Tax policy is playing a critical role as countries seek to promote economic recovery from the COVID-19 pandemic and respond to the impact of rapid increases in energy prices, according to a new OECD report.

Tax Policy Reforms 2022 describes recent tax reforms across 71 countries and jurisdictions, including all OECD members and selected members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting.

The report finds that tax reforms – notably reductions in taxes on labour and more generous corporate tax incentives – have been among the key policy tools that countries have used to stimulate growth and promote economic recovery from the pandemic.

As energy prices rose steeply from the second half of 2021, countries moved quickly to shield households and businesses by providing temporary fiscal support – including tax cuts – and by tapering existing stimulus measures that could add to inflation.

“Recent tax reforms have been targeted at stimulating economic recovery from COVID-19, while countries with the greatest fiscal space have been providing more generous tax benefits for longer periods of time,” said Pascal Saint‑Amans, Director of the OECD Centre for Tax Policy and Administration. “Countries have also used tax policy as one of their main tools in responding to rapid rises in energy prices.”

Personal income taxes and social security contributions were reduced in 2021 in almost all countries covered in the report, with most reductions targeted at lower-income households to support employment and provide in-work benefits. Many countries also increased corporate tax incentives to stimulate investment and innovation.

The most significant VAT reforms focused on the digital economy and e-commerce, including strong growth in e-invoicing and digital reporting requirements. Property tax reforms were less common in 2021, with a small number of countries implementing measures to reduce the use of properties as investment vehicles and improve equity in the housing market.

A Special Feature in this year’s report highlights how tax policy has been used by governments to provide significant support to households and businesses, shielding them from the impact of high energy prices. The report notes that the measures introduced through mid-2022 to lower the price of energy were rapidly deployed and often relatively simple to implement. However, the report also suggests that governments could provide more targeted measures for at-risk groups, improve the resilience of households that are vulnerable to price shocks, and accelerate the development of alternative sources of energy and modes of transport.

To access the report, data, and summary, visit www.oecd.org/tax/tax-policy-reforms-26173433.htm.

Contacts:

• David Bradbury, Head of the Tax Policy and Statistics Division in the OECD Centre for Tax Policy and Administration (CTPA) | david.bradbury@oecd.org
• Bert Brys, Head of the Country Tax Policy Unit in CTPA | bert.brys@oecd.org
• Lawrence Speer, OECD Media Office | Lawrence.Speer@oecd.org | news.contact@oecd.org

Compliments of the OECD.

• Financing of unprecedented EUR 1 billion built-to-sell construction facility including one of the biggest loans ever granted by the European Investment Bank (EIB) under a Project Finance structure
• EIB loan backed by the EU’s new InvestEU programme
• Further loans from seven commercial banks
• More than EUR 2 billion project volume in total for entire renewable energy pipeline in Spain and Portugal with over 50 projects

Aquila Clean Energy EMEA, the clean energy development platform in Europe of Aquila Capital, has closed a EUR 1 billion construction facility, supported by the InvestEU programme. The financing will support the development and construction of Aquila Clean Energy’s entire renewable energy pipeline in Spain and Portugal over the next three years. The projects will be implemented in regions like Castilla y León, Comunidad Valenciana, Andalucía, Cantabria, Castilla-La Mancha and Murcia, in Spain, and Setúbal, Coimbra, Evora, Leiria, in Portugal.

The pipeline consists of more than 50 projects of predominately solar photovoltaics (PV) and onshore wind assets, with a total electricity generation capacity of 2.6 giga watts (GW), a volume equivalent to the annual consumption of around 1.4 million households. These projects will have an estimated yield of 5.3 Terawatt-hours per year.

The operation is aligned with the EU’s renewable energy targets and supports Spain and Portugal in meeting their commitments to reduce greenhouse gas emissions. In addition, the vast majority of investments are expected to be located in the EIB’s cohesion priority regions (91 % according to the project pipeline), thus supporting the economic recovery in these regions which were particularly affected by the COVID-19 pandemic.

For the construction facility, Santander acted as the Facility and Security Agent. NatWest acted as Documentation Agent and KfW IPEX-Bank as Hedging Documentation Agent. BNP Paribas, ING, Intesa SanPaolo and Banco Sabadell further supported the facility. The debt was significantly oversubscribed, confirming lenders’ strong interest in the financing.

