Mediaboss Marketing

Although Kyriakos Mitsotakis says "we have strong growth and a significant drop in unemployment of 3% since last year and 5% since 2019", Greece is still in a delicate situation. The unemployment rate was 30% at the height of the crisis, it was still 14.8% according to the World Bank in 2021 and would have fallen to 12% in 2022 (7% on average in the euro zone). The European Commission is forecasting GDP growth of 4% in 2022 (2.6% on average in the euro zone), compared with 8.3% in 2021, mainly thanks to tourism. However, at $216bn ($215.7bn) in 2021, it is still more than 15% below its 2008 level. The World Bank has indicated that inflation will rise by 1.2% in 2021.

The hole caused by the effects of the debt, which is expected to rise to 180% of GDP (97% on average in the other countries of the euro zone) by the end of 2022, will have to be filled. As well as raising wages, which are among the lowest in the eurozone. To achieve this, Athens is forced to run a series of budget surpluses.

"The Commission will continue to support Greece in this new phase of its economic development, working in partnership to carry out the reforms and investments foreseen in the ambitious recovery and resilience plan," says Paola Gentiloni. In June 2021, the European Union approved Greece's recovery plan of 17.8bn in grants and 12.7bn in loans under the Recovery and Resilience Facility (RRF).

See more here:
Greece officially freed from the European Union's tutelage - en.econostrum.info

The euro has fallen below parity with the dollar, diving to its lowest level in 20 years and ending a one-to-one exchange rate with the U.S. currency.

READ MORE: Europes central bank raises interest rates for first time in 11 years

Its a psychological barrier in the markets. But psychology is important, and the euros slide underlines the foreboding in the 19 European countries using the currency as they struggle with an energy crisis caused by Russias war in Ukraine.

Heres why the euros slide is happening and what impact it could have:

It means the European and American currencies are worth the same amount. While constantly changing, the euro has dropped just below a value of $1 this week.

A currencys exchange rate can be a verdict on economic prospects, and Europes have been fading. Expectations that the economy would see a rebound after turning the corner from the COVID-19 pandemic have been replaced by recession predictions.

More than anything, high energy prices and record inflation are to blame. Europe is far more dependent on Russian oil and natural gas than the U.S. to keep industry humming and generate electricity. Fears that the war in Ukraine will lead to a loss of Russian oil on global markets have pushed oil prices higher. And Russia has been cutting back natural gas supplies to the European Union, which EU leaders described as retaliation for sanctions and weapons deliveries to Ukraine.

Energy prices have driven euro-area inflation to a record 8.9 percent in July, making everything from groceries to utility bills more expensive. They also have raised fears about governments needing to ration natural gas to industries like steel, glassmaking and agriculture if Russia further reduces or shuts off the gas taps completely.

The sense of doom increased as Russia reduced the flows through the Nord Stream 1 pipeline to Germany to 20 percent of capacity and said it would shut it down for three days next week for routine maintenance at a compressor station.

Natural gas prices on Europes TTF benchmark have soared to record highs amid dwindling supplies, fears of further cutoffs and strong demand.

If you think Euro at parity is cheap, think again, Robin Brooks, chief economist at the Institute of International Finance banking trade group, tweeted Monday. German manufacturing lost access to cheap Russian energy & thus its competitive edge.

Global recession is coming, he said in a second tweet.

The euro was last valued below $1 on July 15, 2002.

The European currency hit its all-time high of $1.18 shortly after its launch on Jan. 1, 1999, but then began a long slide, falling through the $1 mark in February 2000 and hitting a record low of 82.30 cents in October 2000. It rose above parity in 2002 as large trade deficits and accounting scandals on Wall Street weighed on the dollar.

WATCH: American cities, states cant find enough workers despite an influx of federal funding

Then as now, what appears to be a euro story is also in many ways a dollar story. Thats because the U.S. dollar is still the worlds dominant currency for trade and central bank reserves. And the dollar has been hitting 20-year highs against the currencies of its major trading partners, not just the euro.

The dollar is also benefiting from its status as a safe haven for investors in times of uncertainty.

