Putin’s gas shock is acid test of EU unity 27 Apr 2022 In severing Polish and Bulgarian supply, the Russian leader shattered a fragile equilibrium that had seen European energy buyers fund his war. He hopes other EU states will carry on, dividing the bloc. Instead, Europe should backstop the costly process of ditching Moscow’s fuel.
EU greenwashing fix gets off to dodgy start 14 Apr 2022 Some 4 trln euros of funds are now deemed sustainable under European disclosure rules governing ESG investing. Yet the EU yardstick for such a definition is vaguer than for some private sector players. At the very least this is confusing; at most it actually aids greenwashing.
Draghi’s bond-buying triumph lacks obvious sequel 13 Apr 2022 The ECB’s plans to tighten monetary policy and the Ukraine war revive fears that weak euro zone members’ borrowing costs will soar. Though the former central bank boss tamed debt spreads in 2012, a repeat is tricky. Besides, governments that struggle can use tools Draghi devised.
Macron-Le Pen replay reveals deeper French splits 10 Apr 2022 President Emmanuel Macron resisted a surge in support for his far-right challenger Marine Le Pen in the first round of elections. But the vote laid bare more divisions than existed five years ago. These rifts will make running the euro zone’s second biggest economy arduous.
Ukraine should be rebuilt without Russian money 6 Apr 2022 Reconstruction may cost as much as $200 bln, more than Europe’s post-WW2 Marshall Plan in today’s money. Even if Kyiv wanted Russia’s roubles, Western finance will keep Ukraine in Europe’s orbit. Moscow’s main penance for the carnage will be in the form of long-term sanctions.
Time for Europe to break energy sanctions taboo 4 Apr 2022 Alleged Russian atrocities against Ukrainian civilians are set to trigger a harsher EU response. Dependency on Russian oil and gas makes Germany and others reluctant to back a full energy embargo. Taxing hydrocarbon imports is a halfway-house option that still hurts Moscow.
Christine Lagarde’s inflation excuses wear thin 1 Apr 2022 Euro zone prices rose at a record annual rate of 7.5% in March, almost as much as in the United States where the Fed has started hiking rates. There’s more going on than just surging energy costs. It’s getting harder for the European Central Bank boss not to follow Jerome Powell.
EU’s Ukraine currency fix is a problem best shared 29 Mar 2022 The ECB wants the European Union to guarantee potential losses when Ukrainians fleeing the war change their currency into euros. A rival plan would leave this up to national governments. The pooled scheme is much more likely to give Ukrainians hope in the value of the hryvnia.
Germany’s oil embargo block is short-sighted 29 Mar 2022 Berlin is opposing a European ban on Russian energy. A gas embargo would take months to manage. But stopping oil imports now would be doable, while depriving Moscow of resources to fund the war. And Germany could afford the economic price.
ECB squeeze leaves room for fiscal war response 24 Mar 2022 The central bank is fighting inflation and cutting bond purchases, leaving European governments to shoulder the cost of the Ukraine war. That may add up to 4% of GDP to public debt loads inflated by the pandemic. But even with rising yields, national budgets can afford it.
Energy market bailout is cheaper of two evils 18 Mar 2022 Europe’s gas producers and utilities want state support to offset the wild swings in commodity prices since Russia invaded Ukraine. Given this could aid big oil companies like Shell, that sounds wrong. But a market breakdown would be worse, and states can levy windfall taxes.
EU energy crisis is a 130 bln euro joint problem 17 Mar 2022 That's how much it could cost to wean the bloc off Russian gas, at a time when energy bills are already soaring. States could tax energy companies or draw unused pandemic loans to offer subsidies. Common grants look like a better option.
EU charts expensive path towards energy freedom 8 Mar 2022 The European Commission wants to lop over 70% off Russian gas use this year by ramping up LNG purchases, green energy and gas storage. It implies Europeans consuming less energy and paying more than feared for what they use. Pooled EU resources may be needed to cushion the blow.
EU greenwash laxity could see it build back worse 13 Jan 2022 Europe’s green taxonomy is meant to direct billions of euros towards clean energy so a post-virus continent can “build back better”. Yet political fudges mean gas and nuclear count as sustainable. Worse, the tool’s new draft contains loopholes that could make it dirtier still.
EU’s anti-greenwashing crusade takes a risky turn 5 Jan 2022 The bloc’s new draft of its green taxonomy includes gas and nuclear power. The risk is a tool intended to make sustainable financing less prone to greenwashing does the opposite. A lot hinges on whether investors properly differentiate between clean and “transition” activities.
Europe tightens energy noose round its own neck 17 Dec 2021 Germany will not certify Nord Stream 2 until the second half of next year. The Baltic pipeline is a hugely flawed solution to Europe’s energy security shortcomings. But the main losers from delaying its launch are likely to be its own consumers, rather than Russia or Gazprom.
Trailblazing UK rate rise may pay off in the end 16 Dec 2021 The Bank of England is the first major central bank to hike its policy rate. The ECB faces less acute price pressures and the Fed must consider the job market alongside inflation. It’s a gamble, but acting now means British rate-setters will have less hiking to do in the future.
ECB needs a louder megaphone to reach bond markets 28 Oct 2021 President Christine Lagarde said she won’t hike rates as soon as investors anticipate. But that didn’t change their expectations and euro zone debt yields rose. She will have to do a better job of convincing them if she is to avert an unwanted tightening in financing conditions.
Mario Draghi can play hardball with Andrea Orcel 21 Oct 2021 UniCredit’s boss wants the Italian premier to inject 7 bln euros into bailed-out bank MPS before he buys it. The state needs to sell its stake to meet EU rules, but taxpayers may balk at another large handout. Seeking an extension from Brussels may work to Rome’s advantage.
Jens Weidmann’s best replacement is another hawk 20 Oct 2021 The Bundesbank president has unexpectedly resigned. Weidmann criticised Mario Draghi’s bond-buying plan, and a more dovish rate-setter could help the ECB keep policy loose in tricky times. But having an articulate and critical representative also helped keep German voters happy.