Economy

The Council of the European Union on Monday (24 June) adopted a 14th package of economic and individual restrictive measures against Russia, "dealing a further blow to the Putin regime and those who perpetuate its illegal, unprovoked and unjustified war of aggression against Ukraine". These measures are designed to target high-value sectors of the Russian economy, such as energy, finance and trade, and make it increasingly difficult to evade EU sanctions.

Proposed European Union tariffs on Chinese goods are not a "punishment", German Federal Minister for Economic Affairs and Climate Action Robert Habeck assured Chinese officials in Beijing on Saturday (22 June). The visit is the first by a senior European official since Brussels proposed significant tariffs on imports of Chinese-made electric vehicles (EVs) in response to what the EU sees as excessive subsidies. Ahead of Habeck's arrival, China warned that rising tensions over EVs could spark a trade war. "It is important to understand that these are not punitive tariffs," Habeck told the opening session of a dialogue on climate and transformation. He stressed that unlike the US, Brazil and Turkey, which have used punitive tariffs, the EU is taking a different approach.

Russia's ongoing full-scale war in Ukraine, initiated on 24 February 2022, has caused significant environmental and climate damage, severely impacting global efforts to combat climate change. This is highlighted in the latest report from the Initiative on Greenhouse Gas Accounting of War (IGGAW), which analyses the environmental costs over the past two years. The report was published Thursday (13 June) by the Ministry for Environmental Protection and Natural Resources of Ukraine in collaboration with climate advocacy groups. The IGGAW report estimates climate-related damages at $32 billion, attributed to activities such as the extensive use of military fuels and the destruction of landscapes and infrastructure. Over 24 months, the conflict resulted in the emission of 175 million tonnes of carbon dioxide - more than the annual emissions of a developed country like the Netherlands.

The European Union is poised to impose significant new tariffs on Chinese electric vehicles (EVs), a move expected to raise more than €2 billion a year despite warnings from Germany about the potential economic impact. Brussels is determined to impose additional tariffs of up to 25% on these imports from next month, arguing that subsidies given to Chinese EV manufacturers allow them to unfairly undercut European competitors. The decision has sparked controversy, particularly in Germany, where there are fears of sparking a trade war with China, the EU's biggest trading partner.

The G7 will explore ways to use future revenues from frozen Russian assets to help Ukraine. Following Russia's invasion of Ukraine in February 2022, the G7 and its allies froze around $300 billion in Russian assets. "We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilized Russian sovereign assets to the benefit of Ukraine," the draft statement said. G7 negotiators have been discussing for weeks how best to use these assets, which include major currencies and government bonds held mainly in European vaults. The United States (US) has been urging its G7 partners - Japan, Germany, France, Britain, Italy and Canada - to support a loan that could provide Kyiv with up to $50 billion in the near term. The cautious language of the statement, lacking figures or specifics, underlines the many legal and technical issues that would need to be resolved before such a loan could be issued. A G7 source indicated that there would be no significant changes to the statement before the final version is released later on Saturday (25 May).

Egypt's already considerable economic problems took a turn for the worse last month as revenues from transit of shipping through the Suez Canal dropped by half as a result of security problems in  the Red Sea and the Gulf of Aden. Attacks by Houthi rebels on commercial vessels forced major shipping companies to divert away from the key global trade artery. Income from the international strategic waterway last month dropped to $428 million, compared to $804 million in January 2023, Osama Rabie, chairman of the Suez Canal Authority, said in an interview with Egyptian television channel ON TV. The total number of ships through the Suez Canal last month fell to 1,362 vessels, down 36 per cent from the 2,155 vessels navigating the canal during January 2023, he said. Houthi militants in Yemen began attacking commercial vessels in October in solidarity with the Palestinians in the Israel-Gaza war, and show no signs of retreating despite the US and Western allies attempting to deter the Iran-backed group with air strikes, which began on January 12.  Many shipping companies have rerouted their vessels away from the Red Sea to avoid the attacks, opting instead for the longer and more expensive route around the Cape of Good Hope at the southern tip of Africa. The Suez Canal is the shortest sea route between Asia and Europe. With about 12 per cent of the world's shipping traffic passing through it, the waterway is a major facilitator of global trade. The canal is also a crucial source of foreign currency for Egypt. The North African economy, already grappling with record inflation and a heavy debt burden was further impacted by the Israel-Gaza war, which has slowed tourism and decreased shipping through the Suez Canal. Egypt is "particularly exposed" to the Red Sea shipping crisis as the country generates about 2.2 per cent of its gross domestic product in annual balance-of-payment receipts and 1.2 per cent of GDP in fiscal revenue from Suez Canal dues, the International Monetary Fund said in its regional economic outlook in January.