World
State of the Union: Zelenskyy's attempts to drum up new support
This edition of State of the Union focuses on the crucial visit of Ukrainian president Volodymyr Zelenskyy to the U.S., the latest economic forecast by the EBRD and attempts to support the struggling German car industry.
For weeks now, Europe is anxiously looking at its number one economic powerhouse, Germany – to be more precise: at the country’s ailing car manufacturers, some of Germany’s industrial pillars.
A serious car crisis in the Federal Republic, triggered by a quasi-collapse of the electrical vehicle market, could have severe consequences elsewhere in the EU.
Threats of historic job cuts, plant closures at Volkswagen and plunging earnings at Mercedes-Benz and BMW prompted emergency talks at Berlin’s economy ministry this week.
But given strained federal finances and fights with China over tariffs, the government’s toolbox is rather empty.
Nonetheless, economy minister Robert Habeck expressed his willingness to help but excluded quick fixes: “Everyone has said that planning is the most important thing. And that means long-term planning. Not a flash-in-the-pan action, because this only has the effect of pumping up the market again in the short term and then possibly collapsing again.”
Germany is in the uncomfortable position today to be forced to re-orient its entire manufacturing sector that depended on cheap Russian energy.
You can already hear Ukraine’s president Zelenskyy shouting: “I told you so!”
Zelenskyy was at the United Nations this week to drum up support for what he called his “victory plan”.
He also reacted to pleas from the European far-left and far-right to negotiate with Russia:
“We know some in the world want to talk to Putin. We know it. To meet, to talk, to speak. But what could they possibly hear from him? That he’s upset because we are exercising our right to defend our people, or that he wants to keep the war and terror going just so no one thinks he was wrong.”
How the Ukrainian economy keeps suffering from the war was detailed this week by the latest outlook from the European Bank for Reconstruction and Development.
The EBRD covers not only Ukraine, but large parts of eastern Europe and central Asia. The bank’s findings are an important bellwether for the global economy.
We spoke to Beata Javorcik, the chief economist of the EBRD.
Euronews: So, your latest Regional Economic Prospects report is called “Along the adjustment path” – that sounds like a friendly way of saying “It’s disappointing”. What do the economies you invest in need to adjust to?
Javorcik: Well, the situation in Europe remains quite challenging. We continue to have very high prices of energy. Particularly the price of natural gas is five times as high as in the US. The demand for exports, particularly from Germany, is muted. Given the difficult situation of the German economy and, finally, the costs of borrowing continue to be high, there is this extra risk premium, this extra interest rate. Countries in the regions had to pay when the war in Ukraine started. And this risk premium continues to be there.
Euronews: On the upside are a decline in inflation and an increase in real wages. What exactly happened?
Javorcik: Well, by historical standards we have seen a very fast disinflation process, though of course the adjustment is not done yet. Inflation remains above the pre-COVID level, but on the positive side we have managed to avoid a hard landing. So, this fight with inflation has come without very big unpleasant effects in terms of unemployment. As the inflation episode started, we saw a big decline in real wages, but then real wages started catching up. That was visible in the last few months in the last year. They are not yet back to the pre-COVID trend, but they have certainly caught up in a significant way.
Euronews: I guess there are still some remaining inflationary pressures – what are they?
Javorcik: Inflation still remains high in some countries, such as Turkey or Egypt, still in high double digits. And depreciation of domestic currencies, which has made imports more expensive, has contributed to further inflation.
Euronews: One country is still in the spotlight: Ukraine. How are they coping with the ongoing war economically?
Javorcik: Well, despite the war early this year, so in the first quarter, Ukrainian economy managed to grow very fast. The bleak Black Sea corridor allowed Ukraine to export grain as well as metals and ores. But then this heavy bombing and destruction of electricity infrastructure happened. And that made the situation very difficult. There are rolling blackouts. There are shortages of electricity. The country is importing electricity from Europe, but it comes at a higher cost. And that’s weighing down on the economy.
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The United Nations says it has removed a controversial quilt panel artwork that called for the extermination of Israel.
The incendiary painting on the panel featured a map of Israel, resembling a watermelon, without the West Bank or Gaza partition. In the top right-hand corner was the Palestinian flag.