CMS and White & Case (both Hamburg) acted as borrowers’ and lenders’ legal counsel, respectively. Glas SAS in Frankfurt is acting as Administration Agent.

For the EIB, this short-term construction financing is breaking new ground, as the development bank had mainly acted as long-term lender in the infrastructure space in the past. This project was made possible because of an EU budget guarantee under the InvestEU programme, which allows the EIB to increase its risk taking capacity and in this particular case, to assume electricity merchant risk under a non-recourse financing structure as the transaction does not involve any price hedge mechanism such as PPA.

The InvestEU programme follows up on the success of the Investment Plan for Europe and aims to facilitate investments in the EU. The landmark transaction announced today not only increases the renewable energy generation capacity on the Iberian Peninsula significantly, but also contributes to the objectives of the European Green Deal.

A bespoke EUR 1 billion construction facility consists of EUR 400 million credit from EIB – supported by an EU budget guarantee under InvestEU – and EUR 600 million from the consortium of the commercial banks. For the total project volume of over EUR 2 billion, the remaining amount of more than EUR 1 billion comes from funds managed by Aquila Capital.

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “Developing the infrastructure that will secure the objectives of the European Green Deal will require significant financial support. InvestEU will play an important role in mobilising the financing. I am delighted that this programme is facilitating a €2 billion investment that will help Spain and Portugal fulfil their green energy potential.”

Susanne Wermter, CEO of Aquila Clean Energy EMEA, emphasises: “We are extremely pleased being able to secure this landmark financing in a market environment which is marked by high inflation, rising interest rates, supply chain issues and the war in the Ukraine. This transaction constitutes the largest financing in the history of Aquila Clean Energy and Aquila Capital. It demonstrates the creditability and appeal of our clean energy assets that aim to actively shape the European energy transition. With the financing now secured, we are opening up additional growth for our company and with the planned assets we will be able to offer our investors further interesting opportunities. I would like to thank all parties involved for their dedication and effort shown over the past twelve months to make this deal work.”

Ricardo Mourinho Félix, EIB Vice-President, highlights: “This construction facility is the first of its kind and a landmark transaction for the EIB. As the EU climate bank, we put sustainable development at the heart of our activities. We are therefore extremely proud of financing this project, through a Green Loan that contributes substantively to Europe’s energy transition and the security of energy supply.”

About Aquila Clean Energy

Aquila Clean Energy EMEA is Aquila Capital´s clean energy platform in Europe. Aquila Clean Energy develops, realizes and operates clean energy assets in the technologies solar, wind, hydropower and battery storage. Currently, Aquila Clean Energy manages a portfolio with a total capacity of more than 8.2GW.

With a local approach and through local teams of experts, Aquila Clean Energy initiates, develops, realizes and operates what we identify as essential assets along the entire value chain and lifetime. Aquila Clean Energy has built a permanent presence in 7 countries with 140 employees, believing that local, on-site management teams are key to the company’s operations.

Aquila Clean Energy is part is part of Aquila Capital, an investment and asset development company focused on generating and managing essential assets on behalf its clients. Currently, Aquila Capital manages nearly 14 billion euros on behalf of institutional investors worldwide. The company has been carbon neutral since 2006 and aims to act carbon negative.

Further information: https://www.aquila-capital.de/en/

About the European Investment Bank

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It provides long-term financing for sound investments that contribute to EU policy. The Bank finances projects in four priority areas: infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs). The EIB recently adopted its Climate Bank Roadmap to deliver on its ambitious agenda to support €1 trillion of climate action and environmental sustainability investments in the decade to 2030 and to allocate more than 50% of its financing to climate action and environmental sustainability by 2025. As part of the roadmap, all new EIB Group operations have been aligned with the goals and principles of the Paris Agreement since 2021.

About the InvestEU Programme

The InvestEU Programme provides the EU with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the EU’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU Programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the EU, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub, and the InvestEU Portal. The InvestEU Fund is implemented through financial partners who will invest in projects using the EU budget guarantee of €26.2 billion. The entire budgetary guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.

Further information: http://investeu.europa.eu

Compliments of the European Commission.

The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) issued today their Autumn 2022 joint risk report. The report highlights that the deteriorating economic outlook, high inflation and rising energy prices have increased vulnerabilities across the financial sectors. The ESAs advise national supervisors, financial institutions and market participants to prepare for challenges ahead.

