Europe's news in English

COPY LINK

POLITICS

German coalition blocks Scholz tax fraud probe

German lawmakers on Wednesday blocked an investigation into Chancellor Olaf Scholz over his possible involvement as mayor of Hamburg in a tax fraud scam that cost the government millions of euros.

Published: 6 July 2023 09:16 CEST

German Chancellor Olaf Scholz

German Chancellor Olaf Scholz (SPD) speaks at a gathering of the SPD parliamentary group in Berlin. Photo: picture alliance/dpa | Kay Nietfeld

The probe, pushed for by MPs from the conservative opposition CDU and CSU, would have explored whether political figures helped the private bank M.M. Warburg to avoid paying back falsely claimed tax rebates in Hamburg.

MPs from the coalition parties, including Scholz’s Social Democrats, the Greens and the pro-business FDP approved a motion rejecting the plans.

The CDU and CSU said their rights as the parliamentary opposition had not been respected, and signalled they would appeal the move at the German constitutional court.

Scholz, who was mayor of Hamburg from 2011 to 2018, has repeatedly been forced to reject allegations he was involved in the decision to let the bank off the hook.

READ ALSO: Germany’s Scholz denies influence in tax fraud probe

The chancellor is already facing a similar parliamentary inquiry in Hamburg, one of Germany’s 16 federal states.

The Hamburg committee is investigating why local finance authorities in 2016 dropped a bid to claw back 47 million euros ($48 million) in taxes from Warburg over so-called cum-ex trades.

First exposed in 2017, the “cum-ex” scandal involved numerous participants swiftly exchanging company shares amongst themselves around the day of dividend payments, to claim multiple tax rebates on a single payout.

Used across Europe, the tax scheme is estimated to have left a multibillion-euro hole in Germany’s public finances.

READ ALSO: German court jails three ex-bankers in tax fraud scam

The scam has seen dozens of people indicted in Germany, including bankers, stock traders, lawyers and financial consultants.

Warburg eventually had to pay back tens of millions of euros under pressure from the federal government under former Chancellor Angela Merkel.

Member comments

Log in here to leave a comment.

Become a Member to leave a comment.

INTERVIEW: 'Failed climate policies are fuelling far-right politics in Germany'

It’s understood that far-right and populist political parties tend to either downplay the realities of climate change, or block progressive policies that would try to mitigate its impacts. But the link between failed climate policies and the recent rise of populist parties is rarely addressed.

Speaking as a panellist at the Green Tech Festival in Berlin on Thursday, climate policy thought-leader Sandrine Dixson-Declève voiced concern that poor climate and economic policies are fuelling the popularity of far-right politics in Germany and across Europe.

Co-president of the Club of Rome, Dixson-Declève works to promote policies that she believes would help secure a sustainable future for humanity. Such policies are laid out in the book Earth for All: A Survival Guide for Humanity, that she co-authored.

The Local spoke with Sandrine Dixson-Declève about Germany’s climate policy failures, and why she thinks the upcoming European elections are of the utmost importance.

The shortcomings of Germany’s ‘Energiewende’ had serious political consequences

Having been a contributor and advisor to Germany’s Energiewende (energy transition), Dixson-Declève has followed German politics and environmental policy for years.

“I believe that one of the biggest mistakes was that we politicised energy policy in Germany from the outset,” she told The Local, adding, “Merkel actually accepted the big green push to pull out of nuclear, which actually created a big mess.”

Germany’s anti-nuclear energy movement dates back to the 19070s, and led to the foundation of the Green party. Under Merkel’s leadership, a plan was adopted to phase out nuclear power with the last three nuclear power plants taken offline in 2023.

But losing nuclear power as an energy source came with some serious consequences.

“The first big mess was the continued burning of coal,” Dixson-Declève explained. “The second big mess was Nord Stream 2, and that led to the invasion of Ukraine…because it gave Putin power.”

Still, she wouldn’t suggest that Germany try to revive its nuclear power now: “I believe that Germany needs to really think through the next steps.”

