One could dismiss the political earthquake inside the CDU as a summer story – but we should remember that CDU grassroots are not the types who stage revolutions. They usually suffer their disappointments quietly. We can only ever recall two serious revolts, in 1988 against Helmut Kohl, by a group of rivals led by Lothar Späth, then the prime minister of Baden-Württemberg. Kohl won this battle and governed for another 10 years. And in late 1999, early 2000, the party revolted against its leaders over a scandal involving illegal party donations. Angela Merkel put the dagger in with an article to call on her party to liberate itself from Kohl. Shortly afterwards, Wolfgang Schäuble was forced to resign as CDU party leader, and Kohl resigned as the party’s honorary leader. And that was it. Merkel herself never faced a revolt.

Why is Merz so unpopular inside his own party? There are some parallels to Sir Keir Starmer. Sir Keir never survived the controversy surrounding his appointment of Lord Mandelson as the UK’s US ambassador. But this affair was only the trigger. The cause is more prosaic. Labour concluded that it cannot win the next elections unless they changed leader. What is happening in the CDU is very similar. The CDU/CSU is now polling barely above 20%. This is the AfD effect. There will be three state elections in east Germany in September – Saxony-Anhalt, Mecklenburg-Vorpommern and Berlin – where the CDU is likely to do badly.

The trigger for the revolt against Merz was a botched cabinet reshuffle. After Jens Spahn resigned as head over of the CDU/CSU group in the Bundestag, Merz reshuffled altogether eight positions. In one case, he fired a minister without lining up a successor – as we reported earlier this week. But then he fired a very popular minister from east Germany, Christiane Schenderlein, previously minister for sport, and demoted her to a junior ministerial role. This decision triggered the rage of CDU leaders in eastern Germany. At a meeting of the CDU/CSU group one MP told Merz that he runs his party like a company. Normally, MPs do not openly attack the chancellor in such meetings, because everything always leaks out, as it did in this case. Merz has triggered a level of dissatisfaction that is unprecedented in his party. The coup against Kohl was a battle with rivals. Nobody ever accused Kohl of not knowing how to run a party or a government.

As so often, when in trouble, politicians think they have a communication problem. Merz said at yesterday’s meeting of the CDU/CSU group:

“A key focus of my work will be ensuring good communication amongst the federal government, the parliamentary group and the party – communication that explains and conveys things more effectively.“

So he blames his critics for not understanding him properly. It is not hard to see where this goes wrong.

We agree with the commentator from ARD Tagesschau who wrote that every new crisis will hit Merz unfiltered. He has lost his shield. There will be eight elections over the next year – including in some of the west German heartlands of North-Rhine Westphalia and Lower Saxony. We are not predicting what will happen in these elections. But what we can predict is that Merz will not survive unless his party succeeds. Our advice to him would be to propose one substantive change – drop the firewall as a rigid construction that is binding on everybody, and let state and regional leaders decide what to do on a case-by-case basis. We are not holding our breath.

If war is politics by other means, then the central question of politics – what you actually seek to accomplish – is the same central question that applies to wars. And to trade wars. We’ve seen plenty of salon-level discussion of how to win trade wars, prompted by European alarm at its growing bilateral trade imbalance with China. The question we should be asking is what victory would actually mean, and most importantly what you prioritise if you cannot win every battle.

One European industry’s concern gives us particular reason to consider that. Machine tooling has long been a European industrial strength, and another external vulnerability for China. Like it relied on Middle Eastern oil, or US financial systems, it relied on European machine tools to make many of its manufactured goods. But the pattern has inverted recently, and China is starting to muscle in on the most European of European industries. Its share of global metalworking machine tool exports has grown from 8% in 2016 to 23% last year. Over the same time period, Europe’s fell from 52% to 46%. China is now the world’s single biggest metalworking machine tools exporter, not Germany.

These numbers point to two things: that things are looking bad directionally for the European industry, and that it might not be too late to try and save it, if it is a priority. European machine tooling associations themselves certainly think so. The German VDMA recently called for a more forceful European response against China to protect its industry. The Italian machine tooling association, the UCIMU, did something similar yesterday.

