- EU members agree to gas rationing RT
EU nations have agreed on a controversial scheme to slash gas consumption in preparation for a possible complete stoppage of supplies from Russia, diplomats have told German news agency DPA.
Some members – led by Hungary and Greece – have expressed strong objections to the proposal.
With the level of reliance on Russia gas varying between member states, the proposal by the European Commission had been met with criticism from many governments within the EU.
The emergency plan will see member states voluntarily reduce their consumption of natural gas by 15% between August 2022 and the end of March 2023, the sources said.
- Germany and the E.U. both have multi-year plans to cut their reliance on Russian gas. Putin’s acting like the end is already here Fortune
Germany and the E.U. have been doing everything they can to reduce their reliance on Russian energy since the war in Ukraine began. And with Russia, once again, moving the goal posts this week, we could see the timeline of those plans accelerate substantially.
On Monday, Russia’s state-run gas giant, Gazprom, said it will cut deliveries of natural gas to Germany via the Nord Stream pipeline to about 20% of maximum capacity starting Wednesday morning.
Kremlin spokesman Dmitry Peskov told reporters that President Vladimir Putin is “not interested” in completely cutting gas deliveries to Europe, but added that “if Europe continues its course of absolutely recklessly imposing sanctions and restrictions…the situation may change,” Bloomberg reported.
- European natural gas prices soar 17% after Russia says it will slash supplies to the continent, driving fears of a deep recession Business Insider
European natural gas prices have shot 17% higher over the last two days after Russia said it will slash supplies of the fossil fuel to the continent through the Nord Stream 1 pipeline.
Dutch TTF natural gas futures for August — the benchmark European price — rose sharply on Monday after Russia’s Gazprom announced the move.
It jumped again on Tuesday to around 188 euros ($191.50) per megawatt hour, according to data from the ICE exchange. That was more than 17% above Friday’s closing price of around 160 euros and the highest since early March.
European natural gas prices have now risen for four consecutive days and were up more than 700% from a year earlier on Tuesday.
- Gas crunch fears hammer euro, lift dollar and Swiss franc Reuters
The prospect of another Russian gas supply cut knocked the euro lower on Tuesday, while dollar gains were tempered by mounting uncertainty over the U.S. Federal Reserve’s policy-tightening path after this week’s expected interest rate rise.
- Glaciers vanishing at record rate in Alps following heatwaves Reuters
The Alps' glaciers are on track for their highest mass losses in at least 60 years of record keeping, data shared exclusively with Reuters shows.
Since last winter, which brought relatively little snowfall, the Alps have sweltered through two big early summer heatwaves – including one in July marked by temperatures near 30 Celsius (86 Fahrenheit) in the Swiss mountain village of Zermatt.
First Ukraine grain ships may move in days, says U.N. Reuters
Ukrainian energy giant’s debt plan rejected RT
Creditors of Ukraine’s state-owned energy company Naftogaz have rejected the firm’s request for a two-year debt payment freeze, the country’s media reported on Monday.
Naftogaz made the proposal earlier this month, citing a “significant economic and business decline in Ukraine” caused by the ongoing conflict with Russia. The deadline for the bondholders’ response to the proposal expired last Thursday. Naftogaz has a $335 million bond maturing, as well as two interest payments that were due on July 19 and the proposal sparked fears that the company, and the government, were about to default on their debts.
According to an earlier report by Reuters, Naftogaz’s creditors didn’t think the company was facing an immediate cash crunch and continued to view the company as a profitable enterprise. According to Interfax Ukraine, Naftogaz will now prepare a new offer to bondholders.
Naftogaz is Ukraine’s largest state-owned oil and gas company and a major source of income, accounting for almost 17% of the country’s total state budget revenue last year.
- China And India Are Buying Less Russian Crude Oil Price
Asian nations are letting up on discounted Russian oil exports, with Bloomberg data showing a 13% decline over the past four weeks as Chinese and Indian demand ease, chipping away at Russian oil revenues.
