Davos Manchin: Senate kingpin meets a tough crowd

It was a charge that captured the hurt feelings and political frustrations of America’s allies in Europe after the passage of the Inflation Reduction Act, HR 5376 (117), which included a mammoth program of clean energy subsidies and made-in-America manufacturing rules that has thrown the transatlantic economic relationship into crisis. Manchin, as the fiftieth crucial vote for the legislation and whose office wrote the controversial provisions, did more to shape the final version of the law than any lawmaker.

Now Manchin has marched into the lair of Europe’s elite, mingling at the World Economic Forum in Davos with an audience of continental technocrats, true free traders and oligarchs more at home in Monte Carlo than in Morgantown, West Virginia, where Manchin played . college football

The gulf in political and cultural sensibilities could hardly have been more marked.

In the Swiss Alps, Manchin was determined to change the minds of men and women who see him as the face of a new American rival, causing a major break in transatlantic economic relations. Now, having made the trip across the Atlantic, he is trying to put the pieces back together. It’s been in one mode and only here: sell, baby, sell.

Manchin is unabashedly proud of his role in shaping the IRA, handing out one-pagers and telling stories about the people, some of them in Davos, who are already benefiting. But US allies such as France and Germany see the $369 billion investment in energy security, including subsidies for climate and technology companies and incentives for consumers, as a frontal assault on European industry, a blunt instrument aimed to coerce companies to shift investments from Europe and perhaps enter into energy and manufacturing deals in North America that they would not otherwise pursue.

A new man in town

In Washington, Manchin is among the most famous members of Congress. But now the once unknown, gum-chewing, no-nonsense West Virginian is infamous in Europe. European leaders, usually used to dealing with their fellow heads of state, are now looking to face the new man in Davos. They’re getting a lot of them.

Walking into Anthony Scaramucci’s wine-tasting party at Hotel Europe’s Piano Bar on Tuesday night, Manchin had left another group of Europeans grilling that day. He seemed more bewildered than upset by the experience. He said he explained that the IRA is good for the US and for European allies.

Did it convince anyone?

Not really, he said, but he made his case.

As snow fell in Davos on Wednesday afternoon, Manchin joined the congressional delegation here for a quiet meeting with German Chancellor Olaf Scholz, the leader of Europe’s largest economy. Manchin related to POLITICO that Scholz expressed frustration that the U.S. law would directly harm the vital German auto market. The incentives will prove harmful to Germany and Europe and ultimately lead to a trade war, Scholz added.

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Manchin pushed back, saying there’s nothing stopping Germany from producing more cars in the United States, a point that wasn’t exactly a response to Scholz’s frustration.

“I think it rubs him the wrong way when I say that,” the senator told POLITICO.

Manchin said Scholz responded that the US put too many penalties on European cars entering the American market. So the West Virginian pulled out his cell phone and Googled “car tariff cost in Germany.” In bold, the search engine’s front page excerpted the relevant portion of a 2019 Deutsche Welle article: “US levies 2.5 percent tariff on European auto imports, while EU imposes a 10 percent tariff.”

A German government spokesman described Scholz’s conversation with Manchin and the other 11 lawmakers about the IRA as a “direct exchange” that was “an expression of our close and good relationship with the US.”

Still, Manchin says his main message to Scholz, and to Europe in general, is that “this law was not intended to harm anyone. It was intended to keep America strong so we could help our friends. That’s it.”

Sen. Chris Coons (D-Del.), the leader of the US congressional delegation in Davos, said the conversation with Scholz about the IRA was cordial and professional. But Coons, a seasoned diplomat who serves on the Senate Foreign Relations Committee, acknowledged there were clear differences.

“We’re optimistic that we can find a way to move forward through this,” he said. “We have work to do to be heard.”

Nobody likes to be the last to know

Manchin prides himself on being able to have frank conversations with allies about a disagreement, making them learn from him and he learns from them. But he was surprised by the rancor and confusion he encountered on the part of European officials who felt blindsided by America’s robust industrial policy.

Manchin never heard about the controversial part of the law from lobbies or governments because his team drafted it in secret. No one except senior Democrats in the Senate knew they were drafting the measure. Once it came to light and proved the saving grace of President Joe Biden’s climate agenda, the legislative process moved so quickly that no one had time to react.

“They didn’t know,” Manchin said, but now they do.

Initial confusion over the law in Europe gave way to anger and, soon after, an aggressive political response from national and EU leaders who are crafting their own large-scale support program for the clean energy industry .

