Photo : europa.eu/eurostat
15 July 2022, Friday | NIAS Europe Daily Brief #254
Eurozone inflation: Three reasons
By Sai Pranav
On 01 July, the inflation rate rose to 8.6 per cent in June. The EU is suffering economically due to the covid pandemic and the war in Ukraine. The unpredictability and uncertainty of the war in Ukraine have caused a lot of setbacks to the economy of the euro group countries which led to a revision of the European Commission's forecast. "Recovery is very much underwear due to service sector" said European Central Bank president Christine Lagarde in June. This meant that the service sector is in more demand than goods. The stagnant growth of the economy and the inflation in the Eurozone is predicted to slow down after 2022.
First, EU’s dependency over Russian energy. Europe was the largest importer of Russian oil and gas until the war began and sanctions game set in by the EU and the US on Russia. The oil embargo on energy imports from Russia and its response through cut off gas and oil supply to the nations that depended on it. EU member states dependent on Russian energy are facing the brunt to find alternates for Russian energy which has led to rise in energy prices. Along with large economies such as Germany and Italy, the Baltic countries Estonia, Lithuania and Latvia economies have also been affected resulting in an 18 to 21 per cent rise in inflation rate.
Second, war induced rise in food prices. The existing food crisis from the pandemic intensified with Ukraine war. With Russia holding back more than 30 per cent of wheat exports and blocking Ukraine ports from sending the agriculture supplies to rest of world has caused price hike in food, reflecting in Eurozone.
Third, the falling rate of the euro. The euro is in parity with the dollar and is falling rapidly due to the Ukraine war. The increase in energy prices, food pricing, and cost of living have contributed to the drop in the euro's rate. The European Central Bank (ECB) is looking to increase its interest rate by 25 points. This is the first time in 11 years that ECB is increasing the interest rate. It has predicted the inflation rate to ease by 2023 and 2024, but with the Ukraine war and search for energy alternative prolonging the Eurozone economies will face the challenge to keep up with the inflation.
"Eurozone inflation soars to record 8.6% in June," Deutsche Welle, 01 July 2022
Johanna Treeck, "Eurozone new inflation record adds pressure on ECB," POLITICO, 01 July 2022
Douglas Fraser, "The effect of war on food prices," BBC News, 07 March 2022
Richard Partington, "Inflation in eurozone hits record 8.6% as Ukraine war continues," the Guardian, 01 July 2022
"What a sinking euro means for consumers in Europe and US," Deutsche Welle, 12 July 2022
"Worried about a US or eurozone recession? 5 things that can offer hope," Deutsche Welle, 06 July 2022
"EU seeks urgent solution amid Russian 'weaponization' of gas," Deutsche Welle, 24 June 2022
Daniel Gros, "An Inflation-Adjusted Social Contract for Europe," Project Syndicate, 08 July 2022
Melissa Eddy, "Eurozone inflation rises to 8.6 percent, the highest ever, driven by energy prices.," NY Times, 01 July 2022
War in Ukraine: Day 141
By Rishma Banerjee
War on the Ground
On 14 July, Kyiv Post reported that there was an overnight missile attack in Mykolaiv, where a business centre and two educational institutions were targeted. Shelling also took place in the Dnipropetrovsk region. Missile attacks were reported in Kramatorsk, Kharkiv and Kherson regions. Moreover, fighting continued in the Luhansk region.
President Zelenskyy criticised the recent Russian attacks and said that they once again proved that they are a “terrorist state.” He said: “No other state in the world allows itself to destroy peaceful cities and ordinary human life with cruise missiles and rocket artillery every day.”
At the International Conference in The Hague, Zelenskyy referred to the “war crimes, crimes against humanity, the crime of genocide” committed by Russia in Ukraine and said that all perpetrators must be punished by law. To aid the investigation of the same, Ukraine will be launching the "Book of Torturers of the Ukrainian People" project. The project will be collecting evidence and data of war crimes. However, he mentioned that the current institution will not be enough but a Special Tribunal needed to be set up for the same.