China and India account for purchases of 55% of Russia’s seaborne oil exports; however, Chinese demand over the past four weeks has dropped by 52,000 barrels per day, while Indian demand has eased by 18%, according to Bloomberg.
Reuters also reports that Chinese state-run Sinopec–the biggest refiner in Asia–reduced purchases of discounted Russian ESPO crude oil this month after refusing to outbid Indian buyers.
Citing trading sources, Reuters said Sinpoec’s move was purely mathematical and not geopolitical.
- High Energy Prices Force One In Six German Firms To Cut Production Oil Price
One of every six German industrial companies feels forced to reduce production due to high energy prices, a survey by the Association of German Chambers of Industry and Commerce, DIHK, showed on Monday.
Nearly a quarter of the companies forced to reduce production have already done so, and another one-quarter are in the process of scaling back production due to sky-high energy prices, according to the survey of 3,500 companies from all sectors and regions in Germany.
- Germans pessimistic about the future RT
The business climate has substantially worsened in Germany, with industries feeling increasingly concerned about the coming months, according to a survey by a German think tank released on Monday.
“Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the cusp of a recession,” reads the release by the Ifo Institute.
The ifo business climate index fell from 92.2 in June to 88.6 in July, the lowest point since June 2020 – the height of the coronavirus pandemic – and follows over a year of post-pandemic recovery.
Among the sectors feeling the most pessimistic about the future are manufacturing, service, construction, and trade.
The index is based on a survey of around 9,000 managers from across the German business community and measures their confidence in the current climate in comparison to a 2015 reference point.
- ‘Like a giant sewage plant’: how Germany’s ‘pig belt’ got too big Guardian
There is an old saying, rather unloved by local people, that if you roll down the window while driving through Germany, you’ll always know from the smell when you are in Lower Saxony.
This is the heartland of a €6bn (£5.1bn) pork industry that sends thousands of tonnes of German pigmeat across the world. But it has done so at a cost. Maps of the Schweinegürtel (pig belt) glow a toxic red if you show ammonia emissions from farm animals and nitrates in groundwater.
Critics say local authorities in the region have allowed the industry to flourish while turning a blind eye to its environmental impact.
While animal welfare has jumped up the public agenda, say campaigners, hotspots of intensive livestock farming and the pollution of waterways is not in many people’s minds.
The sheer density of pigs in Lower Saxony is at the heart of the problem, explains Christine Chemnitz, director of the German agricultural thinktank Agora Agriculture.
While animal manure is a source of agricultural fertiliser, overuse can lead to excess nitrates seeping into groundwater, where it can damage rivers, lakes and oceans.
Almost 60% of pigs in Germany are found in Lower Saxony and North Rhine-Westphalia, its neighbouring state to the south. In some areas in Lower Saxony – home to more than 7 million pigs – the density of pigs is four times the national average.
- UK freezes international aid to keep within self-imposed limit Climate Change News
The UK has frozen “non-essential” new international aid spending over the summer, in a move likely to hit climate programmes in developing countries.
The finance ministry’s chief secretary Simon Clarke told the foreign ministry last week to limit new payments over concerns that the UK will spend more than its self-imposed limit of 0.5% of national income, the Financial Times reported.
Like many countries, the UK boosted aid to Ukraine after it was invaded by Russia in February. As the war was unexpected, this aid was not planned and other budgets have been raided to pay for it.
Asia and Oceania
- China’s new mega tunnel will send water from the Three Gorges Dam to Beijing SCMP
China has launched a new tunnelling project to send water from the Three Gorges Dam to Beijing as part of a massive infrastructure plan to boost food production and the economy.
The Yinjiangbuhan tunnel will drain water from the Three Gorges – the world’s largest dam – to the Han River, a major tributary of the Yangtze River.
Reaching the Danjiangkou reservoir at the lower reaches of the Han, the water will head north as far as Beijing via the middle line of the South-to-North Water Diversion Project, a 1,400km-long (870-mile) open canal.