On the night she passed the IRA last year, Ursula von der Leyen, president of the European Commission, issued tweet to congratulate Biden on the passage of the IRA in Congress A few weeks later, his team was openly concerned about the IRA’s measures, particularly regarding subsidies for electric vehicles which it saw as discriminatory.

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In the winter, when Macron clashed with Manchin in Washington, European leaders understood that the US energy law could have unintended consequences for their countries. Manchin said that when Macron approached him, the French leader denounced the investments that were flowing out of other parts of the world — including Europe — and flooding into the United States.

In Manchin’s recollection, he countered by telling Macron that the US took the approach of incentivizing its way to energy security, while France and the Europeans chose to tax it. The American approach “attracts people from all over the world” to work on hydrogen, small nuclear reactors and battery storage, Manchin recalled.

He said he told Macron: “I will sit down and work with you in any way, shape or form to alleviate your concerns and fears that we are basically trying to hurt you or your society.”

A French official with direct knowledge of the exchange confirmed this, noting that the president “very calmly explained our serious concerns.”

Sticking to their guns

Concerns have continued to mount in Europe, and Manchin hasn’t always worked hard to ease them.

At a dinner Manchin and his congressional colleagues had this week with Xavier Bettel, the prime minister of Luxembourg, in Davos, the leader expressed Europe’s concerns about the IRA, particularly in light of the IRA increase in the cost of energy due to Russia’s war in Ukraine, a well-known person. with the conversation he said. Manchin argued that Luxembourg would see those prices drop if the country had long-term contracts with U.S. producers.

Such comments are likely to further alienate the EU, confirming the view in Brussels that US natural gas producers are poised to benefit from the EU’s energy woes as the bloc tries to wind down energy russian

Asked about the dinner with lawmakers, Bettel said that “Luxembourg remains committed to dialogue with our American friends on European concerns, such as the IRA and energy security,” adding that his country would report to the European Commission on the dialogue he had with Manchin and others.

Manchin was not the only American shocked by the intensity of European leaders’ resentment of the legislation, which some suggested was misplaced.

“For the past two decades, our friends in Europe have encouraged the United States to address climate change, and now we’re doing it in a big way, and some are criticizing the way we’re doing it,” the representative said. Brendan Boyle (D-Penn.), chairman of the EU Caucus on Capitol Hill who is part of the US delegation to Davos.

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“This bill took a year and a half,” Boyle said. “I am president of the caucus of the EU Congress; practically every week I meet with other parliamentarians and EU countries. Not once, ever, did any European official from any country express to me that they had problems or concerns with any specific aspect of the Inflation Reduction Act that was being publicly discussed.”

But European officials say they were upset that they first heard about it in the media. After all, the US and the EU had created a new body, called the Trade and Technology Council, with the express purpose of coordinating these policies just a year earlier.

crisis mode

EU officials are now scrambling to find some way out of the dilemma inflicted on them by the IRA, particularly the provisions of the electric vehicle bill, which gave favorable treatment to Mexico and Canada, but not to the EU . An EU country leader, who did not want to be named, said this week that “We are confident that by bringing it up we can make sure that the US does the right thing.”

The European Commission in October set up a “working group” led by Von der Leyen’s chief of staff, Bjoern Seibert, and deputy national security adviser Mike Pyle, to explore options. In particular, they are trying to ensure that the local provisions, part of the law that allows manufacturers in Mexico and Canada to benefit from tax breaks, also apply in Europe.

But there is little hope in Europe at the moment that the US will fundamentally change the IRA’s offensive provisions. US Trade Representative Katherine Tai said after a meeting with Commissioner Valdis Dombrovskis in Brussels this week that the EU needed to be “realistic” in resolving the issues.

Manchin said he is open to addressing any suggestions the Europeans may have, working closely with them to ensure there is not a brutal fight to win the technology race to a new energy economy.

It’s unclear how much power he will have now that Democrats have 50 members in the Senate, not 51, which gave him the wildcard vote. And with Republicans in control of the House of Representatives, prospects look dim for major legislation on complex issues.

For now, Manchin is looking forward to relaxing on his flight home and getting out of sales mode, at least for now.

“I didn’t know it was going to be this intense, to be honest with you,” he said.

Burgess Everett, Matt Kaminski, Jakob Hanke Vela, Hans von der Burchard and Ryan Heath contributed to this report.


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