AFP

EU leaders clashed over how to ride out Europe’s energy shock Thursday, with France and Germany at loggerheads over imposing a cap on gas prices pushed skywards by the war in Ukraine.

The bloc’s 27 member states have been squabbling for months over measures to lower energy bills, and a Brussels summit began in a chilly mood.

Countries such as Italy are pushing hard for a swift and ambitious cap on prices, in the teeth of opposition from Germany, the EU’s biggest economy.

There is huge political pressure to act, with strikes and protests over the cost of living spreading across Europe — notably in France and Belgium — and businesses fearing bankruptcy.

Berlin risks finding itself isolated in the debate, with countries furious that the German government won’t back a gas cap and for going it alone in helping its citizens pay for high prices with a 200-billion-euro ($196-billion) spending bonanza.

German Chancellor Olaf Scholz shot back at his critics as he arrived for the talks saying that it was “quite clear that Germany has acted in solidarity” with his EU partners.

French President Emmanuel Macron warned against Berlin standing alone as the talks began.

“Our role is to do everything to ensure that there is European unity and that Germany is part of it,” Macron said.

On the table for leaders are proposals by the European Commission, the EU’s executive arm, that try to satisfy the diverging views.

But these have already been dismissed as timid by those wanting a clear ceiling on gas prices despite the opposing view — championed by Germany, but also Denmark and the Netherlands — that this would choke off supply or encourage consumption.

The push for a common approach has been further hampered by Franco-German discord which burst into the open Wednesday when they delayed a regular meeting between cabinet ministers.

Breakthroughs are difficult when the EU’s biggest powers do not see eye to eye and Macron and Scholz met ahead of the summit in a bid to find common ground.

In a sign of a possible easing of tensions, France on the sidelines of the summit agreed to build a green energy pipeline linking the Spain and Portugal to the rest of Europe.

Berlin is seeking an alternative to Russian gas supply it has relied on for decades, but it was not clear whether the new plan would satisfy them.

– ‘No cap’ –

The commission’s proposals include an idea to allow joint purchases by the EU energy giants in order to command cheaper prices to replenish reserves.

Another proposal is to give the EU’s executive arm the power to establish a pricing “corridor” on Europe’s main gas index to intervene when prices get out of control.

The EU leaders were expected to haggle for hours over the commission’s proposals, with some countries seeking something much more far-reaching than what is on offer.

But Scholz on Thursday again rejected any attempt by the EU to cap prices on gas imports, saying it “carries the risk that producers will then sell their gas elsewhere.”

However, Scholz welcomed the European Commission’s proposal for joint purchases in the EU.

A big problem in Europe is the link between gas and electricity prices. Under EU rules, a gas price index helps set the price of electric power across the continent, even if sourced from nuclear energy, renewables or coal.

But the index has skyrocketed since Ukraine was invaded by Russia, the country that supplied 40 percent of the EU’s gas imports before the war.

Several countries — including France with its nuclear power plants — are calling for an exception to the gas price mechanism while the commission draws up a new system that better reflects market reality.

This was already granted to Spain and Portugal earlier this year, giving them freer rein to keep electricity prices lower despite surging prices.

The European Space Agency announced Thursday it will use SpaceX’s Falcon 9 rockets to launch two scientific missions because of delays to its own Ariane 6 rocket and the cancellation of flights on Russia’s Soyuz launchers. 

The ESA’s space telescope Euclid had been planned to launch next year on a Soyuz rocket, but in February Russia pulled out in response to European sanctions over Moscow’s war in Ukraine. 

Euclid, which aims to better understand the mysteries of dark energy and dark matter, will now instead catch a ride into space on the Falcon 9 rocket of billionaire Elon Musk’s US company SpaceX.

The ESA’s Hera mission, which will probe the Didymos asteroid that NASA successfully knocked off course in September by smashing the DART spacecraft into it, will launch on a Falcon 9 in late 2024, ESA director general Josef Aschbacher said.

The use of other launchers was “a temporary measure” for the ESA due to the “drop out of Soyuz in particular,” but also over the Ariane 6 delay, Aschbacher told a press conference.

The ESA previously used a Falcon 9 to launch European-developed radar altimeter satellite Sentinel-6 Michael Freilich in 2020.

The European-Japanese EarthCARE observation satellite had also been planning to reach space on a Soyuz rocket, but will instead take the ESA’s lighter new Vega-C launcher in early 2024, Aschbacher said. 

Tensions over the war in Ukraine also led to a long postponement for the once joint European-Russian ExoMars mission. It had been scheduled to launch last month using a Soyuz rocket to put European rover Rosalind Franklin on Mars to drill for signs of life.

David Parker, the ESA’s director of human and robotic exploration, said a 2028 ExoMars launch date would be proposed to the agency’s 22 members states at a ministerial council in late November. 

“It is exactly one month since we would have been at the launch, which was scheduled for September 20,” he told the press conference.

“But now we will have to wait — if the ministers desire to go forward with the project — until launch in 2028, with a landing in 2030,” he said.

– Ariane 6 delayed again –

Thursday’s announcement came a day after the ESA revealed that Ariane 6’s maiden flight had been delayed again, and will now launch in the last quarter of next year.

Originally planned for 2020, the inaugural flight of the Ariane 6 has previously been postponed by the Covid-19 pandemic as well as development difficulties.

The replacement for the highly successful Ariane 5 is hoped to eventually take over the ESA’s Soyuz missions. Once in operation it is likely to compete with SpaceX rockets, particularly when it comes to sending small satellites into the sky. 

