<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS.jpeg" alt="" class="wp-image-418628" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107091954-1658396983875-gettyimages-1239259022-GERMANY_ECB_WATCHERS-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>The European Central Bank is increasing interest rates for the first time in 11 years. But in Italy, political turmoil is back. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank on Thursday increased interest rates for the first time in 11 years in an attempt to cool rampant inflation in the euro zone.



The ECB, the central bank of the 19 nations that share the euro currency, surprised markets by pushing its benchmark rate up by 50 basis points, bringing its deposit rate to zero. Economists had expected a smaller hike of 25 basis points.



“The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalisation path than signalled at its previous meeting,” the ECB said in a statement Thursday.



The Frankfurt institution had kept rates at historic lows, in negative territory since 2014, as it dealt with the region’s sovereign debt crisis and the coronavirus pandemic.



The euro rose to a session high on news of the more aggressive rate hike, to trade at $1.0257. The yield on the 10-year Italian bond also jumped on the news, extending gains after reacting to the resignation of Prime Minister Mario Draghi earlier on Thursday.



The ECB also said that this move in interest rates “will support the return of inflation to the Governing Council’s medium-term target by strengthening the anchoring of inflation expectations and by ensuring that demand conditions adjust to deliver its inflation target in the medium term.” The central bank’s inflation target is 2%.



The ECB had previously signaled it would be increasing rates in July and September as consumer prices keep surging, but it was unclear whether it would go as far as bringing rates back to zero. The ECB’s deposit rate is now 0%, the main refinancing operations rate is 0.5% and the marginal lending facility is at 0.75%.



<h2 class="wp-block-heading" id="h-surging-inflation"><a></a>Surging inflation</h2>



A first reading for inflation in June showed a record high of 8.6%. However, some investors are skeptical over the ECB’s actions as they predict a recession later this year. Back in June, ECB forecasts pointed to an inflation rate of 6.8% for the whole of this year, and 3.5% in 2023. In terms of growth, the central bank estimates a GDP rate of 2.1% for this year and the next.



One of the biggest uncertainties going forward is whether Russia will cut supplies of natural gas to Europe completely. Moscow has been accused of weaponizing fossil fuels as the EU slaps tough sanctions on the Kremlin for its unprovoked onslaught in Ukraine.



Natural gas flows have fallen by about 60% since June and a critical pipeline, Nord Stream 1, saw supplies resume Thursday after maintenance — albeit at a reduced capacity.



Europe’s Economics Commissioner Paolo Gentiloni has said that a full cut-off in supplies from Moscow, with Europe so dependent on Russia hydrocarbons, could push the euro zone into a recession this year, though this isn’t the EU’s base-case scenario currently.



<h2 class="wp-block-heading" id="h-anti-fragmentation-tool"><a></a>Anti-fragmentation tool</h2>



Meanwhile on Thursday, investors kept a keen eye on details regarding the ECB’s new anti-fragmentation tool, which is aimed at supporting those nations with lofty debt piles, like Italy.



The central bank called this new tool TPI (Transmission Protection Instrument). It can be activated to counter “unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area,” it said.



“The scale of TPI purchases depends on the severity of the risks facing policy transmission,” the ECB added, while stating that further details would be published at 2:45 p.m. London time Thursday.



Expectations point to some conditionality between implementing strict domestic reforms and qualifying for this new instrument. This becomes particularly important in the context of Italian politics, where snap elections are now expected to take place in the fall after Prime Minister Mario Draghi resigned Thursday morning.



A credible government that sticks to the targets agreed with the European Commission will be critical if it’s to benefit from the new tool.

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European Central Bank raises rates by 50 basis points, its first hike in 11 years

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM.jpg" alt="" class="wp-image-418577" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/CFUNBLQBTNMUXCL6VHQ4PDL2EM-135x90.jpg 135w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>U.S. President Joe Biden attends a news conference at Waldorf Astoria in Jeddah, Saudi Arabia July 15, 2022. REUTERS/Evelyn Hockstein</figcaption></figure>



WASHINGTON, July 20(Reuters)&nbsp;&#8211;&nbsp;President Joe Biden announced on Wednesday that&nbsp;the United States will bring together leaders from across the African continent for a major summit in December&nbsp;in Washington to discuss pressing challenges from food security to climate change.



&#8220;The summit will demonstrate the United States’ enduring commitment to Africa, and will underscore the importance of U.S.-Africa relations and increased cooperation on shared global priorities,&#8221; Biden said in a statement.



The U.S.-Africa Leaders Summit, scheduled for&nbsp;Dec. 13-15,&nbsp;was announced simultaneously in virtual remarks by Vice President Kamala Harris to the U.S.-Africa Business Summit in Marrakech hosted by the Corporate Council on Africa and the kingdom of Morocco and attended by a U.S. delegation.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Z05OD&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



A senior administration official, discussing the U.S.-Africa summit plans on condition of anonymity, said about 50 African leaders are expected to join Biden for the Dec. 13-15 series of meetings.



