Josep Borrell speaks to the press on 13 May 2022 on the occasion of the G7 meeting
in Gut Weißenhaus, Wangels . PHOTO/GREGOR FISCHER
As a pivotal High Representative who must see to it that the European Union plays a commanding role on the global geopolitical stage, how does HR/VP Josep Borrell’s mind work?
Borrell’s blog “A Window on the World” on the EU’s official website will surely provide the reader with a clue to this tantalizing puzzle.
Here’s a blog of the EU foreign minister’s.
16 May 2022
Last weekend I attended in Germany the G7 meeting of ministers of foreign affairs. One of our main topics was the massive negative impact on the world economy of the war on Ukraine with significant risks of destabilization in many regions and countries. It could also weaken international support to condemn Russian aggression. . . Europeans need to be fully aware of those risks and act to limit them globally.
Many voices are warning of the recession that the war against Ukraine could cause. “War sets back economic recovery” the International Monetary Fund (IMF) stated recently. “Is the global economy flying into a perfect storm, with Europe, China, and the United States all entering downturns at the same time later this year? ” the American economist Kenneth Rogoff asked. Such a negative dynamic could trigger a new global financial crisis.
War on Ukraine has major consequences in the EU itself [and the developing countries]
The negative consequences of the war are obviously major within the EU itself, since we are neighbouring the theatre of operations and had close economic ties with both Ukraine and Russia. It also brings with it in the EU a flow of refugees that is unprecedented since the Second World War. The European Commission has already dealt with these issues and will continue to do so, notably on the energy front. . . But our own difficulties must not make us forget those faced by many emerging and developing countries. . . The shock waves are reaching more and more countries and sectors. . .
The war against Ukraine has been accompanied by a sharp rise in inflation under the pressure of food, energy and major commodity prices. Inflation had already been rising throughout 2021 as a result of increased demand caused by the economic recovery and the continued disruption of many value chains, but the war has accelerated it. And this movement has been more pronounced in emerging and developing countries. Inflation affects most the poorest and weakest and contributes to increasing inequalities worldwide.
This rise in inflation is leading to significant increases in interest rates by central banks and a tightening of monetary conditions. And here again, this movement is even more marked in emerging and developing countries. This is a context where the external debt of these countries had again increased in recent years because of the pandemic. Emerging and developing countries have less fiscal room to combat crises and cushion the impact on their citizens than developed ones. This was already the case before, but it is even more the case today.
In this worrying context, we have also observed in recent weeks a rapid fall in share prices on financial markets and a spectacular loss of value on cryptocurrencies. This could trigger a new financial crisis, accompanied by a “flight to quality” of international capital to the United States. This risk is already beginning to materialize with a sharp rise of the exchange rate of U.S. currency; a movement that feeds inflation in countries whose currency is depreciating. This context has led the IMF to significantly lower its economic forecasts compared to last January, particularly for emerging countries, aggravating the loss of growth suffered by these countries due to the pandemic. . .
In short, this bleak economic outlook in many emerging and developing countries will have negative social and political consequences and affect the perception of the war on Ukraine. Most partners do not question our position on the war, but demand more action from us in addressing these consequences. As the crisis advances, the risk is clear: encouraged by the Russian propaganda apparatus, many could be tempted to blame Europeans and the West for these problems rather than the war of aggression led by Vladimir Putin. This is wrong on the facts but if people define a situation as real, it is real in its consequences.
During the G7 ministers’ meeting we had a video conference with Retno Marsudi, our colleague from Indonesia, ahead of the G20 meeting planned in November in Bali. She warned us about this trend and so did Argentinian President Alberto Fernandez when meeting the Spanish Government in Madrid last week. That is why we must counter everywhere the Russian narrative and explain the reality of the facts and responsibilities, not only to political leaders but also directly to the public opinion.
We need to do more
But we need also to do more. First, by increasing the pressure to bring Vladimir Putin to stop this war and withdraw Russian troops from Ukrainian territory and by enabling Ukraine to keep producing and exporting agricultural products. Second, we must lead with ambition within the international institutions, the United Nations, the World Bank, the International Monetary Fund, the Food and Agriculture Organisation and the World Food Program, the G7 and G20. It will be necessary to expand the efforts already undertaken for debt relief of over-indebted poor countries, in particular by getting China to assume all its responsibilities in this area. And, once again, we need a closely coordinated macroeconomic policy response from the world’s largest economies to limit the risks of recession and global financial crisis.
We should also avoid false solutions, keeping trade open, as trade barriers would only worsen affordability and have an asymmetrical impact on the poor. We should help stimulate local production in emerging and developing countries rather than dumping in-kind donations of food with adverse developmental effects. During the G7 Foreign Ministers meeting, we discussed extensively the issue and welcomed the UN Secretary General’s initiative to convene a “Global Crisis Response Group on Food, Energy and Finance” (GCRG). The global response is disjointed so far and the challenge is not just to do more, but also to better coordinate efforts.
The EU and its member states [are] already the largest contributors in development aid in the world.
However, we must recognise that we face strong constraints. Due to its limited amount and multi-year nature, the EU budget does not give us a large room for manoeuvre to deal with exceptional situations such as the one we are currently facing globally. This is one of the subjects on which the work undertaken on the future of Europe should allow to make progress.
We must at least ensure that our internal difficulties and our support to Ukraine do not weigh on the aid we are providing to other regions of the world. . .
The war on Ukraine has pushed us to speak the “language of power”, giving active support to Ukraine, being determined on sanctions and improving our common defence capacities. However, to compel Vladimir Putin to back down, we have also to convince the world that the economic problems we are facing are the result of Putin’s war of choice and take resolute action to address the wider impacts that this brutal war is having on our partners worldwide.
Permission to reuse foregoing blog: “Reuse is authorised, provided the source is acknowledged. The reuse policy of the European Commission is implemented by a Decision of 12 December 2011″
Disclaimer: Guidepost’s publication of Mr Borrell’s blog does not in any way imply any special relationship between our magazine and the HR/VP or the EU for that matter. The publication is purely a journalistic exercise.
Featured image ©European Union, 2022. Source: EC Audiovisual Service
Inflation/Peretz Partensky, CC BY-SA2.0 via Flickr
Stockmarket crisis/Petra Wessman, CC BY-SA2.0 via Flickr
Saint Petersburg TV tower/Evgeny Gerashchenko, CC BY-SA 3.0 via Wikimedia Commons
Tiananmen/Tomislav Domes, CC BY2.0 via Flickr
Putin/Just Click’s With A Camera, PD via Flickr
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