US Democrat John Podesta, responsible for implementing the Inflation Reduction Act, on December 20, 2022 in Washington. KEVIN DIETSCH / GETTY IMAGES VIA AFP
John Podesta is an old hand in politics, as we get to know in the American series. The 74-year-old Democrat was overshadowed by Bill Clinton and Barack Obama, led Hillary Clinton’s 2016 presidential campaign and is now an advisor to Joe Biden. And as such responsible for the implementation of the famous Inflation Reduction Act (IRA), which is intended to reindustrialize America thanks to massive subsidies for ecological change.
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As the craftsman of the great globalization adventure of the 1990s under Clinton, he is now responsible for closing this chapter without hesitation. “We will not apologize that American taxpayer dollars must fund American investments and jobs,” he said in an evidence-focused interview with the Financial Times on Friday, February 24.
Evidence that bears the seeds of a radical change in international trade and a serious problem for Europe, based on the philosophy of free trade. “The United States is completing and accelerating its economic retreat begun since the end of Bretton Woods in 1971,” economist Véronique Riches-Flores said in her latest February 24 note.
“fragmentation risk”
During an official visit to the United States on November 30, 2022, President Emmanuel Macron already underlined the “risk of fragmentation of the West”. Since then, this European panic has been fueled by the very clear messages from industrialists from the old continent, who threaten to favor the United States in their new investment decisions, given the tax breaks on offer and energy prices.
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It is no coincidence that the American measures concern the energy transition. In addition to the urgency to act, this is the sector most dependent on public subsidies for its development. The latest example so far is the attempt by offshore wind power producers in the UK to try to renegotiate their contracts with the UK government, according to the Financial Times.
On the other side of the English Channel, energy projects are accelerating from Rome to Berlin, via Paris or Amsterdam. Should this be done by reserving aid for European investment and jobs? The French are for it; The big northern exporters, led by Germany, are vehemently opposed, fearing the spiral of retaliation that decimated the economy of the 1930s. Finding a deal will require changing the European software and coming to terms with the Americans. It’s not up for grabs.