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from MacroScope:

Britain to join the fray

A pair of U.S. Air Force F-15E Strike Eagles fly over northern Iraq

The British parliament will vote today on whether UK forces should join U.S.-led air attacks against Islamic State militants. Any action will be confined to Iraq, which has asked for help, not Syria where IS also controls swathes of territory. Prime Minister David Cameron has promised a separate vote on that if it comes to it.

Unlike last year when action to stop Syria's Bashar al-Assad using chemical weapons against his own people was voted down, all the main parties appear to be broadly in support, probably swayed by the beheading of captives by the Sunni militants.

There shouldn’t be much difficulty arguing that the group poses a threat to Britain and its interests. Iraq’s prime minister said overnight that Baghdad had "credible" intelligence that Islamic State militants plan to attack subway systems in Paris and the United States. The attacks, he said, were plotted from inside Iraq.

There is also the grisly spectacle of an apparently British man featuring in videos of captives being beheaded. The FBI said last night that the masked man seen wielding a knife in the videos had been identified though it declined to give his name or nationality.

from Breakingviews:

Sinopec’s petrol station revamp is an uphill job

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Chinese oil giant Sinopec wants to sell more from its 23,000 pump-side stores. But as a new Breakingviews calculator shows, even a dramatic increase in non-fuel sales won’t do much to lift the $58 billion valuation that outside investors have put on the business.

from Hugo Dixon:

Gas and bank security have similarities

Europe is currently conducting two stress tests. One is on its energy suppliers, to see how badly they would fare if Russian gas was disrupted. The other is on euro zone banks, to ensure they are strong enough to finance economic recovery.

It is hard to know which of the two is the more important. But it is clear that an effective regime for energy security requires many of the same elements as financial stability.

from MacroScope:

Of Iraq and Ukraine

Barack Obama’s message that any military support for Iraq’s besieged government is contingent on Prime Minister Nuri al-Maliki taking steps to broaden his Shi'ite-dominated government may be having an impact.

Just hours after Maliki's Shi'ite allies vowed to boycott any cooperation with the biggest Sunni party and his government had accused Sunni neighbour Saudi Arabia of backing "genocide", Maliki broadcast a joint appeal for national unity alongside Sunni critics of his Shi'ite-led government.

from Breakingviews:

Gazprom/Ukraine dispute is proxy for Putin’s whims

By Pierre Briançon 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Europe has long been used to the perennial drama of “Ukraine versus Gazprom,” but this year’s version is not your run-of-the-mill gas price dispute. Making good on a longstanding threat, Gazprom has said it will deliver gas to Ukraine only if it has been pre-paid. This comes after the Russian energy group failed to settle a dispute with Naftogaz, its Kiev-backed counterpart, over what it claims are more than $4 billion of overdue bills.

from MacroScope:

Common cause for Washington and Tehran in Iraq?

Iraq is going up in flames and there appears to be no question of the West putting boots back on the ground in contrast to 2003 when the United States and Britain invaded to topple Saddam Hussein and set in train a decade of chaos that has now exploded again.

Iraq's most senior Shi'ite Muslim cleric has urged his followers to take up arms against a full-blown Sunni militant insurgency to topple Shi'ite Prime Minister Nuri al-Maliki. The chances of ISIL militants taking heavily armed Baghdad are slim but that doesn’t mean conflict will not continue and, with Iraqi Kurdish forces seizing control the oil hub of Kirkuk just outside their autonomous enclave in the north, the prospect of the country splitting along sectarian lines is real.

from MacroScope:

EU’s top two — oh to be a fly on the wall

Who are the two most important people in the EU? It’s hard to argue against Angela Merkel and Mario Draghi and they meet today in Berlin.

It’s supposed to be a private meeting but of course we’ll be digging, particularly for any signs that the German leader is for or against the European Central Bank printing money if it is required to beat back deflation.

from MacroScope:

ECB aftermath; how firm is opposition to QE?

After the European Central Bank opened its toolbox and deployed pretty much everything it had left, bar printing money, the question is if and when QE becomes a live possibility.

ECB chief Mario Draghi pointedly said at his monthly news conference that all policy options had not been exhausted.
German resistance to such a move will remain, however, and Draghi’s deputy, Vitor Constancio, has already intimated that it will take until late this year to judge whether the latest gambits have made a difference before moving onto the next stage.

from MacroScope:

We need to talk about Juncker

Swedish Prime Minister Fredrik Reinfeldt will host Germany’s Angela Merkel, Britain’s David Cameron and Dutch premier Mark Rutte at his private residence over two days to discuss reforming the EU and "achieving a more efficient EU that is focused on creating jobs and growth". 

After EU elections delivered strong returns for far-right and far-left parties, EU leaders say they have recognized the need to refocus on what matters to their people. But at the same time, the orthodox camp is determined to keep bearing down on debt and the bloc’s heads are arguing over who should take the top jobs in Brussels which set the tone.

from MacroScope:

Euro zone inflation data to set seal on ECB action

Euro zone inflation – due at 0900 GMT - is forecast to hold at a paltry 0.7 percent in May, in what European Central Bank President Mario Draghi has labelled the danger zone below 1.0 percent for the eighth successive month.

After German inflation fell to just 0.6 percent on the EU measure on Monday, well below forecasts, the bloc-wide figure could also undercut. We already know the Spanish and Italian inflation rates were just 0.2 and 0.4 percent respectively last month. If that comes to pass, any doubts about ECB action on Thursday, which are thin on the ground anyway, must surely be banished.

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