The post-pandemic economic recovery in Europe has dwindled as a result of the Russian invasion of Ukraine. Russia’s war on Ukraine and the disruptions in trade caused a rapid deterioration of the economic outlook. It adds to pre-existing inflationary pressures by strongly raising energy- and commodity prices, exacerbates imbalances in supply and demand, and weakens the purchasing power of households. The risk of persistent inflation and stagflation has risen.

These factors, coupled with the deteriorated economic outlook, have significantly impacted the risk environment of the financial sector. Financial market volatility has increased across the board given high uncertainties. After a long period of low interest rates, central banks are tightening monetary policy. The combination of higher financing costs and lower economic output may put pressure on government, corporate and household debt refinancing while also negatively impacting the credit quality of financial institutions’ loan portfolios. The reduction of real returns through higher inflation could lead investors to higher risk-taking at a time when rate rises are setting in motion a far-reaching rebalancing of portfolios.

Financial institutions also face increased operational challenges associated with heightened cyber risks and the implementation of sanctions against Russia. The financial system has to date been resilient despite the increasing political and economic uncertainty.

In light of the above risks and vulnerabilities, the Joint Committee of the ESAs advises national competent authorities, financial institutions and market participants to take the following policy actions:

1. Financial institutions and supervisors should continue to be prepared for a deterioration in asset quality in the financial sector and monitor developments including in assets that benefitted from temporary measures related to the pandemic and those that are particularly vulnerable to a deteriorating economic environment, to inflation as well as to high energy and commodity prices.
2. The impact of further increases in policy rates and of potential sudden increases in risk premia on financial institutions and market participants at large should be closely monitored.
3. Financial institutions and supervisors should closely monitor the impact of inflation risks.
4. Supervisors should continue to monitor risks to retail investors, in particular with regard to products where consumers may not fully realise the extent of the risks involved, such as crypto-assets.
5. Financial institutions and supervisors should continue to carefully manage environmental risks and cyber risks to address threats to information security and business continuity.

Contact:

• Solveig Kleiveland, Acting Team Leader | press@esma.europa.eu

Compliments of the European Securities and Markets Authority.

Privacy Policy

OECD labour markets bounced back strongly from the COVID-19 pandemic, but the global employment outlook is now highly uncertain according to a new OECD report.

Russia’s war of aggression against Ukraine has caused lower global growth and higher inflation, with negative impacts on business investment and private consumption.

The OECD Employment Outlook 2022 says that while labour markets remain tight in most OECD countries, lower global growth means employment growth is also likely to slow, while major hikes in energy and commodity prices are generating a cost of living crisis.

Since the low point of the pandemic in April 2020, OECD countries have created about 66 million jobs, 9 million more than those destroyed in a few months at the onset of the pandemic.

The OECD unemployment rate stabilised at 4.9% in July 2022, 0.4 points below its pre-pandemic level recorded in February 2020 and at its lowest level since the start of the series in 2001.

The number of unemployed workers in the OECD continued to fall in July and reached 33.0 million, 2.4 million less than before the pandemic.

Looking at individual countries however, the unemployment rate in July remained higher than before the pandemic in one fifth of OECD countries. In a number of countries, labour force participation and employment rates are also still below pre-crisis levels. Moreover, employment is growing more strongly in high pay service industries, while it remains below pre-pandemic levels in many low pay, contact-intensive industries.

“Rising food and energy prices are taking a heavy toll, in particular on low income households,” OECD Secretary-General Mathias Cormann said. “Despite widespread labour shortages, real wages growth is not keeping pace with the current high rates of inflation. In this context, governments should consider well targeted, means-tested and temporary support measures. This would help cushion the impact on households and businesses most in need, while limiting inflation impacts and fiscal cost of that policy support,” he said.

Graph is courtesy of the OECD.

Tight labour market conditions mean that companies across the OECD are confronted with unprecedented labour shortages. In the European Union, almost three in ten manufacturing and service firms reported production constraints in the second quarter of 2022 due to a lack of labour.

Nominal wages are not keeping pace with the rapid rise in inflation. The real value of wages is expected to decline over the course of 2022, as inflation is projected to remain high and generally well above the level expected at the time of relevant collective agreements for 2022. The cost of living crisis is affecting lower-income households disproportionally. They have to devote a significantly larger share of their incomes on energy and food than other groups and were also the population segment falling behind in the jobs recovery from the COVID-19 pandemic.