The Moscow View
Claims by Russia
On 14 July, President Vladimir Putin signed a law, which will disallow Russia’s private companies to refuse military contracts. The law specifically mentions the purchase of goods and services for army use and stockpiling of raw materials and semi-finished goods. This legislation will ensure that the Russian Armed Forces are properly equipped to carry out counter-terrorism and other military operations.
Putin also signed another bill into law, which allows Russia to retaliate against countries banning Russian media. As per the bill, the prosecutor-general and deputies will be able to withdraw the registrations and terminate the licenses of those media outlets in the country.. Prior to law, only the courts had the power to do the same. Further, another law signed by the president expanded the definition of “foreign agents”. The list of any people or organisations who have worked with or received funding from foreign agents will be included in a new Justice Ministry list. According to the law, Russia’s state communications watchdog Roskomnadzor will now be able to block “foreign agent” websites at the Justice Ministry’s request without a court order. The law comes into force from 01 December, 2022.
On the same day, the head of Zaphorizhzhya’s military-civilian administration, Yevgeny Balitsky, said that the region will hold a referendum about joining Russia in the coming days. He mentioned that the procedure for the referendum needed to be fixed and the ballot paper for the same would be printed soon. 70 per cent of Zaphorizhzhya region is under Russia while the main city is still under Kyiv’s control.
Russia’s deputy foreign minister, Sergey Vershinin said that Russia was not blocking any initiative to export Russia’s grains. However, he mentioned that in order to start trading Ukraine will have to clear their ports of mines.
The West View
Responses from the US and Europe
On 14 July, the European Union is set to deliberate on the seventh round of sanctions on Russia. The member states are expected to approve the same by next week. This new package is likely to include a ban on the import of Russia’s gold, which is the country’s biggest non-energy export. It might also widen a list of dual-use goods banned for export, and add to the list of individuals facing sanctions. The Czech Prime Minister Petr Fiala said that this package of sanctions will not curb the import of Russian gas, as that would destabilize too many countries at once.
In a recent forecast, the European Commission said that the inflation in the Eurozone is likely to reach a “historical high” of 7.6 per cent. EU Vice President Valdis Dombrovskis said: "Russia's war against Ukraine continues to cast a long shadow over Europe and our economy.” The EU also reduced their growth forecasts for the Eurozone for the same reason. Brussels now forecasts growth of just 1.4 per cent in 2023, which is down from the previous estimate of 2.3 per cent.
The European Space Agency (ESA) reported that they will withdraw from a joint Russian-European rover mission to Mars. This is in response to Russia’s invasion of Ukraine. ESA chief Josef Aschbacher tweeted: “Council mandated me to officially terminate the currently suspended cooperation with [Russia’s space agency] Roscosmos on the ExoMars Rover and Surface Platform mission.”
The Republic of Ireland reported that they will use some military facilities to accommodate the Ukrainian people to arriving to the country. So far, around 250 people were housed in an old terminal building at Dublin Airport. However, from 18 July, the Gormanston Camp, in County Meath will become functional and will host up 320 people. Till date, there has been an influx of around 41,000 people fleeing the war.
The Global Fallouts
Implications of the Ukraine war
On 13 July, the head of the International Monetary Fund (IMF), Kristalina Georgieva issued a warning about how the war in Ukraine will affect the global economic growth. She said that the global economic outlook "has darkened significantly". She mentioned how the restrictions on food exports worsening energy security in Europe, higher than expected inflation rate and the Covid pandemic are all drivers for this downgrading in economic growth.
14 July, Brazil’s president Jair Bolsonaro said that he will present a solution to the Ukraine war to Zelenskyy scheduled for 18 July 2022. He referred to Argentina’s solution to the Falkland wars of 1982 and said that a similar framework can be adopted.
