BERLIN/PARIS — After publicly falling out, Olaf Scholz and Emmanuel Macron have found something they agree on: mounting alarm over unfair competition from the U.S. and the potential need for Europe to hit back.
The German chancellor and the French president discussed their joint concerns during nearly three-and-a-half hours of talks over a lunch of fish, wine and Champagne in Paris on Wednesday.
They agreed that recent American state subsidy plans represent market-distorting measures that aim to convince companies to shift their production to the U.S., according to people familiar with their discussions. And that is a problem they want the European Union to address.
The meeting of minds on this issue followed public disagreements in recent weeks on key political issues such as energy and defense, fracturing what is often seen as the EU’s central political alliance between its two biggest economies.
But even though their lunch came against an awkward backdrop, both leaders agreed that the EU cannot remain idle if Washington pushes ahead with its Inflation Reduction Act, which offers tax cuts and energy benefits for companies investing on U.S. soil, in its current form. Specifically, the recently signed U.S. legislation encourages consumers to “Buy American” when it comes to choosing an electric vehicle — a move particularly galling for major car industries in the likes of France and Germany.
The message from the Paris lunch is: If the U.S. doesn’t scale back, then the EU will have to strike back. Similar incentive schemes for companies will be needed to avoid unfair competition or losing investments. That move would risk plunging transatlantic relations into a new trade war.
Macron was the first to make the stark warning public. “We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” the French president said Wednesday night in an interview with TV channel France 2, referring specifically to state subsidies for electric cars.
Scholz and Macron agreed the EU must act if the US progresses a ‘Buy American’ act offering incentives for companies investing on US soil, which would particularly affect French and German electric vehicle industries | David Hecker / Getty Images
Macron also mentioned similar concerns about state-subsidized competition from China: “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house,” Macron said, adding: “[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation.”
Crucially, Berlin — which has traditionally been more reluctant when it comes to confronting the U.S. in trade disputes — is indeed backing the French push. Scholz agrees that the EU will need to roll out countermeasures similar to the U.S. scheme if Washington refuses to address key concerns voiced by Berlin and Paris, according to people familiar with the chancellor’s thinking.
Scholz is not a big fan of Macron’s wording of a “Buy European Act” as it evokes the nearly 90-year-old “Buy American Act,” which is often criticized for being protectionist because it favors American companies. But the chancellor shares Macron’s concerns about unfair competitive advantages, the people said.
Earlier this month, Scholz said publicly that Europe will have to discuss the Inflation Reduction Act with the U.S. “in great depth.”
In a blow to Germany’s industrial core, chemical giant BASF announced plans Wednesday to reduce its business activities and jobs in Germany, with company chief Martin Brudermüller citing heightened gas prices — which he criticized for being six times as high as in the U.S. — as well as increasing EU regulation as the reason.
“The decisions of a successful company like BASF show that we need to improve the overall attractiveness of Germany as a business location,” German Finance Minister Christian Lindner said in a tweet, vowing to take various measures such as “tax relief for private investments.”
Before bringing out the big guns, though, Scholz and Macron want to try to reach a negotiated solution with Washington. This should be done via a new “EU-U.S. Taskforce on the Inflation Reduction Act” that was established during a meeting between European Commission President Ursula von der Leyen and U.S. Deputy National Security Adviser Mike Pyle on Tuesday.
The taskforce of EU and U.S. officials will meet via videoconference toward the end of next week, underlining the seriousness of the European push.
On top of that, EU trade ministers will gather for an informal meeting in Prague next Monday, with U.S. trade envoy Katherine Tai planning to attend to discuss the tensions.
In Brussels, the Commission is also looking with concern at Macron’s wording of a “Buy European Act,” which evokes protectionist tendencies that the EU institution has long sought to fight.
“Every measure we take needs to be in line with the World Trade Organization rules,” a Commission official said, adding that Europe and the U.S. should resolve differences via talks and “not descend into tit-for-tat trade war measures as we experienced them under [former U.S. President Donald] Trump.”
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An array of bitcoin mining units inside a container at a Cleanspark facility in College Park, Georgia, U.S., on Friday, April 22, 2022.
Elijah Nouvelage | Bloomberg | Getty Images
Core Scientific, one of the largest publicly traded crypto mining companies in the U.S., raised the possibility of bankruptcy in a statement filed with the Securities and Exchange Commission. The company also disclosed that it will not make its debt payments coming due in late Oct. and early Nov.
Core’s stock was down as much as 77% on Thursday following the filing.
Since listing on the Nasdaq through a special purpose acquisition company, or SPAC, Core’s market capitalization has fallen to $90 million, down from a $4.3 billion valuation in July 2021 when the company went public. The stock is now down more than 97% this year. In the event of a bankruptcy, Core says that holders of its common stock could suffer “a total loss of their investment.”
Core Scientific mines for proof-of-work cryptocurrencies like bitcoin. The process involves powering data centers across the country, packed with highly specialized computers that crunch math equations in order to validate transactions and simultaneously create new tokens. The process requires expensive equipment, some technical know-how, and a lot of electricity.
Core, which primarily mints bitcoin, has seen the price of the token drop from an all-time high above $69,000 in Nov. 2021, to around $20,500. That 70% loss in value, paired with greater competition among miners — and increased energy prices — have compressed itsprofit margins.
The crypto miner said its “operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs,” as well as “the increase in the global bitcoin network hash rate” — a term used to describe the computing power of all miners in the bitcoin network.
The filing also blamed “litigation with Celsius Networks LLC and its affiliates” for Core’s financial struggles. Celsius was once one of the biggest names in the crypto lending space, offering annual returns of nearly 19%, until it filed for bankruptcy this spring.
The Austin, Texas-based miner, which has operations in North Dakota, North Carolina, Georgia, and Kentucky, says that it may “seek alternative sources of equity or debt financing.” The company is also considering asset sales, as well as delaying larger capital expenditures, including construction projects.
As for its creditors, Core wrote in the filing that they were free to sue the company for nonpayment, take action with respect to collateral, as well as“electing to accelerate the principal amount of such debt.”
Analysts believe Chapter 11 bankruptcy is a real possibility.
“With the substantial decline in mining rig prices in 2022, we believe there’s a significant chance the creditors holding this debt decide to restructure instead of taking possession of the collateral,” wrote analysts from Compass Point. “Still, without knowing how discussions are going with CORZ’s creditors, we think a scenario where CORZ has to file for Chapter 11 protection has to be taken seriously, especially if BTC prices decline further from current levels.”
Core — which is one of the largest providers of blockchain infrastructure and hosting, as well as one of the largest digital asset miners, in North America — isn’t alone in its struggles. Compute North, which provides hosting services and infrastructure for crypto mining, filed for Chapter 11 bankruptcy in Sept., and at least one other miner, Marathon Digital Holdings, reported an $80 million exposure to the bankrupt mining firm.
The logo of Shell on an oil storage silo, beyond railway tanker wagons at the company’s Pernis refinery in Rotterdam, Netherlands, on Sunday, Oct. 23, 2022.
Bloomberg | Bloomberg | Getty Images
British oil major Shell reported a third-quarter profit Thursday, but lower refining and trading revenues brought an end to its run of record quarterly earnings.
Shell posted adjusted earnings of $9.45 billion for the three months through to the end of September, meeting analyst expectations of $9.5 billion according to Refinitiv. The company posted adjusted earnings of $4.1billion over the same period a year earlier and notched a whopping $11.5 billion for the second quarter of 2022.
The oil giant said it planned to increase its dividend per share by around 15% for the fourth quarter 2022, to be paid out in March 2023. It also announced a new share buyback program, which is set to result in an additional $4 billion of distributions and expected to be completed by its next earnings release.
Shares of Shell are up over 41% year-to-date.
The London-headquartered oil major reported consecutive quarters of record profits through the first six months of the year, benefitting from surging commodity prices following Russia’s invasion of Ukraine.
Shell warned in an update earlier this month, however, that lower refining and chemicals margins and weaker gas trading were likely to negatively impact third-quarter earnings.
On Thursday, the company said a recovery in global product supply had contributed to lower refining margins in the third quarter, and gas trading earnings had also fallen.
“The trading and optimisation contributions were mainly impacted by a combination of seasonality and supply constraints, coupled with substantial differences between paper and physical realisations in a volatile and dislocated market,” Shell said in a its earnings release.
Wael Sawan, currently Shell’s director of integrated gas, renewables and energy solutions, will become its next chief executive on Jan. 1.
A dual Lebanese-Canadian national, Sawan has held roles in downstream retail and various commercial projects during his 25-year career at Shell.
