans-Atlantic relations because the U.S. and Europe share fundamental democratic values. And, in many ways, the criticisms they levy against the U.S. are similar to ones that people – especially those on the left – have of their own government, too.

Young Europeans do not approve of the United States’ role as the “world’s policeman”

Though surveys find that majorities in France, Germany and the UK have favorable views of the U.S., America’s role on the world stage is described in mostly negative terms by the focus group participants. Across all three countries and four ideological groupings, young Europeans are steadfast in the opinion that the U.S. acts as the world’s policeman to the detriment of the world community. One young Briton said clearly, “I think on balance, [they] probably hurt more than they help.”

One French man said, “They’ve started wars that were completely illegal, against the opinion of the UN even, without any mandate.” A German woman added that the U.S. generally “finds themselves too great” and “interferes wherever they want, just because of their military power.” For his part, one young man in Germany noted that “a lot is swept under the carpet. They’ve got their fingers everywhere in the world. It’s not so clean.”

The United States’ actions in Iraq and Afghanistan, and its consequent withdrawal, were often pointed to as examples of this behavior. Majorities in each country considered the U.S. withdrawal poorly executed, according to Spring 2022 data from the Center, and the young people in the focus groups described both the withdrawal and the entire 20-year U.S. history in the country in forceful terms. One Briton framed it as “short-term help, long-term hurt.” Another French man said, “We saw with Iraq, they came in and left the country in ruins.” And a German man called the decision to withdraw from Afghanistan “a huge failure of a [20]-year long project. They just went away and the country was taken overnight.”

There was some reflection on the fact that each of these countries played their own role in Iraq and Afghanistan and have their own histories of military intervention. Still, the sense is that the charge was led by the U.S., as exemplified by a young Briton who said, in reference to his country’s presence in Iraq, “I think we can get influenced by larger countries, that we’re supposedly allies with, into conflicts that we shouldn’t really have involvement with.” Across the board, young people want to avoid military interventions, even among those eager for their countries to engage on the world stage. A young German woman questioned the extent to which intervening is beneficial, even “in countries where terrorism is high.”

Still, a few French individuals did highlight some of the potential benefits of American interventionism, focusing more on America as a strong power that can take forceful action. For example, noting U.S. support for Taiwan’s security, one French man said, “I think the only time the U.S. did well to intervene was regarding Taiwan … I think that if the U.S. hadn’t shown their support, Taiwan would have been part of China by now.” And one French woman shared respect for the idea of an “America first” policy,” suggesting it “is something France should do and be more strategic about.”

Disapproval of American interventionism among the focus group participants is tied clearly to their sense that U.S. actions abroad are self-interested. Center surveys have long found that people do not think the U.S. takes other countries’ interests into account when making foreign policy decisions; this theme was on full display in the focus groups. One German woman said she has “the impression that the U.S. doesn’t cooperate with anybody.” A French woman added that American interventions “aren’t in cooperation, it’s just themselves” and a Briton called it “just a power thing.”

Critiques of U.S. interventionism are particularly strong among internationally engaged Europeans who called out hypocrisy in the United States’ practice of addressing issues around the world while failing to tackle social inequities at home. In recent years, Center surveys have shown that people from these countries do not see the U.S. as a positive actor or example on climate, health care or civil rights. Take, for example, a French woman who called the U.S. a bad example for “human rights, in general.” When asked why, she said “they’ve gone back on abortion rights.” Others called out the United States’ lack of climate action, high rates of gun violence, inequitable health care system or even the fact that schools in poor areas get less funding.

The focus groups’ discussions led to a common conclusion: Young people are eager to see their countries maintain a strong, more independent presence on the world stage without relying on policy cues from the U.S. When describing his wishes for the UK, one Briton said, “I guess it’s not being like America and trying to save everyone, but offering help to people in need and communicating, sharing intelligence and collaborating on things that are world issues, whether that’s climate change or something else.” For her part, a young German woman called cooperation with the U.S. “sometimes useless, except for defining how we definitely don’t want to act.”  

Still, most in these countries see the U.S. as at least a somewhat reliable and important partner to their country. And while there is a desire to disentangle their policies and reputations from the U.S., young people maintain the expectation of some trans-Atlantic partnership. One German suggested that “in foreign policy, we should keep a healthy closeness to them, because they have a lot of influence in the whole world.” Similarly, though few like the way the U.S. has utilized its military strength, there is a shared sense that it is “the most powerful” and is important to have as an ally. A young German internationalist called it “quite useful” to have “the biggest military force … within the Western community.”

One pain point in relations with the U.S. that came up in each country was leadership. Confidence in the U.S. president reached historic or near historic lows in Center surveys during Trump’s four-year term. In focus groups, one Briton said he thought it was a joke “when the U.S. elected Trump.” A French man cited Trump’s presidency as reasoning for France to have a strong presence on the world stage saying they “would suffer the consequences of the choices of other powers, such as the U.S., as we saw with Donald Trump, we had a lot of difficulty dealing with him, even though his decisions had a direct impact on Europe.”

