Category Archives: Germany

(CNBC) Germany and China sign deals, lobby against US trade tariffs

(CNBC)

  • The two countries signed deals worth 20 billion euros ($23.6 billion).
  • In addition to multiple joint cooperation projects between governmental agencies, companies like BASF, BMW, Volkswagen, Daimler, Siemens and Bosch announced deals and partnerships.
Porsche cars destined for export stand at Bremerhaven port on March 19, 2018 in Bremerhaven, Germany.

Alexander Koerner/Getty Images
Porsche cars destined for export stand at Bremerhaven port on March 19, 2018 in Bremerhaven, Germany.

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang stressed their commitment to a multilateral trade system Monday in the wake of Washington’s decision to impose widespread tariffs, saying it was to everyone’s benefit.

Speaking in Berlin after the two countries signed deals worth 20 billion euros ($23.6 billion), Li told reporters the projects demonstrated how nations could work together.

In addition to multiple joint cooperation projects between governmental agencies, companies like BASF, BMW, Volkswagen, Daimler, Siemens and Bosch announced deals and partnerships.

“Free trade plays a strong leading role for both sides and for the world economy,” Li said through an interpreter in the Berlin chancellery.

On Friday, U.S. President Donald Trump imposed 25 percent tariffs on $34 billion of Chinese goods in response to complaints Beijing steals or pressuring companies to hand over technology. China announced retaliatory tariffs on a similar amount of U.S. goods.

Trump has also imposed tariffs on aluminum and steel imports that include the European Union, and has threatened additional tariffs on products like automobiles, singling out Germany in particular.

Bavaria-based automaker BMW has already been caught in the middle of escalating trade strife between the U.S. and China, saying Monday it would have to raise prices on SUVs it builds in the U.S. that it exports to China, after Beijing raised the import tax on cars from the United States to 40 percent from 15 percent.

“We have a lot of direct investment in the United States of America, we have a lot of direct investment in China,” Merkel said.

“It really is a multilateral interdependent system that at its best most likely is really a plurilateral win-win situation when we stick to the rules.”

She also applauded China for relaxing rules on foreign investment, saying that it was important to see “the market opening in China in this area is not only words, but is also being followed by deeds.”

In one deal finalized on Monday, Chinese firm CATL announced that it would build a factory in the German state of Thuringia to build batteries to supply to BMW for use in electric cars.

BMW said it had agreed to purchase 4 billion euros worth of batteries, with 1.5 billion euros of sales in Germany and 2.5 billion in China.

Merkel said the company brings a product and technology to Germany that wasn’t previously available.

She added, however: “If we could do it ourselves, I’d also not be sad.”

(Reuters) U.S. offers German car bosses ‘zero tariffs’ solution to trade row – Handelsblatt

(Reuters) The U.S. ambassador to Germany has told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars, a German newspaper reported on Wednesday.

Handelsblatt said Ambassador Richard Grenell told executives from Daimler (DAIGn.DE), Volkswagen (VOWG_p.DE) and BMW (BMWG.DE) during a meeting that in exchange Trump wanted the EU to annul duties on U.S. cars imported to the bloc.

Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.

Handelsblatt cited people present at the meeting, which took place at the U.S. embassy in Berlin on Wednesday. It said the chief executives of Daimler, BMW and Volkswagen – Dieter Zetsche, Harald Krueger and Herbert Diess respectively – were in attendance.

Daimler and Volkswagen declined to comment. BMW was not immediately available for comment.

A spokeswoman for the German Economy Ministry also declined to comment on the report, saying issues related to the trade dispute with the United States were being handled by the European Commission in Brussels on behalf of EU member states.

A European Commission spokeswoman declined to comment on the report. She said Commission President Jean-Claude Juncker would discuss trade during talks with Trump in Washington later this month.

“This will be an opportunity to discuss the many issues of common interest, notably also relating to trade,” the spokeswoman said.

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Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.

Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.

The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.

Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.

(EUobserver) Migrant holding centres: first Germany, now Austria

(EUobserver)

  • Brenner pass could become EU migrant bottleneck (Photo: Alice Latta)

Austria has said it will follow Germany in turning back asylum seekers, in widening ripples from Europe’s political migration crisis.

“The Austrian government is … ready to take action, especially to protect our southern border,” its right-wing leaders said in a joint statement on Tuesday (3 July) in reaction to Germany’s plan to police its own border with Austria.

  • EU crackdown prompting ever-riskier migrant crossings, IOM said (Photo: SOS Mediterranee)

“Should this agreement become the German government position, we consider it necessary to take action to fend off any disadvantages for Austria and its people,” Austrian chancellor Sebastian Kurz and far-right deputy leader Heinz-Christian Strache said.

“If Berlin introduced national measures, which would have a chain reaction, it could mean that Austria would have to react,” Kurz added in solo remarks to press.

Their words augured a clamp-down on the Brenner Pass through the Alps to Italy, prompting immediate howls of complaint from Rome.

“We [the EU] should enter a phase of cooperation,” Italian foreign minister Enrico Moavero Milanesi said.

“The Austrian decision to close the Brenner would be against this spirit and so whoever put into practice would have to assume responsibility for it,” he said.

The “chain reaction” comes after German chancellor Angela Merkel agreed with her interior minister, Horst Seehofer, to police the 90 crossing points along Germany’s 500-mile southern border with Austria.

Migrants would be held in new detention centres, with those found to have first-entered the EU in, for instance, Italy, turned back “on the basis of an agreement with the Republic of Austria”.

The deal still needs the blessing of the centre-left SPD party in Merkel’s coalition to go ahead.

It has voiced horror over such centres in the past and said on Tuesday it still had “unanswered questions”.

But the European Commission gave Merkel’s plan a quick thumbs up, with its chief, Jean-Claude Juncker, saying in Strasbourg on Tuesday: “I have not studied it in detail, but at first glance, and I have asked the legal services to look at it, it seems to me to be in line with [EU] law.”

The German debate also seemed likely to come down to rhetoric rather than substance, amid doublespeak on how the camps should be described.

“Transit centres are not prisons,” German transport minister Stephan Mayer told Bild, a tabloid daily.

“In the centres everyone can move freely, but no one is allowed out,” he said.

The Merkel-Seehofer deal comes after her interior minister, from the CSU, a minor party in the coalition, had threatened a rebellion that could have destabilised the government.

Germany recorded just 18,349 people this year who would be eligible for deportation to other EU states under the proposed scheme.

The number is drastically lower than at the height of the migration crisis, when hundreds of thousands of people entered Germany via Austria and Greece.

But it comes in a harsh new climate, with the CSU party trying to win votes from the far-right AfD party in elections in Bavaria, south Germany, in October, and with anti-immigrant populists already in power in Austria, Hungary, Italy, Poland, and Slovenia.

If the Juncker-approved German deal goes ahead and Austria follows suit that is likely to prompt an even harder line on migration in Italy, which already begun refusing to take in migrant boats under its new government.

