Moritz Korner
European Commission President Ursula von der Leyen wants to respond to the protectionist US Inflation Reduction Act (IRA) with a new EU fund. This so-called EU sovereignty fund is intended to finance subsidies in the EU through new common debt. Why this is the wrong way to go from a liberal point of view.
We reap what we sow. The Inflation Reduction Act is not the beginning of a protectionist US economic policy, but the American counter-reaction to the interventionist EU policy of the past few years.
When Biden took office in 2021, the EU had already budgeted almost 600 billion euros for financing the European Green Deal – with the clear aim of giving subsidies to the European cleantech industry. If you add in the national subsidies of the member states, the US$369 billion to be spent in ten years is peanuts at best.
The protectionist settlement requirements of the new US law cannot be seen independently of the planned European CO2 border tax, with which the EU wants to protect its companies from cheaper, less climate-conscious competition from third countries.
Accordingly, the EU is not a victim, but a trigger of the new American subsidy policy. A subsidy policy, which would not negatively affect us as a free trade partner of the USA today, if German chlorine chicken fearmongers had not intentionally brought down the EU-US free trade agreement negotiations years ago. So if we want to bring about change among Americans, we should first put our own house in order.
Anyone who now uses US economic policy as a pretext to demand additional EU subsidies will only fuel the negative protectionist race and thus permanently damage the free trade-based global market economy to which Germany owes its prosperity.
It would be suicide for fear of death. We must not jeopardize our market economy principles. A state-interventionist subsidy economy is not a model for the future, but a business model for economic collapse.
Instead of entering into a ruinous competition for isolation and subsidies, the EU must concentrate its policy on advancing globalization and concluding new trade agreements. A single market with almost 450 million inhabitants has enough market power to enforce the existing rules of international trade and economic relations.
* World Online
