European Union

Europe’s energy subsidies help Putin and pollution

8 Jun 2022

EU leaders are trying to cushion the blow of rocketing energy bills. But keeping a lid on gas prices encourages consumption, which enriches Russia and hinders decarbonisation. Better focus public support on poorer households, and push harder on energy efficiency.

ECB’s farewell to QE may prove premature

8 Jun 2022

The European Central Bank may on Thursday confirm plans to end its 3 trln euro asset purchase programme and raise rates in July. Weaker economies’ borrowing costs are already soaring. A mere hint that bond-buying could resume if yields jump may not be enough to keep markets calm.

Oil embargo will hurt Putin more than EU

31 May 2022

Europe will halt 75% of Russian crude imports now and 90% by year end. Replacing the lost fuel will hike EU consumers’ red-hot energy bills. Moscow can sell oil elsewhere but may still lose more than a third of its most lucrative export revenue source, hurting its war machine.

Seizing oligarch assets is a slippery slope

26 May 2022

The EU hopes to confiscate $31 bln of yachts and villas from blacklisted billionaires. Washington is mulling similar steps. However wrong Russia’s invasion of Ukraine may be, short-circuiting the criminal process to seize property risks weakening trust in Western rule of law.

ECB caught in a rate quagmire of its own making

20 May 2022

The European Central Bank may raise rates in July but is divided on how high it should go. By then, weakening growth will make it harder for President Christine Lagarde to end the eight-year era of negative rates. Moving earlier to curb inflation would have avoided the dilemma.

Ukraine’s spare energy can help itself and Europe

20 May 2022

The war-torn nation generates more electricity than it needs, and from carbon-neutral nuclear plants, too. But its links to the EU power grid are sketchy. Helping Ukraine bolster exports to the EU would support Kyiv’s economy while easing the bloc’s energy headache.

EU funds can ease, not end common energy pain

18 May 2022

Brussels has earmarked 300 bln euros to cut fossil fuel ties with Russia. Rising rates make cheap, repurposed Covid-rescue loans more attractive to many EU states, increasing the chance they’ll be used. But higher fuel purchases will still have to come from national budgets.

Germany and France could make ECB’s life easier

16 May 2022

Inflation is surging in Europe’s biggest economies and the central bank is keen to avoid a wage-price spiral. If Berlin and Paris help the poorest households cope with rising costs, there may be less pressure for hefty pay rises. That would be a big help for rate-setters.

Europe may swap one energy dependency for another

9 May 2022

The bloc is ramping up investment in renewable sources to help kick its addiction to Russian oil and gas. Yet China currently controls at least 75% of the solar panel supply chain. To gain its energy freedom, Europe will also need to invest in manufacturing at home.

EU’s oil embargo is slave to volatile crude price

4 May 2022

The bloc wants to stop buying Russian exports within six months. That looks too slow to properly choke off funding for President Vladimir Putin’s war machine. Yet going any faster could make crude prices spike, exacerbating Europe’s battle against inflation.

ECB forecasting snafus may turn into trust problem

28 Apr 2022

Christine Lagarde’s central bank underestimated how high inflation would soar and deferred rate hikes. Its own research says rising inequality hurts faith in public institutions. Soaring prices risk undermining such confidence, which is critical in a still-young currency union.

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.