Some 18,500 satellites weighing less than 500 kilogrammes are expected to be launched into space over the next decade, according to advisory firm Euroconsult.

Progress has made in recent days on the Ariane 6, including a test of the new upper stage of the rocket’s engine at a German space site in Lampoldshausen.

Aschbacher said the first 45-second firing test was “extremely successful,” calling it an “important milestone”.

A test model of Ariane 6 was also recently successfully assembled on the launchpad of Europe’s spaceport in French Guiana’s Kourou. 

South Africa’s financial watchdog on Thursday declared cryptocurrency a financial product, paving way for the regulation of the assets in the continent’s most advanced economy.

The announcement comes in the wake of financial institutions and watchdogs around the world grappling on how to regulate digital currencies.

The decision by the Financial Sector Conduct Authority (FSCA) means financial firms dealing in cryptos will have to apply for licensing next year between June 1 and November 20.

“You cannot have a situation where you have entities operating outside the regulatory framework, it is not ideal, and certainly not in the public interest,” FSCA Commissioner Unathi Kamlana told a news briefing.

The crypto asset, which will not be issued by the central bank, will be tradeable, transferred or stored electronically “for the purpose of payment, investment”.

American Airlines reported a strong third quarter Thursday, capitalizing on robust demand for travel that the company sees persisting as Covid-19 worries recede.

Echoing commentary from rivals such as United Airlines and Delta Air Lines, American scored a 13 percent jump in revenues compared with the 2019 period on lofty ticket prices, despite flying around 10 percent less capacity.

“Demand remains strong, and it’s clear that customers in the US and other parts of the world continue to value air travel and the ability to reconnect post-pandemic,” said American Chief Executive Robert Isom.

Profits for the quarter ending September 30 was $483 million, more than double the year-ago level with a 50 percent increase in revenues to $13.5 billion, a quarterly record.

After a devastating industry downturn during the worst days of the coronavirus pandemic, US carriers have begun to prosper in 2022 as more governments pare back restrictions.

Executives point to several factors that are overriding worries about inflation and rising recession risk: continuing “pent-up” travel demand following Covid-19 lockdowns; the shift to hybrid working that allows more travel; and industry-wide capacity constraints that are lifting plane ticket prices.

American released fourth-quarter forecasts that show continued strength, with its projection of between 50 and 70 cents per share in profits easily topping analyst expectations.

Shares rose 2.4 percent to $14.32 in pre-market trading.

Turkey’s central bank on Thursday cut its policy rate for the third consecutive month despite a plunging lira and an annual inflation rate that has soared over 83 percent.

Turkey’s monetary policymakers are bucking the global trend of central banks raising interest rates to combat inflation, as high borrowing rates cool down the economy and prices.

The latest decision comes after President Recep Tayyip Erdogan said the central bank would keep cutting rates every month for “as long as I am in power” — and despite inflation hitting 83.45 percent in September on an annual basis.

Erdogan wants to lower interest rates to single digits by the end of the year as he prioritises economic growth eight months before a general election — which could promise to be the closest since he came to power nearly two decades ago.

Turkish policymakers have insisted on following this unconventional economic model at the expense of an astronomical inflation.

The central bank said Thursday it was cutting its one-week repo rate to 10.5 percent from 12 percent, with a surge in consumer prices it said was “driven by the lagged and indirect effects of rising energy costs” caused by Russia’s war on Ukraine.

The interest rate cut was widely anticipated, but the 150 basis points cut was larger than expected after two 100 basis points moves in both August and September.

The bank hinted that the easing cycle would end next month.

“The (Monetary Policy) Committee evaluated taking a similar step in the following meeting and ending the rate cut cycle,” the bank said.

Liam Peach, senior emerging markets economist at the London-based Capital Economics, said this guidance “appears to be an admission that lowering interest rates is hardly the right thing to be doing when inflation is so high.”

“But at the same time, it would take interest rates to nine percent and satisfy Erdogan’s wish to bring rates down into single digits,” he added. 

– ‘Re-election strategy’-

Inflation began to rise worldwide after economies emerged from Covid lockdowns but it worsened this year as Russia’s invasion of Ukraine sent energy and food prices through the roof.

Erdogan, a vocal opponent of higher borrowing costs, has called high interest rates his “biggest enemy”. 

Earlier this month he vowed that while he remained in power, “the interest will continue to come down with each passing day, each passing week, each passing month.”

As a result, the Turkish lira keeps losing its value against the US dollar and is down 28 percent since January.   

“Erdogan’s economic re-election strategy is clear… use money from Russia and (the) Gulf to fund FX intervention to defend the lira, cut policy rates as far as possible to get credit and growth going,” BlueBay Asset Management analyst Timothy Ash said. 

The powerful Turkish leader has responded to the economic crisis by an overhaul of his foreign policy and repairing ties with his former rivals in the Arab world, including oil-rich Saudi Arabia. 

Additional trade-focussed deals with Russia have helped shore up Turkey’s dwindling foreign currency reserves and potentially given Erdogan enough breathing room to ride out the economic storm until the June election.

However, Washington has been warning Turkish companies and banks trading with Russia for several months they could face possible sanctions.

Elizabeth Rosenberg, the US assistant secretary for terrorist financing and financial crimes, traveled to Ankara and Istanbul this week, the Department of the Treasury said. 

Her meetings “affirmed the importance of close partnership between the United States and Turkey in addressing the risks caused by sanctions evasion and other illicit financial activities.”