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tv   Counting the Cost  Al Jazeera  July 30, 2022 12:30pm-1:01pm AST

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oh, they say that they will not back up, they will not allow it to unless and until the parliamentary is past due with data demand, they say that they do not trust the parliament. and they say that the, the parliament could probably hold that session. that was postponed, but hold it behind behind her closed those. and yet they say that they but they say that we do not want to wait until they come up with them. uh huh. yeah. so that he being nominated there or being behind a prime minister. they say that it will continue to do continue to put pressure on the government until the government responds to it demands. it's a better deal to kids. medicaid, they have, they have whole dallan, old concrete wo from on the way from their daddy square in the city center on my left until until the land to la greens on, on my, on my right there have been ambulance in heading. good reason,
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probably because of the casualties outside of the gas canada, and also there have been will those heading that way? probably tied to that he moved there. that knox put bicycles. you forces to prevent a fancy any other day in or close to there at greenville. now that's primarily relies on government old that situation. i mean the solution now primarily utilize on the mediation. if you go to the table or on the margin mediation between rival faculty that have been negotiations have been me a native framework, the police department to the block. and i was said that it is started. it is not did it under the table negotiations since friday,
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whether or not this is actually we cannot verify for the time being at least for now. i've been a puts about about all going with the asians by iran, namely by the commander of the did it. but it was, he got to put source ismael connie, he's been here in bo dot for days now trying to mediate between that i will fax it to each i common ground in a way to he is the risk between namely that she put it together. most of the problem now lies within the she are political factions. yes. yeah, but it goes back to, namely, between work that a saw the on the one hand and the pro iran, putnam is a book on the other hand. okay. okay. we're gonna have to we're gonna have to leave it then it will abdougla had joining us night me from baghdad. thank you very much for that. we've been seeing dramatic pictures of protests as at baghdad. heavily fortified green zone. neither rocky parliament, supporters of chick there it looked harder, outsider,
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gearing up for another day. there of those with demonstrations will bring you a lot more in this as we get it here at al jazeera. for now, will he be with those dramatic pictures? how and why did food and become so obsessed with this law, we were giving them a tool to hold the corrupt individuals in human rights abusers accountable. they're gonna rip this deal apart if they take the white house of 2025. what is the world hearing when we're talking about why american today we take on us politics and society? that's the bottom line. i . hello, i'm adrian for again, this is counting the cost on al jazeera. you'll look at the world of business and economics this week, joining the fight against inflation. europe raises interest rates for the 1st time in more than a decade. bus will to measure work. also, risk also this week,
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as interest rates rise for the highly indebted countries like italy could get into more trouble, will the european central bank come to its rescue? and european nations agree to reduce the amount of natural gas they use, but will that help them stay warm this winter if russia stops all deliveries? ah, europe is struggling to put out the fires, hurting its economy on several fronts, spots it's the rising cost of heating homes and feeding families. that's worrying. many europeans, probably the most annual inflation of the european union reached almost 9 percent in june. the last time it was that high, the euro, which a shed by 19 of the box countries didn't exist. the european central bank has raised interest rates for the 1st time in more than a decade to try to rein in price increases. the cost of borrowing was increased by a large and unexpected half percentage point. that takes the easy bees key interest
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rate to 0, ending the blanks h. your experiment with negative interest rates. june inflation was more than the bank had predicted. the euro fell to parity with the dollar for the 1st time in 20 years last week, or the banks president christie law. god explained the easy bees decision to hike rates. legard also gave few signals about what comes next. economic activity is slowing rushes and justified aggression. towards ukraine is an ongoing drug on growth. the impact of high inflation on purchasing power. continuous supply constrains and higher uncertainty are having a dampening effect on the economy. serves, continue to face higher costs and disruptions in their supply chains. although there are tentative signs that some of the supply bottlenecks are easing taken
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together. these factors are significantly clouding the outlook for the 2nd half of 2022 and beyond. well, the bank also introduced a new policy tool to shield some of the blocks most indebted nations from excessive borrowing costs, the transmission protection, instrument, or t p. i is intended to stop disorderly moves in government bond markets and prevent euro spreads from widening the gap between italian, a german benchmark yields a closely watched gauge of financial stress, grew to as much as 2.38 percentage points. now the tool allows the bank to buy the bonds of countries experiencing an unwarranted deterioration in financing conditions. and by doing so on prices go up and their yields down. and that in theory caps interest costs. but it wouldn't offer protection if the easy be determined that higher borrowing costs resulted from poor government decisions. or
