Daily Briefing

Germany’s very own brand of automotive fudge

Not quite cloud nine. Source: Imago

Berlin has kicked the can down the road on diesels and let’s watch it go bumpety bump all the way to Romania.

Politicians here have a problem. They happily encouraged carmakers to go the whole hog on diesels. But then Brussels came along and complained about air quality in many cities. Facing the threat of lawsuits, Berlin changed its tune and threatened to ban the oldest, dirtiest diesel cars from city centers in order to clean up the problem. That’s bad news for owners of diesel cars, and Germans love their diesels no matter what. For the last few weeks, politicians and carmakers have been squabbling over how to clean the cars without charging car owners.

Now they have an ineffective and un-neighborly workaround. Car owners can either get a €10,000 voucher if they trade in their cars for a cleaner one or, if their model is a more recent one, they can take it to the shop for a new catalytic converter. It all depends on the model and where you live.

Fair enough? Sure, but expect all those traded-in diesels to wind up in Romania where regulators are more chilled. There’s a large field in Cluj-Napoca, a Transylvanian town, and it smells of sausages, exhaust fumes and chicken poop. It’s lined with rows and rows of old clunkers from Germany for sale. Serbia, Kosovo, Albania, and Georgia all have similar bazaars.

Nor are the upgrades a better bet. Retro-fitting will increase the risk of cars rusting without promising the desired outcome. The whole solution is expensive for carmakers, inconvenient for car owners and unsatisfying in its potential for fresher air. Eastern Europe, for one, won’t have better air.

Regulators are already taking stick these days over their lengthy approval processes for M&A. Companies are caught in a bind, in a rush to merge but waiting as cartel authorities mull over the details of global deals. In their defense, regulators say deals are larger and ever more complex, markets harder to assess than in the past and plus, they can’t just rely in the paperwork companies give them. The blame game rattles on.

There’s a hefty fight brewing over Iran. Europe is teaming up with Russia and China to save the Iran deal by setting up a payments system to bypass US sanctions. The special purpose vehicle is to get a banking license and be authorized to grant loans. That raises the stakes: so far, the EU had introduced a blocking motion to enable companies to circumvent the sanctions. But that didn’t help, given banks are terrified of crossing Washington. Can Europe succeed?

Speaking of trouble. After a day spent celebrating German unity and the joy East Germans felt at their new-found freedom of movement 28 years ago, it’s over to Brexit where a song and a dance couldn’t quite persuade me that the Chequers plan or no deal will work. But some Germans take a conciliatory view, arguing that the EU has made plenty of exceptions so why not on Brexit? Stop playing hardball on London and negotiate, it’s in everyone’s interest. What the EU is good for is being practical, from foreign policy to the euro crisis. Let’s find a way forward.

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