Its deputy PM Luig Di Maio said on Monday he would supply motor boats to the Libyan coastguard so that they could take people back to detention centres in Libya instead.

That would be “against our values, international law and European law … we are well aware of the inhumane situation for many migrants in Libya,” an EU commission spokesowman said.

But Europe’s political crisis on migration, which began in Bavaria, was already sending ripples as far south as Africa, the International Organization for Migration (IOM), an international body, warned.

More than 1,000 people have drowned trying to reach the EU by sea in the first six months of the year, with a sharp increase in deaths and risky crossings in recent days and weeks, it said.

“Smugglers are exploiting the desperation of migrants to leave before there are further crackdowns on Mediterranean crossings by Europe,” Othman Belbeisi, the IOM’s Libya chief said.

(BBG) Merkel Averts German Coalition Crisis With Migration Deal

(BBGMerkel’s plan to tighten migration and keep her colaition together. Bloomberg’s Maria Tadeo reports.

German Chancellor Angela Merkel halted the immediate threat of a government breakup in Europe’s biggest economy, crafting a plan to tighten migration and keep her Bavarian sister party in the fold.

The euro and stocks rose after Merkel and Interior Minister Horst Seehofer, her antagonist who had threatened to resign, ended their two-week standoff late Monday. The compromise — which Merkel called “really good” — averts a split of the alliance that’s governed Germany for most of the time since World War II, but its success could well depend on factors beyond Merkel’s control and it may prove only to be a temporary solution.

“There are many questions that are open,” particularly because the migrant relocation plan accepted by Merkel to halt the dispute requires cooperation by Italy and Austria, Holger Schmieding, chief economist at Berenberg, said in a Bloomberg Television interview.

The deal between Merkel’s Christian Democratic Union and Bavaria’s ruling Christian Social Union also requires support from the Social Democratic Party, Merkel’s junior coalition partner. Merkel will try to get the SPD on board with the compromise at a meeting Tuesday evening.

Ralf Stegner, a deputy SPD chairman, was scathing about the CDU-CSU dispute, saying it had caused “real damage” and “in the end only benefited right-wing populists.”

Public Entertainment

“The SPD is the only party doing professional government work at the moment, the others are entertaining the public with genuine hamming-it-up theater,” Stegner said in an interview with Deutschlandfunk radio. “It’s not as if we can just go back to daily business and everything is fine.”

Merkel and CSU leader Seehofer pulled back from the brink as they risked a coalition split that could have unraveled Merkel’s chancellorship after almost 13 years.

For the moment, the truce clears an obstacle that was eroding the chancellor’s authority at a time when her challenges include a trade conflict with U.S. President Donald Trump, the U.K.’s exit from the European Union and rising populism across Europe. Merkel meets U.K. Prime Minister Theresa May and Hungary’s Viktor Orban on Thursday, before heading to a North Atlantic Treaty Organization summit with Trump next week in Brussels.

Merkel’s deal calls for setting up holding centers at the German border for refugees already registered in other EU countries. It’s meant to dovetail with a migration pact reached by the bloc’s leaders last week under pressure from the CSU, which includes pledges by some EU members to take back asylum seekers rejected by Germany.

Seehofer spoke by telephone with Austrian Chancellor Sebastian Kurz on Tuesday and said he also planned to speak to the Italian government, news agency DPA reported. Kurz said on Twitter that he wants a “swift explanation” from Germany and that Austria is ready to “react accordingly, especially at our southern border.”

Migration Flashpoint

Bavaria became a migration flashpoint during Europe’s refugee crisis in 2015 and 2016 as the main entry route to Germany. Gains by the populist Alternative for Germany have returned the topic to the CSU’s agenda ahead of a state election in October.

Infighting began after Seehofer pledged to send back asylum seekers at Germany’s border if they’re already registered in another EU country. Merkel rejected that proposal as a unilateral move that violated European asylum law and risked causing havoc with other EU governments.

Polls during the standoff suggested waning public support for the CSU’s stance and the regional leaders promoting it, while Merkel’s approval rating declined only slightly. Yet as German politicians head toward their summer recess, Merkel may only have won a temporary respite.

The CDU-CSU dispute clash created “only losers,” Michael Kellner, political general manager of the opposition Green party, said on Bloomberg Television. “It’s kind of a stalemate now, so it’s not very stable.”

(CNN) Merkel on the brink as interior minister signals intention to resign

(CNN

Berlin (CNN)German Chancellor Angela Merkel was battling to save her coalition Monday after Interior Minister Horst Seehofer announced his intention to resign over a controversial migration policy, according to German media reports.

Seehofer offered to quit as interior minister and as leader of the Christian Social Union (CSU), the Bavarian sister party of Merkel’s Christian Democrats (CDU), during a marathon party meeting Sunday, but was later persuaded by CSU colleagues to meet with Merkel one more time and attempt to resolve the row, Reuters reported.
“In the interest of the country and the ability by the coalition to act, we want to try to find a way to unify on this central question: border control and refusal, only on this question,” Seehofer said early Monday. “And I hope that we can manage it. This is an act of goodwill on my part and another attempt to come to an agreement, otherwise this would have been it today.”
Merkel was meeting with the CDU leadership Monday morning ahead of crunch talks between the two parties later in the day.
The CSU chief, who has repeatedly called for tougher policies on refugees, had given Merkel two weeks to reach an agreement with other European Union leadersthat would allow German police to reject asylum seekers at the border who are already registered in another EU country. Under EU law, those people must be taken in and arrangements made on a case by case basis to send them back to the first country of entry.
Seehofer had threatened to implement that policy unilaterally if Merkel could not reach a satisfactory deal by Sunday. Instead, he reportedly offered to step down, a move that could provide temporary respite for Merkel but that may spell the end for the decades-old CDU/CSU alliance and for the coalition government.
Leopold Traugott, policy analyst at think tank Open Europe, sees little hope for a compromise between the parties as they meet again Monday. “It’s unlikely Merkel will give the CSU more concessions,” he told CNN. “They have been pushing this issue too hard and too fast.”
The chancellor is in the strongest position, Traugott explains. “Her own party is really behind her. Now that the CSU is behaving more aggressively towards Merkel and the CDU, those normally critical have come to her support.”
Horst Seehofer speaks to journalists early Monday after late-night talks with the CSU leadership.

How did we get here?