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to discuss all of that. joining us from london, melanie to bono, a senior europe economist at pantheon, macroeconomics and independent economic research firm. good tele with us up melanie . so the sea bees move makes sense. it's well behind its peers though. is it too little, too late? easy be raised, bates, i 50 basis points last week, taking a ski deposit rate from minus point $5.00 to 0. this was more than most of us had expected and it's probably not enough now. so we look or an extra $75.00 basis points of hikes. it be now and the end of the year, i think that deposit rate 2.7 percent or i but higher rates it's feared, are going to push the euro block into recession. how far and how fast you think the e c b should be moving rates right now? well, at this point id, eurozone con, amused heading into recession, whether an easy be was hiking or it's, or not. after the pandemic, when it seemed like supply issues were abating on the war and ukraine broke out. so
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and as a result, the russian gas supplies have dwindled and we got heading into europe. and this is affecting industry, especially in the likes of germany and italy, which are highly reliant on those gas supplies. so we force all and iraq on recession either with or without further eating be inflation across the eurozone. melody is running a is, was your bottles quickly as it is across the u. s. why is it so much harder for the e. c. b to get inflation under control, but it is for the 3rd. i wouldn't necessarily say it's harder both are struggling at the moment because inflation is high in both cases. but at this point, a lot of what is driving the inflation rate, higher is energy, and that is something that easy, big cannot control. so interest rate hikes will eventually damp and inflation because they will convince that will lead to lower demand for certain goods.
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convincing firms to stop by raising prices. but in the meantime, it's energy that's driving inflation and that will continue, especially if, as we saw this week with the surgeon gas prices, again, the energy rate will remain higher than otherwise would have been the case 0 go up on the early games that it made after the e, c, p is decision on our rates. to what extent boat could a depreciating euro actually be better for the euro zone economy? depreciating euro helps exporters. so when the euro depreciates against us dollar, european goods are relatively more, it's more cheaper for a head to given price. so that means the exporters benefit because their goods are more competitive on the global market. or it's a, would it take for the euro to make her a to make, gauged to become stronger? well, at this point, we, so we expect 0 to depreciate a bit further because on the branches. so that's because the u. s. federal reserve
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bank will high. i more than easy be over the coming months, but we do see this turning. so in september where r u. s. economist a expects us inflation to make a turn and the fed to start hiking by less than it's done in recent months. that is, when we will see the dollar lose out compared to the euro, will prussia on the euro's own economy. get worse if russia carries through its threat to cut off suppliers or severely reduce gas suppliers to europe. we expect that russia will close the caps fully before year end, and probably before a europe manages to phillip gas levels or gas applies to the intended rate is by 9 to protect come, 80 percent, sorry, come november. and that will be hard. it will hurt, especially like i previously mentioned countries like germany and italy, which are highly exposed to this russian gas. i'm, but it's not something that europe can't adapt to. so
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a lot of european countries have already ramped up cold production. and it seems also that nuclear production may come back on the line in germany or discussion so far has been pretty pessimistic. relevant, is there anything positive to say right now about the euro's own economy, tourism is expanding at breakneck speed. it of course, took a large hit during the panic and now it's on a terror. so if tourism wasn't rebounding, to the extent that it was now, we'd probably see a much deeper recession and ears own in the coming to quarters than we currently expect. literally, there are concerns about how higher borrowing costs are gonna affect indebted nations. that's something i want to talk to you about a little more in just a moment. stay with us. we'll, italy is among both countries. it has the 2nd highest debt burden in euro's own, and raising interest rates too quickly could high comp italy's debt and make it harder for it to pay. it comes to the country faces, political uncertainty of the resignation of prime minister mario rocky will get more into the details on how the t p i works, which we told you about in