“I’m looking forward to channelling the pioneering spirit and passion of our incredible people to rise to the immense challenges, and grasp the opportunities presented by the energy transition,” Sawan said in a statement on Sept. 15, adding that it was an honor to follow van Beurden’s leadership.
“We will be disciplined and value focused, as we work with our customers and partners to deliver the reliable, affordable and cleaner energy the world needs.”
PARIS — Emmanuel Macron called for a “Buy European Act” on Wednesday to protect carmakers on the Continent in the face of competition from China and in response to the United States’ own controversial scheme to incentivize domestic production.
Speaking on TV channel France 2, the French president criticized the European Union as being “too open” on the topic of state subsidies for electric cars as it seeks to accelerate its transition to greener energy sources.
“We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” Macron said. “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house.”
France has been leading the charge against Washington’s recent Inflation Reduction Act, which includes tax incentives for U.S. consumers to “Buy American” when it comes to choosing an electric car. The European Union, South Korea, Japan, China and Russia have all complained at the World Trade Organization that this measure violates international trade rules by unfairly discriminating against foreign manufacturers.
French Finance Minister Bruno Le Maire also recently slammed the U.S. scheme as “jeopardizing the level playing field” and raising the risk of a “new trade war.”
Macron said in the TV interview he had discussed an EU response to U.S. trade barriers during a lunch with German Chancellor Olaf Scholz at the Elysée Palace earlier on Wednesday. However, it was unclear whether the two leaders share the same view on exactly what steps to take.
“[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation,” Macron said.
Relations between the French president and his German counterpart have been fraught amid disagreements over energy, defense and the economy. But discontent over the U.S. legislation appears to be an area where they converge, given both their countries host major carmakers like Renault and Mercedes-Benz.
According to an adviser to the French presidency, the two leaders agreed to push the European Commission to prepare a response to the U.S. Inflation Reduction Act.
Giorgio Leali contributed reporting.
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Achieving the temperature goals of the Paris Agreement requires not only slowing new construction, but also retiring existing coal power plants early, worldwide. Credit: Wikimedia Commons
Opinion by Philippe Benoit (paris)
Inter Press Service
PARIS, Oct 26 (IPS) – With COP 27 approaching, pressure is mounting on wealthy countries to increase their support to poorer ones in the face of climate change. The recent floods in Pakistan have amplified this issue. China, as the world’s second largest economy, will similarly face increasing pressure to help other developing countries on climate.
At last year’s COP, the Asian Development Bank (ADB) unveiled an innovative program to fund the early retirement of coal power plants by mobilizing capital to buy-out the investors in these plants. This approach has an interesting, and potentially even easier, application to the coal plants financed by China in Pakistan and elsewhere overseas under its Belt and Road Initiative (“BRI”). The key to unlocking this, somewhat surprisingly, lies in the dominance of China’s state-owned companies in BRI transactions.
In response to this challenge, the ADB announced the Energy Transition Mechanism which includes an initiative to buy out existing coal investors to shutter their plants early and thereby avoid the attendant future emissions. Typically, this would involve mobilizing international financing from multilateral development banks, climate funds, etc. to compensate the private sector investors in these plants.
Interestingly, the dominance in the BRI’s overseas projects of China’s state-owned companies creates the opportunity for the Chinese Government to apply the ADB mechanism in a streamlined manner — under what could be called the “BRI Clean Energy Transition Mechanism”. How might this work? Some initial ideas follow.
As noted above, Chinese state-owned financial institutions are the major lenders to the BRI coal power projects in Pakistan. Similarly, Chinese government-owned energy firms are the dominant coal plant owners. It is the financial interests of these various Chinese state-owned lenders and other enterprises (SOEs) that would be affected adversely by any early retirement.
Consequently, under the proposed mechanism, China would be compensating its own SOEs for the revenues they would lose in the future from the early plant retirements in Pakistan. In essence, China would pay itself. This is a unique feature of this BRI coal retirement program that flows from China’s reliance on its own SOEs … and it presents several operational and financial advantages.
The financial arrangements for early retirement should be easier to negotiate and execute since the parties are all affiliated — i.e., the Chinese government, its state-owned banks and other SOEs. This should also reduce transaction costs.
In the ADB’s early retirement context, private sector investors would typically insist on some compensation being paid today for the loss of projected future revenues. In contrast, because the BRI context would involve compensation from the Chinese Government to its own SOEs, the Government could reasonably delay payments till the point at which the SOEs would actually be foregoing revenues. So, for example, if we assume early retirement in 2030 — an interval that would give Pakistan the time to replace the retired coal electricity generation with renewables in an orderly manner (see discussion below) – then the payments by the Chinese Government to its SOE lenders and energy firms could similarly be deferred till that time.
The Government would also, as a practical matter, enjoy significant discretion regarding the level of compensation to be paid to its SOE lenders and energy firms in 2030 and beyond. Notably, the Government could impose a discount on these future payments — especially if it has implemented by that time financial disincentives targeting coal generation (e.g., a carbon price) to support its own carbon peaking and neutrality goals.
The proposed BRI mechanism would resemble in various ways a debt-for-nature swap, notably from the perspective of China as a creditor/donor country. In this BRI “debt-for-coal” swap, China would forego the payments due its SOEs in the future from the operation of these Pakistan coal plants in exchange for the reduced emissions generated by their early retirement. Significantly, this mechanism would produce emissions avoidance benefits without China providing any new overseas funding.
What are some possible motivations for Beijing to launch this type of initiative?
Second, the ability to launch an international climate program that does not require China to disburse funds for the next several years — and, when it does so, to pay its own SOEs — may appeal to the Government, particularly given the current domestic economic stress. This is consistent with other debt-for-nature swap programs advanced by other donor countries where the financial cost to the donor is from foregone revenues, not new funding.
Moreover, the loss in revenues for China and its SOEs from the early BRI coal plant retirements would only take place in 2030 when China’s economy should be markedly larger and more capable of absorbing the expense.
Importantly, Pakistan and other BRI developing countries will need even more electricity to power their economic development. Consequently, the BRI Clean Energy Transition Mechanism needs to include additional funding for new renewables power generation capacity (as is the case under the ADB’s approach).
The extreme climate events of 2022 have increased awareness regarding the vulnerability of poorer countries to climate change and the consequent importance of reducing future emissions. This article sets out a proposal for how China could retire BRI coal plants early in Pakistan and elsewhere that capitalizes on its use of state-owned companies, while supporting more renewables in these countries to reduce the climate change threat and promote sustainable economic growth.
Philippe Benoit has over 20 years working on international energy, climate and development issues, including management positions at the World Bank and the International Energy Agency. He is currently research director at Global Infrastructure Analytics and Sustainability 2050.
This photo illustration taken on March 31, 2022 in Moscow, shows gas burning on a domestic hob. – … [+] President Vladimir Putin on March 31 warned “unfriendly” countries, including all EU members, that they would be cut off from Russian gas unless they opened an account in rubles to pay for deliveries. Western countries have piled crippling sanctions on Moscow since it moved troops into Ukraine, including the freezing of its $300 billion of foreign currency reserves. While the United States banned the import of Russian oil and gas, the European Union — which received around 40 percent of its gas supplies from Russia in 2021 — has retained deliveries from Moscow. (Photo by Natalia KOLESNIKOVA / AFP) (Photo by NATALIA KOLESNIKOVA/AFP via Getty Images)
AFP via Getty Images
Britain’s new Prime Minister Rishi Sunak reinstated the country’s ban on hydraulic fracturing (a.k.a. fracking) on Wednesday. That means no UK fracking for for oil and gas.
It’s not surprising given that the vast majority of British people likely don’t know they are already consuming literal boat loads of fracked natural gas from the U.S.
Yet here we are with Britain thinking its doing the environmentally suitable thing by not fracking and at the same time benefiting from the fruits of this energy extraction technique.
Approximately two thirds of natural gas sold in the U.S. is extracted using fracking methods, according to the American Petroleum Institute. That means it is almost a certainty that two thirds of the gas Britain purchases from America is fracked, or approximately 26% of household use via electricity consumption. Stovetop gas use likely adds more.
Of course, no one blames people for wanting to keep warm in the northern hemisphere’s winter. It can be chilly to the extent that people die without heat.
However, what seems hypocritical is the willingness of Brits to use fracked gas as long as it isn’t from Britain.
Or perhaps just as likely, it is ignorance, willful or otherwise, of the population to how much the UK is dependent on the technology that is used to extract a vital resource.
Saudi oil and gas company Aramco unveiled a $1.5 billion fund on Wednesday for sustainable investments, part of efforts to burnish the state-owned company’s green credentials in an announcement ahead of the U.N. climate conference next month in Egypt.
Aramco CEO Amin Nasser said at an investment conference in Saudi Arabia that the fund will focus on “breakthrough technologies that are important and startups that will help us to address climate change.”
