CDU sides with govt to pass constitutional amendment to AfD-proof the judiciary +++ Handelsblatt deep-dive into Europe's semiconductor woes
Wednesday 24th July
Good morning.
A look at Germany’s front pages shows a mixed picture this morning. One story picked up by several of the major papers is an agreement between the ‘Ampel’ coalition and the CDU/CSU to pass a constitutional amendment which would give greater protection to the Federal Constitutional Court in light of a growing risk that the court may become subject to ‘unwanted influence’ by ‘fringe political parties’.
Also of note is a deep-dive, published by Handelsblatt, into the global supply of semiconductors, which illustrates Europe’s struggle to compete against increasingly aggressive industrial policies in the US and China.
FAZ, Die Welt: How the ‘Ampel’ and the CDU/CSU want to strengthen the Constitutional Court
The FAZ, along with Die Welt, prioritise the announcement of a joint plan between the SPD, FDP, Greens, CDU and CSU to pass a constitutional amendment to strengthen the Federal Constitutional Court (FCC) against potential influence by ‘fringe parties’ (read: the AfD). The agreement, reported to have been negotiated over several months is an unusual show of unity (representing the 2/3 parliamentary majority required to pass a constitutional amendment).
Both articles emphasise the lessons German jurists have taken from Poland in the last decade, where under the far-right PiS government, “the (Constitutional) Court’s working methods were changed in such a way that it was barely able to fulfill its supervisory role. The separation of powers was suddenly at stake”. Turning to their own country’s system, Die Welt says, “legal experts noted that the German Federal Constitutional Court would not be immune to possible authoritarian takeovers.”
As such, the amendment will “raise the specific structure of the court to the level of the constitution”, with specific provisions detailing judges’ maximum term lengths (12 years), upper age limits (68), the number of judges on the court (16), and processes for the selection of new judges, including a clause which will allow the Bundesrat, the federal upper chamber whose members are appointed by the Länder, to take over the power to elect new judges if the directly-elected Bundestag is unable to approve nominees.
FAZ quotes Federal Minister of Justice Marco Buschmann (FDP)’s comments to a press conference on Tuesday afternoon about the "theoretical case" that there could be relevant minorities or majorities that do not want the Federal Constitutional Court to function. It is clear that this change is directed at the AfD, which has been the subject of several investigations by the FCC for advocating potentially ‘anti-constitutional’ extremist views.
Handelsblatt: the unsettling chip boom
Handelsblatt reports on an exclusive investigation it has commissioned into the state of global semiconductor production and supply chains. The EU is “alarmed”, the report says, by the growth of Chinese capacity. Since 2021, 100 new chip manufacturing sites have been built in China. In the same period, 29 have been built in the US, while only 20 have appeared in Europe. Since the publication of the CCP’s 2015 document ‘Made in China 2025’, China pursued self-reliance in supply chains, with enormous state subsidies for new manufacturers.
While Chinese production has an significant advantage in quantity, the report finds that the US and EU are leagues ahead in quality. US sanctions on the export of the most advanced semiconductors, such as those produced by Nvidia (particularly sought-after by the AI industry) , and technologies required to produce them like the ‘EUV’ lithograph manufactured by Dutch company ASML, have meant that Chinese companies have largely had to focus on the mass production of more basic ‘legacy chips’. Subsidies offered by the US Inflation Reduction Act on the condition that companies do not also invest in China, has also hit foreign investment in the PRC’s chip industry. This difference in quality, the authors to suggest, means that “end customers worldwide, including the global South, are more likely to connect to the US tech ecosystem than to the Chinese one.”
When the article turns to Europe, it is clear that the continent is stuck between the two industrial superpowers, who are increasingly set on pursuing self-interested industrial policy. However, as the authors point out, European firms are still investing heavily China. The largest European chipmaker, ST Microelectronics, has plans to build a new plant in Chongqing to the tune of some $3bn. Meanwhile, Europe’s own domestic production is said to be ‘stalling’.
Germany and the EU’s struggles with the chip industry are part of a broader story of the consequences of a more autarchic China— the growth China’s EV industry is following a very similar path— and the end of a global economy based on ‘Chimerica’. So far, Germany’s (and therefore the EU’s) response has been to try and maintain the status quo as far as possible, but that seems to be increasingly untenable when, as the ‘chip boom’ shows, both the US and China are determined to compete, and divide the spoils of the new world economy between them.