The political crisis is one more sign of a growing rift in Europe between those who want to work together to reduce the number of migrants and refugees entering the bloc, and those who have grown tired of failed attempts to reach bloc-wide agreements and are taking unilateral action.
Speaking ahead of an EU summit last week, Merkel — a staunch advocate of EU-wide solutions — said migration could be a “make or break” issue for the union.
Europe’s leaders emerged from talks with a bloc-wide agreement that it was best to deal with the issue collectively rather than unilaterally. But the wording was vague and nations will participate in relocation and resettlement programs only on a voluntary basis.
Speaking at his party’s annual gathering Sunday, Matteo Salvini, Italy’s interior minister and leader of the anti-immigrant League party said he wanted to create a pan-European association of like-minded parties, Reuters reported, a further indication that nationalist forces are gaining strength.
Merkel insisted the EU-wide deal reached on Friday was a victory, but Seehofer’s party was not so sure. The CSU is fighting state elections in Bavaria in October and, under pressure from the far-right, anti-immigrant Alternative for Germany (AfD), is seeking to burnish its own anti-refugee credentials in an attempt to win back voters.
But Traugott believes the CSU’s attempts will fail and that Seehofer’s apparent dithering will alienate discontented voters. “They have really miscalculated what helps them and what harms them,” he said.
Merkel and Seehofer had long battled over the right approach to migration, but seemed to reach an agreement after federal elections last year when the chancellor agreed to try and limit the number of refugees arriving in Germany each year to 200,000 — a policy that Seehofer had repeatedly demanded and Merkel had consistently rejected.
The latest flare-up was triggered when Seehofer announced a 63-point “migration master plan” last month, which Merkel refused to endorse due to the proposal to reject asylum seekers already registered elsewhere. Merkel agrees that the current rules — known as the Dublin regulation — must be reformed, but insists that must be done at the European level.

What could happen next?

There are three possible outcomes, according to Traugott. In talks Monday afternoon, the CDU and CSU could reach a compromise that would enable Seehofer to stay in power, both as CSU leader and as interior minister.
Traugott thinks this is unlikely. “I can’t see what Merkel could realistically give him now that would be meaningful,” he said.
If Seehofer resigns, his position as interior minister could be taken by another CSU lawmaker. Although Merkel might breathe a momentary sigh of relief, little would change in the long run. “The conflict between the CSU and CDU would continue,” Traugott said. Some CSU politicians are “even more radical on this issue” than Seehofer.
In the third — and least likely option — Seehofer would resign and the CSU would leave government, “the nuclear option,” according to Traugott. The governing coalition — which would then consist only of the CDU and Social Democrats (SPD) — would be short of a majority and Merkel would either have to rule with a minority government or seek the formal support of the Green Party or the pro-business FDP.
That would be extremely difficult, as both parties have “very different ideas on migration policy” to the CDU and SPD.
Should the government break down completely, it could pave the way for new elections, an option that Merkel has previously said she prefers to ruling in a minority government.

(Reuters) Germany to raise minimum wage to 9.35 euros in 2020

(Reuters) Germany plans to raise the minimum wage to 9.19 euros ($10.74) per hour next year and to 9.35 euros per hour in 2020, the labor minister said on Tuesday, paving the way for a possible boost to private consumption in Europe’s biggest economy.

Chancellor Angela Merkel’s government introduced a national minimum wage of 8.50 euros for more than 3 million workers in 2015. It was last raised in 2017, to the current 8.84 euros.

The increase, proposed by a commission, is likely to help lift household spending as U.S. President Donald Trump’s protectionist trade policies pose a threat to Germany’s export growth.

The International Monetary Fund and the Organization for Economic Co-operation and Development have both urged Germany to raise wages and invest more to boost domestic demand and reduce its large current account surplus.

Labour Minister Hubertus Heil welcomed the recommendations and said the two-stage rise reflected the robust economy and vibrant labor market, which have led unions and employees to agree generous pay increases this year.

The government was following the commission’s previous recommendation when it raised the minimum wage in 2017.

COMPLIANCE

The commission based its calculation on a complex formula that partly reflected an average wage rise of 4.8 percent over the last two years in Germany. The increase in the minimum wage in 2019 would amount to about 4 percent.

The introduction of the wage floor in 2015 was a key demand of Merkel’s junior coalition partner, the Social Democrats (SPD). Senior SPD members, including Finance Minister Olaf Scholz, have called for a higher minimum wage of up to 12 euros per hour.

Scholz is planning to increase the number of minimum wage inspectors by 1,400 to 8,600 until 2022 to better control companies’ compliance and fight circumvention of the wage rules.

Economists welcomed the recommendations, albeit with reservations.

Alexandra Fedorets of the DIW institute said that for the pay hikes to be effective the government must ensure employers comply with minimum wage rules.

“Many workers are still paid less than the minimum wage even though they are entitled to it,” she wrote in a note. “In addition, rising hourly wages don’t automatically translate into higher monthly incomes because many people, specifically the under-employed, work less hours and do so involuntarily.”

Holger Schmieding of Berenberg Bank said the hikes could inadvertently hinder the integration of refugees into the labor market.

“The question arises whether Germany is doing itself a favor in the longer term,” he wrote in a note. “Because this creates more barriers to the labor market for less qualified refugees. The integration of many people with the permanent right to remain will unfortunately be made somewhat difficult.”

Germany’s unemployment rate has fallen to record lows despite the unprecedented influx of 1.6 million migrants since the start of 2015 and the introduction of a minimum wage in the same year.

(KeepTalkingGreece) Germany makes €2.9billion profit from Greece’s crisis since 2010

(KeepTalkingGreece) Germany has earned around 2.9 billion euros in profit from interest rate since the first bailout for Greece in 2010. This is the official response of the Federal Government to a request submitted by the Green party in Berlin. The profit was transmitted to the central Bundesbank and from there to the federal budget.

The revenues came mainly due to purchases of Greek government bonds under the so-called Securities Markets Program (SMP) of the European Central Bank (ECB).

Previous agreements between the government in Athens and the eurozone states foresaw that other states will pay out the profits from this program to Greece if  Athens would meet all the austerity and reform requirements. However, according to Berlin’s response, only in 2013 and 2014 such funds have been transferred to the Greek State and the ESM. The money to the euro bailout landed on a seggregated account.

As the Federal Government announced, the Bundesbank achieved by 2017 about 3.4 billion euros in interest gains from the SMP purchases. In 2013, approximately 527 million euros were transferred back to Greece and around 387 million to the ESM in 2014. Therefore, the overall profit is 2.5 billion euros.

In addition, there are interest profits of 400 million euros from a loan from the state bank KfW.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece,” said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece.

“It can not be that the federal government with billions of revenues from the Greek interest the German budget recapitalize,” Kindler criticized. “Greece has saved hard and kept its commitments, now the Eurogroup must keep its promise,” he stressed.

“Sorry, Angie, I couldn’t make more, yet 2.9billion is not bad profit either…”

The Eurogroup is meeting today to approve the last bailout tranche for Greece and eventually take crucial decisions on a settlement of the Greek debt, before the country exits the 3. fiscal adjustment program in August.

According to ESM chief Klaus Regling, Greece has been given loans of over 270 billion euros.

(CNBC) Audi CEO arrested in Germany over diesel scandal

(CNBC

Audi S3 automobile

Akos Stiller | Bloomberg | Getty Images
Audi S3 automobile

The head of Volkswagen’s luxury arm Audi was arrested on Monday, the most senior company official so far to be taken into custody over the German carmaker’s emissions test cheating scandal.