In these circumstances, supporting real wages for low-paid workers is essential, according to the report. Governments should consider ways to adjust statutory minimum wages to maintain effective purchasing power for low paid workers. Targeted, means-tested, and temporary social transfers to people most affected by energy and food price hikes would also help support the living standards of the most vulnerable.

In the current circumstances, active discussions between governments, workers and firms on wages will also be key. None of them can absorb the full cost associated with the hike in energy and commodity prices alone. This calls for giving new impetus to collective bargaining, and for rebalancing bargaining power between employers and workers, enabling workers to bargain their wage on a level playing field.

Countries should step up their efforts to reconnect the low-skilled and other vulnerable groups to available jobs. About two thirds of OECD countries have increased their budget for public employment services since the onset of the COVID 19 crisis. However, more funding is not enough: employment and training services need to be integrated, comprehensive and effective in reaching out to employers and job seekers.

Improving job quality for frontline jobs should be an urgent priority for governments. More than half of OECD countries set up one-time rewards to compensate workers in the long-term care sector for extra work during the pandemic. Yet less than 30% of countries have increased pay on an ongoing basis.

Contact:

• Spencer Wilson | spencer.wilson@oecd.org

Compliments of the OECD.

The recent plunge in crypto assets has left investors numbed by losses and surely in doubt. But the future of money is undoubtedly digital. The question is, what will it look like? In our latest issue of Finance & Development, some of the world’s leading experts try to answer this complex and politically charged question.

Of course, digital money has been developing for some time already. New technologies hope to democratize finance and broaden access to financial products and services. A main goal is to achieve much cheaper, instantaneous domestic and cross-border payments. The gains could be especially great for people in developing countries.

Cornell’s Eswar Prasad takes us on a tour of existing and emerging forms of digital money and looks at the implications for finance, monetary policy, international capital flows—even the organization of societies.

Not every form of digital money will prove viable. Bitcoin, now down nearly 70 percent from its November peak, and other crypto assets fail as money, says Singapore’s Ravi Menon, among others. While they are actively traded and heavily speculated on, prices are divorced from any underlying economic value. Stablecoins are designed to rein in the volatility, but many have proved to be anything but stable, Menon adds, and depend on the quality of the reserve assets backing them.

Still, journalist Michael Casey argues, decentralized finance and crypto are not only here to stay but can address real-world problems such as the energy crisis.

Regulation is key. The regulatory fabric is being woven, and a pattern is expected to emerge, explain the IMF’s Aditya Narain and Marina Moretti. But the longer this takes, they argue, the more national authorities will get locked into differing regulatory frameworks. They call for globally coordinated regulation to bring order to markets, help instill consumer confidence, and provide a safe space for innovation.

Meanwhile, central banks are considering their own digital currencies. Bank for International Settlements chief Agustín Carstens and his coauthors suggest that central banks should harness the technological innovations offered by crypto while also providing a crucial foundation of trust. Privacy and cybersecurity risks can be managed with responsibly designed central bank digital currencies, adds the Atlantic Council’s Josh Lipsky.

Elsewhere in the issue, our contributors look at the benefits and drawbacks of decentralized finance, the future of cross-border payments, and how India and countries in Africa are advancing the digital payment frontier.

It’s too early to tell how the digital landscape will evolve. But with the right policy and regulatory choices, we can imagine a future with a mix of government and privately backed currencies held safely in the digital wallets of billions of people.

Thank you, as ever, for reading us.

Author:

• Gita Bhatt is the Head of Policy Communications and Editor-In-Chief of Finance & Development Magazine

Compliments of the IMF.

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today publishes the second Trends, Risks and Vulnerabilities (TRV) Report of 2022. The Russian war on Ukraine against a backdrop of already-increasing inflation has profoundly impacted the risk environment of EU financial markets, with overall risks to ESMA’s remit remaining at its highest level.

In the first half of 2022 financial markets saw faltering recoveries, increasing volatility and likelihood of market corrections. Separately, crypto-markets saw large falls in value and the collapse of an algorithmic stablecoin, highlighting again the very high-risk nature of the sector.

Verena Ross, Chair, said:

“The current high inflation environment is having impacts across the financial markets. Consumers are faced with fast rising cost of living and negative real returns on many of their investments. Consumers also need to watch out as they might be targeted by aggressive marketing promoting high-risk products that may not be suitable for them.