Many analysts attribute the euros slide to expectations for rapid interest rate increases by the U.S. Federal Reserve to combat inflation at close to 40-year highs.

As the Fed raises interest rates, the rates on interest-bearing investments tend to rise as well. If the Fed raises rates more than the European Central Bank, higher interest returns will attract investor money from euros into dollar-denominated investments. Those investors will have to sell euros and buy dollars to buy those holdings. That drives the euro down and the dollar up.

Last month, the ECB raised interest rates for the first time in 11 years by a larger-than-expected half-percentage point. It is expected to add another increase in September. But if the economy sinks into recession, that could halt the ECBs series of rate increases.

Meanwhile, the U.S. economy looks more robust, meaning the Fed could go on tightening and widen the rate gap.

American tourists in Europe will find cheaper hotel and restaurant bills and admission tickets. The weaker euro could make European export goods more competitive on price in the United States. The U.S. and the EU are major trade partners, so the exchange rate shift will get noticed.

In the U.S., a stronger dollar means lower prices on imported goods from cars and computers to toys and medical equipment which could help moderate inflation.

American companies that do a lot of business in Europe will see the revenue from those businesses shrink when and if they bring those earnings back to the U.S. If euro earnings remain in Europe to cover costs there, the exchange rate becomes less of an issue.

A key worry for the U.S. is that a stronger dollar makes U.S.-made products more expensive in overseas markets, widening the trade deficit and reducing economic output, while giving foreign products a price edge in the United States.

A weaker euro can be a headache for the European Central Bank because it can mean higher prices for imported goods, particularly oil, which is priced in dollars. The ECB is already being pulled in different directions: It is raising interest rates, the typical medicine for inflation, but higher rates also can slow economic growth.

Continue reading here:
What does it mean that the euro has fallen below parity with the dollar? - PBS NewsHour

The new American James Webb satellite explores the outer boundaries of the universe. Private US starts ups Space X and Blue Origin are pioneering commercial space exploration and the launch of inexpensive low orbit satellites. In contrast, the European Space Agency (ESA) seems grounded.

Radical change is required. Europe must consolidate its public space agencies and encourage its private space companies to grow. This requires a harmonized and united European front on space exploration.

Established in 1975, Europes Space Agency (ESA) lacks power over the EUs national agencies. It acts as an intergovernmental mechanism allowing members to cooperate and exchange information on international and national space law. Translated from Eurospeak, this means the ESA acts as a technical and legal consultant to national space agencies, not as a coherent, centralized, strong leader. In addition, only 22 of the EUs members participate, with small states such as Bulgaria, Cyprus, and Slovakia, staying away.

The ESA is not part of the European Union structure, though it receives much of its funding from the European Commission. The EU has its space program, called the European Space Program, adding to the confusion.

Part of the reason behind this decentralized structure is that much space research concerns defense. Under EU law, national security remains a national responsibility, out of the EU scope.

Unnecessary duplication and slow decision-making results. Even the most ambitious ESA projects such as the Rosalind Franklin rover (headed for Mars) or Electra (a telecommunications satellite) focus on providing unmanned services and exploration research, rather than pursuing ambitious manned or defense missions.

The funding represents another challenge. The ESA budget totals a mere EUR14 billion over five years compared to the US, which spent 54 billion dollars in 2021, or China, which spent a little over $10 billion last year.

Europe needs to pool its resources to pursue ambitious projects such as the colonization of Mars, and the Moon, or defense-oriented measures such as missile defense or advanced satellite networks.

This goal could be achieved by remodeling the ESA in the spirit of NASA. In a public presentation, ESA manager Martin Born says his organization must increase flexibility and reduce bureaucracy. For example, he points out that while NASA holds weekly risk meetings, ESA requires lengthy paper risk reports. NASA conducts a streamlined three-part progress review. ESA has a five-step drawn-out review system. NASA takes direction from a single government administration, allowing it to develop and implement a coherent, and often ambitious, set of priorities. In contrast, the ESA must balance the interest of its member states.