Munich prosecutors said Rupert Stadler was being detained due to fears he might hinder an ongoing investigation into the scandal, plunging Volkswagen (VW) into a leadership crisis.

News of the arrest comes as VW’s new group CEO Herbert Diess is trying to introduce a new leadership structure, which includes Stadler, and speed up the group’s shift towards electric vehicles in the wake of its emissions scandal.

“As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor’s office executed an arrest warrant against Mr Professor Rupert Stadler on June 18, 2018,” the Munich prosecutor’s office said in a statement.

A judge in Germany has ordered that Stadler be remanded in custody, it said, to prevent him from obstructing or hindering the diesel investigation.

Audi and VW confirmed the arrest and reiterated there was still a presumption of innocence for Stadler. Stadler himself was not immediately available for comment.

A spokesman for Porsche SE, the company that controls VW and Audi, said Stadler’s arrest would be discussed at a supervisory board meeting on Monday.

VW admitted in September 2015 to using illegal software to cheat U.S. emissions tests on diesel engines, sparking the biggest crisis in the company’s history and leading to a regulatory crackdown across the auto industry.

The United States filed criminal charges against former VW CEO Martin Winterkorn in May, but he is unlikely to face U.S. authorities because Germany does not extradite its nationals to countries outside the European Union.

The Munich prosecutors said Stadler’s arrest was not made at the behest of U.S. authorities. The executive was arrested at his home in Ingolstadt, in the early hours on Monday, they said.

(Reuters) Bavarians offer respite in migrant plan row with Merkel

(Reuters) Bavaria’s Christian Social Union (CSU) offered German Chancellor Angela Merkel an olive branch on Monday in the midst of their row over immigration curbs, suggesting that a plan to turn migrants away at the border could be implemented gradually.

A showdown over immigration between Merkel and her conservative Bavarian allies has escalated in the last week, but CSU chairman Horst Seehofer, who is also Germany’s interior minister, has signaled a compromise is possible..

Seehofer wants the right to reject migrants who have already registered in another European Union member state. Merkel opposes any unilateral move by him that would reverse her 2015 open-door policy on migrants and undermine her authority.

She insists that an EU-wide settlement must be reached at a June 28-29 Brussels summit, and says Seehofer’s “masterplan” to turn away migrants who have previously been expelled would prejudice her chances of reaching a multilateral deal.

At a meeting of his party’s leadership in Munich on Monday, Seehofer suggested the plan could be introduced piecemeal, in order to avoid pre-empting Merkel’s negotiations in Brussels.

“We’ll somehow bridge those 14 days” until the summit, Seehofer said, according to senior CSU officials.

Should the CSU and Merkel’s Christian Democrats (CDU) fail to resolve their differences, there is talk that their 70-year-old conservative alliance could fall apart. Merkel’s three-month old coalition, which also includes the center-left Social Democrats, would then lose its parliamentary majority.

“MASTERPLAN”

Bavarian state premier Markus Soeder said the CSU wanted to back the “masterplan” to limit immigration at the border but would leave it up to Seehofer to decide how to implement it.

“The overwhelming majority of the German population supports this idea” — of turning the previously registered back at the borders — “and that’s why we want to provide support today for implementing it,” he said.

Under current German law, anybody who lodges an asylum request at Germany’s border is admitted to the country.

The CSU, which faces regional elections in October, fears it could be toppled from its decades-old perch atop the wealthy southern state by the anti-immigration Alternative for Germany (AfD) party if it does not tighten policy toward migrants.

“We must show the world that it is no longer the case that anybody who sets foot on European soil can come to Germany,” senior CSU lawmaker Alexander Dobrindt said at the meeting, according to CSU officials.

Merkel is adamant that a European solution is needed and is seeking bilateral deals with some partners, such as Italy and Greece, similar to one agreed in 2016 between the EU and Turkey, which cut the number of migrants reaching Europe.

Crucially, Joachim Herrmann, interior minister in Bavaria, said some preparation was still needed to make technical implementation of the plan possible.

“It doesn’t matter whether it takes hours or days – the main thing is that it is effectively implemented,” Herrmann said.

Striking a conciliatory tone in a guest column in the Frankfurter Allgemeine newspaper, Seehofer said the cohesion of Europe and Germany was at stake.

“The situation is serious but it can be overcome,” he wrote, urging EU members to guarantee the protection of the bloc’s external borders, to fairly distribute people allowed to stay and quickly return those without that right.

Merkel’s open-door migrant policy is widely blamed for the rise of the right-wing AfD, now the main opposition party in the federal parliament.

More than 1.6 million migrants, mostly Muslims fleeing wars in the Middle East, have arrived in Germany since 2014.

(ZH) Euro Dumps Then Jumps On Conflicting Reports Of Merkel Government Collapse

(ZH) Yesterday we reported that the tenuous Merkel coalition government is in a crisis following a revolt of the junior coalition partner, the CSU, over Merkel’s immigration policies.

Specifically, as we said Merkel was facing a rebellion from her hardline Interior Minister Horst Seehofer, who demands that German border police be given the right to turn back migrants without identity papers or who are already registered elsewhere in the European Union.

This morning, the rebellion appeared to come to fruition when a report on a local radio said that Merkel’s Interior Minister Seehofer announced the end of the CSU’s allliance with Merkel’s CDU, effectively collapsing Merkel’s government. From Reuters.

  • GERMAN BROADCASTER HESSISCHER RUNDFUNK SAYS ON TWITTER INTERIOR MINISTER SEEHOFER ANNOUNCES END OF CSU PARTY’S ALLIANCE WITH MERKEL’S CHRISTIAN DEMOCRATS IN INTERNAL MESSAGE

The result was an immediate plunge in the Euro:

However, this was promptly reverse following subsequent reports by an unnamed CSU lawmaker who denied the report:

  • SENIOR CSU LAWMAKER SAYS REPORTS OF CSU PLAN TO DISSOLVE ALLIANCE WITH MERKEL’S CDU IS “RUBBISH”
  • SENIOR CSU LAWMAKER SAYS WE WANT TO PRESERVE PARLIAMENTARY ALLIANCE WITH MERKEL’S CDU

The Euro then promptly spiked:

With Reuters and Bloomberg making the following clarification:

  • SPOKESMAN FOR HESSISCHER FUNDFUNK TO REUTERS THE TWITTER ACCOUNT THAT TWEETED REPORT CSU FRACTION TO BE DISSOLVED IS NOT OURS
  • SEIBERT: REPORT CSU QUIT MERKEL ALLIANCE FROM SATIRICAL MEDIA

It wasn’t just the Euro: Bunds rallied 32c higher with 13k contracts trading in a one-minute window on the initial report; the rally was trimmed however after German government spokesman denied the initial report.

So for now, Merkel’s government appears to be still in place, although it remains to be seen just how the CSU and CDU reach a compromise over the increasingly disruptive topic of immigration. If anything, the sharp EUR reaction showed just how great Merkel’s influence on Europe’s overall stability is. Of course, if Draghi really needs to crush the Euro, he now knows which European politician he needs to get rid of next.