The Russian invasion of Ukraine continues to significantly affect commodity markets, leading to rapid price increases and elevated volatility. These present liquidity risks for exposed counterparties and show the continued importance of close monitoring to ensure orderly markets, a core objective for ESMA.”

Risk summary and outlook

The overall risk to ESMA’s remit remains at its highest level. Contagion and operational risks are now considered very high, like liquidity and market risks. Credit risk stays high but is expected to rise. Risks remain very high in securities markets and for asset management. Risks to infrastructures and to consumers both remain high, though now with a worsening outlook, while environmental risks remain elevated. Looking ahead, the confluence of risk sources continues to provide a highly fragile market environment, and investors should be prepared for further market corrections.

Main findings

Market environment: The Russian aggression drove a commodities-supply shock which added to pre-existing pandemic-related inflation pressures. Monetary policy tightening also gathered pace globally, with markets adjusting to the end of the low interest rates period.

Securities markets: Market volatility, bond yields and spreads jumped as inflation drove expectations of higher rates, equity price falls halted the recovery that had started in 2020, and invasion-sensitive commodity values surged, particularly energy, impacting natural gas derivatives and highlighting liquidity risks for exposed counterparties.

Asset management: Direct impacts of the invasion were limited but the deteriorating macroeconomic conditions amplified vulnerabilities and interest rate risk has grown with expectations of higher inflation. Exiting the low-rate environment presents a medium-term challenge for the sector.

Consumers: Sentiment worsened in response to growing uncertainty and geopolitical risks. The growing volatility and inflation could negatively impact many consumers, with effects potentially exacerbated by behavioural biases. Household savings fell from the record highs of the pandemic lockdowns.

Sustainable finance: The invasion presented a new major challenge to EU climate objectives as several member states turned to coal to compensate for lower Russian fossil fuel imports. Although EU ESG bond issuance fell and EU ESG equity funds experiencing net outflows for the first time in two years, funds with an ESG impact objective were largely spared and the pricing of long-term green bonds proved resilient.

Financial innovation: Crypto-asset markets fell over 60% in value in 1H22 from an all-time-high, amid rising inflation and a deteriorating outlook. The sharp sell-off, the Terra stablecoin collapse in May, and the pause in consumer withdrawals by crypto lender Celsius, added to investor mistrust and confirmed the speculative nature of many business models in this sector.

Compliments of the European Securities and Markets Authority, European Commission.

In parallel with the adoption of EU instruments in the area of civil and commercial law, the EU’s exclusive external competence to negotiate and conclude international conventions has also increased. As a result, the EU (represented by the Commission) has gradually replaced Member States internationally. Where the EU cannot be formally a Contracting Party to an international Convention (because the participation of regional/international organisations is not foreseen in the convention), the EU exercises its competence through its Member States.

The EU promotes multilateral conventions in its relations with third countries in order to rely on a common legal framework on a wide range of issues. The aim is to enhance EU values, promote trade and protect EU citizens and businesses at the global level. The main international partner of the EU on civil justice cooperation is the Hague Conference on Private International Law, of which the EU is a full Member since 2007. Other relevant organisations are Uncitral (United Nations Commission on International Trade Law) and Unidroit (International institute for the unification of private law), where the EU has an observer status. Conventions developed by these international organisations cover issues such as child protection ( in particular  child support and  prevention of child abduction), choice of court, recognition and enforcement of foreign judgments, security interests, insolvency or protection of vulnerable adults.

So far, four major multilateral conventions have been negotiated by the Commission on behalf of the Union: the Lugano Convention with Norway, Switzerland and Iceland on jurisdiction, recognition and enforcement of judgments in civil and commercial matters basically extending the Union’s system to these three countries; the 2007 Hague Child Support Convention (ratified  by the EU in 2014) and its Protocol on applicable law (concluded in 2010) ensuring the protection of children and spouses in need to maintenance beyond the EU’s borders; the 2005 Hague Choice of Court Convention, ratified  by the EU in 2015, which ensures that a court chosen by parties is respected and the resulting judgment is recognised and enforced and the 2019 Hague Judgments Convention, which sets up a comprehensive system for the recognition and enforcement of foreign judgments in civil or commercial matters.