And, while confidence in the U.S. president jumped dramatically when Biden took office in 2021, it has since tempered, especially among young people. In Germany and France, those ages 18 to 29 are much less likely than those 50 or older to be confident in Biden’s leadership. While young adults are at least 30 percentage points more confident in Biden than they were in Trump in 2020, when the groups mentioned Biden, they often qualified their generally warm feelings with disappointment, with some suggesting he has done little to counteract Trump’s course. As one French respondent shared that, at this point, “I don’t even think U.S. policy changes that much when leaders change. It’s more the approach that changes but Biden won’t necessarily shift every policy.”

Young Europeans concerned by China’s power as the “world’s factory”

Whereas focus group participants heavily focused on the United States’ role as “the world’s policeman,” they discussed China more often as “the world’s factory.” This is driven by both its dominance in manufacturing and exporting goods as well as its investment and infrastructure building around the world. When surveyed, pluralities in Germany, France and the UK called China the world’s leading economic power over the U.S., European Union and Japan. Put simply, one French woman said, “Everything is Chinese.” Another Briton referenced China as “producers of technology and clothes” saying that “they have these giant industrial cities where they churn stuff out at a rate and price which other countries basically see as a deal that’s too good to refuse.” Technology emerged as a common thread in discussions about China’s production power, and multiple participants mentioned the role China plays in the manufacturing of technology products from American and European companies such as Apple and Nokia.

Young Europeans are also wary of China’s investment around the world. A German man said he “finds it extremely dangerous that they try to buy or build up infrastructure in every country. In Africa they are building roads, in Greece they have bought harbors and have agreed to assume Greece’s debts. And they have also tried to buy harbors in Germany.” This sort of lending was also an issue for a French woman who noted that “because they have money, they allow long loans in exchange for ports or infrastructure,” continuing that “there’s nothing fair and honorable in the way the government is managed.”

Underpinning the wariness of China’s economic dominance are severe critiques of the country on two fronts: domestic human rights abuses and military action in the South China Sea. In a 2021 survey, more than eight-in-ten Germans, Britons and French say China does not respect the personal freedoms of its people. This view was espoused by one young British woman who said, “What they do to Muslim people there, concentration camps and invading Hong Kong … I think they’re great in terms of commodities but crap in terms of human rights.” In a similar vein, a French man said he thinks of China as “a dictatorship, which carried out a genocide on its own soil.”

The same man noted that China “wants to invade Taiwan …, contests the statue of Hong Kong [and] Macau” and that “it doesn’t have any legitimacy to intervene.” Unlike the U.S., China’s military was rarely mentioned. When participants did bring up the Chinese military, it was often in reference to Taiwan. A British man shared his view, saying that in “situations sort of like China and Taiwan, everyone’s too afraid to get involved … and Taiwan is this tiny little piece of land where China is doing ballistic missile tests every week now just to show their strength.”

There is agreement that these actions are bad but many young participants, particularly those on the ideological left, are clear that their own countries and the U.S. are not above the same criticisms. A French man said “we blame them for things we do ourselves, we blame [them] for their aggression towards certain countries, which is true, but we are also very aggressive, we wage war to many countries in the West more generally.”

When asked to look toward the future and consider their countries’ ongoing relationships with China, the young focus group participants acknowledge the struggle of balancing China’s human rights track record with their economic power. In fact, when asked to choose between promoting human rights in China regardless of economic consequence and prioritizing economic relations over addressing human rights issues in a recent survey, majorities in each of these countries chose the former. Some are optimistic that their country could, to some degree, achieve this through multilateralism and strengthening economic ties with other major actors, like the U.S. A French man noted that “facing against China could be complicated,” suggesting that his country “could get closer to key institutions, the EU for example, to try to have more power, among others, to try and change the balance a bit, because France alone wouldn’t have much impact against … the force of the Chinese economy.”

More commonly, participants feel that some morally driven stand against China would be nice, but when asked to describe how that would happen, they acknowledge that untying their countries and themselves from China economically is not a pragmatic goal. Put simply by a young British man: “It’s quite easy to point fingers but once again, what would we actually do without them?” Another Briton called the price of material goods coming from China “a deal that’s too good to refuse.” A German man posited that “if [China] were to sanction, then the German economy would crash from one day to the next and also many other countries, because a lot comes from China.” In that vein, some level of cooperation with China seems to be just as inevitable as partnership with the U.S. to young Europeans.

Source: Pew Research Center

The post Young Adults in Europe Are Critical of the U.S. and China – but for Different Reasons appeared first on Policy Print.

The French have protested against a planned pension reform. But in fact, the country’s pension system is fairly generous when compared with many others in Europe. In several countries, people work much longer.

French President Emmanuel Macron wants to raise the retirement age in France from 62 to 64. His plans have sparked protests and strikes across France. 