(DW) VW ordered to pay €1 billion fine for Dieselgate in Germany

(DW) Public prosecutors have ordered the auto giant to pay for falsifying their vehicles’ emissions test results. VW has said it “accepts responsibility” and will pay the fine without contesting it.

  
Symbolbild: Volkswagen (picture-alliance/dpa/J. Stratenschulte)

Volkswagen was handed a fine of €1 billion ($1.18 billion) on Wednesday by district prosecutors in the central German city of Braunschweig, close to VW’s headquarters in Wolfsburg.

“Volkswagen accepts this fine and acknowledges its responsibility,” for the Dieselgate emissions scandal, the company said in a press release.

The penalty is for “between the years of 2007 and 2015, allowing some 10.7 million vehicles on the road with unreliable emissions software… in the US, Canada and worldwide.”

Volkswagen slapped with another billion euro fine

The company expressed optimism that paying the fine would partly set right its wrongdoing, and serve as a deterrent for any similar behavior in the future.

News of the emissions scandal broke in September 2015 when US researchers discovered that millions of Volkswagen diesel cars had been installed with faulty software that made the vehicles appear to pass emissions standards, though their pollution levels were actually higher than regulations allowed.

The scandal helped prompt mass recalls, significant damage to VW’s reputation and the resignations of several of the firms’ top employees.

It has since transpired that several other car manufacturers had employed similar software to dupe tests on their diesels, especially in order to pass particularly stringent US standards for nitrogen oxide emissions.

VW boss: Carmaker must become ‘more open’

Volkswagen is also facing fines or investigations from 19 other countries including the US, Canada, India, Brazil, China and Australia.

The move by the Braunschweig prosecutors to file a claim of an administrative offense is one of the few ways that VW can be made to pay for the scandal inside Germany, as it mostly affected cars being sold abroad. There are however still several lawsuits from German consumers pending against the company.

P.O. (BBG) Saudi Govt Is Said to Halt Orders from German Companies: Spiegel

P.O.

…A huge slap in the face and rebuff of Germany by Saudi Arabia…

…And i have to say that if i were in the shoes of the Saudi Government i         would have done the exact same thing.

…Iran is an obvious and fierce enemy of Saudi Arabia.

…So why would Saudi Arabia promote business and give money to a Country that    defends its enemy…

FCMP

(Bloomberg) — Crown Prince and First Deputy Prime Minister
Mohammed bin Salman ordered a halt to government orders for
German companies, German weekly Der Spiegel reports without
saying where it got the information.
* Cites anger over German position on Iran
* Large companies including Daimler, Siemens, Bayer, Boehringer
affected
* 800 German companies are active in Saudi Arabia; exports from
Germany amounted to EU6.6b in 2017: Spiegel
* NOTE, Mar. 18: Saudi Arabia Is Said to Block Some German
Business Over Rift
* NOTE, Nov. 18: Saudi Arabia Recalls Ambassador to Germany, SPA
Says

(Politico) German prosecutors push for Puigdemont extradition

(Politico) German state’s prosecutors want to send former regional president back to Spain in the light of new video evidence.

German prosecutors are preparing the paperwork to extradite former Catalan leader Carles Puigdemont back to Spain on charges of rebellion and disturbance of the peace, they said in a statement Tuesday.

However, a German court on Tuesday ruled that Puigdemont — who was detained by German police in March — cannot be rearrested because he does not pose a flight risk.

The state of Schleswig-Holstein’s highest regional court had previously ruledthat Puigdemont couldn’t be extradited on charges of rebellion because of a lack of evidence of “sufficient violence,” but it would review the request for extradition for misusing public funds.

But the state’s prosecutors want to send the former regional president back to Spain in the light of new video evidence which they say shows “violence perpetrated against the Spanish police forces.”

+++ (BBG) Porsche Slapped With Diesel Recall by German Regulator

…A big and expensive slap…

(BBG)  Porsche must recall almost 60,000 sport utility vehicles in Europe to fix manipulated diesel engines after the German auto industry regulator found software functions that are illegal.

Inspections of Macan and Cayenne SUVs found they contained software that could reduce emissions controls for smog-inducing nitrogen oxide, the German transport ministry said Friday in an emailed statement. Porsche, a unit of Volkswagen AG, confirmed it received notifications for the recall from the regulator this week.

The recall, for 52,831 Macan 3.0-liter V6 and 6,755 Cayenne 4.2-liter V8 vehicles, marks the latest setback in VW’s efforts to draw a line under the diesel-emissions scandal the world’s biggest carmaker has battled since September 2015. Last week, Porsche’s sister brand Audi suspended deliveries of the current A6 and A7 models, continuing a drip-feed of recalls that are a blow to the brand’s image.

Porsche, which uses diesel engines supplied by Audi, had informed German regulators in February about “irregularities” it found in emission tests. The mandatory recall was first reported by magazine Der Spiegel. Audi in March said it expected Germany’s automotive watchdog to issue more diesel recalls as it scrutinizes a pool of vehicles it sold in Europe. Audi started tests in July on some 850,000 cars.

In the statement today Porsche reiterated it takes full responsibility toward affected customers, who will be contacted by dealers after engine fix has been approved by the regulator. “Independently from the technical solution Porsche continues to conduct internal tests on its vehicles and makes optimizations” based on its findings, the company said. Porsche said it continues to work closely with the relevant authorities.

(AP) German state orders crosses mounted at government buildings

(AP)

Markus Soeder, Governor of the German state of Bavaria, hangs up a cross at the entrance of the state chancellery in Munich, Germany, Tuesday, April 24, 2018. (Peter Kneffel/dpa via AP)The Associated Press
Markus Soeder, Governor of the German state of Bavaria, hangs up a cross at the entrance of the state chancellery in Munich, Germany, Tuesday, April 24, 2018. (Peter Kneffel/dpa via AP)

Bavaria’s conservative government is ordering Christian crosses to be placed at the entrance of all state administrative buildings.

The regional government says the crosses shouldn’t be seen as religious symbols, but are meant to reflect the southern German state’s “cultural identity and Christian-western influence.”

German news agency dpa reported that Tuesday’s decree won’t affect municipal and federal government buildings in Bavaria.

Crosses are already compulsory in public schools and courtrooms in predominantly Catholic Bavaria.

The governing Christian Social Union — the Bavaria-only wing of Chancellor Angela Merkel’s party — is hoping to avoid losing its state majority to Alternative for Germany, a party on the right whose anti-Muslim campaigns have struck a chord with some German voters.

+++ (BBG) Merkel May Have Met Her Match in Germany’s New SPD Leader Nahles

(BBG) Angela Merkel has enjoyed a relatively painless start to her fourth term in office. That could be about to change with the German leader’s Social Democrat coalition partners poised to elect a combative one-time party rebel as their leader.

