Fri. Jan 21st, 2022


Good morning and welcome to Europe Express.

We start with sad news: David Sassoli, the president of the European Parliament, died overnight in hospital in his native Italy. The 65-year-old was admitted on December 26 after a “dysfunction of his immune system”, his spokesman said on Monday.

The Socialists’ term of office ended this month after two-and-a-half years in a power-sharing agreement with the center-right European People’s Party. Expect tributes from across the political spectrum today.

Frans Timmermans, Vice-President of the European Commission, tweeted: “David Sassoli, EP President and dear friend, is dead. I have a lack of words. His kindness was an inspiration to all who knew him. My deepest sympathy to his family and all his loved ones. Addio amico mio. ”

We’ll have more on FT.com later and in tomorrow’s Europe Express.

Meanwhile, a low-key follow-up ceremony with significant consequences for the eurozone is taking place today in Frankfurt, while Jens Weidmann gives his baton to his former colleague from the Bundesbank, Joachim Nagel. We will look at the two personalities and what challenges lie ahead for Nagel.

In other central banking news, outside the eurozone, we will investigate why the outgoing NATO chief Jens Stoltenberg finds himself in turbulent waters as he seeks to ensure a seamless transition to Norges Bank in October when his term expires at the defense alliance.

And on the Brexit front, the UK’s new negotiator and foreign secretary, Liz Truss, has cut out her job for her as the Conservatives’ ally in Northern Ireland, the DUP, hardens its position ahead of elections in May.

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No more Mr No

Jens Weidmann will bow as president of the Bundesbank today with a final warning about the dangers of “fiscal domination” in the eurozone while handing over the reins of Germany’s central bank to Joachim Nagel, writes Martin Arnold in Frankfurt.

The risk that government debt has risen so high in the coronavirus pandemic that the European Central Bank may find it politically impossible to raise interest rates to tackle rising inflation is one of many hot topics waiting in Nagel’s bowl.

He will also face concerns over German inflation, which recently reached a 30-year high of 6 percent, while supply chain bottlenecks stifle production in the country’s major manufacturing sector and renewed coronavirus restrictions mean the economy is on the verge of a recession is.

Nagel, a 55-year-old former chief executive of the Bank for International Settlements, worked for the Bundesbank for 17 years before leaving in 2016 and was chosen by Germany’s new government to take over after Weidmann decided a decade in the post is long enough.

The position – the management of an institution with more than 10 000 staff members and a balance sheet of € 2.5 billion – is somewhat unusual because the Bundesbank gave up many of its most important monetary policy powers when the ECB was created more than 20 years ago. .

However, as president of the Bundesbank, Nagel is a member of the ECB’s 25-member governing body and, as a representative of the eurozone’s largest economy, will play a key role in drafting ECB policy.

At a “virtual ceremony” today, Weidmann will welcome Nagel to the post while warning him to note that monetary policy is being held hostage by fiscal policy. This was one of the outgoing Bundesbank boss’s biggest concerns, as large ECB bond purchases kept borrowing costs extremely low, even as government debt levels rose sharply.

Nagel, who has previously expressed similar fears, may also be concerned about Germany being isolated in the vital debate on how to reform EU fiscal rules after French President Emmanuel Macron and Italian Prime Minister Mario Draghi wrote a Financial Times article calls for a refurbishment to boost investment and drive long-term growth.

Christine Lagarde, President of the ECB, will also speak at today’s event and will probably be generous in thanking Weidmann for his constructive contribution to policy making, while welcoming Nagel to the fight.

Lagarde may not see eye-to-eye with Weidmann on many issues, but it seemed to build a more constructive relationship than he had with her predecessor, Draghi, who christened the German. no for everything – no for everything.

The honeymoon for Nagel will not be long before he has to decide where he stands, both in the debate on how quickly the ECB should withdraw its stimulus to counter high inflation and whether Germany should be more assertive in EU reform. fiscal rules.

Norwegian decisions

This could be a great week for Jens Stoltenberg: Not only is the Secretary General of NATO handling talks with Russia on the prospect of another conflict in Ukraine, but Stoltenberg can find out at the end of the week whether he has a new job or not, writes Richard Milne, Nordic and Baltic correspondent.