But in a number of other European countries, people are shaking their heads at the vehemence of the French demonstrations. They already work to an older age before being eligible for pensions. In Germany, for example, the pensionable age is to climb gradually to 67, starting from 2024.

“It is always hard to compare pension systems because they are all very complex and very different. But this comparison is skewed,” says Ulrich Becker from the Max Planck Institute for Social Law and Social Policy, which compares pension schemes from around the world with its “Pension Map.”

That is because the rise that has brought so many out to protest in France is actually an increase in the earliest age at which paid workers can retire without deductions from their pensions. Previously they had to work for 41-and-a-half years. After the reforms, it is supposed to rise to 43 years. 

In Germany, one can retire at the age of 63, but only if you have already contributed to the pension funds for 45 years. These conditions are further complicated by other factors, such as the year one was born. 

In France, a full pension that does not depend on time spent working, is paid out only after someone has reached 67, and this will remain the case even after the reform. 

Compared with the rest of the world — not just with Germany — French retirees have had it rather good up until now, at least with regard to the following three aspects: the pension rate, the pensionable age and the duration of pension payments (or the life expectancy, something counted from when people first start receiving a pension until their deaths).

High standard of retirement living

Whether you can maintain your standard of living during retirement depends on what is known as the net pension replacement rate. That is the percentage of money that remains of the after-tax income you earned, on average over your working life. In France, in 2020, this was 74.4%. That means If you received €2,500 ($2,689) a month on average, for example, then you would receive about €1,860 ($2,002) as your pension.

In France, the net pension replacement rate is 14 percentage points above the OECD average. In Germany, pensioners receive just 52.9% of their after-tax earnings, calculated during their working lives. Taking the example above, that is about €540 less than in France.

The net pension replacement rate could now fall for many people in France in the future. This is because it is not only the minimum retirement age being raised, but also the number of paid working years one needs to receive a full pension before the age of 67. This would mainly affect low-income earners, because they mostly start working earlier. Someone who doesn’t start paying pension contributions until the age of 25 because she or he has studied, is going to turn 67 after just 42 years of work.  

To compensate for this, the French pension reform will raise the minimum pension to about €1,200 for single people. At present, the minimum pension is €961.08, putting it mid-table compared with other OECD countries.

Incidentally, Germany is one of the few countries not to have a minimum pension. People with very low pensions can, however, apply to have them topped up.

Long retirement

A lot of wage earners are happy to accept pension cuts in return for being able to stop work earlier. In France, on average, men retire at 60.4 and women at 60.9. That means French males retire almost 3.5 years earlier than their OECD peer group, and French females 1.5 years earlier.

At the same time, life expectancy in France is particularly high. Only in Luxembourg, do men enjoy their retirement for longer (24 years) than in France (23.5 years). And only Greek women (28.4 years) and Spanish women (27.7 years) have it better in this regard than French women (27.1 years).

Securing the pensions system for the future

But this is one of the reasons why the French government finds it necessary to reform the pension system, says Becker from the Max Planck Institute. “France — like all OECD countries, and others as well — must ask itself how it is going to adapt its pension system to the demographic changes,” he says.

For pension funds, it is a problem that people are living longer because it obviously means pensions have to be paid out for a longer period of time, despite the fact that nothing more is being paid into those funds. What is more, birth rates are falling, which means there are fewer wage earners to pay contributions in, and for increasing numbers of pensioners.

No pension system within the OECD can manage with just the contributions from those within it.

In Germany, for example, you can claim pension payments for the time spent at school or university, or raising children, and these are taken from the federal budget and not from pension contributions. But many pension funds still post losses that must be compensated for with tax revenues. The more generous pensions are, and the less favorable the demographic situation is, the bigger those subsidies tend to be.

In France, public pension subsidies are among the highest in the OECD, when measured against the gross domestic product. Only Italy has higher ones. This was what French prime minister, Elisabeth Borne, was talking about when she declared: “With this project, we make a pledge to balance out pension funds financially by 2030.”

France: Seeking a balance

“An obvious and widely discussed remedy is to raise the retirement age,” Becker explained. “This way, people pay in for longer and receive benefits for a shorter time. The idea is to redress the relationship between contributions and benefits.”

This is exactly what a number of OECD countries have already done. In the Netherlands, the retirement age will rise to 67 years and three months by 2028. 

“Based on legislated measures, the normal retirement age will increase by about two years in the OECD on average by the mid‑2060s,” the organization itself reported in 2021. “The future normal retirement age is 69 years or more in Denmark, Estonia, Italy and the Netherlands.”

In Germany, no one has dared to seriously tackle a further increase since the 2006 decision to raise the retirement age to 67, by the year 2031. 

And in France?  “People have lost sight of the fact that the reforms were also supposed to abolish privileges of certain groups, albeit in a rather arbitrary way,” Becker argued. “Obviously the reason for this, is that the defence of social rights is considered more important than their generation-appropriate distribution.” 

Source : DW

The post Too Little, Too Late: Comparing Europe’s Pension Systems appeared first on Policy Print.