“Overnight Russian attacks partly destroy business center in Mykolaiv, hit Kharkiv,” Kyiv Post, 14 July 2022
“Missile attack on Vinnytsia: Number of hospitalized rises to 71,” Ukrinform, 14 July 2022
“Twenty-three civilians reported killed in Russia’s missile attack on Vinnytsia,” Ukrinform, 14 July 2022
“This day once again proved that Russia must be recognized as a terrorist state - address by the President of Ukraine,” President of Ukraine, 14 July 2022
“All Russian criminals must face a mandatory and principled punishment - President's speech at the International Conference in The Hague on holding Russia accountable for crimes in Ukraine,” President of Ukraine, 14 July 2022
“Over 20 evacuation requests received from Ukraine in past day — defense ministry,” TASS, 14 July 2022
“Zaporozhye Region to come up with procedure for referendum to join Russia next week,” TASS, 14 July 2022
“New Russian law obliges domestic firms to support military,” RT, 14 July 2022
“Putin signs media discrimination tit-for-tat law,” RT, 14 July 2022
“Putin Signs Expanded ‘Foreign Agents’ Law,” The Moscow Times, 14 July 2022
“No obstacles on Russia’s part to export of Ukrainian grain — Russian senior diplomat,” TASS, 14 July 2022
Alexandra Brzozowski, “A preview of EU’s seventh sanctions package on Russia, to be agreed by next week,” Euractiv, 14 July 2022
Robert Muller and Jason Hovet “Gas won't make EU's next Russian sanctions package, Czech leader says,” Reuters, 14 July 2022
“Europe Aborts Joint Mars Mission With Russia,” The Moscow Times, 14 July 2022
Larry Elliott, “Russian war slowing growth and hiking inflation, European Commission warns,” The Guardian, 14 July 2022
“Ukrainian refugees to be housed in Irish military camp,” BBC News, 14 July 2022
Jonathan Josephs, “IMF warns of 'darkening' global economic outlook,” BBC News, 14 July 2022
Neil Peay, “Bolsonaro says he will give Zelensky the solution to the Ukraine war,” The Catholic Transcript, 15 July 2022
By Emmanuel Selva Royan
President reduces to accept Draghi’s resignation amid political and economic crisis
On 15 July, the prime minister Mario Draghi announced his resignation due to a political crisis. However, president Sergio Mattarella said he would not accept Draghi's resignation. The president’s office stated that Mattarella "did not accept the resignation and invited the prime minister to appear before Parliament to give a speech." Draghi won a no-confidence vote in the Senate, but the future of his administration remained in doubt as a result of the populist 5-Star Movement (5SM), a significant coalition ally, abstaining from the vote. Draghi won the vote 172-39, but the 5SM boycott represented a clear threat to his government. Draghi had clearly stated that 5SM was a coalition partner in his unity government and that he had no intention of governing without them. Mattarella has avoided a catastrophic political disaster by rejecting Draghi's resignation while Italy battles significant debt issues, a terrible drought, and rising energy costs as a result of Russia's invasion of Ukraine (“Italy: President rejects PM Mario Draghi′s resignation,” Deutsche Welle, 14 July 2022)
Tonnes of human ashes unearthed in former Nazi camp Soldau
On 15 July, a mass burial containing 17.5 tonnes of human ashes was discovered in the Nazi concentration camp of Soldau in northern Poland. Tomasz Jankowski from Poland's national memorial institute stated that there were at least 8,000 victims in the cemetery. It is believed that the Nazis torched the bodies after digging them up to cover up the evidence of their deaths. At Soldau, the Nazis killed Jews, political opponents, and Polish aristocracy. The concentration camp was constructed in 1939 and utilised during the Nazi occupation for transit, detention, and extermination. It is estimated that up to 30,000 individuals were slaughtered there, and experts aim to use DNA analysis to learn more about the deaths. Numerous remnants of clothing, buttons, and other objects have been discovered by archaeologists, but nothing valuable has been discovered, indicating that the victims were looted before being set ablaze. (Paul Kirby, “Nazi Soldau: Ashes of 8,000 victims found in mass grave in Poland,” BBC, 14 July 2022)
Stockholm convicts Iranian accused of war crimes in 1998