Päijänne, the world’s longest water tunnel in Finland, stretches 120km in bedrock up to 130 metres deep. The Yinjiangbuhan tunnel is about twice as long and parts will go as deep as 1,000 metres underground.
It will take a decade to build and cost 60 billion yuan (US$8.9 billion), according to a report on July 8 by Guangming Daily, a state-owned newspaper based in Beijing.
- China Approves First Homegrown Antiviral Pill to Combat Covid Bloomberg
China approved its first homegrown Covid antiviral, as regulators cleared a medicine from Genuine Biotech that was previously used to treat HIV.
The National Medical Products Administration gave the nod to Azvudine from the Henan-based drug company for adults with normal symptoms under an emergency use authorization, according to a statement by the agency on Monday.
The drug will compete with Pfizer Inc.’s Paxlovid, which was approved in China in February shortly before the country experienced its worst outbreak of the pandemic. Adding a homemade therapy to the country’s existing arsenal of vaccines to fight the virus could help China transition to life beyond Covid Zero.
- Beijing is trying to stop Pelosi from visiting the leading supplier of chips to the U.S., warning it is ‘seriously prepared’ to retaliate if she goes to Taiwan Fortune
U.S. Speaker of the House Nancy Pelosi is reportedly scheduling a trip to Taiwan in August, paying visit to the world’s leading producer of semiconductors and the most important supplier of chips to the U.S. The self-governing island produces 92% of the world’s most advanced chips, including the chipsets that power iPhones and most other U.S. tech.
But despite the booming trade between Taiwan and the U.S., political relations remain complicated. The Chinese government in Beijing claims sovereignty over Taiwan and vehemently resists any move by Washington to recognize the Taiwanese government in Taipei.
Now reports of Pelosi’s unconfirmed visit have stoked tensions between the U.S. and China so high that even officials from Washington are advising the speaker against going.
- US Considers Deploying Carriers To Support Pelosi’s Taiwan Trip Popular Resistance
The US military is considering “moving aircraft carriers or sending fighter planes for close air support” as part of a potential trip by US house speaker Nancy Pelosi to Taiwan, the Washington Post reported Saturday.
“The U.S. military is devising options for protecting Pelosi’s delegation, who—as is normal procedure for congressional delegations to Taiwan—would be flying on a military plane. The measures under consideration include moving aircraft carriers or sending fighter planes for close air support. That, in turn, could be misinterpreted by the Chinese side as an aggressive rather than a defensive measure.”
- Indonesia, China pledge deeper ties after rare Beijing summit Jakarta Post
The leaders of China and Indonesia pledged on Tuesday to scale up bilateral trade and expand cooperation in areas such as agriculture and food security, following a rare visit to COVID-wary China by a foreign head of state.
China and Indonesia believe their relations have great strategic significance and far-reaching global influence, the Chinese foreign ministry said after a meeting of the countries' leaders.
The ministry statement followed meetings by President Xi Jinping and Premier Li Keqiang with President Joko “Jokowi” Widodo in Beijing on Tuesday.
- Sri Lanka’s New President Cracks Down on Protests as Challenges Mount The Diplomat
The United Nations and the United States have condemned the heavy-handed tactics of the Sri Lankan government after the army and police forcibly dismantled a protest camp of tents and makeshift homes, the focal point of protestors for more than three months.
Demonstrators had said they would voluntarily leave the site after Gotabaya Rajapaksa fled the country and resigned as president but his successor, former Prime Minister Ranil Wickremesinghe, lost patience and ordered their removal.
“We are alarmed by the unnecessary use of force reportedly employed by Sri Lanka’s security forces to break up a protest camp near presidential offices in Colombo,” said Jeremy Laurence, spokesman for the U.N. Human Rights Office spokesperson Jeremy Laurence.
“The raid on the camp sends a chilling message to peaceful protesters, including elsewhere in the country. Everyone has the right to peacefully demonstrate and to publicly express their frustration over the economic and political crisis,” he said.