Challenges arise concerning the role of private companies: in the US, NASA cooperates with and compliments space startups producing cheap rockets and satellites. In Europe, the ESA imposes onerous regulations on companies through stringent supply chain reporting, creating a barrier for private companies, and leaving Europes space startups struggling for finance.

Brexit presents another obstacle. When the UK pulled out of the EU, it was frozen out of the ESAs Galileo project, which is building a rival to the US GPS. Britain boasts a potentially dynamic satellite company called OneWeb, which is building hundreds of low-flying satellites. The UK has big ambitions for mass-produced small satellites.

OneWeb and Frances Eutelsat recently announced a merger to create a strong competitor to Elon Musks SpaceX. Both EU and UK antitrust regulators need to approve the deal. Investors are wary: Eutelsats shares fell by more than one-third in the two days after news of its planned deal with OneWeb emerged. Some UK politicians have expressed concerns about the deal.

Comprehensive reform of Europes public space sector remains required. When European Commission President Ursula Von Der Leyen took office in 2019, she called for cross-fertilization between civil, defense and space industries and focus on improving the crucial link between space and defense and security, In 2020, the Commission published an Action Plan calling for better coordination between civil, defense and space projects.

The most straightforward solution would be to give the European Commission a leadership role. Work has already been done to consolidate the two agencies, although bureaucratic infighting has hampered its progress. In 2021, the ESA and EU took new steps to guarantee that they would work in closer collaboration. The European Space Forum, scheduled for the end of October, represents an appropriate venue to launch an ambitious overhaul. Lets hope Europe doesnt miss the opportunity to blast off.

Jonathan Garraffo is an intern in CEPAs Business Development Program. Alexander Wirth is a Program Officer in CEPAs Digital Innovation Initiative.

Read more:
How Europe's Space Industry Could Blast Off - Center for European Policy Analysis

In mid-July 2022 the European Union imposed new restrictions on South African citrus imports. The new phytosanitary requirements were meant to address False Codling Moth, a citrus pest that is native to South Africa and for which there is zero tolerance in the EU.

The new regulations are a major blow to South Africas citrus industry as they will severely disrupt exports. The country is the worlds second largest exporter of citrus after Spain. The EU accounted for 41% of Southern African citrus exports by value in 2021. Locally, in 2021 citrus accounted for 25% of South Africas total agriculture exports up from 19% in 2011.

In our view, which is based on decades of engaging with EU regulations, and food exports more generally, the regulations are unfair and punitive.

Firstly, the EU gave South Africa less than a month to adapt to the new regulations. The EU measures were published on 21 June 2022, entered into force on 24 June 2022, and required that consignments arriving in Europe from 14 July 2022 onwards had to comply with the new requirements.

The South African government managed to negotiate a settlement with the EU to clear floating containers of citrus blocked at EU Ports on 11 August 2022 (3 weeks later). Nevertheless the whole process imposed additional costs on growers. At a minimum, transition measures are required. This is done to give countries time to adapt.

Secondly, since the EU first declared the False Codling Moth a quarantine pest in 2018, South Africa put in place extensive measures in line to meet the phytosanitary regulations. Its integrated pest management (systems approach) has meant significant investments in research and learning by doing to get the system right. There is evidence of success.

In our view, the new rules are de facto non-tariff barriers to trade. Non-tariff measures are imposed _de jure to protect consumers from unhealthy or low-quality products, but de facto they represent an increase in trade costs. _

We also believe that additional requirements will only mean diverting scarce resources and imposing new costs on growers, threatening the long-term sustainability of the industry.

Product and process standards are the main factors shaping the international trade regime. The ability to meet these standards is both a threat for producers (excluding them from profitable markets) and an opportunity (providing the potential to enter high-margin markets).

Phytosanitary standards are particularly important. The challenge is that they are determined solely by the buying party or country, with the producer having little capacity to challenge decisions on conformance. An added problem is that strong lobbies can push for standards to be protectionist barriers. This harms both consumers who pay higher prices as well as producers who are forced to apply new ways of processing.