Nasser billed the fund as one of the world’s biggest sustainability-focused venture capital funds and said it would invest globally and launch immediately. He spoke at Saudi Arabia’s Future Investment Initiative meeting, sometimes known as “Davos in the Desert,” a comparison to the World Economic Forum’s annual meeting of corporate bigwigs and world leaders in the Swiss Alps.
Aramco is one of the largest corporate greenhouse gas emitters. Environmentalists have long accused oil and gas companies of using climate-friendly pledges to “greenwash” their polluting activities.
One area Aramco’s fund will focus on is carbon capture and storage, which involves sucking heat-trapping carbon dioxide from factory smokestacks and storing it underground.
Climate experts, however, warn the technology is risky, unproven and expensive and could be used to delay the phaseout of fossil fuels. Others say all untested solutions should be pursued given how little time there is left to meet U.N. emissions-cutting goals.
Other investment themes the fund will target include greenhouse gas emissions, energy efficiency, nature-based climate solutions, digital sustainability, hydrogen, ammonia and synthetic fuels.
Aramco has committed to reaching net zero operational emissions by 2050, but that only accounts for a fraction of the company’s total emissions. It does not include the carbon dioxide released by the burning of fossil fuels that the company produces.
Oil companies have been using “green-sounding ‘net-zero by 2050’ pledges” to justify technological fixes that will allow them to “keep on digging up and selling oil and gas,” said Pascoe Sabido, a researcher specializing in the energy and climate sector at Corporate Europe Observatory, which investigates European Union business lobbying.
“Aramco’s sustainability fund has nothing to with fighting climate change and everything to do with extending the life of its fossil fuel business,” he said.
Saudi Crown Prince Mohammed bin Salman has been trying to diversify the economy away from oil revenue, though the government continues to rely heavily on crude exports.
The U.N. climate conference, known as COP27, will hold negotiations aimed at limiting global temperature increases next month in the Red Sea resort town of Sharm el-Sheikh, Egypt.
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Shares in London-listed fracking companies slumped on Wednesday after new U.K. Prime Minister Rishi Sunak said he would stick by his party’s manifesto pledge to ban the shale gas extraction process in Britain.
IGas Energy stock IGAS, -27.66%
dropped 28% and the equity of Egdon Resources EDR, -18.21%
slumped 11%. The shares of AJ Lucas AJL, +2.99%,
which owns nearly 50% of U.K. fracker Cuadrilla, are quoted on the Australian stock exchange, which was closed.
The fracking sector is tiny in the U.K. — the two U.K.-quoted companies have a combined valuation of less than £60 million — with few suitable sites for the process to be viable.
But the industry’s practices are highly controversial, with campaigners arguing it causes small earth tremors, pollutes water tables and is not compatible with lower carbon production targets.
The shares of IGas Energy had jumped around ninefold since the start of the year, getting an extra recent boost from previous Prime Minister Liz Truss’s decision to go against the Conservative Party’s wishes and allow fracking.
STOCKHOLM, Oct 26 (IPS) – In his treatise On War, the Prussian general Carl von Clausewitz (1780–1831) stated that war is “merely a continuation of policy with other means”. With his experience from the Napoleonic Wars von Clausewitz knew that totalitarian regimes could end up conducting huge and ruthless military campaigns. Furthermore, he assumed that to win a war it is necessary to mobilize and indoctrinate the inhabitants of an entire nation. Such an endeavour is called total war, a term that actually can be applied to Putin’s war in Ukraine.
Putin came to power during the turbulent times following the collapse of the Soviet Empire. His image as a forceful personality convinced many that Putin could make Russia “safe for democracy and business”. In June 2000, Bill Clinton proclaimed that Putin was “fully capable of building a prosperous, strong Russia, while preserving freedom and pluralism and the rule of law.”
Soon business flourished, satisfying foreign investors eager to enjoy Russia’s vast deposits of natural riches. At the same time, fear of terrorism was boosted by explosions in heavily populated residential areas. Putin’s answer to these assumed terrorist threats was in accordance with von Clausewitz´s advice to use “force unsparingly, without reference to the quantity of bloodshed.” The pursuing escalation of the war in Chechnya, pinpointed as the origin of terrorism in Russia, made Putin a nationalist hero, while his characteristics as teetotaler, capable administrator, quick learner and talented actor made him assume the role of a Hollywood-inspired saviour/hero. He single-highhandedly flew planes and rode bare-chested through the wilderness surrounding Siberian rivers. Media lionised him as a rough and strong judo/black-belt champion capable of leading an entire, long suffering nation onto a straight path to prosperity.
Some worrisome signs were nevertheless written on the wall. In 2004, Putin declared the collapse of the Soviet Union as” the greatest geopolitical catastrophe of the twentieth century.” Meanwhile, his acolytes were amassing the spoils from the collapsed Soviet Empire. Putin supported and protected those oligarchs who backed him, while bankrolling his inner circle.
In Munich 2007, Putin bared his teeth and claws in a speech given at an international Security Conference. He declared that the US was a predatory nation prone to apply an ”almost unconstrained hyper-use of force – military force – in international relations plunging the world into an abyss of conflicts.” This revelation was in 2008 followed by Russia´s military assault on neighbouring Georgia.
General elections were rigged, while some political opponents ended up dead, like Boris Nemtsov, who in 2015 was killed on a bridge close to the Kremlin. Alex Navalny, Putin’s most prominent and fearless opponent, was arrested and imprisoned for thirteen years. Out of jail, he was in 2020 poisoned on a flight to Siberia. Close to dying, he was brought to Germany for expert treatment. After recovering, Navalny went back to Russia, where he was immediately put on trial and imprisoned.
Non-compliant oligarchs were and are routinely harassed. First to be rounded up were those who controlled independent media, like Vladimir Gusinsky and Boris Berezovsky. Both fled the country. In 2013, Berezovsky died ”in suspicious circumstances”. Another oligarch, Mikhail Khodorkovsky, who had funded independent media, was already in October 2003 arrested on board his private jet and imprisoned for ten years.
Putin can now unopposed claim that the belligerent attack on Ukraine was necessary for protecting the Motherland. Subdued Russian media affirm that ruthless Ukrainian leaders have transformed their nation into a pawn in the cynical game of a Superpower intending to subjugate, or even annihilate, the Russian Federation.
It appears as if Putin is not only dedicated to make “Russia great again”. Another goal of his seems to be to enrich himself and his cronies. As a means to cover up his greed, Putin poses as upholder of “strict” morals, based on “pro-life” and traditional “family” values, as well as heroic patriotism and religious fundamentalism. Twenty years after coming to power Putin could declare: “The liberal idea has become obsolete. Liberals cannot simply dictate anything to anyone just like they have been attempting to do over recent decades.”
In spite of the Ukrainian war and his disrespect for human rights, Putin remains an icon for right-wing nationalists. A symbol of defiance to Western Liberal Establishment’s alleged encouragement of mass immigration and affinity to ”multiculturalism”, conceived as attempts to undermine morals and national identities.
As a counterweight to such assumed measures, backward looking politicians around the world pay homage to nostalgic notions, like a lost Great Chinese Tradition, a Russian Empire, Hindu pride before the arrival of Islam, a Global Britain, the Ottoman Empire, etc. This trend is occasionally joined with a global system where ruling elites consider themselves to be unrestrained by international norms, traditional modes of state governance, and democratic decision processes. Some world leaders try to pull the wool over the eyes of their followers by packaging their intents within populist opinions, like despise for political correctness, globalism, investigative journalism, LBTQ rights, feminism and environmental NGOs. A dangerous trend that, if unchecked, might as in the case of Putin´s Russia lead to socioeconomic conflicts degenerating into total war.
In the US, a strengthened adherence to illiberalism was fostered by Donald Trump. Under his watch US politics began to shift from rule-based order to one where might and wealth make right, a message boosted by media like Fox – and Breitbart News. Trump behaved like a wannabe despot, trying to apply authoritarian tactics at home, while paying homage to thugs and dictators abroad. Before him, US presidents had pledged their adherence to human rights, democracy, and freedom of speech. Nevertheless, their governments occasionally supported despots and dictators, not linking concerns for human rights to security, economy and financial affairs. A Realpolitik, which to “friendly” despots indicated that the US did not care so much about repression and corruption within the fiefdoms of their friends. Such behaviour was based on strategic reasons, while Donald Trump appeared to embrace authoritarians because he actually admired them – Dutete, Xi Jinping, Orbán, Erdo?an, Kim Jung-un, and not the least, Putin.