If we were trying to devise our own response to China’s industrial push, we’d spend less time worrying about cars, and more worrying about machine tools. They are a European specialist area that largely pre-dates the post-financial crisis current account. Crucially, unlike a car, or a car engine for that matter, they are a capital good. A finished car drives you around. Without metalworking machine tools to make the components that go in it, you have no way to build that car.

This is a problem beyond the fact that dominating machine tools would give China another supply chain dependency it could use against us. China’s own industrial dominance is based on shaky macroeconomic and financial pillars. The problem with being reliant on China across a wide swathe of intermediate and capital goods may well not be that it ends up choosing to weaponise this against us. It might be that, in a future crisis, many of these firms end up in distress or go bust. Without machine tools, their industrial crisis quickly becomes ours too.

Spanish residents have been returning to their homes on Tuesday this week after the wildfires came under control and the emergency situation ended. France has not been so lucky. About 14 blazes reignited yesterday, forcing a new wave of evacuations. Thankfully though the fires are no longer advancing, and no firestorm is in the making.

The fires in the Gironde region around the city of Bordeaux have forced 220,000 to flee, the largest peacetime evacuation in France. Reportedly 240 homes have been destroyed, and new evacuations have been ordered as the new heatwave progresses with weather conditions similar to when the fires first started.

We have not yet reached the end of the summer to see whether this is France’s only mayor fire emergency this year, or whether new heatwaves cause new emergencies. The Gironde fire will certainly leave its trace in politics, whether it is about emergency preparedness or how best to counter climate change.

One of the looming questions is whether the leading candidate, Marine Le Pen, will rejig her agenda for the presidential elections. Her priorities for the 2027 campaign are on immigration, security, and purchasing power, without a word about the environment and climate change disasters.

The first round of the presidential elections will be in April 2027. Eight months are a long time in politics. So whether the current wildfires have a political dimension on the campaign trail depends on how traumatic the events were for the French and what conclusion they draw from this.

We have long come to the conclusion that if climate change policies were to succeed to shift habits in a society, it has to come from the right. The recent energy crisis is an example of how environmental choices were taken not as a green choice but out of energy and security concerns as petrol prices rose due to the Iran conflict. Could the Gironde wildfires be a reason for the far-right to get interested in environmental policies? The fact that one of their beloved historic cities of Bordeaux was threatened by the fires and that tens of thousands of hectares of rural land has burned is a matter of national pride for RN voters. How to prevent this from happening again is a motivating factor for hard-right voters, not the question of whether humans are to blame for climate change and should rectify it.

So far we have seen little evidence that there will be a substantial shift. Marine Le Pen expressed her sorrow for the terrible images and assured the families of her support. But will this support translate into concrete actions or a programme? Up until now the RN liked to downplay risks. In the past RN politicians dismissed the alarmist findings of the Intergovernmental Panel on Climate Change in 2023 and used to describe the government’s communication as hysterical. In 2022 the RN offered an 18 page booklet on environmental issues, proposing new stages in regional planning to get people out of the city into the rural areas. They also like to talk about France’s ecological security through energy, food, and health self-sufficiency, environmental education from a very young age, and a national heritage service. The party clearly dislikes any alarmist tone when it comes to climate change and is even pushing against it. In the European parliament, Jordan Bardella has made the fight against the green deal one of its main battles. And as a way to combat heatwaves in the summer party has proposed a massive national air-conditioning plan with government backed interest free loans. This plan looks inadequate to do anything about the wildfires. La clim, as the French call it, won’t stop fires from spreading. Something needs to give.

If Europe is a museum to US citizens, its tech companies are still keen to use European artifacts to train their language models on it. Some call it theft, others copyright infringement. Under what circumstances is a piece of art considered stolen? If a copyright artifact is made available as part of a public library, can AI use it? There are legal definitions and terms that are being tested in the US.

In one of the first legal copyright infringement cases of its kind, the Irish Writers’ Union now reached a settlement with Anthropic for €1.31bn for using the writers’ works in training their large language models without proper compensation.

The case was a class action case taken in 2024 by Andrea Bartz, Charles Graeber and Kirk Wallace Johnson, to which other authors could sign up. By the end of the process, more than 482,000 works were involved with claims for 91% of them. The $1.5bn settlement amounts to $3000 per book.