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a few moments. but 1st, let's hear how some italians, a coping. can i sell it for? for euro's what i was selling to before, you know what they tell me here to close. so all of these price increases are paid for by of the small, medium business owners going on. i'm anxious if you try to not turn on the air conditioning take the car less, but the still anxiety because you have to think twice about doing things that were normal before. so we simply need to pay more attention than we have up here. it's impossible to get ahead this way between tax bills and everything else. it's impossible to get ahead. i walked in the morning until late, more than 10 hours and for what to pay the bill. so let's get back to melanie about a senior europe economist, a pansy and micro economics. so melanie concerned growing over it to return to the years. i'm christ just broke out in 2010. what, what are the chances that get services cost will run? and so because e, c, b is hiking up interest rates,
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government bond yields were rise in italy and especially because now the tv has ended its program and it's no longer hoover in all the new get the italian government issuing. so any markets or just been tor buying that, that are much more price sensitive and will require higher premium to buy the debt . in turn, the government is still issuing you debt because it is having to spend a lot more on trying to appease what trying to offset the rising cost of living. and because now of course has to invest in the green transition and it has to and more of the defense because of the risk on the doorstep. so it's spending a lot more, it's having to issue new debt. and therefore, debt servicing costs will rise. and the debt burden arise? do we think it's going to lead to a new crisis? no, we don't think so. the debt is more manageable now, and we think that the relationship between government bond yields and none of that is much more benign than it was in 2012 plus if we were heading in that direction,
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the e. c, b would be much more willing to come to the rescue for actually now compared to the intrinsic just of 2012. all right, so do you think that the p p i will work if indeed it is even used. you think it's going to be yours and is it just me or have the details been left deliberately vague? it's not just you only yes, there are so easy be president christine le guard said that they will not tell us everything about the t p. i am, we do have some information and that's basically that the t p i is like a form of asset purchase program. but of course not exactly like you ease. so it's in simple terms or a promise, find it easy be that it will by a certain government bonds if it things that bond yields are rising much more quickly than the fundamentals would imply. there is a number of conditions on there such as fiscal sustainability and, and it really just depends how strictly and easy reinforces those conditions, whether or not it will be helpful for countries like italy or not. it's very easy
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to see is the governing council members warning putting up headlines signals that they don't want to support some countries because of past vistas, inability war is and so who knows if it will help and who knows of it new. okay, christina, god declined to say whether italy is actually on the list given the political crisis, could, could italy even meet t p ice conditions, i'm guessing, from what you were saying earlier that it possibly could. and what does all of this mean for investors? so at this point, and italy probably does meet the conditions yet, but of course we're heading for staff elections. so as we do had for snap collections, we expect italian bond yields to rise, and that's based on political uncertainty. and that's one of the things of the t v i. condition set out if the bon yards are rising and spreads are widening because of political yacht self inflicted political uncertainty and it wouldn't warrant the use of t b. i. so we'll have to wait and see whether or not at this point,
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what happens in the coming months, we'll need these if you to step in. so what's next? we're to lose economy. melanie asked to draw his exit, why is it in such a mess? and is it at risk to think of even crashing out of the euro's home? we do not see a risk that italy will crash out a deer as own. and none of the political parties are offering that pern they've learned from the mistakes of before. and they would like to stay in the euro, even the most are right wing parties and, and so we do not see a risk of that. as it happens my a drug didn't resign and we are heading for sap elections. does that change the outlook for italy? we don't think so. so for us are further fiscal support was an upside risk to our forecast. the snap election mused that further fiscal support this year is highly unlikely. and that's not because of willpower, but it's more because of logistics. the snap election is being held on the 25th of september coalition politics mean that in italy t. it will take time for
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a governing coalition to form, let alone that new government agreeing on. you've escalade so because fiscal support was an upside for for, has before. now it's no longer there and we still expect the italian economy to enter recession by q for this year. our forecast currently point to growth of 2.7 percent for this year. the whole which is lower than what the government has recently forecast. really good to talk to melanie many, thanks. everybody. wilson counting the course course. thank you. weren't any ah, no, it was seen as an act of solidarity in the face of what you country say is energy blackmail by russia locks watered down plan to cut gas consumption by 15 percent comes with moscow, announced another count to supply, sending prices up once again russian energy from gas prom says that it's reduced gas flows into germany to allow walk on a turbine on the lord stream one pipeline. but e u leaders say that move is politically motivated, al zeros,
