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The EU’s Achilles heel? #Transport infrastructure

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In a bid to halt the encroachment of Chinese companies into European markets, the EU is seeking to restrict foreign direct investment (FDI) by implementing a rigorous screening framework designed to identify any substantive threats to the bloc’s critical infrastructure or technologies, with transport one of the most acute ones. The information-exchange system would alert governments to proposed foreign investments in a member country and would offer a mechanism for examining how they might affect an existing European project.

As the EU is exceptionally vulnerable to Chinese encroachments, the nervousness over FDI is justified. It’s a troubling matter of fact that that Europe is lagging behind Beijing in a number of industries, particularly when it comes to transportation. Ironically, it’s a situation exacerbated by the rigid application of EU competition regulations.

Allegations that the system is holding back important developments were first voiced by Angela Merkel and French finance minister Bruno Le Maire in the context of EU concerns over the Siemens-Alstom merger. The deal would create a European train “champion” to resist the Chinese incursion. However, Competition Commissioner Margrethe Vestager will likely derail it over fears that the merger is ‘incompatible’ with the internal market. While the new entity would certainly have the clout to challenge the world’s largest train maker – Beijing-backed CRRC – EU officials believe that the Chinese threat is exaggerated and competition in the sector unlikely in the immediate future.

Considering Brussels’ fears over encroaching Chinese FDI, such attitudes regarding the transport sector are nothing short of absurd. Vesteger’s comment that “The champions we need are the ones that can fight their way to the top of a competitive market in Europe – and go on to do the same across the world” perfectly encapsulates this tragic irony. After all, Vesteger’s demand for globally competitive firms is directly undermined by the EU’s unwillingness to allow large competitive firms to arise in the first place.

It’s easy to dismiss the merger as a Franco-German scheme to dominate the EU’s railway sector. But Merkel and Le Maire have a point: China is ready, willing and able to plug the technology and infrastructure hole that Brussels has been unable to fill.

Because it is integral to Beijing’s Belt and Road Initiative, CRRC enjoys long-term strategic and operational support from its government. That backing has enabled it to capture 46 percent of the global railway market for trains, services and signalling. According to 2016 figures, CRRC is twice the size of its nearest competitor, Canadian group Bombardier, with Alstom and Siemens ranked third and fourth. The company would like exports to account for a fifth of its business by 2021 and has Europe firmly in its sights.

The argument in favour of scaling up the EU response should therefore be gaining ground. For China has upped its game in the quest for greater international engagement: a country that traditionally relied on technology transfer is now operating from a deep indigenous knowledge base and is transitioning from importer to exporter.

Unfortunately, the European industrial base essential for pushing back against China isn’t performing at its peak. The fragmentation of the transport sector across the EU means that few companies have the ability to manage long-term projects efficiently.

French aerospace and transport specialist Thales is a case in point. Although Thales has been unsuccessfully attempting to sell its ticketing division since 2016, the firm was contracted to provide Bordeaux with a contactless ticketing service. Company officials recently admitted the project twenty months behind schedule. Originally due for implementation in summer 2017, it has been dogged by setbacks and is now estimated to launch in March 2019. The delays have notably angered the city’s mayor and former French prime minister Alain Juppé, who called Thales’s inability to meet its commitments “unacceptable behaviour”.

The criticism is the more scathing considering that this regional debacle doesn’t bode well for the company’s $265m transportation contract in Vietnam’s capital city, awarded in 2017. Planned to be operational by 2021, the terms require Thales to deliver a telecommunications system for Hanoi’s metro Line 3. However, progress is already behind schedule due to delays in “dealing and conducting bidding packages”, as well as other issues.

Unfortunately, Thales isn’t the only such case. Spanish conglomerate Acciona has already demonstrated its inability to adhere to contractual terms in international projects. In charge of Sydney’s light rail project, repeated delays and cost overruns have caused lots of farcical discord between company representatives and local government officials over failing to disclose information crucial to the project’s success.