- Sri Lanka to restrict fuel imports for next 12 months Reuters
Sri Lanka will restrict fuel imports for the next 12 months because of a severe shortage of foreign exchange, its energy minister said on Monday, as the island nation’s new government seeks to find a way out of a crippling economic crisis.
- Bangladesh seeks $4.5bn IMF loan as forex reserves shrink Al Jazeera
Bangladesh has sought a $4.5bn loan from the International Monetary Fund, the country’s leading newspaper reports, joining South Asian neighbours Pakistan and Sri Lanka in seeking help to cope with mounting pressure on their economies.
Known for its big garment-exporting industry, Bangladesh has sought the funds for its balance of payment and budgetary needs, as well as for efforts to deal with climate change, the Daily Star reported on Tuesday, citing documents it had seen.
- U.S. and Taliban make progress on Afghan reserves, but big gaps remain Reuters
U.S. and Taliban officials have exchanged proposals for the release of billions of dollars from Afghan central bank reserves held abroad into a trust fund, three sources familiar with the talks said, giving a hint of progress in efforts to ease Afghanistan’s economic crisis.
Significant differences between the sides remain, however, according to two of the sources, including the Taliban’s refusal to replace the bank’s top political appointees, one of whom is under U.S. sanctions as are several of the movement’s leaders.
- US senator favours ending aid to Rwanda over human rights abuses Al Jazeera
The chairman of the United States Senate Committee on Foreign Relations said he would place a hold on US security assistance to Rwanda in Congress over concerns about the Rwandan government’s human rights record and role in the conflict in the neighbouring Democratic Republic of the Congo.
In a letter to US Secretary of State Antony Blinken, Senator Robert Menendez called for a comprehensive review of American policy towards Rwanda.
Menendez said he would begin by placing a hold on several million dollars in support for Rwandan peacekeepers participating in UN missions, according to the letter, which was leaked to the media and which his office confirmed was authentic.
- The AAA says high gas prices are destroying demand, with 64% of Americans altering their lifestyle as fuel costs surge Business Insider
High gas prices are triggering so-called demand destruction, according to an American Automobile Association survey, which showed Americans are changing their lifestyles to consume less fuel.
The AAA surveyed more than 1,000 Americans last month, with 64% saying they had made changes to their lifestyle in response to the jump in gas prices.
Out of that 64%, almost 90% said they were driving less. People also said they were postponing vacations, combining errands, and reducing shopping trips. The survey data was released Monday.
- US home prices are about to tumble as demand for new houses ‘craters’, an economist warns Business Insider
US home prices are already falling and are about to drop even more sharply as demand for new houses “craters”, according to an economist at the consultancy Pantheon Macroeconomics.
“Single-family homes are about 15% to 20% overvalued, so the next few months will be very tough,” Ian Shepherdson, chief economist at Pantheon Macro, said in a note to clients Tuesday.
Data on US new home sales for June is due out Tuesday. Economists polled by Bloomberg expect sales to have fallen to 659,000, from 696,000 in May.
However, Shepherdson said he is expecting a much bigger drop to 550,000. New home sales topped 1 million in August 2020.
- Jerome Powell’s Fed Pursues a Painful and Ineffective Inflation Cure, by Elizabeth Warren, in the WSJ. I quote in full:
Even as the pandemic continues to take its toll, the U.S. has experienced a surprisingly strong economic recovery. Since President Biden’s inauguration, the U.S. economy has created nine million new jobs. Private-sector jobs have fully recovered. Yet the Federal Reserve, led by Jerome Powell, is on the verge of sacrificing all this progress in its effort to tamp down inflation. With Mr. Powell expected to announce another round of aggressive interest-rate hikes, the Fed risks triggering a devastating recession.