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barbara and go per reports. the energy crisis slimming over europe, dominated the meeting of e ministers in brussels, cutting gas consumption ahead of winter, the best and only way to reduce ease reliance and russian energy. fortified be a sam correspond stay 15 percent cut in our usual gas consumption to be in the beginning of august and the end of march. that's why we have pointed to this percentage as the target on member states should stay forward. russia is set to further reduce supplies to the north stream pipelines. blaming a technical fault at one of their stations, something e and ministers disappeared. e leaders say there's no technical reason for the latest reduction pursuing ashley again. as of today, there is no solution to the ongoing equipment issues at the party. i buy out compress the station near. there is no solution whatsoever yet. seems as saying
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nothing because they're trying to find solutions. but there are milan spectrum out as the western russia exchange economic blows in response to russia's warden ukraine. european leaders say moscow is not a trustworthy part. now, the wind is coming ah, and we don't know how cold it will be. but what we know for sure that the in will continue to play his, her, not the games her in misusing and like, mailing cur, by ha, ha, ga supplies, ukraine's president for lottie may. zalinski says i, that europe is a ready at war with russia, and gas is a new front line, or is he in his bride? all this is done by russia on purpose to make it as difficult as possible for europeans to prepare for winter. and this is an open guess war that russia is waging against the united europe. this is precisely how it should be perceived. and they don't cable happen to the people or how they will suffer from hunger g to the
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blockade horse, or from winter cold and poverty, or from occupation. these are just different forms of terror yet. wellness does that. nearly half of all the gas europe needs comes from russia. the supply is now down to relative trickle. come winter, if you're a pin, countries don't have enough supplies toward up and time. russians will almost certainly mean a struggle to heat homes and power cities. barbara anger per hour to sara, voluntary agreement may become mandatory if suppliers reach crisis levels. however, some countries not connected to the used gas pipelines such as island, malta, and cyprus would be exempt. states like baltic nations that are heavily reliant on gas for electricity can also avoid the reductions, and it's the same for any country. the fills it's gas storage tanks to the required 80 percent level, as well as critical industries and supply chains that use gas as
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a feedstock. now, an e u official said that hungary was the only member state that opposed the gas reduction agreement. let's discuss all of this further with michael bradshaw, professor of global energy at warrick business school. he joins us now from coventry in the u. k. michael good. have you with us once again. what do you make of this deal? how a business is factories households going to be affected? and as you suggested, it's a compromise. i mean, not a bargain has been struck. there's lots of exemptions and we must wait and see what happens if we get to a physical shortage of supply. if you look at the kind of measures that propose, i think for, for households, it really means that they are hoping on what we might call behavioral change. that people will take measures to reduce their gas consumption in the winter. i mean, these things are not necessarily hard to do turning down thermostats in improving the efficiency of your house in terms of insulation of windows, not heating rooms you don't need. and so for the industry is much harder, particularly the, the energy intensive industries is already
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a degree of demand destruction as a consequence of high price. but most countries probably have in place a, c, a system that will, will actually say to key industries you need to reduce or, or stop operating to save gas. so that gas can be used to generate electricity. and he households, it's being described as a show of resolve a show of solidarity among you nations. but are they really united in the energy war with russia? well, obviously what president could hopes to do with dr. discord and disunity among european member states. the fact that they've reached the agreement is a positive, but as your report is a suggested, it comes with various caveats and exemptions. the other, other concern among member states is what more might call commission creek. that actually the european commission is over stepping its mandate here because that responsibility for energy security and energy mix is actually something that lies with national government, not european union. i think it will become it. we really will be tested if we get
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to this emergency situation where they try to make it mandatory until then it's a voluntary agreement and we must wait and say, i given the long list of exemptions could european nations still fill the gaps left? if russia does turn off the taps completely, especially if, if europe faces an exceptionally cold winter, i think the short answer is no to simply not enough gas available in global markets . because most of the, the other gas will have to come as liquefied natural gas. and it's not just whether or not there's a, there's a mild winter in europe. we've been relatively lucky in europe that the chinese demand has been depressed as a consequence of cove. it, if we have a hard winter in the northern hemisphere, that effects asian l. n. g demand will be in competition with asia to try and secure the available, flexible, and n g. the simply not enough flexible energy to cover the gap. so where does all of this leave? the use plans to ultimately win itself off?
