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EU Demands Rapid Response to Biden’s $369bn Green Subsidy Package




EU ministers say that time is running out to resolve the worsening dispute with the US over Washington’s $369bn in green subsidies as they seek to head off a transatlantic trade war.

Brussels and Washington have set up a task force to address the impact of the Inflation Reduction Act (IRA) and its “buy American” provisions, but European capitals are growing impatient with the lack of progress.

Jozef Sikela, the Czech minister who is chairing a meeting of EU trade ministers in Brussels on Friday, said he wanted solutions by the next meeting of a separate bilateral Trade and Technology Council on December 5.

“What is important for us is that the US is aware of our concerns and the task force has to work out a solution which will be acceptable for both parties,” he added. “We will focus on having certain solutions in place for the TTC on December 5.”

His comments underscore the mounting anxiety in the EU over the scale of the US subsidy scheme and concerns that a failure to obtain better terms for the EU could lead to a serious dispute at a time when both sides need to prioritise transatlantic unity in the face of Russia’s invasion of Ukraine.

Liesje Schreinemacher, the trade minister of Netherlands, described the IRA as “very worrisome”, adding: “I want to avoid a trade war by any means. No one benefits from any trade war.”

The IRA provides tax credits and subsidies for US consumers and companies for products such as electric vehicles, wind turbines and green hydrogen, as the US attempts to slash its carbon emissions while creating jobs. Most are available only for products substantially made in the US.

It comes into force on January 1 but several EU companies have said they will choose the US rather than the EU for their next investment. Energy prices are far lower in the US, adding a further pull factor.

Valdis Dombrovskis, EU trade commissioner, said the TTC meeting would provide “a good time to take stock on how the task force is doing and then decide on what are the next steps”.

Some EU members, such as France, have called for Brussels to replicate the US act with a “buy European” subsidy regime of its own. German economy minister Robert Habeck has also suggested increased subsidies.

Élisabeth Borne, France’s prime minister, held talks with Olaf Scholz, Germany’s chancellor, in Berlin on Friday. She told reporters that the EU would “steer investments into the energy transformation”. The two countries “very much agree on using the European tools . . . and on concentrating on new technologies so they can be implemented more quickly and with less bureaucracy”.

Dombrovskis warned that “subsidy races tend to be expensive and inefficient” after the trade ministers’ meeting. He added that the bloc was providing large subsidies for greening the economy “but it is essential we make them in a more targeted and efficient way”.

Leo Varadkar, deputy prime minister of Ireland, said: “Nobody wants to get into a tit-for-tat or a subsidy race but what the US has done really is not consistent with principles of free trade and fair competition.”

But other smaller and more liberal states such as the Netherlands and Sweden have warned against a subsidy race or a discriminatory regime that could invite retaliation by other trade partners.

Additional reporting by Guy Chazan in Berlin

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China’s Support for Russia Taints Ukraine ‘peace’ Plan, Western Officials Say





China has called for a ceasefire in the war in Ukraine and a return to negotiations as Beijing attempts to position itself as a peacemaker in the conflict on the first anniversary of Russia’s full-scale invasion.

However, western leaders immediately called into question China’s motives, accusing Beijing of having already taken Russia’s side in the war.

The Chinese foreign ministry on Friday released a 12-point paper outlining its position on a “political settlement” to the war, though many of the measures reiterated Beijing’s previous talking points.

Chinese diplomats have engaged in a difficult balancing act over the war, seeking to appear neutral despite Beijing’s close ties to Moscow while blaming Washington and Nato for provoking the conflict.

“Dialogue and negotiation are the only viable solution to the Ukraine crisis,” the foreign ministry said in the document, which did not directly describe it as a war. “All efforts conducive to the peaceful settlement of the crisis must be encouraged.”

The heads of Nato and the European Commission said the proposal was tainted by Beijing’s failure to condemn Russia’s invasion.

“We will look at the principles, of course, but we will look at them against the backdrop that China has taken sides,” said Ursula von der Leyen, commission president. “It is not a peace plan.”

Jens Stoltenberg, secretary-general of Nato, said: “China does not have much credibility because they have not been able to condemn the illegal invasion of Ukraine.”

US secretary of state Antony Blinken said Washington was looking at the plan but he stressed that the war “would end tomorrow” if the first point — about respecting sovereignty — was observed by Moscow.

“No one wants peace more than the Ukrainians, and any proposal that can advance peace is something that’s worth looking at,” Blinken said on Friday. “Putin’s flagrant disregard for Ukraine’s sovereignty is what’s at the heart of this. The war could end tomorrow if he simply pulled his troops out.”

Beijing’s plan is also unlikely to receive support in Kyiv until Russia withdraws from territories it has occupied, an issue that was not addressed in the 12-point position paper.

“It was an important signal that China looks like it’s going to participate in [a peace formula]. I don’t know what comes next . . . I want to believe that China is going to side with the idea of peace,” Ukrainian president Volodymyr Zelenskyy said on Friday.

Zhanna Leshchynska, charge d’affaires of Ukraine’s embassy in Beijing, ruled out a ceasefire that would freeze the conflict along the present front line.

Leshchynska told reporters in Beijing on Friday that China should demonstrate its neutrality by pushing Russia to withdraw its troops and increasing engagement with Ukraine.