Inflation is a global phenomenon inflicting significant financial pain on families everywhere. Rising costs are an urgent problem, and interest rates play a key role in maintaining price stability. But urgency is no excuse for doubling down on a dangerous treatment. As with any illness, the right medicine starts with the right diagnosis. Unfortunately, the Fed has seized on aggressive rate hikes—a big dose of the only medicine at its disposal—even though they are largely ineffective against many of the underlying causes of this inflationary spike.
Mr. Powell has acknowledged this. Testifying before the Senate Banking Committee in June, he noted that elevated interest rates likely wouldn’t bring down gasoline or food prices. “There are many things we can’t affect,” he admitted in a June press conference—namely, the key causes of today’s inflation. Higher interest rates won’t end skyrocketing energy prices caused by Vladimir Putin’s war on Ukraine. They won’t fix supply chains still reeling from the pandemic. And they won’t break up the corporate monopolies that Mr. Powell admitted in January could be “raising prices because they can.”
If the Fed’s interest-rate hikes won’t address many causes of today’s inflation, it’s worth asking: What would they do?
When the Fed raises interest rates, increasing the cost of borrowing money, it becomes more expensive for businesses to invest in their operations. As a result, employers will slow hiring, cut hours and fire workers, leaving families with less money. In the bloodless language of economists, that’s referred to as “dampening demand.” But make no mistake: If the Fed cuts too much or too abruptly, the resulting recession will leave millions of people—disproportionately lower-wage workers and workers of color—with smaller paychecks or no paycheck at all.
The likelihood that overzealous rate hikes trigger a recession is growing. Goldman Sachs cautioned that the Fed’s policy is more aggressive than necessary and doubled its forecast of the likelihood that the economy falls into a recession over the next year. Nobel Prize-winning economist Peter Diamond has warned about the substantial risk of a crash landing from the Fed’s aggressive approach. Mr. Powell has even conceded that the Fed’s actions may lead to a downturn, saying recession “is not our intended outcome at all, but it’s certainly a possibility.”
Despite these warnings, the Fed chairman still has cheerleaders for his rate-hiking approach. Chief among them is Larry Summers. “We need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” the former Treasury secretary recently told the London School of Economics. You read that correctly: 10% unemployment. This is the comment of someone who has never worried about where his next paycheck will come from.
If Messrs. Powell and Summers have their way, the resulting recession will be brutal. As in past downturns, Republicans in Congress will press for austerity—tax cuts for giant corporations and the rich, weaker regulation on big businesses, and little economic support for the most vulnerable. Democrats should be ready to reject the Republican playbook and prepared to help working families survive.
But it doesn’t have to be this way. The Biden administration recognizes the U.S. has many tools for fighting inflation that wouldn’t make the economy smaller and Americans poorer. The president has undertaken a range of actions. To relieve the pain at the pump imposed by Mr. Putin’s war, the president ordered the largest-ever release of strategic oil reserves and spurred one of the fastest declines in gasoline prices in more than a decade. To lower food prices, he dedicated $1 billion to expand meat-processing capacity. To straighten out supply-chain kinks, Mr. Biden has tackled shipping-container backlogs at our ports. And to combat corporate monopolies using inflation as an excuse to pad their profits, the president has empowered the most aggressive antitrust enforcers in a generation.
Congress should do its part to fight inflation. Investing in high-quality, affordable child care would lower costs by bringing more than a million parents into the workforce. Ending tax breaks for off-shoring and investing in American manufacturing would create good jobs and strengthen supply chains. Allowing Medicare to negotiate prices for prescription drugs would lower healthcare costs. And giving the Biden administration more tools to bolster competition policy would help crack down on price gouging by large corporations.
Before the Federal Reserve triggers a recession, Mr. Powell should remember that the one medicine in his kit doesn’t treat every economic illness. Low unemployment and high inflation are painful, but a Fed-manufactured recession that puts millions of Americans out of work without addressing high prices would be far worse.
- OPEC+ Is Now 2.84 Million Bpd Below Its Oil Production Target Oil Price
The OPEC+ group had a massive shortfall of 2.84 million barrels per day (bpd) in June between actual production and the target oil output level as part of the deal, two delegates at the alliance told Argus on Monday.
