Andrew Watt

Update
It gets even worse.
Now EU High Representative Kallas issues a statement that doesn't even mention the United States or Israel.
bsky.app/profile/toby...

EU strategic autonomy?
Defending the rules-based order?

Not the most important when people are dying, but higher oil prices & freight costs will push up inflation again. Low energy & import-price inflation has helped Europe's tepid economic recovery, creating space for real wage increases & low interest rates.
bsky.app/profile/econ...
Tailwind->headwind

This is highly unlikely to work.The regime will circle the wagons and can justify repression. Civilian casualties like the atrocious killing of more than 100 primary schoolgirls will delegitimise opposition activity.

EU leaders should be clearly distancing themselves from the adventurism of Trump and Netanjahu, two politicians desperately trying to avoid electoral defeat.
There seems to be no plan except deploying air power and calling on the Iranian opposition to take over.

E3 Joint Leaders’ Statement on Iran: by President Emmanuel Macron, Chancellor Friedrich Merz and Prime Minister Keir Starmer

Here is the DE FR UK statement
www.bundesregierung.de/breg-de/aktu...

Apart from international law, the leaders are also ignoring domestic US criticism of Trump for bypassing Congress.

By failing to call for an immediate cessation of hostilities and openly backing Trump and Netahjahu's attack on Iran, European leaders (von der Leyen, Merz, Macron, Starmer) undermine the case for international solidarity with Ukraine.

German wages rose last year by 4.2% in nominal and 1.9% in real terms, as inflation has subsided. This follows 2.9% in 2024. This will underpin consumption & growth in DE and EU this year.
The other side of the €coin: the wage level is only back to its 2019 pre-covid level.
bsky.app/profile/tage...

bsky.app/profile/robi...
The explosion of German (not just military) exports to countries neighbouring Russia after Russia's invasion of Ukraine paints a similar picture. #re-routing
Whereby here the recent decline is quite limited in most cases.
#econsky

An interesting paper coming out on the 4th anniversary of the Russian invasion.
The title is a bit misleading, though, the evidence the authors have collated shows that military sanctions have been very (albeit it not 100%) successful for the last two years. Evasion a major problem 2022 & 23.

Yes. But contrary to what the title and subtitles suggest, looking at fig. 1, it seems sanctions have been very (albeit not completely) effective since around the start of 2024, two years ago. Clearly there were loopholes before that, and military exports "only" fell to around 1/5 of former levels.

Countdown clock on the Brussels town hall in the colours of Ukraine. Premonition of War.

Four long years ago we awoke to news that war in Europe had started.
💔

Brussels stands with Ukraine.

Presumably this is a mix of genuine substitution and redirection/transiting.

Lots of uncertainty. But the new legal base covers him for 150 days.

Donald Trump’s new flat-rate tariff is a boost for China and Brazil US allies including UK, EU and Japan hardest hit after Supreme Court rules against previous levies

So far the impact of tariffs on EU exports to the US has been limited, partly bc EU compeitors were harder hit still. But now, in relative terms, EU exporters will suffer a considerable disadvantage, meaning additional pain for some exporters.
giftarticle.ft.com/giftarticle/...
2/2

Politically the US Supreme Court striking down Trump's IEEPA tariffs is a big deal.
Yet Trump's decision to impose a global 15% tariff, using a different legal base, means an even higher tariff wall for EU exporters. Meanwhile, competitors incl China & benefit from cuts.
1/2

Maybe AI is a superior form of intelligence, after all 🤔

There is a case for simplifying EU legislation. But it's not key to gaining competitiveness. And the so-called omnibus process does not allow proper consideration of the costs and benefits of regulation.
Now employers want an omnibus process for important elements of EU social & employment leg'n.
🚨

A plausible explanation is that the AI capex boom has overdetermined the negative impact of Trump's policies (some of which, like the attack on educational institutions and renewables will only impact in the longer run).
Flying on the one engine of AI is, of course, a vulnerability.
2/2

With tariff turmoil and government shutdown, US GDP figures have been hard to interpret. The best guess is that the US economy is spluttering along at a respectable rate, policy shocks notwithstanding.
Certainly not Trump's "best ever" economy. But not the stagflation I & others had expected.
1/2

probably both, indeed.

Suggested interpretation: The tariff chaos last year explains the "economic emergency chatter". As it recedes (and the damage of the tariffs is apparently more limited than feared), sentiment is improving again.
Also: the emergency chatter comes in handy for those pushing a deregulation agenda.

I scream!

Update
Some further context to judge Rubio's speech and the fawning reaction to it in Munich. What "Little Marco" thought of Viktor Orban in 2019...

bsky.app/profile/mijr...

If you had the slightest doubt as to how to interpret Rubio's speech at the MSC, you just need to see who he visits afterwards.
bsky.app/profile/eura...

That Rubio received a standing ovation & gushing praise shows how ill served Europe is by its transatlantic-oriented foreign policy elite network

Book entitled Intentional - How to finish what you start

Interlude

Somebody picked this book up today at the bookshop ...
but then got distracted by the games and didn't make it to the checkout.
😜

Rubio just made a speech to the European defense community in Munich that did not mention Ukraine. Or democracy. Or US business deals with Russia. Or the administration's plans to support the European far right. But there were lots of nice words about our common civilization.

bsky.app/profile/luca...
Lucas Guttenberg is rightly sceptical about what I call 👆 a "patchwork rug" : replacing a fragmented single market "by inaction" with one fragmented "by design",

Indeed.

Not immediately, ofc, but EU debt could gradually rise to a much higher share of GDP, backed by ECB, no problem.

True.
Although here the point was more about creating EU-level debt (eurobonds), which could actually mean being more stringent about national-level debt.

Belgian castles in the air A missed opportunity for competitiveness through investment

My take on the meeting of EU leaders: a missed opportunity to launch an investment-led recovery

open.substack.com/pub/andrewwa...

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