EsadeGeo Daily Digest, 27/03/2023

Politico – Bartosz Brzezinski / IMF’s Georgieva: ‘Risks to financial stability have increased’

• The outlook for the global economy is likely to remain weak in the medium term amid heightened risks to financial stability, according to International Monetary Fund Managing Director Kristalina Georgieva.
• "We expect 2023 to be another challenging year, with global growth slowing to below 3 percent as scarring from the pandemic, the war in Ukraine, and monetary tightening weigh on economic activity," Georgieva said on Sunday at a conference in China. "Even with a better outlook for 2024, global growth will remain well below its historic average of 3.8 percent," she said.
• "It is also clear that risks to financial stability have increased," Georgieva said. "At a time of higher debt levels, the rapid transition from a prolonged period of low-interest rates to much higher rates — necessary to fight inflation — inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies."
• Policymakers have acted decisively in response to threats to financial stability, helping ease market stress to some extent, she said. But "uncertainty is high, which underscores the need for vigilance," she added.

Financial Times – Max Seddon and Felicia Schwartz / Vladimir Putin plans to deploy tactical nuclear weapons in Belarus

• Vladimir Putin has said Russia plans to deploy tactical nuclear weapons in Belarus, marking Moscow’s latest attempt to use the threat of a nuclear war to ramp up tensions with the US and Nato over the invasion of Ukraine. 
• Russia’s president said work would be completed on building storage units for tactical nuclear weapons in Belarus on July 1, a move he likened to US nuclear deployments in Europe. 
• Though Putin said Russia would not transfer control of the tactical nuclear weapons to Belarus or violate its nuclear non-proliferation obligations, the decision is one of the Kremlin’s most significant steps with its arsenal since it invaded Ukraine more than a year ago. 
• Putin said the deployment was in response to a longstanding request from Belarus’s autocratic leader Alexander Lukashenko, who has allowed Russia to use the country as a launch pad for attacks on Ukraine, thereby moving his country deeper into the Kremlin’s embrace.

The Guardian – Bethan McKernan / Netanyahu expected to announce halt to plans to overhaul Israeli judiciary

• Israel’s embattled prime minister, Benjamin Netanyahu, is expected to announce a halt to his far-right government’s proposal to overhaul the judiciary, after a decision to sack his defence minister for opposing the plans sparked mass protests across the country overnight.
• Israeli media outlets, citing sources in Netanyahu’s Likud party, reported on Monday morning that in a televised address the prime minister was expected to announce a freeze to the bitterly contested legislation, which would limit the powers of the country’s supreme court.
• Shortly before he was due to speak, Israeli television said the statement, originally announced for 10.30am (08.30am BST), would be delayed due to disarray in the governing coalition.
• Netanyahu’s statement will follow one of the most dramatic nights in Israeli history, as tens of thousands of people took to the streets to protest against the firing of the defence minister, Yoav Galant, who became the first senior governing coalition official to made a public call to scrap the proposals on Sunday night.

Financial Times – Alice Hancock, Laura Dubois and Andy Bounds / Brussels agrees deal with Germany in spat over combustion engines ban

• Brussels has agreed to exempt cars which run on certain types of fuel from the EU’s new law which will ban the sale of combustion engines from 2035, after Germany threatened to block it. 
• Frans Timmermans, the EU’s climate commissioner, tweeted on Saturday that the European Commission had “found an agreement” with Berlin over the “future use of e-fuels in cars” after more than three weeks of negotiations to save the law. 
• E-fuels such as e-methane or e-kerosene are made with captured CO₂ and hydrogen produced from renewable or low-carbon electricity. They are often considered carbon neutral, but the technology is at its early stages. 
• German transport minister Volker Wissing said: “This clears the way for vehicles with internal combustion engines that run on CO₂-neutral fuels only to be newly registered after 2035.”

Our opinion reads for today:                     

• Foreign Affairs – Peter Harrell / The limits of economic warfare
• Financial Times – Martin Sandbu / The trilemma that EU leaders must tackle