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Eurozone backs G7 plan on frozen Russian assets

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Eurozone finance ministers on Wednesday (5 May) gave political support to a G7 plan to lend to Ukraine using profits from Russian assets, which they are ready to discuss after the G7 leaders’ summit in June.

The ministerial discussion showed appreciation for the constructive engagement with G7 partners on this issue and full support for it to continue,” Eurogroup President Paschal Donohoe, who chairs meetings of eurozone finance ministers, said in a statement.

Wednesday’s virtual talks were organised to explore options on how to frontload financial assistance to Ukraine by providing loans based on profits from frozen Russian central bank assets.

G7 summit in June is critical

The G7 had collectively frozen about $280bn of such assets, most of which were held at the Belgium-based Euroclear clearing house.

The new support came after G7 finance ministers last month warmed to a plan to withdraw up to $50bn from assets to support Ukraine’s war effort.

Finance ministers will consider the need for further discussion after the G7 summit in Apulia when they meet in June,’ Donohoe said after the talks.

Leaders of the G7 countries, which include the US, Canada, Japan, Britain, France, Germany and Italy, are due to meet in Italy on 13-15 June to consider various forms of the proposal.

90 per cent of profits to the ‘peace fund’, 10 per cent to the EU budget

According to the G7 plans, the profits from Russian assets held in the EU would cover the interest and at the same time repay the principal of the loan to Ukraine from the US, or the US together with other G7 countries, or from the EU’s own budget.

Annual profits would go into a special fund to cover Ukraine’s arms needs and the country’s reconstruction.

According to the plans, 90 per cent of the money will first go to the European Peace Fund (EPF), the bloc’s mechanism for reimbursing member states for arms supplied to Kiev, and then to the newly created Ukraine Assistance Fund (UAF).

The remaining 10% will go to the EU budget and be used to increase the capacity of the Ukrainian defence industry.

The plan includes the possibility of changing the purpose of the funds if Ukraine’s needs shift from defence to reconstruction.

People familiar with the talks said the plan would require risk-sharing between the EU and the US, as EU countries and the European Central Bank are wary of a potential risk to the EU’s single currency.

US plan is more ambitious

But Washington is also floating a more ambitious proposal in which countries would agree to use profits to provide Ukraine with a large loan as soon as possible, rather than settling for a few billion euros a year in the long term.

US Treasury Secretary Janet Yellen told the New York Times last week that the loan would be around $50 billion, backed by profits and interest income.

EU officials said that for the US-led plan to work, the EU would have to assure the lender that profits from Russia’s frozen assets would be used to cover the loan.

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Germany’s decision on Junge Welt

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Last Thursday, the Berlin Administrative Court rejected an appeal by Junge Welt (JW), Germany’s only left-wing daily newspaper founded in 1947, against the inclusion of the newspaper in the annual report of Germany’s domestic intelligence agency, the Federal Office for the Protection of the Constitution (BfV).

The court ruled in favour of the spy agency, which had placed the paper under surveillance for ‘left-wing extremism’. An urgent appeal was rejected in March 2022.

The ruling is intended to provide a legal basis for the claim that the newspaper was ‘unconstitutionally’ and ‘justifiably’ under surveillance by the secret service. The banning of the far-right magazine Compact, which was banned with immediate effect on Tuesday and confiscated by the Interior Ministry, shows how far-reaching the consequences could be.

JW’s fundamental rights are already severely restricted. The inclusion of the newspaper in the annual report of the secret service has a chilling effect on interview partners and readers and generally complicates and hinders the professional practice of journalists and broadcasters.

The plaintiff had therefore requested that the newspaper’s inclusion in 23 annual reports of the secret service since 1998 be annulled.

After the ruling, Dietmar Koschmieder, managing director of JW, said that an appeal would be lodged and, if necessary, the case would be taken to the European Court of Justice.

Koschmieder, a member of the German Communist Party (DKP), accused the court in its ruling of adopting ‘crude and stupid things’ from the constitutional report.

The president of the court, Wilfried Peters, sided with the BfV from the outset. According to the World Socialist Website, he made no secret of his view that socialist and Marxist politics should be banned in Germany.