The former US president´s homage to ideas similar to those of Putin and his pose as a nationalistic superman might be connected with his obvious narcissism and appeal to nationalistic extremists. However, his senseless bragging is also combined with greed. A wealth of investigating reporting has demonstrated links between organized crime and corrupt rulers/oligarchs with the Trump Organization’s overseas business connections.
Money is also part of Russian foreign relations. Populist, chauvinistic parties like Italian Lega Nord (currently known as the Lega) and the French Front National (currently Rassemblement National) have received intellectual and economic support from Russia. This support to European political parties may be considered as a Russian effort to secure support for Putin’s policies abroad, as well as locally.
Germany’s former chancellor, Angela Merkel, a fluent Russian speaker far from being a friend of Putin, dismissed him as a leader using nineteenth-century means to solve twenty-first century problems. For sure, Putin’s attack on Ukraine mirrors age-old use of devastating warfare as a radical solution to complicated sociopolitical problems. It seems to be a stalwart application of the two-hundred-years-old advice provided by von Clausewitz:
Philanthropists may easily imagine there is a skillful method of disarming and overcoming an enemy without causing great bloodshed, and that this is the proper tendency of the Art of War. However plausible this may appear, still it is an error which must be extirpated; for in such dangerous things as war, the errors which proceed from a spirit of benevolence are just the worst. As the use of physical power to the utmost extent by no means excludes the co-operation of the intelligence, it follows that he who uses force unsparingly, without reference to the quantity of bloodshed, must obtain a superiority if his adversary does not act likewise. By such means the former dictates the law to the latter, and both proceed to extremities, to which the only limitations are those imposed by the amount of counteracting force on each side.
Putin´s Ukrainian war neglects human suffering and has now disintegrated into a bloody power struggle, where Russia “to the utmost extent” makes use of its military strength, while being supported by “the co-operation” of a propaganda striving to engage the entire Russian population in the war effort.
The Ukrainian war not only concerns the protection of Mother Russia from a “predatory West”, its ultimate goal is to control a hitherto sovereign nation’s politics and natural resources. Putin’s declared support to an allegedly discriminated Russian minority in Luhansk and Donetsk seems to be a subterfuge for grabbing an essential part of Ukraine’s economic resources.
During early 2000s, privatization of state industries yielded a so called Donbas Clan control of the economic and political power in the Donbas region. These oligarchs were supported by Kremlin and a rampant corruption soon took hold of an area dominated by heavy industry, such as coal mining (60 billion tonnes of coal are waiting to be extracted) and metallurgy.
Before Russia in 2014 backed separatist forces in a ferocious civil war, this particular area produced about 30 percent of Ukraine’s exports and a huge amount of gas reserves in the Dnieper-Donets basin was beginning to be extracted. In those days, the most prominent oligarchs in the Luhansk and Donetsk regions were Putin proteges – Rinat Akhmetov and Viktor Yanukovych, the latter had become Ukraine’s President, though his attachment to Russia and conspicuous corruption led to his fall through the Maidan Uprising in 2013, starting point for Ukraine’s transformation into a prosperous nation.
The Maidan Revolution caused a wave of insecurity sweeping through the former Soviet Empire, shaking up corrupt “counterfeit” democracies/dictatorships like Belarus, Azerbaijan, Kazakhstan, Tajikistan, and Uzbekistan. Small wonder that the authoritarian leaders of these nations are stout supporters of Putin’s war in Ukraine.
While reading von Clausewitz’s On War it is quite easy to relate it to Putin’s politics that undeniably have resulted in war as a “continuation of policy with other means.” It is not the first time in history that authoritarian regimes have plunged entire nations into a blood-drained pit of war. All of us have to be be aware that support of authoritarian regimes might lead us all down into Hell.
Main Sources: Klaas, Brian (2018) The Despot´s Accomplice: How the West is Aiding and Abetting the Decline of Democracy. London. Hurst & Company. von Clausewitz, Carl (1982) On War. London: Penguin Classics.
A boat photographed in Turkey. This year’s COP27 climate change summit will look to build on the work undertaken at COP26 in Glasgow.
Temizyurek | E+ | Getty Images
Countries are not doing enough to limit the planet’s temperature rise to 1.5 degrees Celsius by the end of this century, according to a new report from U.N. Climate Change.
In an assessment published Wednesday, the U.N. said that “the combined climate pledges of 193 Parties under the Paris Agreement could put the world on track for around 2.5 degrees Celsius of warming by the end of the century.”
The analysis comes ahead of next month’s COP27 climate change summit in Sharm el-Sheikh, Egypt, where the shadow of 2015’s Paris Agreement will loom large.
A key aim of the Paris accord is restricting global warming “to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”
The challenge is huge, and the U.N. has noted that 1.5 degrees Celsius is viewed as being “the upper limit” when it comes to avoiding the worst consequences of the climate emergency.
U.N. Climate Change said its new report also showed that countries’ pledges, as they stand now, would see emissions jump by 10.6% by the year 2030, compared to levels in 2010.
“Last year’s analysis showed projected emissions would continue to increase beyond 2030,” it said.
“However, this year’s analysis shows that while emissions are no longer increasing after 2030, they are still not demonstrating the rapid downward trend science says is necessary this decade.”
In a statement Wednesday, Simon Stiell, executive secretary of U.N. Climate Change, pulled no punches about the current position the world finds itself in.
“We are still nowhere near the scale and pace of emission reductions required to put us on track toward a 1.5 degrees Celsius world,” he said.
“To keep this goal alive, national governments need to strengthen their climate action plans now and implement them in the next eight years,” he added.
COP27 will look to continue the work undertaken at last year’s COP26 summit in Glasgow, Scotland, which resulted in the Glasgow Climate Pact.
On Wednesday Alok Sharma, the COP26 president said it was “critical that we do everything within our means to keep 1.5C in reach.”
International Energy Agency Executive Director Fatih Birol warned emerging and developing countries are most vulnerable to soaring energy prices.
“It is not the U.S. who will suffer the most [from] the high energy prices,” Birol told CNBC on Tuesday.
Birol said those who will be hit hardest include oil-importing nations in Africa, Asia and Latin America because of higher import prices and their weaker currencies.
“Higher commodity prices add to the challenges stemming from elevated inflation and debt, tightening global financial conditions, uneven vaccination progress, and underlying fragilities and conflict in some countries,” the IMF said in their report.
An oil terminal next to Doraleh Multi-Purpose Port in Djibouti. The International Monetary Fund in May revised down growth projection forecasts for oil importing nations, with the notion that the higher energy prices add to litany of economic challenges already plaguing these countries.
Yasuyoshi Chiba | Afp | Getty Images
Oil-importing Middle East and North African nations include Djibouti, Sudan, Morocco and Pakistan, amongst others.
Europe is struggling with a gas shortage as Russia slashes supplies, forcing many countries into an energy crisis in the lead-up to winter. The U.K.’s National Grid has warned of possible power cuts.
“We are in the middle of the first truly global energy crisis,” Birol said. “Our world has never ever witnessed an energy crisis with this depth and complexity.”
He added that oil markets will continue to see volatility for as long as Russia’s war in Ukraine persists.
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OPEC+ agreed to impose deep output cuts at the start of the month, seeking to spur a recovery in crude prices despite calls from the U.S. to pump more to help the global economy.
Birol called the decision “unprecedented,” and likened the energy alliance’s move to “scoring an own goal.”
The result of inflated prices would be an economy “flirting with a recession,” which he cautioned will lead to an environment that is neither good for buyers nor sellers.
“Europe wants to buy LNG, China is coming back as a major LNG importer, and there is very little new LNG capacity coming into [the] market,” he attributed as reasons.
Soaring energy prices plaguing global markets could offer much-needed impetus to nudge governments to invest toward moving away from dirty energy.
An aerial of the Strategic Petroleum Reserve storage at the Bryan Mound site seen on October 19, 2022 in Freeport, Texas. The main casualties who will suffer the brunt of high energy prices is neither the United States nor Europe — but emerging and developing nations, said the head of International Energy Agency (IEA) Fatih Birol.
Brandon Bell | Getty Images News | Getty Images
“We shouldn’t forget that this crisis is giving impetus to many governments around the world to put huge amounts of money [into] clean energy transitions,” Birol said.
He cited the recently enacted Inflation Reduction Act. The White House says the climate investment will reduce costs related to rising temperatures, minimize property damage from sea level rise and other disasters and reduce health impacts such as premature death.
BERLIN/PARIS — Relations are now so icy between Emmanuel Macron and Olaf Scholz, the leaders of the EU’s two economic powerhouses, that they are even struggling to agree on whether to be seen together in front of the press.
As the French president and German chancellor prepared for a tête-à-tête in Paris on Wednesday, Berlin announced that they would make a joint appearance in front of the cameras, which is normally the driest of routine diplomatic courtesies after bilateral meetings.