It will come at the end of a year when Biden has engaged other regions of the world with trips to visit U.S. allies in Asia, Europe and the Middle East. Biden has yet to visit Africa since becoming president, and the summit will be his most comprehensive look at the complexities of the continent.



<h3 class="wp-block-heading" id="h-read-more-biden-to-lead-major-economies-in-push-for-more-urgent-action-on-climate">Read more: <a href="https://www.cnbcafrica.com/2022/biden-to-lead-major-economies-in-push-for-more-urgent-action-on-climate/">Biden to lead major economies in push for more urgent action on climate</a></h3>



A backbeat of Biden&#8217;s diplomatic efforts thus far has been to promote Western democracies as a counterweight to China, but the official said the U.S.-Africa summit was not all about Beijing.



&#8220;We are not asking our African partners to choose,&#8221; the official told Reuters. &#8220;We believe the United States offers a better model, but we are not asking our African partners to choose.&#8221;



The U.S. Agency for International Development announced on Monday that it is providing nearly $1.3 billion in aid to the Horn of Africa nations of Ethiopia, Kenya and Somalia to help stave off mass starvation and deaths in the drought-stricken region.



Biden said the summit will work toward new economic engagement, promote democracy and human rights, advance peace and security, and address challenges such as food security and climate change as well as the pandemic.



The president believes that U.S. collaboration with leaders from African governments, civil society, the private sector and the African diaspora will help tackle some of the challenges, the official said.



(Reporting by Steve Holland; Editing by Leslie Adler)

U.S. President Biden visits Saudi Arabia

Biden announces U.S.-Africa summit for mid-December

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY.jpeg" alt="" class="wp-image-418513" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks during a press conference as she meets with economic and financial organizations in Berlin at the German chancellery on August 26, 2021 in Berlin, Germany. (Photo by &#8211; Pool/Getty Images) Clemens Bilan | Getty Images</figcaption></figure>



Global interest rates will likely keep rising until 2023 when heated prices will begin to cool in response to the actions from central banks, according to Kristalina Georgieva, managing director of the International Monetary Fund.



Commodity prices, such as oil, may have leveled out and started sliding in recent months, but Georgieva said that they will do so in response to recession risks and not necessarily because inflation has been tamed.



“Central banks are stepping up to control inflation, it’s a priority. They have to to keep going until it’s clear that inflation expectations remain firmly anchored,” Georgieva told CNBC at the G-20 meeting in Bali on Friday.



“At the moment we still see inflation going up; we have to throw some cold water on it.



Pandemic-led disruptions to supply chains have created bottlenecks while the war in Ukraine has exacerbated these shocks. The result has been a surge in prices of goods including key staples like food, fertilizer and energy.



While food price inflation was already in motion before the pandemic and war, the two events have only added to the issue. Global food prices reached an all-time high between March and April this year, according to the World Bank. The World Bank’s Food Commodity Price Index for March-April rose 15% over the previous two months and was more than 80% higher than two years ago.



The Food and Agriculture Organization told the G-20 Friday that the global malnourished will increase by 7.6 million this year, and rise again by 19 million in 2023.



Oil prices have levelled out and starting sliding, falling from a high of $120 a barrel in early June to under $100 a barrel this week.



<h3 class="wp-block-heading" id="h-read-more-imf-s-georgieva-says-chad-ethiopia-zambia-creditor-committees-to-meet-soon">Read more: <a href="https://www.cnbcafrica.com/2022/imfs-georgieva-says-chad-ethiopia-zambia-creditor-committees-to-meet-soon/">IMF’s Georgieva says Chad, Ethiopia, Zambia creditor committees to meet soon</a></h3>



Yet, consumer inflation in the U.S. registered a 40-year high of 9.1% last month, a condition described by Treasury Secretary Janet Yellen at the G-20 as “unacceptably high”.



While much data used to determine inflation has a lag, Georgieva told CNBC that all the signs indicated that inflation has not yet been reined in.



She added that it is paramount that inflation is controlled otherwise incomes will be eroded, hitting hardest in the poorest parts of the world.



Reflecting lessons learned from past economic crises, Yellen told the G-20 on Friday that it was crucial for governments to establish and maintain a “playbook” of policy responses which would “minimize the duration and severity of recessions” and “mitigate adverse economic consequences on firms and individuals.”



Elaborating on Indonesia’s “playbook,” Finance Minister Sri Mulyani Indrawati said at the G-20 on Friday that controlling demand was key at this juncture as fiscal and monetary easing measures executed at the start of the Covid-19 pandemic had restored demand but not supply.



Indonesia for example lifted its 3% fiscal deficit cap — for three years — in order to inject stimulus in the economy countering “extraordinary” conditions imposed by the pandemic, she said.



“We have to admit that demand has been boosted by countercyclical policy,” she said.