On 14 July, a former Iranian official, Hamid Nouri was convicted of war crimes by the supreme court of Sweden in connection with the 1988 mass killings of political prisoners in Iran. Nouri was accused by Swedish prosecutors of committing war crimes and murder between July and September 1988, while they claimed he was working as the deputy prosecutor's assistant at Karaj's Gohardasht jail. Nouri was given a life sentence for his alleged major role in the murder of several opposition individuals. Iran referred to the verdict as "political." In 2019, Nouri was detained after taking a flight to Sweden, and he was tried under the doctrine of universal jurisdiction. He was the first to be charged with taking part in the executions. (David Gritton, “Swedish court convicts Iranian ex-official over 1988 executions,” BBC, 14 July 2022)
Rishi Sunak leads the conservative party’s contest for prime ministership
On 14 July, in the second round of the Tory leadership contest the attorney general, Suella Braverman was eliminated, leaving five candidates standing. Rishi Sunak received 101 votes, Penny Mordaunt gained support by receiving 83 votes, and Liz Truss received 64 votes to finish third. Former Brexit minister Steve Baker has also endorsed Truss, and the majority of the 27 Conservative members of parliament who supported Braverman are reportedly planning to follow suit. Both Tom Tugendhat, head of the foreign affairs committee, who finished sixth with 32 votes, and Kemi Badenoch, a former equalities minister, say they are committed to continuing the race. On 18 July, the contender with the fewest votes will be eliminated in the next round of voting. (Tory leadership race: Rishi Sunak leads pack in tightening contest,” BBC, 15 July 2022)
EU bans fly shooting method of fishing
On 14 July, the European Parliament voted to outlaw "fly shooting" fishing in French territorial waters in the English Channel. The decision favors small-scale fishermen. Organizations that represent coastal fishing communities on both sides of the English Channel have issued warnings that fly-shooting and other industrial trawling techniques are destroying both the marine ecosystem and their livelihoods. The members of parliament stated that the decision delivered a crucial message to decision-makers about the impact of fly-shooting on coastal fishing communities. The European Commission, the European Parliament, and the EU member states will now deliberate the vote on a change to the common fisheries policy including access to territorial seas. In 2021, the UK was charged with allowing fishing vessels "unfettered access" to the English Channel without properly evaluating the impact on fish, the seabed, or the livelihoods of coastal residents. (Karen McVeigh, “European parliament votes to ban 'fly shooting' fishing in part of Channel,” the Guardian, 14 July 2022)
Denmark censured by the EU for advertising the Greek label ‘fete’
On 14 July, the European Court of Justice reprimanded Denmark for allowing local businesses to market cheese outside the EU under the label "feta." In a victory for Greece, ECJ declared that Denmark had "failed to fulfill its obligations under EU law" by "failing to stop the use of the designation 'feta' for cheese intended for export to third countries." Greece wants to maintain sole ownership of the title since it considers feta to be a part of its cultural heritage. It claims to have been producing the brined white cheese made from sheep's milk or a blend of goat's and sheep's milk for 6,000 years. Denmark was told by the ECJ to stop using the classification immediately, or the European Commission could reappear in court to demand monetary penalties. However, Denmark was praised by the court for its earnest cooperation in the matter. (“′Feta′ is Greek, EU top court rules, stopping Denmark from using designation,” BBC, 14 July 2022)
SCIENCE AND TECHNOLOGY
Use of Satellite images and ground data predicts amount of harvest
On 15 July, BBC reported on the analysis shared by Kayrros and EarthDaily on the health of crops worldwide. The analysis uses satellite images to determine the crops health by calculating how much infrared light the plants reflect back. The study examined data from satellite photographs, which can reveal a plant's health by measuring the amount of infrared light it reflects back at the satellites' cameras. The probable harvest is then shown by cross-referencing that data with information on the weather and soil moisture. BBC examined this data and discovered that the major wheat producing countries will be producing less than usual because of unfavorable weather. The UN's Food and Agriculture Organization (FAO) reports that prices for wheat are reducing marginally as harvests begin but are still 48.5 per cent higher than they were at this time in 2021. (Stephanie Hegarty, “Satellites give clues about the coming global harvest,” BBC, 15 July 2022)