The left side of the map contained the phrase “From the River to the Sea” and the right side contained the phrase, “Will be Free” in an obvious nod to the phrase, “From the River to the Sea, Palestine Will be Free.”
A panel on a quilt at the U.N. was removed because of controversial drawings. (Fox News Digital)
The phrase has become a rallying cry for Palestinians around the world protesting Israel amid the ongoing conflict in Gaza, sparked by Hamas’ Oct. 7, 2023, massacre in Israel. Israelis regard the phrase as a call to genocide, and for Israel to be wiped off the map entirely.
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Fox News Digital was the first to report on the U.N. painting on Monday. It also drew the attention of Danny Danon, Israel’s permanent representative to the U.N., who called the display a “disgrace” and demanded the U.N. remove it.
The U.N. told Fox News Digital on Wednesday that the “Peace Flags” exhibit was a way to “re-purpose fashion waste for positive impact.”
An exhibit displayed at the United Nations. (Fox News Digital)
The U.N. said a staffer informed the organizer upon installation that several panels — including the one with the phrase “From the River to the Sea” — could not be displayed.
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The U.N. said the controversial panels were covered in the second week of October, but someone “removed those covers” earlier last week.
Most of the drawings show an explicit call for peace. (Fox News Digital)
“Our colleagues covered it twice last week and were planning to do the same today upon learning that it was uncovered again,” a U.N. spokesperson told Fox News Digital. “We have alerted UN Security to the continued unauthorized interference in the exhibit and to review security footage to find out who is responsible.”
Danon took to X on Tuesday, criticizing the U.N. for what he deemed to be its lack of leadership.
“Yesterday, I exposed the hypocrisy of the U.N. through an exhibition featuring children’s drawings where the State of Israel was erased and filled with hateful imagery,” Danon said. “After firmly addressing the U.N. leadership this exhibition was fixed, and these antisemitic drawings were removed from the walls. We will stand up for truth and each time we witness acts of antisemitism and hypocrisy, we will confront them head-on.”
Fox News Digital confirmed Wednesday that after initially covering the panel with the “From the River to the Sea” drawing, the panel has now been removed entirely.
A spokesperson for the Secretary General told reporters Wednesday: “It is being dealt with, and we’re answering the Israeli ambassador.”
A recent study found that 186,000 jobs could be lost in the European automotive industry over the next decade.
If Donald Trump follow through with his promise on tariffs during the electoral campaign, EU economic growth could be seriously undermined.
The president-elect repeatedly stated his intention to impose a 10% tariff on European products.
One of the worst hit sectors would be the automotive industry, in particular that of Germany.
The Association of the German Automotive Industry (VDA) says everything must be done to ensure that new US tariffs are not imposed. The association’s spokesperson, Simon Schuetz, told Euronews:
“I think that both sides need to talk to prevent this. If it does, we both know what will happen next. And the European Union will probably have some measures in response, and that would be the start of another trade conflict or something of that kind. And that’s not what we need. Europe and the US need to understand that, looking at all the geopolitical challenges, we need to work together, and that politics and economics needs to be considered together.”
The situation for the automotive industry in Germany is already difficult, with Volkswagen recently announcing the closure of three plants. A recent study found that 186,000 jobs could be lost over the next decade, as the industry switches to EV production.
The unsolved issue of steel and aluminium
The other most affected sector would be the steel industry. The US and Europe still have not fully resolved the issue of tariffs imposed by the previous Trump administration – which have already caused a noticeable slump in exports.
According to the European Steel Association (EUROFER), further lengthy and complex negotiations lie ahead.
Axel Egger, its Director General, told Euronews:
“A way forward had been agreed upon between Joe Biden and the European Commission under Ursula von der Leyen to address the trade conflict concerning steel, as well as a global arrangement on sustainable steel and aluminum. The negotiations have stalled since the election campaigns in the US began, however. Our hope is that negotiations can continue after the elections in order to find a solution, because otherwise we will fall back into an era of tough 25% tariffs on European steel”.
The Association also underlines the need for the new US president to be persuaded with regards to climate goals, not least with regards to his country’s own industry, as steel and aluminium manufacturing are one of the biggest carbon-emitters.
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