Andrea Nahles, who made her mark as a rabble-rousing opponent of former SPD Chancellor Gerhard Schroeder’s labor reforms, is slated to become the first woman to lead the party — formed as a workers’ movement in the second half of the 19th century — at a meeting on Sunday in Wiesbaden.

Seeking to revive the party’s fortunes after a bludgeoning in last year’s election and a tortuous process of forming a new coalition with Merkel, Nahles has promised to be an uncomfortable ally. Should she succeed, the plain-spoken 47-year-old could aim even higher if, as expected, Merkel exits the political scene by the 2021 general election.

“She will use the next four years to lay out her program for the post-Merkel era,” Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington, said in an interview. Nahles may be the next SPD chancellor candidate “if she doesn’t make any major mistakes.”

Less Docile

For Merkel, grappling with European reforms and shifting global alliances, that means her governing partner is shaping up to be less docile than in previous “grand” coalitions. Nahles demonstrated the SPD’s assertiveness on Tuesday, warning against the hard line being takenby Merkel and her bloc on euro reform.

“I have to wonder why so many red lines have been drawn by our coalition partner that I can’t accept,” Nahles, who leads the SPD’s parliamentary group, told reporters.

Her priority will be to rebuild support after the party suffered its worst electoral loss in Germany’s post-World War II history in September. She takes the reins from Martin Schulz, who led the SPD to defeat, only to be pushed into coalition talks with Merkel. He resigned the leadership in February following a party revolt over his failed bid to become foreign minister. Finance Minister Olaf Scholz has been serving as interim chairman.

Twin Roles

Ralf Stegner, an SPD vice president and an influential figure on the party’s left, drew a comparison between Nahles and Merkel’s own rise to power. After taking over the Christian Democratic Union in 2000, Merkel led the party’s parliamentary group for five years before replacing Schroeder as chancellor.

“Nahles is certainly more vocal than Merkel,” Stegner said in an interview. “But they do have something in common.”

Nahles will also occupy the twin roles of parliamentary leader and party chairwoman. Even though the SPD is in the coalition, Nahles is building a “power center” outside the government, according to SPD whip Carsten Schneider. She didn’t take a cabinet post under Merkel, giving her more freedom to take on the Merkel-led initiatives she opposes.

“We expect that Nahles will go beyond the constraints of the coalition agreement” to sharpen the party’s profile, SPD lawmaker Lothar Binding said in an interview.

Feeling Wistful

The chancellor has developed a respect for Nahles as a politician who works professionally behind the scenes and stands by her political pledges. As labor minister in Merkel’s previous government, she led a seamless implementation of the minimum wage, a top SPD campaign promise in 2013.

But there are clear contrasts with Merkel, a physicist by training raised in East Germany. Nahles, who has a degree in German literature, grew up in the West Germany of the 1970s and 1980s with a firm attachment to the country’s leftist politics. She led the SPD’s youth wing at the end of the 1990s, before spearheading the opposition to Schroeder’s welfare cuts and deregulation of the labor market.

Nahles’s lingering rebelliousness was on display after last year’s election, when the SPD initially vowed to go into opposition. She resigned her cabinet post to take over the party caucus — and admitted to feeling wistful in her last cabinet meeting with Merkel, only to add: “Tomorrow they’ll get it in the teeth.”

Stumbling Delivery

But the collapse of Merkel’s attempt to form a government with the Greens and the Free Democrats in November forced the SPD to reconsider, with Nahles leading the way. Her impassioned speech at a party conference in Bonn in January is credited with sealing a vote to enter coalition talks — and notably outshone Schulz’s more stumbling delivery.

Nahles has long shed her outsider role — and an already restive base has taken some issue with her appointment to the top position, a result, they say, of backroom deal-making. She’ll be challenged for the leadership by Simone Lange, 41, the SPD mayor of Flensburg on the Danish border. But most expect Nahles to win by a sizable margin.

“Nahles will be supported by a good majority at the party convention,” Schneider predicted.

+++ (BBG) Berlin Can Do Little to Stop ‘Rent Madness’: Leonid Bershidsky

(BBG) Last Sunday, 13,000 people took to the streets of Berlin carrying signs like “Renters Aren’t Lemons”.

Despite Germany’s tenant friendly laws, a tide of gentrification is gradually turning Berlin from the “poor but sexy” capital of cool into another generic hipsterville. The city calls it “rent madness”.

The smallest increase in rents between 2007 and 2016 was 34% in Marzahn-Hellersdorf.

In Friedrichshein-Kreuzberg, the famed centre of nightlife that also serves as the long-term home to much of the city’s poorer population, growth reached 71%. In my borough, Charlottenburg, rents have increased by 48%, close to London’s 45% average for the same 10 years.

To many outsiders, especially those from London, New York, Paris or Amsterdam, Berlin is still cheap.

The average rent for a two-bedroom apartment in a pre-1918 building is €6.78 (RM32.61) per sq m (US$78 per 100 sq ft) before utilities — about a quarter of what one would pay in London.

But then Berlin is historically not an affluent city. Though the average annual salary in the city is €34,931 — €2,910 a month, an amount quite compatible with the rent level, the city’s unemployment level — 8.5% — is much higher than Germany’s 5.3%, and another 11.9% of Berliners are officially considered underemployed.

According to the city’s tenants’ association, 55% of Berlin households qualify for social housing, but only 105,000 of the city’s 1.89 million apartments are available to them.

These conditions mean Berlin should be benefitting from the German “rent brake” laws.

Since 2013, the country has required that rents go up by no more than 20% in any three consecutive years of a tenancy, and 15% in areas with a shortage of affordable housing.

Tenancies are, by law, unlimited, which encourages landlords to “front-load” the rent increases at the start of a new tenancy.

So in 2015, Germany began allowing communities to limit the rent in new lease agreements to the area’s average plus 10%.

New and extensively renovated housing, as well as landlords whose tenants already paid more than 10% the local average, are exempt.

These rules distort the market, which is why the liberal Free Democratic Party has campaigned to abolish them.

But the distortions are mild: They don’t hinder muchneeded new housing construction, and they allow landlords to increase their income. Many of them don’t even go to the annual limit allowed by the law.

The “rent brake” has worked to a degree, but not as well as the legislation’s proponents — primarily the Social Democrats — hoped.

A recent study by DIW Berlin showed that in parts of Berlin, namely where the rent growth was the fastest, rents quoted in new leases dropped by 2.9% immediately after the latest “rent brake” legislation took effect.

The beneficial effects of the law reached some 40% of Berlin’s area and some 70% of its population.

But the city is growing rapidly, adding 40,000 to 50,000 residents a year to the current 3.6 million.

Simply attempting to rent an apartment in Berlin is increasingly daunting: Showings are often stampeded by dozens of people attending.

Landlords can pick and choose, and many of them still set rents higher than the “brake” allows: The law specifies no punishment for non-compliance.

Germans, of course, have a strong, traditional respect for laws — but they also don’t feel they must pass up their share of income from the city’s explosive growth.