The disputes have turned into political crisis for the Sydney government marked by official inquiries into Acciona’s conduct and Acciona suing in response, alleging govenrment misconduct in handling the project – all the while the firm itself is under pressure for seemingly failing to provide sufficient oversight on the ground.

If big players like Thales and Acciona have such difficulties getting their projects off the ground, their ability to successfully complete future demanding international contracts is reasonably called into question – which in turn highlights the lack of global credibility of European infrastructure and tech providers.

It’s no wonder then that the EU’s common transport policy is only making stuttering advances. It prioritises issues pertaining de-carbonization rather than pressing infrastructure and industrial base improvements. By trying to satisfy the parameters of an ever-shifting sustainability model, the transport sector hasn’t had the resources to bolster a skill base fit for the future.

The lesson for the EU is simple: widespread advances pivotal for the future of the bloc’s transport sector can only be realised if a big player is allowed to scale up and develop pioneering technology and greater efficiencies, thereby remaining competitive in the face of growing Chinese pressures. Besides strengthening FDI controls, Brussels urgently needs to adapt its industrial policy to help home-grown companies stay relevant in a rapidly changing international market. If Europe’s competition rules don’t allow European champions to emerge, it’s clearly time to take for a rethink.

Aviation/airlines

Airbus and Air France ordered to stand trial over 2009 crash

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Air France (AIRF.PA) and Airbus (AIR.PA) should stand trial for involuntary manslaughter over their role in a 2009 crash in the Atlantic that killed 228 people, the Paris court of appeal ruled on Wednesday. (12 May)

The ruling reverses a 2019 decision not to prosecute either company over the accident, in which the pilots lost control of the Airbus A330 jet after ice blocked its airspeed sensors.

Victims' families welcomed the ruling, but Airbus and Air France said they would seek to overturn it at the Cour de Cassation, France's highest appeal court.

"The court decision that has just been announced does not reflect in any way the conclusions of the investigation," Airbus said in an emailed statement.

Air France logo is pictured at the Air France check-in at Bordeaux-Merignac airport, as Air France pilots, cabin and ground crews unions call for a strike over salaries in Merignac near Bordeaux, France April 7, 2018. REUTERS/Regis Duvignau
The Airbus logo pictured at the company's headquarters in Blagnac near Toulouse, France, March 20, 2019.  REUTERS/Regis Duvignau

Air France "maintains that it committed no criminal fault at the root of this tragic accident", said a spokesman for the carrier, which is part of Air France-KLM.

Air France flight AF447 from Rio de Janeiro to Paris crashed on 1 June, 2009, killing everyone on board.

French investigators found that the crew had mishandled the situation arising from the loss of speed data from sensors blocked with ice and caused an aerodynamic stall by holding the aircraft's nose too high.

The earlier decision not to go to trial drew legal challenges from the families as well as pilot unions and prosecutors who had pursued charges against Air France alone.

Wednesday's ruling upheld new demands for a trial of both companies from senior prosecutors who have accused Air France of pilot training failures and Airbus for underestimating dangers posed by known problems with the speed sensors.

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Aviation/airlines

Airline launches airbridge to bring relief to virus-stricken India

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The airline Emirates has set up a humanitarian airbridge between Dubai and India to transport urgent medical and relief items, to support India in its fight to control the serious COVID-19 situation in the country, writes Martin Banks.

Emirates will offer cargo capacity free of charge on an “as available” basis on all of its flights to nine cities in India, to help international NGOs deliver relief supplies rapidly to where it is needed.

In the past weeks, Emirates SkyCargo has already been transporting medicines and medical equipment on scheduled and charter cargo flights to India. This latest airbridge initiative takes Emirates’ support for India and for the NGO community to the next level.