The ever changing landscape in phytosanitary standards is characteristic of global trade in fresh fruit. Responding to it requires constant investments in research and technology development to keep up and to comply. However, the political nature of these issues, which require government-to-government negotiations, makes it difficult to prove compliance and the basis for such standards.

As of 12 August, the current hurdle has cost local citrus growers over R200 million in losses. In addition, growers are more than likely to receive half their expected returns on any fruit that is released, due to the fact that most containers have been standing for a few weeks, and have therefore missed their programmes due to late arrival.

Applicable from the 1 January 2018, the EU Directive listed False Codling Moth (FCM) as an EU quarantine pest and prescribed specific import requirements. This meant that South African citrus exporters who shipped to the EU market would be subject to new requirements. Non-EU countries could use cold treatment or another effective treatment to ensure the products are free from the pest.

From the 1 September 2019, exporting countries were required prior to export, to provide documentary evidence of the effectiveness of the treatment used for trade to continue.

In response to the EUs 2018 False Codling Moth phytosanitary regulations, South Africas citrus industry developed the FCM Management System as an alternative to post-harvest disinfestation (cold treatment).

South Africa is currently using integrated pest management (systems approach) - the sterile insect technique and mating disruption - in conjunction with complementary controls to ensure citrus fruits are free of the moth from the field to the packing house and shipment to the EU. A systems approach is a pest risk management option that integrates different measures, at least two of which act independently, with cumulative effect.

The False Codling Moth Management System was implemented for the first time in 2018 for citrus exports to the EU with continuos improvements over the years (p.32). Interceptions of FCM have been consistently low over the past three years.

The new regulations require orange imports to undergo further mandatory cold treatment processes and pre-cooling steps for specific periods. These have to be done at loading before shipping and subsequent importation.

Some cold stores have modern technology to cool down the fruit to stipulated temperatures. But a number of cold stores still have outdated technologies that cant.

South Africas citrus industry recognises that standards are clearly essential. It has invested in research and technology to keep abreast of changes in phytosanitary standards, and to support shared capabilities necessary to supply high-quality, pest-and disease-free fruit.

But the setting of standards can be misused. This means they need to be transparently applied and designed.

Read the original:
South African citrus: new EU rules are unjust and punitive - The Conversation

23 August 2022

The European Central Bank (ECB) has imposed administrative penalties of 4.275 million on Crdit Agricole S.A. (CASA) and 300,000 and 190,000 on its subsidiaries Crdit Agricole Corporate and Investment Bank (CACIB) and Crdit Agricole Consumer Finance (CACF) respectively, after the banks classified shares as Common Equity Tier 1 (CET1) capital without prior permission from the ECB.

For five consecutive quarters during the period 2015-16, CASA classified newly issued shares as CET1 capital without seeking the ECBs permission to do so, despite the ECB reminding the bank of its obligations. This means the bank did not allow the ECB to timely assess whether those instruments were eligible as CET1 capital, which is the highest quality of capital as defined by banking law. This prior control is key to ensure banks can absorb losses. The subsidiaries CACIB and CACF took a similar approach for three consecutive quarters.

The ECB already sanctioned the banks in 2018 for this breach. The banks subsequently challenged the ECBs decisions before the Court of Justice of the European Union, which confirmed the banks liability for the breaches but annulled the pecuniary penalties considering that the ECB hadnt sufficiently explained how it had determined the amounts. The ECB has now addressed that procedural deficiency and reimposed the penalties on the banks.

When deciding on the amount of the penalty to be imposed on a bank, the ECB applies its Guide to the method of setting administrative pecuniary penalties. In this case, the ECB classified the breach as moderately severe for the parent bank CASA and as minor for the two subsidiaries CACIB and CACF. More details on sanctions are available on thesupervisory sanctions web page.

The banks may challenge the ECBs decisions before the Court of Justice of the European Union.

For media queries, please contact Franois Peyratout, tel.: +49 172 8632 119.

See more here:
ECB confirms sanctions on Crdit Agricole for classifying shares as CET1 capital without prior approval - ECB Banking Supervision