Echoing the defendant’s arguments, Peters argued that the newspaper represented a ‘class point of view’ and referred favourably to Marx and Lenin, which was already unconstitutional.

According to the president, Junge Welt could not fall within the scope of freedom of the press because it not only published, but also displayed ‘political aims’ against the ‘free democratic basic order’ by organising an annual conference against capitalism.

The court said that the newspaper had given a voice to ‘extreme left-wing authors’, had referred to organisations on the ‘extreme left-wing spectrum’ and had allegedly failed to distance itself sufficiently from political forces advocating violence in parts of its coverage.

The plaintiff’s lawyer, Heinrich, pointed out that a positive reference to Marx and Lenin is not synonymous with the ideology of ‘Marxism-Leninism’, which was declared unconstitutional in a 1956 Supreme Court ruling against the German Communist Party (KPD) for, among other things, advocating a one-party dictatorship. According to the ruling, only ‘Marxism-Leninism as interpreted by Stalin’ was unconstitutional.

In his ruling, Peters insisted that the BfV had drawn attention to the ‘extreme left-wing’ views of many JW writers and editors, and declared that Lenin, as a historical figure, had ‘fought most vigorously against the constitutional order’.

Judge Peters also set the value of the case at a staggering €115,000, including lawyers’ fees and court costs.

According to the court, there are numerous links between the editors and writers of Junge Welt and the German Communist Party (DKP), which is considered ‘extreme left-wing’.

In addition, Junge Welt does not openly declare its commitment to ‘non-violence’, and former ‘RAF terrorists’ have repeatedly been offered platforms by the newspaper.

The judge ruled that the normal amount in dispute for the BfV’s annual reports was actually 5,000 euros, but that these amounts had to be added together because there were 23 reports in total, albeit almost identical ones.

As a result, the JW broadcasters have to pay large sums of money to the court, even though the case is still ongoing and the judgement has not yet been finalised.

Sevim Dağdelen, foreign policy spokesperson for the Sahra Wagenknecht Alliance (BSW) in the Bundestag, criticised the ruling: ‘The decision undermines freedom of the press and democracy in Germany. Critical reporting on war and capitalism should be defended as part of the political decision-making process, not the job of the Federal Office for the Protection of the Constitution.

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Greece buys Russian gas through TurkStream

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According to the Berliner Zeitung, Greece has suddenly halted its ambitious LNG plans and opted to rely on gas from the TurkStream pipeline from Russia to Turkey.

The EU wants to end its dependence on Russian gas by 2027. Indeed, the share of Russian pipeline gas in EU gas imports will fall from 40 percent in 2021 to 8 percent in 2023.

However, according to the report, there are now signs that this trend will not continue. Some EU countries, such as Greece, have even started to import more Russian pipeline gas again. Instead, plans for additional LNG terminals have been put on hold.

Gas imports via TurkStream on the rise

According to Handelsblatt, around 60 percent of Greece’s gas imports currently come from Russia. In 2022, this figure will be only 14 percent.

Greece is not alone: Russia’s share of Austria’s gas imports has also risen from 87 to 91 per cent.

Hungary has signed new supply contracts with Gazprom for 2023.

Greece, however, had other plans last year. A project for five new LNG terminals was announced, which would make the country one of the most important LNG hubs in the region. The plan was to supply LNG as far as Ukraine.

But the Greek government has now backtracked. Our LNG capacity is more than sufficient,’ Handelsblatt quoted Greek Environment and Energy Minister Theodoros Skylakakis as saying. The future of the LNG projects is now uncertain.

Athens wants to block ship-to-ship transfers of Russian oil

However, according to a report in the Greek City Times, the Greek navy this week extended an advisory effectively banning shipping off the south-east coast of the Peloponnese and beyond.

According to three sources, the move is aimed at preventing ship-to-ship transfers of Russian oil in Greek waters.

In recent months, Greece has regularly issued and extended similar advisories for military exercises in the Gulf of Lakonia and off the island of Kythera (Chuha), urging commercial and other vessels to avoid these areas.

The latest advisory has been extended until 15 September 2024.

It is clearly effective in preventing the diversion of shipments that should not be diverted,” said one of the sources, citing this as one of the main reasons for the extension.

Russian gas continues to reach the EU

Data from the think tank Bruegel show that the EU’s gas imports from Russia are increasing.