HH Sheikh Ahmed bin Saeed Al Maktoum, Emirates’ Chairman and Chief Executive, said: “India and Emirates are deeply connected, since our first flights to India in 1985. We stand with the Indian people and will do all we can to help India get back on its feet. Emirates has a lot of experience in humanitarian relief efforts, and with 95 weekly flights to 9 destinations in India, we will be offering regular and reliable widebody capacity for relief materials. The International Humanitarian City in Dubai is the largest crisis relief hub in the world and we will work closely with them to facilitate the movement of urgent medical supplies.”

The first shipment sent as part of the Emirates India humanitarian airbridge is a consignment of over 12 tons of multi-purpose tents from the World Health Organization (WHO), destined for Delhi, and coordinated by the IHC in Dubai.

Giuseppe Saba, CEO of International Humanitarian City, said: “His Highness Sheikh Mohammed bin Rashid built the International Humanitarian City (IHC), so Dubai, in coordination with humanitarian agencies, would be able to assist communities and families, most in need – around the world. The creation of the humanitarian airbridge between Dubai and India, facilitated by Emirates SkyCargo, Dubai’s International Humanitarian City and UN agencies, to transport urgent medical and relief items, is another example of His Highness Sheikh Mohammed bin Rashid’s vision for the IHC, being brought to life. Last year over 1,292 shipments were dispatched from the IHC in Dubai, setting the standard for humanitarian response globally. We appreciate the great efforts by IHC’s partner Emirates SkyCargo establishing this humanitarian airbridge between Dubai and India in this time of need”.

The freight division of Emirates has a close partnership with IHC, developed over several years of delivering relief materials to communities across the world impacted by natural disasters and other crises. IHC will support Emirates SkyCargo in channelling relief efforts to India through the airbridge.

Following the Port of Beirut blasts in August 2020, Emirates also leveraged its expertise in humanitarian logistics to set up an airbridge to Lebanon to assist with relief efforts.

Emirates has led the aviation and air cargo industry in its efforts to help markets around the world combat the COVID-19 pandemic. The air cargo carrier has helped transport thousands of tonnes of urgently required PPE and other medical supplies across six continents over the last year by rapidly adapting its business model and introducing additional cargo capacity through its modified mini freighters with seats removed from Economy Class on Boeing 777-300ER passenger aircraft along with loading cargo on seats and in overhead bins inside passenger aircraft to transport urgently required materials.

In addition, Emirates SkyCargo has partnered with UNICEF and other entities in Dubai through the Dubai Vaccine Logistics Alliance, to transport COVID-19 vaccines rapidly to developing nations through Dubai. So far, close to 60 million doses of COVID-19 vaccines have been transported on Emirates’ flights, equating to nearly 1 in 20 of all COVID-19 vaccine doses administered around the world.

Through its scheduled cargo flights to close to 140 destinations across six continents, Emirates helps maintain unbroken supply chains for vital commodities such as medical supplies and food.

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Digital economy

Europe's Digital Decade: Commission launches consultation and discussion on EU digital principles

EU Reporter Correspondent

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As a follow-up to its Digital Decade Communication of 9 March, the Commission is launching a public consultation on the formulation of a set of principles to promote and uphold EU values in the digital space. A Europe fit for the Digital Age Executive Vice President Margrethe Vestager said: “A fair and secure digital environment that offers opportunities for all. That is our commitment. The digital principles will guide this European human-centred approach to digital and should be the reference for future action in all areas. That's why we want to hear from EU citizens.” Internal Market Commissioner Thierry Breton said: “This is Europe's Digital Decade and everyone should be empowered to benefit from digital solutions to connect, explore, work and fulfil one's ambitions, online as offline. We want to set together the digital principles on which a resilient digital economy and society will be built.”

The consultation, open until 2 September, seeks to open a wide societal debate and gather views from citizens, non-governmental and civil society organizations, businesses, administrations and all interested parties. These principles will guide the EU and membersStates in designing digital rules and regulations that deliver the benefits of digitalisation for all citizens. The contributions to the public consultation will feed into a proposal from the Commission for a joint inter-institutional declaration on Digital Principles of the European Parliament, the Council, and the Commission. The proposal is expected by the end of 2021. A press release is available online.

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