The main point of contention is that Anthropic used the LibGen online library which provides access to millions of titles but operates outside copyright regulations. The settlement was for the use of the LibGen library, not the unlicensed use of copyright works for training purposes. The judges in the US District Court in California argued that this is a question of fair use, a defence that would not have been possible under EU law.

To file for such a claim, the book has to have been registered for copyright in the United States on the date of settlement. For publishers like Bloomsbury, which has a large US operation, the settlement brings them millions. More important is that the courts acknowledging the principle that it is wrong to use copyrighted books, no matter of how they were obtained, whether through public libraries or not.

Will this case change how authors will be compensated? The fact that their works were on the public LibGen library and thus not pirated copyrighted work means that in principle they can be used for training purposes with the risk that some may sue for settlement. The case though brought to light that these shadow libraries exist and are used by tech companies.

The Irish Times also reports that tech companies are buying up huge quantities of old second-hand books to scan them into their systems. The belief is that they do not need to pay for copyrights on old books anymore. This holds until the first case comes up to demonstrate the opposite.

These are still early days for large language models. The use of shady sources like these online libraries is not a clearcut legal case of stealing. For the courts, this is more a case to clarify the usage rights for public platforms like these libraries. In Europe, such a case of fair use cannot be made, but there are several copyright challenges by rights groups against tech companies active in European courts to test the exact boundaries.

Morally, this is quite another matter, and the sense of injustice can last for a very long time if there is no final settlement. We have examples from European museums’ own history. Greece, for example, is still arguing with the UK over the return of the Parthenon Marbles exhibited in the British Museum in London. Lord Elgin took the sculptures in Athens in the early 1800s during the Ottoman Empire rule and the British Museum bought it in 1816. Potentially there is now a political compromise involving a cultural partnership, but UK law does still not allow the return of the marbles. France, on the other hand, made a return of looted cultural property from its former colonial empire and public collections between 1815 and 1972 easier with a new law this year. Algeria, Mali and Benin have active claims under this new law.

These were the times when there was no copyright law in place. With AI models we are entering an unchartered territory. Will we too have cases dragging on in hundred years? Or will the successor to the early language models offer a solution that works also for authors?

Either all or none of the ships can export oil through the straits of Hormuz. This is the new equation of Iran’s strategy summed up by Mohammad Bagher Ghalibaf, Iran’s chief negotiator and speaker of parliament. Iran’s regime seems determined to force its way through, despite nuanced differences between the different factions. Some of the ultra-hardliners no longer want to negotiate with the US, while others prefer to use the straits as a bargaining chip to change the power dynamics in negotiations.

The US and Iran are about to lock themselves into tit-for-tat escalation in rhetoric and action. Last night was the 13^th consecutive night of US strikes on Iranian targets. On Wednesday, Donald Trump said that Washington would destroy an Iranian bridge or power plant every time Iran fired on a ship crossing the straits. This came a day after Iran-backed Houthis in Yemen threatened to block Saudi oil exports through the Bab el-Mandeb strait.

The gap between threat and action is wide and unpredictable. Yesterday Donald Trump was telling Axios that he is close to a decision on a massive attack and that the US military will inflict military punishment on Iran and the Houthis if there are more strikes. A large attack would have massive implications for US politics and its troops with an uncertain time horizon for an exit. Escalating to force the other side into concessions is a battle of powers that can last for a while. Oil markets took note and added another pressure point for Trump.

The scope of the confrontation is also widening to other foreign policy decisions. Early this week, the US administration signed a nuclear deal would allow Saudi Arabia to enrich uranium without IAEA inspections, a snub to Iran, where the US administration insisted on intrusive inspections beyond the JCPOA. This deal also caught Israel off guard, especially Benjamin Netanyahu, whose special relationship with the US is his biggest asset in the upcoming elections. Next day Trump rowed back and added the joining of the Abraham accords as a pre-condition. Will Trump’s seesawing not embolden the Iranian regime to hold its position to sit out Trump’s threat-and-retreat pattern?