But on Tuesday evening, a statement from the French Elysée Palace contradicted the German announcement, saying there was no press conference planned.
If confirmed, it would be quite a snub for Scholz, who’s traveling with an entire press corps to Paris, and from there continuing to Athens for another state visit. Denying a press conference to a visiting leader is a political tactic that’s generally applied to deliver a rebuke, as was recently done by Scholz when Hungarian Prime Minister Viktor Orbán visited Berlin.
“Presumably, there has so far been a lack of contact and exchange between the respective new government teams of Scholz and Macron,” said Sandra Weeser from Germany’s liberal Free Democratic Party, who sits on the board of the Franco-German Parliamentary Assembly. “So, we are certainly also at the beginning of new interpersonal political relations, for which trust must first be built.”
The tussle over a media show is just the latest episode of a deepening row between the EU’s two biggest powers.
In recent weeks, Scholz and Macron have clashed over how to tackle the energy crisis, how to overcome Europe’s impotence on defense and the best approach to dealing with China.
Last week, those tensions spilled into public when a planned Franco-German Cabinet meeting in the French town of Fontainebleau was postponed to January amid major differences on the text of a joint declaration, as well as conflicting holiday plans of some German ministers. Disagreement between the two governments was also broadly visible at last week’s EU summit in Brussels.
As Scholz and Macron meet in Paris on Wednesday for a “working lunch,” which has been hastily set up as a downgraded replacement for the scrapped Cabinet meeting, politicians and officials across Europe will be closely watching to see whether the bloc’s two heavyweights can find a way back to much-needed unity. The war in Ukraine and the inflation and energy crisis have strained European alliances, just when they are most needed.
French officials complain that Berlin isn’t sufficiently treating them as a close partner. For example, the French claim they weren’t briefed in advance of Germany’s domestic €200 billion energy price relief package — and they have made sure their counterparts in Berlin are aware of their frustration.
“In my talks with French parliamentarians, it has become clear that people in Paris want more and closer coordination with Germany,” said Chantal Kopf, a lawmaker from the Greens, one of the three parties in Germany’s ruling coalition, and a board member of the Franco-German Parliamentary Assembly.
“So far, this cooperation has always worked well in times of crisis — think, for example, of the recovery fund during the coronavirus crisis — and now the French also rightly want the responses to the current energy crisis, or how to deal with China, to be closely coordinated,” Kopf said.
Late last month, Paris felt snubbed by Berlin when German Chancellor Olaf Scholz found no time to speak to French Prime Minister Elisabeth Borne | Jens Schlueter/AFP via Getty Images
A similar conclusion is being drawn by Weeser from the FDP, another coalition partner in the Berlin government. “Paris is irritated by Germany’s go-it-alone on the gas price brake and the lack of support for joint European defense technology projects,” she said. At the same time, she accused the French government of having until recently dragged its feet on a new pipeline connection between the Iberian peninsula and Northern Europe.
Unprecedented tensions
Most recently, the French government was irritated by the news that Scholz plans to visit Beijing next week to meet Xi Jinping in what would be the first visit by a foreign leader since the Chinese president got a norm-breaking third term. Germany and China also plan their own show when it comes to planned government consultations in January.
The thinking at the Elysée is that it would have been better if Macron and Scholz had visited China together — and preferably a bit later rather than straight after China’s Communist Party congress where Xi secured another mandate. According to one French official, a visit shortly after the congress would “legitimize” Xi’s third term and be “too politically costly.”
Germany and France’s uncoordinated approach to China contrasts with Xi’s last visit to Europe in 2019 when he was welcomed by Macron, who had also invited former Chancellor Angela Merkel and former European Commission President Jean-Claude Juncker to Paris to show European unity.
Macron has refrained from directly criticizing a controversial Hamburg port deal with Chinese company Cosco, which Scholz is pushing ahead of his Beijing trip. But the French president last week questioned the wisdom of letting China invest in “essential infrastructure” and warned that Europe had been “naive” toward Chinese purchases in the past “because we thought Europe was an open supermarket.”
Jean-Louis Thiériot, vice president of the defense committee in the French National Assembly, said Germany was increasingly focusing on defense in Eastern Europe at the expense of joint German-French projects. For example, Berlin inked a deal with 13 NATO members, many of them on the Northern and Eastern European flank, to jointly acquire an air and missile defense shield — much to the annoyance of France.
“The situation is unprecedented,” Thiériot said. “Tensions are now getting worse and quickly. In the last couple of months, Germany decided to end work on the [Franco-German] Tiger helicopter, dropped joint navy patrols … And the signature of the air defense shield is a deathblow [to the defense relationship],” he said.
Germany’s massive investment through a €100 billion military upgrade fund, as well as Scholz’s commitment to the NATO goal of putting 2 percent of GDP toward defense spending, will likely raise the annual defense budget to above €80 billion and means Berlin will be on course to outgun France’s €44 billion defense budget.
Sick note
Last week’s suspension of the joint Franco-German Cabinet meeting wasn’t by far the first clash between Berlin and Paris when it comes to high-level meetings.
Back in August, the question was whether Scholz and Macron would meet in Ludwigsburg on September 9 for the 60th anniversary of a famous speech by former French President Charles de Gaulle in the palatial southwestern German town. But despite the highly symbolic nature of that ceremony, the leaders’ meeting never happened — with officials presenting conflicting accounts of why that was the case, from appointment conflicts to alleged disagreements over who should shoulder the costs.
French President Emmanuel Macron has refrained from directly criticizing a controversial Hamburg port deal with Chinese company Cosco | Pool photo by Aurelien Morissard/AFP via Getty Images
Late last month, Paris felt snubbed by Berlin when Scholz found no time to speak to French Prime Minister Elisabeth Borne: A meeting between both leaders in Berlin had been canceled because the chancellor had tested positive for coronavirus. But several French officials told POLITICO that a subsequently arranged videoconference was also canceled, allegedly because the Germans told Borne’s office that Scholz felt too sick.
Paris was even more surprised — and annoyed — when Scholz then appeared the same day via video at a press conference, in which he didn’t seem to be quite so sick, but instead confidently announced his €200 billion energy relief package. The French say they weren’t even briefed beforehand. A German spokesperson could not be reached for a comment on the incident.
Yannick Bury, a lawmaker from Germany’s center-right opposition who focuses on Franco-German relations, said Scholz must use his visit to Paris to start rebuilding ties with Macron. “It’s important that France receives a clear signal that Germany has a great interest in a close and trusting exchange,” Bury said. “Trust has been broken.”
A Lithium-ion battery photographed at a Volkswagen facility in Germany. The EU is looking to increase the number of electric vehicles on its roads in the coming years.
Ronny Hartmann | AFP | Getty Images
Paris-headquartered minerals giant Imerys plans to develop a lithium extraction project that it’s hoped will help meet demand and secure supply for Europe’s emerging electric vehicle market.
In a statement Monday, Imerys said its Emili Project would be located at a site in the center of France, with the company targeting 34,000 metric tons of lithium hydroxide production each year from 2028.
According to the business, this level of production would be enough to “equip approximately 700,000 electrical vehicles per year.”
Alongside its use in cell phones, computers, tablets and a host of other gadgets synonymous with modern life, lithium — which some have dubbed “white gold” — is crucial to the batteries that power electric vehicles.
The project being planned by Imerys is taking shape at a time when major economies like the EU are looking to ramp up the number of electric vehicles on their roads.
With demand for lithium rising, the European Union — of which France is a member — is attempting to shore up its own supplies and reduce dependency on other parts of the world.
In a translation of her State of the Union speech last month, European Commission President Ursula von der Leyen said “lithium and rare earths will soon be more important than oil and gas.”
As well as addressing security of supply, von der Leyen, who switched between several languages during her speech, also stressed the importance of processing.
“Today, China controls the global processing industry,” she said. “Almost 90% … of rare earth[s] and 60% of lithium are processed in China.”
“So we will identify strategic projects all along the supply chain, from extracting to refining, from processing to recycling,” she added. “And we will build up strategic reserves where supply is at risk.”
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Back in France, Imerys said it was finalizing what it described as a “technical scoping study” in order to “explore various operational options and refine geological and industrial aspects relating to the lithium extraction and processing method.”
The site selected for the project has, since the end of the 19th century, been used to produce a type of clay called kaolin for use in the ceramics industry.
The construction capital expenditure of the proposed lithium project is estimated to be around 1 billion euros (roughly $980 million), Imerys added.
“Upon successful completion, the project would contribute to the French and European Union’s energy transition ambitions,” the company said. “It would also increase Europe’s industrial sovereignty at a time when car and battery manufacturers are heavily dependent on imported lithium, which is a key element in the energy transition.”