The Commission has proposed on 16 July 2021 that the EU accedes to the Judgments Convention. The Council adopted the decision on accession on 12 July 2022 and the EU joined the Judgments Convention on 29 August of the same year. The EU accession to this convention aims at facilitating the recognition and enforcement of judgments given by courts in the EU in non-EU countries, while allowing foreign judgments to be recognised and enforced in the EU only where fundamental principles of EU law are respected.

Compliments of the European Commission.

By Donna Isbell Walker

On a recent trip to South Carolina, Stavros Lambrinidis, the European Union’s ambassador to the United States, praised the strong ties between the U.S. and the EU, and lauded South Carolina for its strong economy.

“We are stronger together,” Lambrinidis said at a May 26 dinner sponsored by the European American Chamber of Commerce – Carolinas, and he discussed the Russian invasion of Ukraine at length.

The world community has united against Vladimir Putin, making it less likely that Putin will win the Ukraine war, Lambrinidis told the audience at the Westin Poinsett Hotel.

Lambrinidis, who has been ambassador since 2019, previously served as EU Special Representative for Human Rights and as Foreign Affairs Minister of Greece. 

Lambrinidis also spoke of the Ukraine situation and the global community’s response against Putin in a phone interview the week after the event.

The following Q&A has been edited for length and clarity.

Question: What are the most hopeful things you’ve seen in response to the Russian invasion of Ukraine?

Lambrinidis: Without a doubt, the trans-Atlantic unity of the Americans and Europeans in facing Putin, which is manifest in a number of different ways. The economic sanctions that are crippling his economy as we speak, but will be even harsher in the medium term, in terms of incapacitating his ability to diversify that economy away from fossil fuels and towards a more advanced high-tech future. Those sanctions were not at all a given. In terms of what Mr. Putin was calculating, I’m sure he was betting on having at least one EU member state, or two, disagreeing on them. Because in Europe … you don’t just take the signature of one president, as in the U.S., President Biden, to impose sanctions. You need the signatures of 27 heads of state or 27 dependent European Union countries. You need unanimity to be able to impose sanctions. And those massive sanctions against Russia covering everything, and now increasingly, its energy imports to Europe, I think makes it most hopeful. 

Equally hopeful, I am, about the unity that NATO showed, the European Union itself showed, in the military response to Putin. For the first time in our history, from the European Union budget, this was inconceivable a few years back, even a year back. We have financed, with 2 billion Euros, more than $2 billion, the capacity of our member states to transfer lethal weapons to the Ukrainians. 

And if you like, a third major positive surprise for me has been how the Ukrainians have been able to use that indispensable aid from the EU and the US to fight back to upend Putin’s plans to take over the country in a few days, to take over Kyiv, to topple the Ukrainian government, effectively to wipe Ukraine off the map. He has failed continuously on this, and that’s because of what we have done together. 

And the final thing … is the way that we dealt with the broader energy issue. People don’t know that because of our proximity to Russia, the European countries and the European Union is much more entangled economically with Russia, for obvious reasons, than the United States is. A very large number of our imports in natural gas and oil in all the member states, come from Russia, historically and over decades, even out of the Soviet Union. And our decision to cut entirely coal imports from Russia and just now, to cut 90 percent of all oil imports from Russia by the end of the year, is a hugely important hit to Putin’s ability to keep financing his war. But it’s also a hugely important shift of the EU to two things: A. much more reliable Allied suppliers of gas and oil, and that puts the United States at the top of the map, and B. massive, front-loaded investments in what is the EU’s own homegrown energy, which is renewable energy. 

… This is a chess game. You need to be patient, you need to be resilient. Putin is hoping that he will be more patient than we are, that we will exhaust our capacity to be united against him in this war as it drags on. … The fact is, he will fail. We are united against him in this. We will not tire, and we will bring him to his knees.

Q. What, in your opinion, will it take to get Russia out of Ukraine?

A. One issue is what happens immediately in the war in Ukraine. The second question is, how do we ensure that Russia ends this war in a way that it is massively diminished in its capacity to be a threat in the future, either in Ukraine or anywhere else. The immediate issue of the war right now is one that we need to be supporting Ukraine militarily so it is strong on the battlefield, so it can eventually be strong on the negotiating table. Because any war, at the end of the day, ends certainly with a cease-fire and then a negotiation, but Mr. Putin cannot be in a position that he can force his conditions and benefit from this war against the Ukrainians. So the emphasis on the American side and the European side together, is to keep the Ukrainians strong and resilient in their fight against Russia, and to change the calculus of Mr. Putin dramatically as to what is beneficial for him in this actual war.