The former Norwegian prime minister is one of two serious candidates to become central bank governor in the Scandinavian country with a decision that will possibly be announced on Friday. His term as NATO chief expires in October.

The possibility that Stoltenberg would return to Oslo in the country’s top economic position has brought a strong political outcry, especially among his former opponents on the center-right. Stoltenberg is a good friend of the current center-left Norwegian Prime Minister Jonas Gahr Store, who withdrew from the talks on the governor.

Siv Jensen, the former finance minister and former leader of the populist Progress party, was the latest to warn that giving the central bank to a political heavyweight poses a “significant threat” to Norway’s reputation and the credibility of its monetary policy is.

Instead, she and others in the center-right push the candidacy of Ida Wolden Bache, the current deputy governor who would be the first woman in the role if confirmed.

Proponents of her case have been working to make the actual transcript of this statement available online. But those who Stoltenberg, a former finance minister with a degree in economics, underline his suitability for the governor’s other important job: overseeing the $ 1.4tn. oil fund, the world’s largest sovereign wealth fund.

It was therefore piquant that newspaper Aftenposten revealed on Sunday that Stoltenberg had twice discussed the role of the governor with Nicolai Tangen, the former hedge fund manager who now manages the fund. Tangen told colleagues he sees no problem with Stoltenberg accepting the position.

Yet Norway’s political intrigues may be more difficult to navigate than the geopolitical interests of NATO-Russia talks.

Chart of the day: Brexit effect

One year after Brexit, bankers and officials say that instead of a big bang shift of pieces of UK financial sector business to the EU that some have predicted, the City of London will endure a slow puncture that will take years or decades to play out. (More here)

Difficult for Truss

Getting an agreement on post-Brexit trade arrangements for Northern Ireland will be difficult enough for Liz Truss. Getting one that will please the Democratic Unionist Party while the region prepares for key elections on May 5 could be an even bigger order, writes Jude Webber in Dublin.

Sir Jeffrey Donaldson, who is struggling to beat Irish Republicans Sinn Féin and keep the DUP at the helm of the region’s power-sharing administration, initially made positive noises after the British Foreign Secretary wrote in a newspaper article that London “did not want any checks or documentation for goods moving from Great Britain to Northern Ireland”.

But after a meeting with Truss, Donaldson demanded a grid for the UK to comply with its key requirements regarding the so-called Northern Ireland Protocol. “We have made it clear to the government that we will not be the implementers of Protocol arrangements,” he said.

It is a reference to union’s efforts to veto protocol checks as raised by Edwin Poots, agriculture minister and former DUP leader. Under the 1998 Good Friday Peace Agreement and its implementing legislation, cross-community support is required for executive decisions.

But what Mary Lou McDonald, leader of Sinn Féin, called the DUPs “now election position” could ultimately be a political ploy because the EU withdrawal agreement has sovereignty over domestic law.

In any case, Northern Ireland’s loaded politics will certainly not facilitate Truss’s negotiating strategy when she meets her EU counterpart, Maros Sefcovic, for talks on Thursday and Friday at the Foreign Office’s estate in Kent. (Read more here.)

What to watch today

  1. Lithuanian and Taiwanese Economy Ministers Hold Joint Online News Conference

  2. French President Emmanuel Macron meets with European Council President Charles Michel to discuss the priorities of the French EU Presidency

Remarkable, quotable

  • Prosecute: Russia and the USA held talks in Geneva for almost eight hours yesterday that ended with no breakthrough, but also without interruption. Russia has warned of renewed military action against Ukraine if its red lines are not met.

  • Technical lobby: Google makes one last attempt to water down the EU’s forthcoming regulation on Big Tech with a spate of ads, emails and targeted social media posts aimed at politicians and officials in Brussels, as the company fears that the legislation will affect its profit margin.

  • Dutch flare-up: The Dutch government expressed its irritation over Berlin’s requests for the Netherlands to increase its natural gas exploration and provide Germany with more gas when the Green Party in Berlin blocked any further expansion of Germany’s own gas fields in the North Sea, write Handelsblatt.

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Today’s Europe Express team: martin.arnold@ft.com,
richard.milne@ft.com, jude.webber@ft.com, valentina.pop@ft.com. Follow us on Twitter: @MAmdorsky, @rmilneNordic, @jude_webber, @valentinapop.





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