In the first week of July 2024, they amounted to 648 million cubic metres, compared to only 562 million cubic metres in the same period in 2023.

In particular, more Russian gas was imported via pipelines in Ukraine and Turkey. For example, the TurkStream pipeline transported 344 million cubic metres of gas to the EU in the first week of July, compared to only 298 million cubic metres a year earlier, an increase of around 15 percent.

Russia has again overtaken the US in gas supplies to the EU

This results in lower demand for LNG in the EU, as pipeline gas is generally much cheaper.

In terms of total exports to Europe (pipeline gas and LNG), Russia has once again overtaken the US as the EU’s second largest gas supplier.

According to the Berliner Zeitung, it remains a difficult task for the EU to become independent of Russian gas by 2027.

The EU has so far imposed a total of 14 sanctions packages on Russia, but Russian pipeline gas has not yet been affected.

Russian LNG has also been sanctioned only indirectly. Only transhipment through a European port for resale to third countries is banned.

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NATO plans to seize Chinese infrastructure in Europe in case of ‘wider conflict with Russia’

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NATO officials are discussing taking action to reclaim some Chinese-owned infrastructure projects in Europe in the event of a wider conflict with Russia in the east of the continent, three officials involved in the talks told CNN.

A decade ago, as Europe struggled to emerge from the economic crisis caused by the global financial meltdown, the promise of infrastructure funding from Chinese-owned investment companies seemed like a great “windfall”, according to CNN.

Now, with the biggest ground war in Europe since World War II and Western warnings that Beijing is aiding Russia in the war, Nato countries see these investments as a “liability” and the allies have begun discussing ways to buy back some of these projects, officials said.

According to one US official, there are fears that Beijing could use its infrastructure in Europe to provide material support to Russia if the conflict escalates. The goal is to find a way forward well in advance of any potential conflict, the officials said.

Discussions at an early stage

The discussions also show that the NATO alliance is increasingly focused on China. The People’s Republic of China was strongly targeted in a joint statement issued by 32 heads of state and government at the 75th anniversary summit in Washington last Wednesday.

Discussions on infrastructure measures are still in the early stages, according to three officials involved, with varying levels of commitment among NATO members. One NATO diplomat said the United States, which is leading the talks, should continue the discussions bilaterally to ensure the necessary support.

From railways linking Eastern Europe to China to ports in the North and Baltic Seas, China has financed tens of billions of dollars of infrastructure investment under the Belt and Road Initiative (BRI), which European countries signed up to in 2013.

Infrastructure to be nationalised in case of war

A NATO official said that if war broke out, infrastructure ‘would almost certainly be nationalised or nations would temporarily take operational control under emergency security measures’. China could then take the confiscating countries to court, he said.

US officials believe that moves by European countries to force Russia to sell its assets after the Ukraine war have set a precedent for such takeovers or sales. For more than a year, Finland had repeatedly blocked the operation of the Helsinki Shipyard, a maker of icebreaking ships once owned by a Russian company, until Russia sold it to a Canada-based organisation in late 2023.

A senior US official said the talks had expanded beyond low-tech to include high-tech areas such as quantum computing, semiconductors and telecommunications infrastructure.

Blinken signals Pacific alliance against China

US Secretary of State Antony Blinken said on Wednesday that the war in Ukraine may be the reason why European and Asian countries have realised that their security depends on each other.

“Japanese Prime Minister Kishida said that what happens in Europe today could happen in East Asia tomorrow, and perhaps that was crystallised in Ukraine. When Russia renewed its aggression against Ukraine, Japan stood up, South Korea stood up, Australia stood up, New Zealand stood up, reflecting a recognition that these problems are interconnected,” Blinken said.

France reluctant to use NATO against China

While most NATO members have expressed some level of concern about China’s infrastructure, two officials involved in the discussions told CNN that France in particular has tried to shift the infrastructure debate to the European Union, which has authority over other economic issues.

According to the officials, tensions with France and other countries have influenced the language of the statement, with countries arguing that NATO is not the best platform to challenge China.

But many member states have a very real fear that Beijing could use these assets against the alliance in the future and continue to push for the alliance to defend against this threat, according to CNN.

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