The second, broader question, is, are sanctions really biting? (We must ensure that Russia) pays dearly for this adventure in decades to come. That it will never be in this position to be the threat that it has been up to now, to try to kill democracy in an independent country, to try to kill the right of people to self-determination, and that is what long-term economic pressure is going to achieve. 

Q. As a diplomat, what do you find most challenging in navigating this crisis?

A. What I have found extremely easy is to promote the cooperation of (the world community), which is the  most important piece of this puzzle. The United States has been impressed deeply, not just by European leadership and sanctions against Russia, at the highest and most massive and unified level, but also by our indication of our capacity to be … a major defense player in our neighborhood and in the world. And that has opened avenues of cooperation in every possible field imaginable, including, by the way, in trade and technology discussions we’re having with the United States. We launched a trade and technology council, a dedicated American-European discussion on setting the rules of the road for the 21st-century economy, to enrich our people, our own economies, but also to ensure that fairness (and) open-market conditions exist in the rest of the world.

We also did it to ensure that new technology of the future reflects open, human-centric, human rights-respecting values and not the values of authoritarians. 

… The thing that keeps me up at night on this is not something that’s directly in my portfolio; it’s to ensure that we maintain the focus of the rest of the world on the atrocities that Russia is committing, and to ensure that we can develop an international coalition that will, not just now but in the longer term, rally around the United Nations charter, which Russia is trying to tear up, at the same time it is trying to literally kill Ukrainians and Ukraine on the ground. And that is a more difficult fight because Russia’s war is creating some real emergencies and urgencies around the world, the biggest one of which is food security.

… Because of a deliberate effort from Russia to bomb wheat silos and to bomb tractors and agricultural fields and to make Ukraine’s ability to export by blocking Odessa and other ports impossible, food supply is a real issue, especially in countries in Africa that were relying a lot on Ukrainian and Russian supplies. And there is a concerted disinformation campaign by Russia and China and others to convince them that this is happening somehow because of sanctions that the US and the EU and other countries are imposing, not because of Russia’s aggression. That is as big of a lie as any lie that has been circulating out there. But we have to keep in mind – Americans and Europeans – that the rest of the world doesn’t always look at things the way that we look at them. So we have a tremendous amount of work ahead of

us to ensure that we use diplomacy around the world to isolate Russia even further. 

Q. Global terrorism hasn’t been as much of a presence in the news since the Russian invasion of Ukraine, but what are the biggest threats currently?

A. Well, we’re certainly all looking at Afghanistan and the situation there and how it’s developing. We’re looking at Africa and the importance of countering terrorism in Africa, certainly, because I see that Al-Qaeda has not gone away, but also other terrorist groups. We’re also looking at domestic terrorism in our societies, and we should, and radicalization and extremism. 

… Looking at the root causes of terrorism and the ways to counter them on the field – not just with weapons, which are necessary – but in a sense to root them out, you cannot ignore the tremendous importance of Americans and Europeans in intelligent ways being able to support countries around the world to promote rights. 

… When I was going around the world talking to countries where terrorism was a big issue and where governments very often were violating human rights … they would say, ‘Why are you poisoning the well of our relationships here? We are fighting terrorists; that’s the important thing. Why are you raising luxury issues such as human rights?’ And I would answer that question with another question. I would ask, ‘What is so scary about smart girls?’ I would say, ‘Why did Boko Haram in Nigeria … abduct 300 girls from school back in 2014 instead of bombing one more army barracks, which they’re good at? Why did terrorists in Pakistan try to kill Malala Yousafzai a few years back?’

… Why are terrorists so scared of smart girls? And the answer to me is very clear. They’re scared because smart girls become educated girls, and educated girls become empowered women, and empowered women change entirely the bounds of power in any society. And the last thing the terrorists want is empowered societies. They want societies (to be) dysfunctional, weak, with big black holes of power they can fill in with their violence and hatred.

Compliments of Greenville Business Magazine

Full Article: ‘We Will Bring Him to His Knees’ EU Ambassador Stavros Lambrinidis Talks About World Response to Russia’s Invasion of Ukraine | Greenville Business Magazine