In recent years, a range of factors has created pressure points when it comes to the supply of the materials crucial for EVs, an issue the International Energy Agency highlighted earlier this year in its Global EV Outlook.
“The rapid increase in EV sales during the pandemic has tested the resilience of battery supply chains, and Russia’s war in Ukraine has further exacerbated the challenge,” the IEA’s report noted, adding that prices of materials like lithium, cobalt and nickel have soared.
“In May 2022, lithium prices were over seven times higher than at the start of 2021,” it added. “Unprecedented battery demand and a lack of structural investment in new supply capacity are key factors.”
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In a recent interview with CNBC, the CEO of Mercedes-Benz sketched out the current state of play, as he saw it when it came to the raw materials required for EVs and their batteries.
“Raw material prices have been quite volatile in the last 12 to 18 months — some have spiked and actually some have come back down again,” Ola Kallenius said.
“But it is true as we become electric, all-electric and more and more automakers go into the electric space, there is a need to increase mining capacities and refining capacities for lithium, nickel, and some of those raw materials that are needed to produce electric cars.”
“We have everything that we need now, but we need to look into the mid to long-term and work with the mining industry here to increase capacities.”
LONDON — It took one bruising campaign defeat and six weeks of exile — but on Tuesday, Rishi Sunak will finally become U.K. prime minister.
He faces the toughest in-tray of any British leader since World War II, entering No. 10 Downing Street as the country hurtles into winter with energy bills, hospital waiting lists, borrowing costs and inflation all soaring.
The challenge has been magnified by Liz Truss’ brief crash-and-burn premiership. As a result of her now-infamous mini-budget, which was scrapped almost in its entirety after causing chaos in financial markets, the Conservatives are trailing the opposition Labour Party by over 30 percentage points in opinion polls.
On Monday, Sunak told MPs he was ready to hit the ground running as he addressed them for the first time since becoming Tory leader. Over the days and months ahead, he will need to carry out his first ministerial reshuffle without further fracturing his party; oversee the first budget since the last one wreaked havoc on the economy; and determine what support to offer voters with their energy bills past this spring.
Prime ministers tend to think of their first 100 days as a way to set the tone for their premierships. For Sunak, who has just over two years to govern before he is required to face a general election, that first impression is going to be particularly important.
October 25 — Meeting with the king and first speech outside No. 10 Downing Street
Sunak will become the prime minister Tuesday after an audience with King Charles III, where he will ask the monarch for permission to form a government.
Sunak will then address the country for the first time as prime minister from the steps outside No. 10 Downing Street at around 11.35 a.m.
To much of the British public, the former chancellor is a familiar face who announced the wildly-popular furlough scheme during the coronavirus pandemic in 2020.
His task now will be to reassure people that the government will support them during another difficult economic period — only this time he is in a much tougher position. The popularity he gained during the pandemic has waned, and he is taking over after a major government crisis — the third Tory prime minister to hold office within three months.
October 25 — First reshuffle
The first big political test for Sunak will be his Cabinet reshuffle. Tory MPs believe he will learn the lesson from Truss’ first and only one, where she divvied up roles between her allies and left almost everyone who didn’t back her out in the cold.
“I think his reshuffle will be more unifying, bringing in people from all wings and will not be as destabilizing as Liz’s,” an MP who did not back Sunak predicted.
Sunak’s leadership rival Penny Mordaunt is expected to be handed a major Cabinet position | Dan Kitwood/Getty Images
Sunak is likely to make at least his major Cabinet appointments Tuesday afternoon, so they are in place to line up alongside him on the House of Commons’ front bench when MPs grill him during so-called prime minister’s questions (PMQs) on Wednesday.
His biggest decision will be whether to keep Jeremy Hunt — who was drafted in by Truss in a last-ditch effort to save her premiership — as chancellor. He is also likely to hand a big job to his leadership rival Penny Mordaunt.
Close Sunak allies who are likely to get promotions include Mel Stride, the current chairman of the Treasury select committee, Craig Williams, Claire Coutinho and Laura Trott. Tory big beast Michael Gove could see a return to Cabinet.
October 26 — First PMQs
Sunak will go head-to-head as prime minister with Keir Starmer, the Labour leader, for the first time on Wednesday.
Unlike his predecessor, Sunak won’t have much to worry about from his own side — Tory MPs have largely rowed behind him since he became their leader on Monday, with many expressing relief that the perpetual state of crisis of the Truss government has ended.
But MPs will want him to demonstrate that he can land blows against Starmer at a time when Labour is streets ahead in the polls. Sunak told Tory MPs on Tuesday that their party faced an “existential threat” as a result of its low poll ratings.
October 28 — Deadline to form a government in Belfast
If a power-sharing arrangement is not in place at Stormont by Friday, a fresh set of elections to the Northern Irish assembly will have to be triggered.
Calling these elections — the second set in seven months — could be one of the Sunak government’s first acts and an indication of successive Tory prime ministers’ failure to deal with the political crisis in Northern Ireland.
The Democratic Unionist Party issued a fresh warning on Monday night that it would not participate in the assembly unless Sunak takes action on the post-Brexit Northern Ireland protocol agreed with the EU.
October 31 — First budget
The next budget was penciled in for October 31 by Kwasi Kwarteng, the Truss-era chancellor who wanted to use it to reassure financial markets still reeling from his last one.
The timing of the budget — widely derided by Tory MPs because of the optics of holding it on Halloween — was intended to give the Bank of England time to react before its own key meeting on November 3, where it will set interest rate levels for the weeks ahead.
In its biggest test so far, Sunak’s government will have to decide whether to stick with that date; what actions to take to reassure the markets; and how to fill the enormous hole in the U.K. public finances.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, said: “If his chancellor is Jeremy Hunt and Sunak is comfortable with the way things are proceeding for next Monday, then going ahead has lots of advantages.
“You get the announcement out before the Bank of England makes its next inflation figure, and you get the Office for Budgetary Responsibility forecasts out there, which helps show the markets you are serious about them.
“The case for changing that date is much stronger if Sunak says, ‘Actually, I want to do something different to what Jeremy Hunt has been planning, and I need more time,’” Emmerson added.
November 3 — Bank of England rates meeting
The Bank of England’s monetary policy committee is expected to raise interest rates at its meeting on November 3, triggering a fresh hike in people’s mortgages.
This is the point when many people will realize for the first time that they will have to make much larger mortgage repayments once their current fixed-rate deals come to an end.
Sunak made combating inflation and keeping mortgages low a central theme of his leadership campaign over the summer. Reacting to the rates decision and ensuring the government works closely with the Bank of England to combat inflation will be a key test of his premiership.
November 6 — COP27 summit in Egypt
Sunak made a point of telling Tory MPs on Tuesday that he is committed to the U.K.’s goal of achieving net-zero carbon emissions by 2050.
The question now is whether he attends the COP27 climate summit in Sharm El Sheikh, Egypt. Truss reportedly planned to go, despite her skepticism of aspects of the net-zero agenda.
If Sunak does go to Egypt, it could be his first foreign trip in office (unless he decides to make a quick visit to Ukraine beforehand) and his first opportunity to present himself on the world stage.
November 8 — Boundary changes
The Boundary Commission for England will publish its new constituency map on November 8.
At this point, some Tory MPs will know with near certainty that their constituencies are being carved up between neighboring areas, with some forced to jostle with colleagues over who will get to stand where.
It will be a political headache for Sunak to deal with, and any MPs whose safe seats become marginal will sense their political careers coming to an end — and will have less of an incentive to support him in key votes in the months ahead.
November 13 — G20 meeting in Indonesia
The next big foreign trip coming down the track is the G20 summit in Bali, Indonesia.
The meeting will be an opportunity for Western powers to present a united front against Russia following its invasion of Ukraine and against China’s increased aggression toward Taiwan, but also to hold talks behind closed doors. There have been reports that both China’s Xi Jinping and Russian Vladimir Putin will attend.
Sophia Gaston, the head of foreign policy at the Policy Exchange think tank, said this was shaping up to be “one of the most extraordinary summits of modern history, with a violent war raging in Ukraine and the leading protagonist, Vladimir Putin, on the guest list alongside other autocratic leaders and outraged democratic allies.”
“As well as promoting free trade and the rules-based international order, Sunak would likely see the G20 as an opportunity to build support for his proposed ‘NATO-style’ technology alliance,” Gaston said. “He may well also debut a new U.K. message on the net-zero transition.”
Late November or early December — Chester by-election
Labour whips are preparing to trigger a by-election in the city of Chester in late November or December.
