Stay informed with free updates
Simply sign up to the EU economy myFT Digest — delivered directly to your inbox.
Good morning. Russia’s full-scale war of conquest against Ukraine is now in its third year, and a conflict that has killed over 150,000 people shows no sign of ending.
Today, our Paris correspondent previews a summit of Ukraine’s allies aimed at demonstrating that support for Kyiv will outlast Russia’s aggression. And our financial correspondent reports on the various fiscal gymnastics being considered to fund a much-needed boost to Europe’s defence industry.
Keep calm, carry on
Western leaders meeting in Paris today for a show of unity over Ukraine have a double mission in mind: sending Vladimir Putin a signal of their determination and reminding any critics at home why Kyiv needs support, writes Sarah White.
Context: French President Emmanuel Macron is hosting 20 heads of state and government to discuss how best to restate backing for Ukraine as Russian attacks intensify two years after the start of its full-scale invasion.
Further co-ordination on how to ramp up military support with extra weaponry to plug Ukraine’s ammunition shortages will in particular be top of leaders’ minds, though the summit will be short on precise equipment commitments.
The event, with attendees including German Chancellor Olaf Scholz, Polish President Andrzej Duda and Dutch Prime Minister Mark Rutte, will be the latest attempt to gather momentum, two days after a G7 meeting in Kyiv that several leaders — including Macron — did not attend in person.
“The first aim will be to contradict any impression that things are crumbling. There is no fatigue [in supporting Ukraine],” an Elysée official said, adding leaders wanted to “make President Putin doubt”.
“Europe’s mobilisation and that of its allies is intact and will be reinforced as a result of Russia’s aggressiveness,” they added. “We are neither doomy nor gloomy.”
In a sign of the importance of western support, yesterday Ukraine’s President Volodymyr Zelenskyy warned that Ukraine must receive a $60bn US aid package currently stuck in a congressional stand-off within a month, or “our position on the battlefield will be weaker”.
Within Europe, support for Kyiv through budget financing, military supplies or favourable trade terms has stoked simmering discontent, including among protesting farmers.
At an agricultural show in Paris on Saturday, some farm workers hit out at Macron over the EU’s higher imports of Ukrainian chickens. More broadly, funding efforts for Kyiv come at a time of tight government budgets and domestic spending cuts in the case of France.
“We’re seeing some worries in public opinion in some European countries, including on the agricultural front,” the Elysée official said. “Beyond that particular issue there’s a need to get public opinion in tune with what’s at stake.”
Chart du jour: Safe as houses
The widespread drop in house prices in advanced economies has largely petered out, according to a Financial Times analysis, leading economists to predict that the deepest property downturn in a decade has hit a turning point.
Funding defence
EU finance ministers gathered over the weekend in Ghent discussed ideas on how to fund Europe’s defence sector — the latest EU priority, writes Paola Tamma.
Context: Russia’s war in Ukraine and Europe’s woeful inability to produce enough material in response to keep Kyiv sufficiently armed have resulted in a groundswell of demands from politicians across the EU to spend more on the defence industry.
The Czech delegation had a counterintuitive suggestion: include defence investments under an EU “social bonds” label that would be used as a designator for socially sustainable investments, much like the EU green bond standard does for climate-friendly ones.
Czech reasoning is that “support of a competitive European defence industry is socially responsible”, minister Zbyněk Stanjura wrote in a letter circulated to his peers: “Such a step would be a strong signal for investors if it included the defence industry.”
While far-fetched and probably far from the masterminds behind the European Commission’s “taxonomy”, it’s not impossible. A 2022 report found that a social investment label would need to exclude certain types of weapons banned by international treaties, such as nuclear warheads or cluster bombs, but not that all armaments are intrinsically harmful.
A separate discussion on whether to expand the European Investment Bank’s mandate to fund ammunition and weapons gathered support from some, such as Finland, and opposition from militarily neutral countries such as Austria. Most countries said this needs to be discussed further.
As a compromise, EIB president Nadia Calviño promised to report back in two months on “the scope and definition of dual-use technologies and equipment”, which the bank is authorised to invest in under its current mandate, to see if it needs to be clarified.
Don’t expect that discussion to go away.
What to watch today
-
Polish Prime Minister Donald Tusk visits his Czech counterpart Petr Fiala in Prague.
-
European Central Bank president Christine Lagarde speaks at the European parliament plenary debate on the ECB Annual Report 2022, from 1700.
Now read these
Read the full article here