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russian gas. while it's going to take time there's, there's no question about that at the back to back story here is that the global gas mark is exceedingly tight. and the european union is, is wanting to put it away from pipeline gas to rely on, on, on seaborne liquefied natural gas. and the market there is going to be tight, probably the next 2 or 3 years, at least. and therefore, this is not going to be an easy thing to do and it's going to come at a very high cost. so driving down demand is, is a critical element and truck, but trying to find alternative supplies is going to take time. other options for nations in warmer climes, southern parts of europe to share a spare capacity with, with nations in the north. there are problems here with the gas pipeline network. main. one of the reasons of spain is, is, is exempt. actually, although spain has a lot of l n, g import capacity, the pipeline links between spain and france around the developed and therefore, the gas that spain might have an offer to northern europe cannot actually make it
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into european markets. in a previous, a gas disputes between russian, ukraine did result in european union investing in greater connections within this gas market. but it's not that straightforward to move the gas. it's equally not that straightforward to move the gas from jaelyn g terminals because the pipeline systems based on moving lots of gas from russia. and what is all of this mean for, for householders, like, like, you and me, a bill is going to stay high. now for the foreseeable future, is this cost of living crunch due to the rising cost in heating costs? going to continue? unfortunately, i think it is. i think we have to, to brace ourselves for further increases in price this morning. i actually just received my gas bill and i can't believe it's so high, it must be a mistake, i'm saying to myself. so i think we're going to see further increases and greater pressure on government to protect the tech consumers. and that's not going to go away on that rather gloomy note her professor. we'll leave it many thanks to day
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for be with us. that's michael bradshaw there in coventry a you and broke a deal clearing the way for the export of millions of tons of ukrainian grain is expected to help ease food prices and the global staple shortage. but getting harvest from the farm to the table has become a dangerous job in ukraine. since the russian invasion began al jazeera john henry reports now from the village of christ name. in a wheat field, north of keep a de mining experts sweeps for the weapons of war. the mind detector finds remnants of a cluster bomb. it slow going, but these workers need to clear a path before forming combines can reap the wheat from a war time harvest there among a 1000 de mining experts across ukraine, racing to avert a global food shortage over the last say, hi me. we have found
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a fragment of class emission and a grin aid from an r p g 7, which is unexpected. when the war began, this farm was attacked by russian aircraft artillery and cluster bombs. workers had to replace tractors, trucks in barnes before they could bring in the harvest. you'll never even thought it up. 3. hello. you can see they're burned and destroyed by selling artillery and john strike. medium g as good as farmers scrambled together, wheat, corn, and sunflower oil, russia and ukraine have reached a tenuous agreement to allow 20000000 tons of trapped, ukrainian grain to leave from black c ports through so called safe channels. but with all the dangers of transporting the crop of 2022 in a war zone for now, this far, mis, during wheat in these containers, weight is the symbol of ukraine. that yellow and blue flag represents a field of wheat beneath a sky of blue. and free crane,
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the problem is getting this wheat out of the ports. but for farms like this, the problem is overcoming all of the obstacles to get it harvested in the 1st place . the harvest of war has been tough on farms across ukraine. russia has left its signature on these cluster bombs. let us know what might be in your market ogle, but as he's got him here, we can see the mark of rational forces since the beginning, while her work, our employees font these on our field season, this year, she threw up ala no. the machinery of war rushes, the machines on the far end is summer winds to close, the race to bring in this year's crop grows more urgent every day. john henderson, al jazeera, krazny ukraine, and that's all show fault this week. don't forget if you want to get in touch with us about anything that you've seen. you can tweet me. i'm at a finnegan on twitter. please use the hash tag a j c t c. when you do or you can drop us
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a line counting the cost of al jazeera dot net is our e mail address. there is, of course, more few online at al jazeera dot com slash c t. c. that takes you straight to our page and then you'll find individual reports, links, an entire episodes for you to catch up. but that's it for this edition of counting the cost. i'm adrian finnegan for the whole team here and so hop. thanks for being with us. the news on al jazeera is next a round one percent of electricity globally is consumed by data centers, many of which provide promote storage facilities or what is also known as the cloud . i'm in no way to see how one center is harnessing the entity of these fuel woods to stole our digital information without a heavy cap in foot traits. i'm russell beard off the north coast of the u. k, where the global green energy revolution is taking on
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