Written by 7:07 pm Europe Economy

Macron and Biden Tackle Europe’s Energy Crisis

On the day that the baguette was added to UNESCO’s “intangible cultural heritage” list, French President Emmanuel Macron was regaling hundreds of his country’s expatriates packed into a cavernous room at the French Embassy in Washington. After praising the know-how that had been passed down from one generation of bakers to the next “from the depths of centuries,” he said the French touch wasn’t solely found in the boulangerie but in other business sectors that he planned to highlight during France’s state visit to the United States last week—notably, nuclear and renewable energy, information technology, and space exploration. Macron had come to Washington bearing a clear message: Buy French.

To be sure, his state visit, the first of the Biden administration, wasn’t solely mercantile. The French president spoke of the need for greater “strategic intimacy” between the two nations, a term he employed to encompass closer ties in both commerce and defense. He pinned medals on World War II veterans and announced a program to expand French language instruction in the United States.

But there are intimacy issues. Throughout the trip, the French delegation spoke with an exasperated murmur about what it described as unfair trans-Atlantic economic competition. French diplomats stressed the need to tighten the relationship between democratic allies and reduce their mutual economic dependencies on China and Russia. After three years of struggles stemming from the COVID-19 pandemic, Russia’s war in Ukraine, and the resulting energy and cost of living crises, “there is basically a risk that Europe will come out weakened by all this, which is, to my knowledge, not in the American interest,” said a member of Macron’s entourage, who spoke on condition of anonymity in accordance with diplomatic practice, on the eve of Macron’s meeting with U.S. President Joe Biden.

On the day that the baguette was added to UNESCO’s “intangible cultural heritage” list, French President Emmanuel Macron was regaling hundreds of his country’s expatriates packed into a cavernous room at the French Embassy in Washington. After praising the know-how that had been passed down from one generation of bakers to the next “from the depths of centuries,” he said the French touch wasn’t solely found in the boulangerie but in other business sectors that he planned to highlight during France’s state visit to the United States last week—notably, nuclear and renewable energy, information technology, and space exploration. Macron had come to Washington bearing a clear message: Buy French.

To be sure, his state visit, the first of the Biden administration, wasn’t solely mercantile. The French president spoke of the need for greater “strategic intimacy” between the two nations, a term he employed to encompass closer ties in both commerce and defense. He pinned medals on World War II veterans and announced a program to expand French language instruction in the United States.

But there are intimacy issues. Throughout the trip, the French delegation spoke with an exasperated murmur about what it described as unfair trans-Atlantic economic competition. French diplomats stressed the need to tighten the relationship between democratic allies and reduce their mutual economic dependencies on China and Russia. After three years of struggles stemming from the COVID-19 pandemic, Russia’s war in Ukraine, and the resulting energy and cost of living crises, “there is basically a risk that Europe will come out weakened by all this, which is, to my knowledge, not in the American interest,” said a member of Macron’s entourage, who spoke on condition of anonymity in accordance with diplomatic practice, on the eve of Macron’s meeting with U.S. President Joe Biden.

“We have the means to remain competitive,” he added. “But nevertheless, we do not expect our American partners to complicate the task.”

The crux of French complaints is a package of tax credits in the Inflation Reduction Act meant to promote American-made clean energy products. The French view these tax credits as potentially harmful to their own businesses, and if they aren’t satisfied with the implementation, then they might take their complaints to the World Trade Organization. Europeans subsidize clean energy production, but the American package is larger and swifter because tax credits take effect immediately. Macron alluded to the need to “resynchronize” American and European policies in an interview with Good Morning America during his state visit.

The French diplomatic source said this legislation didn’t rise to the level of the “betrayal” that occurred with the so-called AUKUS security pact last year, which led to Australia canceling a major contract to purchase French submarines. Relations, then tense, have since thawed as the war in Ukraine revealed more mutual dependencies than points of competition.

Indeed, Biden and Macron went out of their way to demonstrate public displays of affection. The French president routinely prefaced his remarks with “dear Joe.” As they entered the Oval Office together, a reporter asked Biden why he had chosen Macron as his first state visit. Biden responded simply: “Because he’s my friend.”

But Paris worries that the new clean energy tax credits might redirect some of the substantial investment capital flows across the Atlantic Ocean. The United States has long been the largest foreign investor in France, and the French worry that if the United States has more attractive incentives for clean energy products, then some of those billions of dollars may reverse course.

The United States and the European Union have established a high-level task force to explore the issue of how to harmonize their incentives for clean energy products. Biden summed up the goal as making sure that “we are our own supply chain, and we share that with Europe and all of our allies.”

Biden and Macron appear to have done what many successful couples must do: compromise. The two discussed the war in Ukraine extensively during their Oval Office meeting. Biden said afterward that he had “no immediate plans to contact Mr. [Vladimir] Putin,” but he might speak with him if the Russian president decides “he’s looking for a way to end the war.” Macron, by contrast, has been in frequent contact with the Putin since Russia’s invasion in February.

Another high-ranking official in the French delegation described the Oval Office meeting between the presidents and their senior advisors as a frank conversation among friends despite rumblings of discontent over trade issues.

“We have exactly the same ambition to accelerate the decarbonization of our economy and, secondly, to be more independent from China in terms of the production of strategic components,” he said. “You have to know who your allies are and who are your competitors. We have all understood that we want to be independent of China and also Russia. And consequently, its better to stick together than to shoot ourselves in the foot.”

The French president traveled with an entourage of dignitaries, including his cabinet ministers for finance, foreign affairs, defense, culture, and higher education and research, who held working lunches and late-night meetings with their counterparts in Washington. In between ceremonies filled with 21-gun salutes and renditions of La Marseillaise, the French national anthem, Macron took an active part in meetings to discuss deepening cooperation on civil nuclear energy and space exploration.

From Washington, the French delegation went to Louisiana, the heart of energy country, where there are some of the biggest terminals for the export of liquefied natural gas (LNG). Since the onset of Russia’s full-scale war in Ukraine in February, pricier LNG has replaced much of Europe’s cheaper Russian natural gas imports. The French gripe that skyrocketing energy prices put their businesses—from car manufactures to bakers of the famous baguette—at a competitive disadvantage.

It was clear that the price of U.S. LNG was going to be on the table when the two presidents met. But U.S. officials bristled at the suggestion that U.S. energy exporters are “profiteering” from Europe’s newfound need for gas. “I’ll just be blunt. We believe that’s a false claim,” said John Kirby, the top spokesperson for the U.S. National Security Council. “What we’re hearing from our European partners is that these LNG sales have helped shore up their stocks coming into winter.” One long-standing problem with U.S. energy exports, especially to Europe, is confusion over what kind of say Washington has over what cargos go where and at what price. Kirby explained that private companies used existing contracts with European companies “who decide for themselves what they’re going to sell it at.”

French presidents invariably admire Brig. Gen. Charles de Gaulle, so it was no surprise when Macron concluded his visit by mingling with crowds in the narrow streets of New Orleans’s French Quarter, as de Gaulle had done more than 60 years ago.

But de Gaulle never wavered from his conviction that France should keep America at arm’s length, and even the France of late has been calling for Europe to assert more autonomy from U.S. dominance in global finance and defense. Recent global challenges, however, appear to have settled Macron’s mind firmly—not keeping Washington at arm’s length but embracing even greater intimacy.

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