EsadeGeo Daily Digest, 19/06/2020

Archivo:MEPs welcome EU summit climate goals but criticise lack of ...

Politico – David M. Herszenhorn et al. / EU leaders expect budget disputes to simmer all summer

  • EU leaders are still so far apart on a long-term budget deal that agreeing where they disagree most on Friday will count as a win at their videoconference get-together. Capitals are at least aligned on the necessity for a deal before the end of the summer.
  • Council President Charles Michel, who will preside over the negotiations, has made clear that he expects heads of state and government to use the meeting to reiterate longstanding positions.
  • Those include what senior officials say are “fundamental difficulties” among the so-called Frugal Four countries with the signature item in the recovery package: a scheme to raise €750 billion from financial markets for a mix of grants and loans.
  • But the €500 billion grants program is just one in a long list of hotly disputed points, including such basic matters as the overall size of the budget. The Commission has now proposed €1.1 trillion, which several capitals have rejected as too high.
  • Euractiv – Beatriz Ríos / No consent to ‘historic’ recovery plan without new revenues, MEPs warn

Financial Times – Martin Arnold / Banks rush to borrow record €1.3tn at negative rates from ECB

  • The ECB said on Thursday that 742 banks had applied to borrow €1.31tn under its main refinancing scheme, which will lend them money over three years at rates as low as minus 1 per cent, providing they meet certain lending thresholds.
  • It is the first time that a major central bank has offered multiyear loans to banks at an interest rate below its main deposit rate, introducing a so-called dual-rate system.
  • Given the ECB’s main deposit rate is minus 0.5 per cent, the ultra-cheap lending is effectively a subsidy for the banking system and provides further evidence of how the ECB is pulling out all the stops to try to prevent the pandemic causing a credit crunch.
  • The banks are due to use about €760bn of the ultra-cheap loans to repay earlier ECB loans that are about to mature. But they are expected to use much of the remaining €549bn to buy bonds issued by their own governments, earning them an instant profit on the “carry trade”.
  • Bloomberg – Piotr Skolimowski, James Hirai and Michael Hunter / Banks snap up $1.5 trillion of ECB’s cheap loans

The New York Times – Maria Abi-Habib / Will India side with the West against China? A test is at hand

  • For years, the United States and its allies have tried to persuade India to become a closer military and economic partner in confronting China’s ambitions, painting it as a chance for the world’s largest democracy to counterbalance the largest autocracy.
  • With China facing new scrutiny and criticism over the coronavirus pandemic, Indian officials have recently seemed emboldened, taking steps that made Western diplomats feel that their goal of an India closer to the West was starting to be realized.
  • This month, India signed a major defense agreement with Australia that allows both countries to use each other’s military bases. And it is expected to invite Australia to join naval exercises it conducts with Japan and the United States.
  • India’s campaign for a larger profile in multinational organizations has also moved quickly. On Wednesday, it was elected unopposed to a nonpermanent seat on the UN Security Council. And in May, it won the chair of the World Health Organization’s executive board.
  • South China Morning Post – Kunal Purohit / China-India border dispute: what are New Delhi’s options to respond?

Foreign Policy – Jason Hickel / The myth of America’s green growth

  • Scientists are increasingly concerned about the impact that excess industrial activity is having on our planet’s ecosystems. More than 11,000 scientists from over 150 countries published an article calling on governments to shift toward “post-growth” economic models.
  • In a new book, technologist Andrew McAfee argues that we can continue to grow global GDP indefinitely while reducing our ecological impact at the same time—and all without any structural, much less revolutionary, changes to the economy or society.
  • He claims that U.S. consumption of resources has remained steady or even declined since the 1980s, while GDP has continued to rise. In other words, the United States is “dematerializing”. This proves “green growth” can be achieved..
  • McAfee’s argument is based on a fundamental accounting error. McAfee uses data on domestic material consumption, which includes the imported goods a country consumes, but does not include the resources involved in extracting, producing, and transporting those goods.
  • Bloomberg – Emily Chasan / Who will profit the most from a green recovery?

Further reading for the weekend:

The selected pieces do not necessarily reflect the views of Javier Solana and EsadeGeo. The summaries above may include word-for-word excerpts from their respective pieces.

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