Shi Yinhong, a professor at Renmin University, said Beijing was probably aware that neither side would heed its proposal. “China feels [it] necessary to repeat its neutrality on the war at this juncture to save some international influence by not only criticising Nato but also distinguishing itself from Russia’s behaviour,” he said.

Wang Yi, China’s top foreign policy official, appeared to make little headway in pushing the proposals when he met Putin on Wednesday.

Beijing’s paper also warned against the use of nuclear weapons in the war and called for Ukraine’s nuclear power plants to be protected. It also demanded a halt to sanctions that have not been authorised by the UN Security Council, a reference to penalties imposed by western nations.

Lily McElwee, a China expert at the Center for Strategic and International Studies, said the position paper aimed to convince Europe that Beijing could play a constructive role in the conflict while maintaining its partnership with Russia. A third objective might be to court the “global south” countries, many of which did not share the western view of the war.

“China fears that the international environment is souring for its global aims and it sees the global south as a useful partner,” McElwee said.

The proposal follows claims from the US that China is considering sending arms and other lethal aid to Russia. Stoltenberg said there was no evidence it had yet done so.

Wang Wenbin, a Chinese foreign minister spokesperson, said China “does not offer any arms deals in any conflict zones or to parties involved in war. What we have been doing is promoting peace talks”.

Hu Xijin, a former editor of nationalist Chinese tabloid Global Times, defended Beijing’s hesitation to provide direct military aid.

China had already provided the “greatest support to Russia’s sanctioned economy” by increasing imports of energy and foodstuffs and maintaining the flow of Chinese “electronics, cars and microprocessors”, Hu said this week. Chinese customs data shows imports from its neighbour climbed 43 per cent last year to $114bn.

Additional reporting by Maiqi Ding and Nian Liu in Beijing

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Western Allies Warn of ‘severe Costs’ for Countries Helping Russia Evade Sanctions





Ukraine’s western allies have warned of “severe costs” for countries helping Russia evade sanctions as concern mounts about China’s role in Moscow’s war economy and the conflict enters its second year.

Washington announced fresh sanctions on Friday against more than 200 entities “across Europe, Asia and the Middle East that are supporting Russia’s war effort” and banned five Chinese groups from acquiring US technology.

In co-ordinated steps ahead of a virtual G7 meeting with Ukraine’s president Volodymyr Zelenskyy, the UK also unveiled sanctions, while the EU and Japan finalised their own trade bans.

“We call on third countries or other international actors who seek to evade or undermine our measures to cease providing material support to Russia’s war, or face severe costs,” the G7 leaders said after the summit.

“To deter this activity around the world, we are taking actions against third-country actors materially supporting Russia’s war in Ukraine.”

Previous waves of sanctions have cut off Moscow from legally accessing western finance, technology and vast swaths of the global economy but Kyiv’s allies have become alarmed that such measures are being circumvented by trade with China and countries in Russia’s neighbourhood.

The G7 leaders added that they were “committed to coordinating efforts to meet Ukraine’s pressing military and defence equipment needs, with an immediate focus on air defence systems and capabilities, as well as necessary munitions and tanks”.

The US announced $2bn in military aid for Kyiv, including ammunition and electronic warfare detection equipment as the war passed its first anniversary on Friday with no sign of Russian let-up despite a series of military failures.

“Ukraine will never be a victory for Russia,” said US president Joe Biden. “Brutality will never grind down the will of the free.”

Washington is increasingly concerned about support for Moscow from Beijing, which has stepped in to replace western countries as a critical supplier of external technology, and has warned China against providing weapons to Russia.

“We have not seen actual delivery of lethal aid, but what we have seen are signs and indications that China may be planning and considering to supply military aid to Russia,” said Nato secretary-general Jens Stoltenberg. “China should not do that, because that would be to support an illegal war of aggression and breach international law.”

Beijing released a 12-point paper on a “political settlement” to the war on Friday although western leaders accuse it of taking Russia’s side.

Zelenskyy said: “I want to believe that China is not going to provide weapons to Russia. I’m doing my best to prevent that from happening . . . because there’s this risk of the third world war.”

In a sign of the new focus on sanctions evasion, the US blacklisted 86 groups from Russia, China and other countries from buying US technology. The companies include China Head Aerospace Technology, which provides systems to process data from satellites.

The White House added that G7 nations would keep Russia’s sovereign assets “immobilised” until there was a resolution to the conflict that addressed its “violation of Ukraine’s sovereignty and integrity”, a move designed to ensure that Russia pays for Ukraine’s long-term reconstruction.

Other US sanctions unveiled on Friday hit more than a dozen Russian banks, defence producers and its entire metals and mining industry as Washington sought to “further degrade Russia’s economy and diminish its ability to wage war against Ukraine”.

The groups targeted include Burevestnik Central Scientific Research Institute, a Russian arms and artillery manufacturer; OOO Metallurg-Tulamash, a steel manufacturer that the US says makes arms for the Russian navy; and several banks simultaneously hit with sanctions by the UK.

The UK said it had banned exports of “every item Russia has been found using on the battlefield”. London also joined the US in imposing sanctions on Russia’s MTS Bank, which recently gained a licence to operate in United Arab Emirates.

In Brussels, EU ambassadors were finalising the bloc’s 10th round of sanctions, a package set to include curbs on exports of electronic components used in Russian drones, missiles and helicopters.

Additional reporting by Felicia Schwartz in Washington, Sam Fleming in Brussels, Kana Inagaki in Tokyo and Maxine Kelly in London

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