As OPEC+ is unwinding its cuts, more and more members are falling further behind their quotas due to a lack of capacity or investment in supply. In June, the compliance rate at the OPEC+ group soared to 320% from an estimated 256% in May, according to Argus’s sources, suggesting that the gap between nameplate production per the agreement and actual production continues to widen.
Per an Argus survey from earlier this month, OPEC+ pumped more than 2.5 million bpd below its target in June, despite a rebound in Russia’s oil production that helped the group’s output rise by 730,000 bpd from May.
The Ukraine War
- Russian forces strike Mykolaiv port infrastructure, mayor says Reuters
Russian forces have struck port infrastructure in Ukraine’s southern Mykolaiv region, Mayor Oleksandr Senkevich said on Tuesday.
“A massive missile strike was launched on the south of Ukraine from the direction of the Black Sea, and with the use of aviation,” he told Ukrainian state television, providing no details on the aftermath of the strike.
Climate and Space
- Russia to quit International Space Station after 2024 RT
Russia is going to withdraw from the International Space Station (ISS) project with the West after 2024, the new head of the country’s space agency Roscosmos, Yury Borisov, said on Tuesday.
Moscow is going to fulfill all its obligations to foreign partners as part of the ISS project, but “the decision to withdraw from this station after 2024 has been made,” Borisov told President Vladimir Putin during a meeting at the Kremlin.
“I think, by that time, we’ll start putting together a Russian orbital station,” the space boss added.
Dipshittery and Cope
- Ukrainian government calls Russian foreign minister’s trip to Africa “the quintessence of sadism” CNN
The Ukrainian government has criticized Russian Foreign Minister Sergey Lavrov’s trip to Africa, with a senior official calling it “the quintessence of sadism.”
“You arrange an artificial hunger and then come to cheer people up,” Mykhailo Podolyak, an adviser to the Ukrainian President’s chief of staff, tweeted on Monday. “With one hand you sign the Istanbul initiative, with the other attack Odessa sea port."
“Whether Moscow wants or not, grain will get to the world,” Podolyak promised. “We know well what an artificial famine prescribed by scriptwriters in the Kremlin is, so we responsibly fulfil agreements. All needed is for to stop lying and start fulfilling the commitments made in Istanbul.”
Bloomerism and Hope
- 2,500 St. Louis Machinists Union Members To Strike Boeing Aug. 1 Popular Resistance
Nearly 2,500 members of the International Association of Machinists and Aerospace Workers (IAM) District 837 have voted to strike the Boeing Co. in St. Louis. IAM District 837, which represents workers at three Boeing Defense locations, released the following statement regarding the rejection of the company’s offer:
“Our members have spoken loudly and with one voice. We reject Boeing’s current contract offer and will strike at all three St. Louis area locations, starting at 12:01 a.m. on Monday, Aug. 1, 2022. We cannot accept a contract that is not fair and equitable, as this company continues to make billions of dollars each year off the backs of our hardworking members. Boeing previously took away a pension from our members, and now the company is unwilling to adequately compensate our members’ 401(k) plan. We will not allow this company to put our members’ hard-earned retirements in jeopardy.
“We stand in solidarity across the United States and will use the might of the Fighting Machinists to bring home a contract that allows us to build and produce some of the best military aircraft and weapons in the world, and enables us to take care of our families.
“It is the bravest decision a union member makes to go on strike, putting their family and loved ones at risk. We do not make this decision lightly or in haste, but do so in order to stand up for working people around the globe and fight for the contract we deserve.”
- Planned Parenthood Workers In Five States Unionize Popular Resistance
On July 21, 435 Planned Parenthood workers from Minnesota, Iowa, North Dakota, South Dakota and Nebraska joined the Service Employees International Union, Healthcare Minnesota and Iowa (SEIU HCMN&IA) in a resounding 90.1% yes vote. 238 workers voted to join the union, and only 26 voted not to.