READ ALSO: ‘Nuclear power is a dead horse in Germany’: Scholz rejects reopening plants

Protestors run past riot police

A wave of protestors break through police lines at Lützerath. Open pit coal mining in west Germany destroyed most of the Hambach Forest, as well as dozens of villages such as Lützerath. At both sites massive citizen protests were met with brutal police evictions. Photo by Paul Krantz.

Energy efficiency is the missing piece to Germany’s climate plans

How to build up renewable energy infrastructure is at the centre of most discourse around curbing fossil fuel use, but using the energy we have more efficiently arguably deserves more immediate attention.

“The other missing link, which no one talks about, is energy efficiency,” Dixson-Declève said. “Actually the best energy is the energy you don’t use. That is unsexy, and that is why energy efficiency hasn’t been taken up the way it should have been since 2010.”

While working on climate and energy plans in 2010, she says she came across a study that said Europe could wean itself off of Russian gas just by putting energy efficiency requirements in place for buildings.

In 2022 the European Commission finally began to take this idea seriously when Germany and Europe suddenly needed to replace Russian gas imports, following Russia’s invasion of Ukraine.

Another massive energy saver that has been politicised for all the wrong reasons in Germany is heat pumps.

According to Eurostat data, about half of all energy consumed in the EU is used for heating and cooling, and most of that energy comes from fossil fuels. Heat pumps are significantly more efficient than boilers and allow for greater use of renewable energy sources.

But when Economy Minister Robert Habeck led an effort to promote heat pumps by banning new fossil-powered heating systems, conservative and far-right parties jumped on the issue as if it were an attack on personal freedoms.

“As environmentalists, we need to get better at translating the environmental narrative into something that resonates with people,” said Dixson-Declève.

READ ALSO: Reader question – How do I install a heat pump in my German property?

A unified coalition government that is serious about climate protections might have better communicated to people that heat pumps would ultimately save them money: “They should have been enabled in a way that truly assisted people in getting the heat that they needed in an affordable way at the right time.”

‘I am very scared we are in a 1930s moment’

Whereas the coalition government has largely failed to communicate to voters how environmental policies will improve their lives and save them money, conservative and far-right parties have done extremely well at hijacking the narrative.

The European People’s Party (EPP – the EU’s largest conservative party), for example, is particularly adept at using citizens’ economic concerns to block environmental policies.

Having analysed the EPP’s manifestos, Dixson-Declève notes that they acknowledge the need to mitigate climate change, but say that protections cannot cost.

“I think the EPP has done a very good job both of putting in fear of the greens, [as if] they’re only going to think about green climate policies and not about social policies [whereas] we’re here to think about you.”

Sandrine Dixson-Declève with Earth for All

Sandrine Dixson-Declève holds up a copy of the book ‘Earth for All’ alongside two of the book’s co-authors. Photo: picture alliance/dpa | Wolfgang Kumm

Germany’s far-right parties tend to use similar messaging to try and convince voters that they will better improve the lives of citizens than the current coalition parties have.

READ ALSO: Why are the far-right AfD doing so well in German polls?

Nearly 100 years ago, the National Socialist (Nazi) party succeeded in drumming up major support along similar lines.

Speaking as a panellist at Berlin’s Green Tech Festival, when asked how she thought European politicians were doing on climate issues, Dixson-Declève described them as deer in the headlights, adding, “I am very scared we are in a 1930s moment”.

“I think that in the 1930s we didn’t see Hitler coming, we didn’t read the tea leaves,” she told The Local, adding that in the present moment, “people are suffering. When people suffer, they look to anything, any message that’s going to make them feel like that next leader is going to help them.”

She also suggests that we can’t count on the youth vote to save us, citing Argentina and Portugal as two places where young voters have actually pushed politics to the right recently.

READ ALSO: A fight for the youth vote: Are German politicians social media savvy enough?

“This is a tipping moment politically, and if we’re not careful, it could explode in our faces,” said Dixson-Declève. “We need to get as many people to vote this year [as possible]. It’s an absolutely fundamental vote, alongside the United States, in order to make sure that we don’t slide to the right across Europe.”

Url copied to clipboard!