The by-election is taking place because the city’s MP Christian Matheson resigned after a parliamentary watchdog recommended he be suspended for sexual misconduct.
Matheson sits on a 6,164-vote majority, and the seat has traditionally been a swing seat flipping between the Tories and Labour. It was Conservative up until 2010.
Based on current polling figures, Labour should win a significantly larger majority than it currently has, though by-elections do suffer from small turnouts and so unexpected results are not uncommon. A dramatic Tory defeat would set alarm bells ringing in the party.
Another by-election could be triggered in the coming months if, as expected, Boris Johnson elevates his ally and MP Nadine Dorries to the House of Lords in his resignation honors. That would likely be the first by-election in a Tory-held seat fought with Sunak as party leader.
December 31 — U.K. deadline for joining trans-Pacific trade bloc
The U.K. government has said it hopes to conclude negotiations on joining the CPTPP — a trade agreement signed by 11 countries including Australia and New Zealand — by the end of the year.
Securing this deal was one of Truss’ priorities. For Sunak it would represent both a concrete foreign policy achievement and an indication that the U.K. is successfully building closer diplomatic ties with countries in the Indo-Pacific after Brexit.
Talks around the partnership have thrown up some diplomatic obstacles, with China reacting angrily to U.K. trade officials meeting Taiwanese counterparts. Both China and Taiwan have applied to join the CPTPP.
There have been suggestions that the evidence against him is so damning that Johnson could face temporary suspension from parliament or even be kicked out as an MP. The inquiry may have formed part of Johnson’s decision not to stand for the Tory leadership contest.
If the privileges committee says Johnson should be sanctioned once it concludes its inquiry, Sunak will have to judge his response and decide whether to whip Tory MPs to back its recommendations even if that provokes Johnson’s ire. There is also the risk that Sunak himself will be dragged into the probe, given he too was fined over the Partygate scandal.
Among other things, the probe will examine the impact of the economic policies that Sunak designed as chancellor during the pandemic, putting his decisions under scrutiny.
His “Eat Out to Help Out” scheme — which encouraged people to dine in restaurants during the post-lockdown summer of 2020 — could become a focus, with critics claiming it drove up coronavirus-related infections and deaths.
February — Energy support nears its end
By the time Sunak’s first 100 days are up, there will be pressure on the government to explain how it will support people with their energy bills past the spring if wholesale gas prices haven’t drastically fallen. Hunt has already rolled back the Truss government’s two-year guarantee and instead capped people’s energy bills at an average of £2,500 for just six months. That policy ends in April.
The Institute for Fiscal Studies’ Emmerson said: “We’ve got a big generous offer from the government through this winter — although prices are still a lot higher than they were last year, they will be nowhere near as high as they would have otherwise been.
“The prime minister and chancellor will spend a lot of time thinking about how they replace that scheme. In some ways, it’s very similar to the kind of furlough scheme that Sunak had during the pandemic — very generous, big scheme with lots of crude edges to it,” he said.
“It’s understandable wanting to get in place quickly to support people, but how do you get out of it? Do it too quickly and that’s too much pain for too many people — keep it in place for too long, and that’s very expensive to the government.”
It’s just one of so many enormous decisions the new PM faces in his first 100 days.
The U.S. is exporting more LNG to Europe as a result of Russia’s war in Ukraine and cuts made to natural gas supplies ahead of winter, but there has been a buildup of LNG vessels waiting to unload at ports with European infrastructure unable to handle the increased LNG shipments.
60 LNG tankers have been idling or slowly sailing around northwest Europe, the Meditteranean, and the Iberian Peninsula, according to MarineTraffic. One is anchored at the Suez Canal. Eight LNG vessels that came from the U.S. are underwayto Spain’s Huelva port.
“The wave of LNG tankers has overwhelmed the ability of the European regasification facilities to unload the cargoes in a timely manner,” said Andrew Lipow, president of Lipow Oil Associates.
These delays postpone the tankers’ return to the Gulf Coast of the United States to pick up the next load, according to Lipow, and as a result, natural gas inventories rise more than the market expected.
The underlying infrastructure issue is a lack of European regasification capacity due to a shortage of regasification plants and pipelines connecting countries that have regasification facilities. As a result, the amount of LNG on the water — floating storage — increases and in turn drives down the price of natural gas.
“European gas storage continues to rise and now exceeds 93%,” said Jacques Rousseau, managing director, global oil and gas for ClearView Energy Partners LLC.
Rousseau said the increase in floating storage, with vessels needed to move capacity around the globe tied up for longer, has contributed to an approximate doubling in LNG tanker rates year over year.
Energy experts tell CNBC they are keeping an eye on an EU LNG price cap. The cap was discussed last Thursday even as prices have come down. “The price cap potentially pushes traders out of the market which would impact future supply arriving in Europe,” Rousseau said.
European gas prices had soared above 340 euros ($332.6) per megawatt hour in late August, but this week dipped below $100 for the first time since Russia cut supplies. Before the war, the price had been as low as 30 euros.
Russia, which supplies a large portion of natural gas to Europe, cut gas supplies as a response to sanctions after the country’s war with Ukraine.
European Union leaders struggle to find solutions for the energy crisis. Credit: Bigstock
by Baher Kamal (madrid)
Inter Press Service
MADRID, Oct 24 (IPS) – European politicians continue to run in all directions to find a way out of their energy crisis. One of them – Simonetta Sommaruga, the Swiss Environment Minister, asked people to ‘shower together’. Others are competing to grant the business of transporting energy from the North of Africa to the continent. All this is not new.
The MidCat
In 2010, a project aimed at transporting 7.500 million cubic metres of gas by linking Catalonia (Spain) to Occitania (France) and from there to other European Union countries.
With an initial estimated cost at over three billion Euro, this MidCat project quasi-blocked just one year later, to be finally stopped in 2018 following cost and impact studies.
Following the energy impact of the condemnable proxy war in Ukraine, Spain has recently proposed relaunching the MIDCAT. But France continued to block the project alleging high costs. Maybe also under the heavy pressure of its extended, powerful business of nuclear plants?
The Italian Connexion
Meanwhile, taking advantage of the deteriorated relations between Spain and Algeria due to Madrid’s support to the annexation of Western Sahara by Morocco, Rome rushed to negotiate with Algiers the transportation of the Algerian gas and oil to Europe through Italy.
But this project hasn’t worked out either.
The Turkish Pipe
At that state, Ankara proposed in September 2022 transporting Russian fossil fuels to Europe through a Turkish pipeline crossing the country’s territory. Also this way out was soon discarded.
The BarMar
During their yet another summit in late October, the European Union’s heads of state and governments launched more debates on how to grant their energy supplies.
At the end, the leaders of Spain, Portugal, and France agreed on 20 October 2022 to replace the MidCat project with a new “green energy corridor” that would be able to transport hydrogen. And they called it BarMar.
Where From?
So far, no accurate details are known of the major features of such a project. For instance: where will this hydrogen come from?
According to the European Union’s data, hydrogen accounts for less than 2% of Europe’s present energy consumption and is primarily used to produce chemical products, such as plastics and fertilisers. 96% of this hydrogen production is through natural gas, resulting in significant amounts of CO2 emissions. So?
How Green Is the “Green Energy Corridor”?
The BarMar project’s defenders say that hydrogen is the future of energy. Critics insist that hydrogen is most efficient if it is used around its source.
Anyway, if it is so green, why has the West, including Europe, not turned up sooner to this source of energy?
For How Long. How Much? Who Will Pay?
This BarMar project implies great costs and, according to European sources, it would be a sort of a “transitional” plan. To what? How long will it take to implement the project?
Not having released specific final details, the Spanish, Portuguese and French leaders decided to meet in December 2022 to discuss those details.
Where Will the Money Come From?
For now, French President Emmanuel Macron rushed to put the bandage before the wound, saying that the BarMar project would “benefit from European funding.”
The European Union’s funds are composed of the proportional contribution of each one of its 27 member countries, with Germany being the major contributor.
However, in view of the big European financial crisis caused by the COVID-19 pandemic and now exacerbated by Ukraine’s proxy war, a big portion of such reserves have been designated to alleviate the economic and social impacts, let alone the spectacular rise of fossil fuels prices for citizens.
The Military Race
During NATO’s Summit in Madrid, this Western alliance of 30 countries, decided to further militarise Europe by increasing the continent’s spending on weapons and multiplying its troops, in addition to further extending its presence in Africa. Such militarisation process implies high costs to Europe.
In addition, following the United States’ huge weapons supplies to Ukraine, which for now are estimated at more than 17 billion US dollars, European countries have also continued to send weapons to Ukraine.
Here, some European politicians started talking about the urgent need to replenish the continent’s “empty weapons shelves.”