Last Sunday’s demonstrators are trying to change that. The German government isn’t likely to force landlords to comply with the rent laws, but Justice Minister Katarina Barley, a Social Democrat, is pushing for a tweak to the rules that would make landlords to disclose to new tenants what previous ones paid.

If that proposal is adopted, some landlords will probably be shamed into sticking to the rules. Then again, many won’t be — given the demand.

As things stand, the “rent brake” rules are only slowing down the displacement of Berlin’s pre-boom population — the driving forces of the city’s colourful neighbourhoods, the long-time customers of quaint bars, the street artists, the people who do manual jobs with pride and an approach to quality that’s a holdover from a bygone era.

Further restrictions would only create the kinds of imbalances that old-style rent ceilings used to set up in the US and the UK.

Germany can pass no laws to ensure they aren’t squeezed out of their carefully built habitats by tech industry expats and businesspeople from other parts of Germany, drawn to the capital by its dynamism.

+++ (NYT) Germans Arrest Former Catalan Leader, Drawing E.U. Into Fight

(New York Times) — MADRID — Carles Puigdemont, the former
leader of Catalonia wanted in Spain on rebellion charges, was detained on
Sunday in Germany on an international arrest warrant, in a move that drags
Berlin into Spain’s festering territorial dispute.
Mr. Puigdemont was arrested by a German highway police patrol soon after
crossing the border with Denmark. He was traveling by car to Belgium from
Finland, and had planned to present himself to the Belgian authorities,
according to Mr. Puigdemont’s lawyer, Jaume Alonso-Cuevillas.
The arrest came two days after Spain, trying to strike a decisive blow
against the secession movement, reactivated a European arrest warrant against
Mr. Puigdemont and five other separatist leaders.
Catalonia has been in political turmoil since its leaders formally
declared independence in October and the central government ousted them,
assuming direct control of the wealthy autonomous region. Madrid also moved to
prosecute Mr. Puigdemont and his allies for rebellion and sedition, prompting
some to flee to several other European countries.
Now, with Spain renewing its efforts to have the former Catalan officials
arrested and returned home for prosecution, Europe may be about to become more
embroiled in the conflict.
Whether Spain’s newly aggressive posture would weaken the independence
movement or strengthen it was not immediately clear.
In Catalonia, the effect of Mr. Puigdemont’s arrest was immediate.
Protesters took to the streets of Barcelona and clashed with the authorities.
Riot police officers in Barcelona shoved and struck protesters with batons to
keep an angry crowd from advancing on the office of the Spanish government’s
representative. Police vans showed stains of yellow paint reportedly thrown by
protesters.
Prime Minister Mariano Rajoy of Spain did not respond immediately to Mr.
Puigdemont’s arrest, but Albert Rivera, leader of the anti-secession party
Ciudadanos, welcomed it.
Mr. Rivera accused Mr. Puigdemont of trying to “destroy a European
democracy” and said that “for this, you can’t enjoy impunity,” he argued.
Roger Torrent, the pro-independence speaker of the Catalan Parliament,
went on Twitter on Sunday to urge fellow Catalans to form “a common front” to
defend individual and collective rights.
Mr. Puigdemont was arrested Sunday morning on the A7 autobahn. He was
transferred to a jail in Neumünster, in the northern German state of
Schleswig-Holstein, according to the German news agency D.P.A. He was to
appear before a German judge on Monday.
The government of Catalonia has been in a deadlock since December, when a
snap election called by Prime Minister Rajoy resulted in separatist parties
retaining a narrow parliamentary majority. Last week, however, separatist
lawmakers could not agree on the latest candidate to replace Mr. Puigdemont as
regional leader, Jordi Turull.
Unable to win at the ballot box, Spain’s central government seems to be
turning its attention to the courts. In addition to reissuing the arrest
warrants for the fugitive separatists, it also jailed without bail five still
in Spain. One of them was Mr. Turull.
Mr. Puigdemont, the embodiment of Catalonia’s aspirations for
independence, announced in early March that he was giving up his efforts to be
reappointed as the region’s president. But he continued his efforts to promote
the Catalan separatist cause internationally, traveling to Switzerland and
Finland to attend conferences there.
When he arrived in Brussels, Mr. Puigdemont said he could not get a fair
trial in Spain. He also said he had selected Brussels, home to the main
European Union institutions, because he wanted to put Catalonia in the
“institutional heart of Europe.”
Mr. Puigdemont received some support from Flemish nationalists and other
separatist politicians across Europe, but his call for the European Union to
mediate in Catalonia fell on deaf ears. No European government leader agreed
to meet him.
But in a column on Sunday in the German newspaper Süddeutsche Zeitung,
Thomas Urban said Mr. Puigdemont had managed to “internationalize” the Catalan
conflict, and that this “cannot be in the interest of Madrid.” He argued that
Madrid’s hard line risked reuniting the pro-independence movement, only days
after the bickering separatists could not agree on a new leader.
On Saturday, Finland’s National Bureau of Investigation said it had
received the warrant for Mr. Puigdemont’s detention issued by Spain, but the
police said they had no knowledge of his whereabouts. According to Spanish
media reports, Mr. Puigdemont’s car was trailed by the Spanish secret service
as it left Finland, who alerted their German counterparts about his arrival.
With Mr. Puigdemont’s arrest in Germany, the spotlight now turns to
judges in European countries who will review Spanish arrest warrants,
including in Belgium, Scotland and Switzerland. The countries the separatists
chose for refuge is important, because European nations have different
criminal codes. Some may not recognize the charges brought by Spanish state
prosecutors against the Catalan politicians, particularly rebellion.
The arrest in Germany could pose a challenge for Angela Merkel, who
started her fourth term as chancellor this month at the helm of a coalition
government after months of tense negotiations.
“Legally, the arrest of Mr. Puigdemont is not objectionable, but
politically it creates great problems,” a member of Parliament from the Free
Democrats, Alexander Graf Lambsdorff, told The Augsburger Allgemeinen Zeitung,
a regional paper, on Sunday.
In Scotland, the police said that the lawyer for one fugitive there, the
former Catalan education minister, Clara Ponsati, had been in touch with them,
and that they were preparing for her to turn herself in.
In December, Pablo Llarena, the Spanish Supreme Court judge who is
leading the case against the Catalan separatist leadership, withdrew his
initial European arrest warrant against Mr. Puigdemont and others who fled to
Belgium, amid concerns that the Belgian judiciary might seek to limit the
crimes for which the separatists could be charged if they were returned to
Spain.
Altogether, the Spanish Supreme Court is seeking to try 25 Catalan
separatist leaders for violating Spain’s Constitution during their
unsuccessful secession attempt.
State prosecutors in Spain have moved to sentence the separatist leaders
to decades in prison for organizing the independence referendum in October
that they say violated Spanish law. The separatists followed the referendum
with their declaration of a new Catalan republic.
Mr. Puigdemont is among 13 defendants who are accused of rebellion, the
most serious charge, as well as other offenses that include the misuse of
public funds to host the referendum.