Iran’s regime seems to be hellbent on also forcing its Arab neighbours to choose sides. Attacking the GCC countries in retaliatory strikes and denying Oman its own rights in the strait of Hormuz risks alienation and complicated post-conflict relations. The latest all-or-none equation on oil exports by closing both the strait of Hormuz and the Bab el-Mandeb is another form of blackmailing the GCC states by inflicting economic pain. Even if the Iranian regime and the Houthis cannot fully enforce their blockades, it reduces export volumes and increases maritime shipping prices for the Gulf states.

The head of the GCC condemned yesterday the Iran-backed Houthi threat to close the Bab el-Mandeb as irresponsible and hostile. He warned that this dangerous escalation is a direct threat to international trade and its strategically most important maritime choke points.

What we are witnessing is a self-enforcing, highly reactive escalation of the Iran conflict. It is not clear at all that either the US or Iran have a coherent strategy for the Middle East other than a diffuse desire to dominate and block out rivals.

Europe has already been through one major gas crisis, starting off around the summer of 2021. It began with higher market prices and unusually low storage volumes through the later part of that year. Of course, it culminated with the Nord Stream shut-off, and the huge spike in prices the next year. Some industries on the continent still haven’t recovered.

It’s very unlikely that the current Hormuz crisis turns out to produce anything as severe as this. But there are some signs of problems brewing that look eerily similar to what we saw at the beginning of that year. First off, futures prices are on an upward march. The Dutch front-month gas price, the European benchmark, has gotten back to roughly its highs from earlier this year when the Iran war began. It is at €60 per megawatt-hour, going up again on a prolonged lack of liquefied natural gas supply from Qatar, which normally supplies close to a fifth of the world market.

That is starting to produce higher power prices. German power futures for Q4 are now trading at a fairly high level of €141 per megawatt-hour, on the back of higher gas prices. Of course, the countries that will be hit with the proverbial big stick are those who rely a lot on gas for power generation, such as Italy. As of noon yesterday, the benchmark day-ahead Italian power price was about €170 per megawatt-hour. Since Edison, one of Italy’s major power producers, was a big customer of Qatar and has been force majeured by them, they are not in a great position.

The problem is not only now, however. It is what happens if this continues until the winter and interacts with another echo of 2021: lower storage volumes. As John Kemp has recently pointed out, storage volumes are now more or less where they were at the same point in the season that year. That is also about 16pp below the previous 10-year average. That is, give or take, a gap of about 16-17bn cubic metres. Put another way, that’s more than Belgium’s annual gas consumption.

That will be an issue if we’re in a position where we have to make up the difference with flexible or spot LNG cargoes, and the Hormuz situation is still not back up to normal. It will also leave us vulnerable to a number of external factors beyond what our next winter looks like, from how temperatures shape up in Northeast Asia to China’s LNG import trajectory.

The Qatar Investment Authority, the sovereign wealth fund, is the third largest owner of Volkswagen, speaking for 17% of the voting rights. It bought the VW stake in 2009, along with a 10% stake in Porsche. These were the times when Germans thought that business and politics were separate things.

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It is now mid-July, four and a half months after the US and Israel first launched airstrikes on Iran. Despite all of the stop-start, negotiations, and presumably very expensive bottled water consumed in Geneva between then and now, the strait of Hormuz is once again shut. After launching a series of attacks on the Gulf states, amidst a series of escalat…

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Edouard Philippe has been a candidate for the French presidential elections for a long time. As Emmanuel Macron’s first prime minister in 2017, he made his reputation by implementing reforms and managing the Covid crisis. Eventually he had to go. Ever since, he was rumoured to eventually take over from Macron. Philippe returned to Le Havre as its mayor …

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Over the weekend there have been two important leaks coming out of VW. The first, and the one that attracted most of the media attention, is the plan to reduce 100,000 jobs and close down four factories in Germany, according to Manager Magazine. This represents 15% of the company’s global workforce.

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On both sides of the Persian Gulf, the old international order and system is under threat. Iraq is the latest big oil producer to consider peeling off from Opec, a hybrid between a traditional cartel and multinational organisation that was a defining institution of the last century. In the strait of Hormuz, the basic principles of maritime navigation ar…

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The German government has agreed to implement the pension reform proposals in full. At last, it got positive headlines in the legacy media. The declared goal of the reform is to ensure the viability of Germany’s defined benefits system. It cancels the exemptions from the 67-year retirement age. And it foresees a very slow increase in the pension age, ri…

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