Mixed signals: German Chancellor Olaf Scholz stepped up pressure on Moscow earlier this month by making it clear that EU sanctions would remain in place as long as Moscow did not agree to a peace deal with Ukraine (a deal he said could not be “imposed” on Kyiv). He was equally blunt in stating that the illegally annexed Crimea region was part of Ukraine.
But Macron struck a very different tone last week, saying Europe “should never succumb to the temptation of humiliation nor to the spirit of revenge” over Russia’s war on Ukraine. He also said the EU should “forge a new security balance” — reiterating lofty positions that those outside the Elysee Palace have yet to decipher.
Yellen is in Brussels today for the Brussels Economic Forum. She will also meet with European Commission President Ursula von der Leyen and EU Financial Services Commissioner Mairead McGuinness. Yellen’s stance on the EU sanctions strategy is interesting – last month she said the EU needed to be “cautious” about imposing a full oil ban on Russia, noting that it could raise oil prices and unexpectedly benefit Russia. She will also discuss cryptocurrencies with McGuinness.
Tax focus, but the real focus of her trip is the whole
Yellen met with Polish Prime Minister Mateusz Morawiecki in Warsaw on Monday to try to get Poland over that line.
Recap: Last October, world leaders reached a new global tax agreement at the G20 summit, a deal that had been years in the making at the Organization for Economic Cooperation and Development (OECD). The second “pillar” of the deal introduced a new minimum global tax rate of 15%, aimed at combating large companies that have been evading paying their fair share of tax.
EU countries backed the deal at OECD level, and the process of enacting the measure into EU law was supposed to be a formality. But several countries raised last-minute objections, notably Poland, raising doubts that Warsaw, in a rule of law dispute with the European Commission, is holding the initiative hostage (Warsaw denied the allegation to our colleague Bjarke Smith-Meyer last month).
Status: The French EU presidency has been pushing for a deal on the document, with EU Finance Minister Bruno Le Maire also actively involved behind the scenes. EU ambassadors will discuss the issue on Friday, ahead of a meeting of finance ministers next week. But sources told Playbook that the real chance for a deal comes later this week at a meeting of G7 finance ministers in Bonn, which Yellen will attend.
Ukraine broke the news last night
Ukraine appears to have handed control of Mariupol to Russia, evacuating its remaining troops from the besieged city after months of fighting. Mariupol has been one of the most heavily fought areas in Ukraine since the war broke out in February and has been under siege for weeks.
Macron appoints new prime minister: France’s president picked left-wing technocrat Labor Minister Elisabeth Borne to lead his new government, ending weeks of speculation following April’s presidential election. Borne must implement critical but politically sensitive pension reforms that Macron promised when he was first elected in 2017 — an initiative that has been repeatedly delayed because of protests and the coronavirus pandemic.
EU and US praise trade cooperation…but can’t hide differences on China: The European Union and the United States on Monday praised their “trade and technology committee” for being able to closely coordinate export controls on Russia. But the language on China remained cautious – EU countries remained reluctant to ban imports of Chinese forced labor or criticize Chinese President Xi Jinping’s draconian (and failed) zero-COVID policy.
The trade committee was set up last year to ease EU-U.S. trade relations, which have been badly damaged by Donald Trump’s presidency, and to jointly counter China’s increasingly abusive trade practices. But the war on Russia also dominated Monday’s meeting.