+++ (BBG) Catalan Separatists Face Reality Check After Puigdemont Held

(Bloomberg) — Carles Puigdemont’s removal from Catalonia’s
political scene to a German jail forces the separatist movement
to take a decision: keep bickering on the way ahead, or set
aside outstanding differences and form a regional government.
The former Catalan president’s detention in Germany on
Sunday was hailed by anti-separatist forces as a decisive blow
against the push for Catalan independence. In a boost for
Spanish Prime Minister Mariano Rajoy, Puigdemont now exits the
political stage, at least for now, and is unable to influence
events in Barcelona.
Yet pending Puigdemont’s return to Spain, the risk is his
detention acts as the catalyst needed to pressure sparring
separatist camps into unity three months after regional
elections.
“The state is attacking the heart of democracy making a
general cause against its political adversaries,” Roger Torrent,
the speaker of the Catalan parliament, said in a televised
statement. He called for a common front to help preserve Catalan
democracy rights and liberties.
Spain is struggling to move on from the events of late last
year when the force of separatist sentiment in Catalonia ran
into the rock of the central government in Madrid’s refusal to
allow Puigdemont’s attempt to split the region from Spain.
Protests on Sunday night on the streets of Barcelona that left
about 100 people seeking medical attention and blockades of
Catalan roads were a reminder the wounds remain far from healed.
“At first sight, it all looks such a mess,” said Caroline
Gray, lecturer at Aston University in the U.K. who specializes
in nationalist movements. “But the fact is that political life
goes on and Catalonia still needs a government.”
The murky picture extended into markets, where Spanish
government bonds were little changed as investors weighed the
Catalan news against a sovereign upgrade from Standard & Poor’s
late Friday. Spain’s bonds even outperformed their Italian
counterparts amid investor concern over the makeup of Italy’s
next government.
While the images of protesters clashing with riot police is
negative, the most likely outcome from the latest Catalan flare-
up could be new regional elections, Adrian Zunzunegui, head of
Iberian equity at Kepler Cheuvreux, said in a note to clients on
Monday.
“Looks like the separatist movement is falling apart,” he
said. “Noise is bad news in any case. Uncertainty will last for
at least another two months.”

Highway Arrest

Puigdemont was held by German highway police on Sunday near
the Danish border after attending a weekend event in Finland. He
has been living in exile in Brussels since October, when Rajoy
used emergency powers to sack the Catalan president and disband
his government after his attempt to declare a republic, an act
in breach of Spain’s constitution.
While Madrid went about restoring Spain’s constitutional
order in Catalonia, judges began a crackdown that culminated in
a Supreme Court judge declaring on Friday that Puigdemont and
other separatist leaders would face prosecution for rebellion.
It was another blow to the secessionist campaign that has
been in limbo since separatist parties emerged with a narrow
majority in December’s regional elections. With Puigdemont in
self-exile and other leaders abroad or in jail, they have so far
failed to form a government.
An attempt to elect as president Jordi Turull, the
spokesman of Puigdemont’s former government, failed last week
when the radical separatist party CUP abstained from voting for
him. Turull was himself jailed on remand on Friday, forcing the
Catalan parliament to abandon a second attempt to hold a vote to
make him president.
One outcome could be that CUP deputies rethink their
decision to abstain, Gray said. Eyes will also be on the
Catalunya en Comu platform linked to the anti-austerity party
Podemos to see if they might support efforts to elect a
government.

‘Big Hit’

Puigdemont’s detention is a “big hit” for the separatist
movement because he has been central to its narrative in recent
months, said Pablo Simon, a political science professor at
Carlos III University in Madrid. Even so, it may also help to
focus their energies on ensuring a new government is formed, he
said.
To be sure, not everyone is convinced that Puigdemont’s
detention changes things much.
“In the short term, it will lead to calls for the
separatist movement to be more united,” said Antonio Barroso, a
political risk analyst at Teneo Intelligence in London. “In the
end though, the internal divisions are there and I don’t think
they’re going to disappear.”
Catalonia’s deadlocked politics have implications across
the Spanish political spectrum. The tough legal crackdown on
separatism sits badly with the Basque nationalists whose votes
Rajoy’s minority government needs to pass a budget and other
important legislation. That friction may mean that a regional
government in Catalonia ultimately helps Rajoy’s case with the
Basques.
The Catalan crisis has meanwhile helped Ciudadanos, the
pro-Spain force that won the most votes of any party in the
regional elections, vault over Rajoy’s People’s Party to take
the lead in national opinion polls. Its leader Albert Rivera
celebrated Puigdemont’s detention Sunday in a tweet that said
“the flight of the coup-monger is finished.”

+++ (BBG) Puigdemont Extradition Bid May Spark Long German Court Battle

(Bloomberg) — Spain’s effort to get hold of former Catalan
President Carles Puigdemont will start a cascade of court
procedures in Germany that could drag on for months.
Puigdemont, who was arrested on Sunday as he crossed into
Germany from Denmark by car, will first appear before a judge on
Monday who will issue a preliminary ruling on whether he can be
held in custody. That hearing isn’t public and will take place
in the town of Neumuenster where the Catalan politician is
currently held.
German prosecutors will then start the process of handling
the Spanish request to return him to Spain to face trial on
rebellion charges. Spain issued a European Arrest Warrant, which
aims to simplify and speed up extraditions between member states
of the European Union. Nevertheless, German law requires that a
court must clear any extradition, a procedure which can take
several weeks or months.
The former Catalan president’s detention in Germany was
hailed by anti-separatist forces as a decisive blow against the
push for Catalan independence. In a boost for Spanish Prime
Minister Mariano Rajoy, Puigdemont now exits the political
stage, at least for the short-term, and is unable to influence
events in Barcelona.
The Schleswig Higher Regional Court will first have to
decide whether Puigdemont can be held in custody while the
proceedings are pending, said Michael Rosenthal, a German
defense lawyer. The judges could decide to grant him bail and
order some provisional measure ensuring he will stay in Germany
while his case is pending.
Prosecutors in the state of Schleswig-Holstein, where
Puigdemont is held, will first have to check on their own
whether there are legal reasons to block his extradition. If
not, they will ask the Schleswig Higher Regional Court to clear
it. Puigdemont’s lawyers will have the opportunity to present
their arguments against it. If the judges rules against him, the
defense can appeal to Germany’s constitutional court.
Even after the court has ruled that there aren’t any legal
obstacles to an extradition, Germany has some political leeway
to oppose and block it, said Rosenthal. While the authorities of
Schleswig-Holstein will have to rule on this, they have to
liaise and consult with the German federal government.
Past proceedings over European Arrest Warrants have in some
situations taken months, if not years. In a case against four
traders charged in the U.K. for rigging interest-rate benchmarks
at Deutsche Bank AG, the U.K. had issued an arrest warrant in
May 2016. The men, all German citizens, weren’t put in custody
and fought their extradition which was finally blocked by a
Frankfurt court in February, almost two years later.