Furthermore, the European leaders have just decided to transfer to Ukraine up to 1.5 billion US dollars… every single month… as part of the estimated 3 to 3.5 billion… a month… that the West decided to send to Ukraine.
Is the Fossil Fuels Rush Over Soon?
Not really. Germany seems to be thinking about reopening their nuclear plants to produce electricity.
Norway is reported as planning to increase oil production from the Northern Sea. The United States, being the world’s largest oil producer, has doubled its liquified gas supplies to Europe.
Venezuela, Saudi Arabia
Washington decided that the heavily sanctioned Nicolas Maduro’s government in Venezuela is not all that bad, therefore the US has approached Caracas to increase its fossil fuels production.
At the time, Western leaders pressured the Organisation of the Petroleum Exporting Countries (OPEC), which groups 13 oil-exporting ‘developing nations,’ to pump more oil and gas in the market.
Having OPEC’s top producer: Saudi Arabia shown reluctance, the US-led West has threatened to punish their own “friend and ally” — the Saudis, through sanctions.
Carbon, Fracking
Meanwhile, several European states, mostly the EU Eastern member countries, have been steadily intensifying the extraction and use of another fossil fuel: coal.
And one more European country however is no longer an EU member: the United Kingdom plans to extend the business of “fracking”.
Further to the United Kingdom’s parliamentary debates around the already ousted Liz Truss Conservative government plan to lift the 2019 decision to ban fracking, the British Broadcasting Corporation (BBC) reminded that hydraulic fracturing, or fracking, is a technique for recovering gas and oil from shale rock.
And that it involves drilling into the earth and directing a high-pressure mixture of water, sand and chemicals at a rock layer in order to release the gas inside.
Environmental organisations and activists worldwide continue to warn about the high dangers to Earth of carrying out such an activity. An activity that, by the way, is still widely extended in the world’s biggest fossil energy producer–the United States.
The French government will cover a part of companies’ electricity bills, with big energy firms asked to contribute to the cost, a minister told TV station BFM Business late Sunday.
An “electricity guarantee” for 2023 will be finalized soon, and will cover part of any amount paid above a reference price fixed by the government, according to Energy Transition Minister Agnes Pannier-Runacher.
Energy companies making large profits will be asked to provide a contribution in relation to the reference price, the minister said, adding that the relevant legal proposition will be made very soon.
The move comes amid surging energy prices across Europe following a stoppage of natural-gas flows from Russia. In France, supply has also been threatened by strikes at nuclear reactors owned by national utility Electricite de France SA.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
After years of anticipation, the cryptocurrency ethereum finally implemented a major network upgrade that completely changes how the blockchain verifies transactions, mints new coins and secures its network. Called proof-of-stake, this system has reduced ethereum’s energy consumption by more than 99%.
Energy usage has been one of the cryptocurrency industry’s biggest targets for critique. But it’s not likely that bitcoin will follow suit.
Instead, the bitcoin network is sticking with a system called proof-of-work, in which highly specialized computers try to guess a winning number that serves to validate transactions and create new coins. This is what’s known as mining.
At the moment, guessing a winning number takes over one hundred sextillion tries. All of this work helps to secure the network by making it nearly impossible for bad actors to accrue enough computing power to take control. But recent research also shows that in 2020, mining Bitcoin consumed 75.4 terawatt hours of electricity, more than all of Austria or Portugal.
This is the system formerly used by ethereum. But now the network has swapped out miners for validators. Instead of playing a massive computational guessing game, validators are assigned to verify new transactions, and earn ether as a reward for doing so.
To ensure that these validators act honestly, they essentially have to make a security deposit by staking a certain amount of ether coins into the network. If a validator tries to attack the network, they’ll lose their stake. Ethereum proponents say this penalty will make the network more secure, while bitcoin enthusiasts see proof-of-work as the more secure, tried and true approach.
However, the optics of bitcoin’s energy use in the midst of the global climate crisis has become a problem for the network. In response, some major bitcoin miners are starting to seek out renewable energy to power their data centers and trying to change the narrative by touting bitcoin’s energy use as an asset, as it helps drive investment into the nation’s aging electrical grid.
Europe, the world’s largest economic bloc, enjoyed stable trade surpluses for a decade but the war in Ukraine and the ensuing energy crisis have tipped the Continent into a spiraling external deficit unseen since the launch of the euro.
The terms-of-trade shock maxed out in August, the latest month for which trade figures are available. And, even though energy prices have since eased, European leaders are still scrambling to shore up supplies of affordable oil and gas to replace lost Russian deliveries. A harsh winter looms.
A breakdown of the trade figures shows that the EU’s manufacturing trade surplus has nearly halved this year.
Can Europe bounce back? Or will its industrial base become hollowed out as industry moves offshore? And will the eurozone, and the EU more broadly, end up being saddled with the chronic external deficits that have long plagued the United States and, more recently, destabilized Britain? POLITICO breaks it down for you:
What’s going on?
The eurozone’s negative trade balance with the rest of the world in August stood at €50.9 billion, the highest deficit ever recorded, compared to a €2.8 billion surplus a year ago, according to the latest Eurostat numbers.
The trade deficit for the EU as a whole spiraled to €64.7 billion.
The eurozone’s current account balance — the balance of all trade in goods and services as well as international transfers of capital, such as remittances — hit a €26.32 billion deficit in August, largely driven by the trade deficit in goods, the European Central Bank reported.
Is that a bad thing?
A trade deficit occurs when a country or trading bloc’s imports exceed its exports. A trade surplus is the opposite. Trade deficits are not per se good or bad, although many countries seek a trade surplus, including by setting up tariffs and quotas to artificially boost their trade balance, a practice known as mercantilism.
Is it temporary?
The trade deficit is largely driven by high energy prices, which in August hit a record €350 per megawatt hour. Prices have come down from their peak, trading at around €150/MWh, but they are still a multiple of where they were a year ago.
“Markets have gone from pricing this energy crisis as being temporary, they are now pricing it to be a much longer-term story, albeit not as elevated as it was in August,” said Kristoffer Kjær Lomholt, chief FX analyst at Danske Bank.
“We think that it is a kind of a more long-term thing that is going to weigh on the currencies of economies that are energy importers, where the eurozone, of course, stands out to a very large extent,” he added.
Others believe that the shift, being largely energy related, could resolve itself over time, said Sam Lowe, who covers trade policy at Flint Global.
An EU official also pointed to EU-Russia trade. “The peak in energy prices has made the value of our imports from Russia increase substantially (while the volume of those imports from Russia decreased), and our exports have spiralled down because of sanctions (export controls),” the official said.
Will the EU be less competitive if energy prices remain high?
A negative trade balance and consequently a weaker currency makes imports more expensive. “Net importers will have to pay more for goods and services,” said Lomholt.
On the other hand, a weaker euro could fuel exports, said Matthias Krämer, head of external economic policy at German industry federation BDI. “If the euro currency was a little bit weaker, it could also make Europe’s position on global markets better by making exports cheaper,” he said.
But there’s another way of looking at this. Lowe argued the sustained large eurozone trade surplus was itself problematic, in that it was a function of intra-EU demand being lower than it should be. “Being overly dependent on external demand also leaves the EU quite vulnerable to both external shocks, and political coercion.”
What does that mean for the euro?
“We expect the euro to decline further in coming months as part of this adjustment,” said Robin Brooks, chief economist at the Institute of International Finance.
A negative trade balance or current account deficit puts downward pressure on the value of free-floating currencies, which move with demand of goods: less demand for a country’s exports means less demand for its currency, which in turn lowers its value relative to others. Conversely, strong foreign demand for goods strengthens a country’s currency.
“Foreign investors need to be compensated via a real depreciation of the exchange rate, and generally higher real interest rates,” said Lomholt at Danske Bank.
The Danish lender has recently downgraded its forecast for the € to $ exchange rate to $0.93 in 12 months from virtual parity now, driven in part by the energy price shock. “We have for some time been arguing that €/$ looked overvalued and not undervalued … And just given the additional push to the energy crisis that we got during summer, we saw a case that the euro/dollar [exchange rate] should actually hit even lower,” he said.
Is business freaking out?
A bit.
“The data are not so surprising considering the high energy prices, but they are worrying”, said Luisa Santos, responsible for international relations at BusinessEurope. She called on the EU to try to bring energy prices down and to boost exports by opening new market opportunities via more trade agreements.
Germany, the bloc’s export powerhouse, increased its exports by 14 percent in the first eight months of the year but imports have surged by more than 27 percent, according to national trade figures.
“We’re not performing in a segment which is highly influenced by a cost driven competition,” said Krämer at the German industry federation. “But if this situation will last longer of course some parts of our industry will be more and more under pressure.”
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