“Two years ago, we tried to rescue the economy from both supply and demand collapse because of the pandemic.” Sri Mulyani said however, since then the recovery in&nbsp;demand&nbsp;has outstripped that of supply.&nbsp;

107065564-1653323443353-gettyimages-1234879264-GERMANY_GOVERNMENT_ECONOMIC_POLICY

Inflation will likely be tamed next year when rate hikes start to work, IMF chief says

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth.jpeg" alt="" class="wp-image-418486" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>While China’s exports surged by more than expected in June, imports climbed far less than anticipated. Workers pictured here disinfect a container ship terminal in Qingdao on July 13, 2022. Future Publishing | Future Publishing | Getty Images</figcaption></figure>



BEIJING — China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls.



Analysts polled by Reuters had forecast growth of 1% in the second quarter.



Industrial production in June also missed expectations, rising by 3.9% from a year ago, versus the 4.1% forecast.



However, retail sales in June rose by 3.1%, recovering from a prior slump and beating expectations for no growth from the prior year. Major e-commerce companies held a promotional shopping festival in the middle of last month.



Retail sales in June saw a boost from spending across many categories including autos, cosmetics and medicine. But catering, furniture and construction materials saw a decline. Within retail sales, online sales of physical goods grew by 8.3% from a year ago in June, slower than the 14% growth the prior month.



Fixed asset investment for the first half of the year came in above expectations, up 6.1% versus 6% predicted.



Overall fixed asset investment picked up on a monthly basis, rising by 0.95% in June from May to an undisclosed figure. While investment in infrastructure and manufacturing maintained a similar or better pace of growth from May to June, that in real estate worsened. Investment in real estate in the first half of the year fell by 5.4% from a year ago, worse than the 4% decline in the first five months of the year.



Unemployment across China’s 31 largest cities fell from pre-pandemic highs to 5.8% in June, but that for the age 16 to 24 category rose further to 19.3%.



The statistics bureau described the latest economic results as “hard-earned achievements” but warned about the “lingering” impact of Covid and “shrinking demand” at home. The bureau also noted the rising “risk of stagflation in the world economy” and tightening monetary policy overseas.



At a press conference Friday, statistics bureau spokesperson Fu Linghui said economic indicators in the second quarter halted a downward trend. He described the impact of Covid as “short-lived,” and emphasized how China’s inflation is far below that of the U.S. and Europe. Fu added that there are “challenges” to achieving the full-year economic targets.



In the second quarter, mainland China faced its worst Covid outbreak since the height of the pandemic in early 2020. Strict stay home orders hit the metropolis of Shanghai for about two months, while travel restrictions contributed to supply chain disruptions.



By early June, Shanghai, Beijing and other parts of China were on their way to resuming normal business activity. In the last few weeks, the central government has cut quarantine times and eased some Covid prevention measures.



But different parts of China have had to reinstate Covid controls as new cases spike.



As of Monday, Nomura said regions that account for 25.5% of China’s GDP were under some form of lockdown or heightened control. That’s up from 14.9% a week earlier.



Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls. Among firms tracked by CNBC, the median forecast was 3.4% as of late June.



The official GDP target of “around 5.5%” was announced in early March.



“China’s economy is no doubt bottoming. But it is still in the midst of its recovery,” said Bruce Pang, chief economist and head of research, Greater China, JLL.



He said he expects policymakers to maintain their easing stance, for a moderate recovery in the second half of the year.

107088556-1657780943947-gettyimages-1241870255-Chinas_Total_Import_And_Export_Value_of_Goods_Trade_Growth

China’s GDP growth misses expectations in the second quarter

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="585" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-820x585.jpeg" alt="" class="wp-image-418422" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-820x585.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-300x214.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-126x90.jpeg 126w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-768x547.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-1536x1095.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107081500-1656374337447-gettyimages-1401803922-img_3139_73d062ca-076c-4531-86d9-44cf6d7190f0-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.



The consumer price index, a broad measure of everyday goods and services, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked another month of the fastest pace for inflation going back to December 1981.



Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared with the 5.7% estimate.



On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%.



Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.



“CPI delivered another shock, and as painful as June’s higher number is, equally as bad is the broadening sources of inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Though CPI’s spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel.”



<h2 class="wp-block-heading" id="h-up-across-the-board"><a></a>Up across the board</h2>



Energy prices surged 7.5% on the month and were up 41.6% on a 12-month basis. The food index increased 1%, while shelter costs, which make up about one-third of the CPI rose 0.6% for the month and were up 5.6% annually. This was the sixth straight month that food at home rose at least 1%.



Rental costs rose 0.8% in June, the largest monthly increase since April 1986, according to the BLS.



Stock market futures slumped following the data while government bond yields surged.



Much of inflation rise came from gasoline prices, which increased 11.2% on the month and just shy of 60% for the 12-month period. Electricity costs rose 1.7% and 13.7%, respectively. New and used vehicle prices posted respective gains of 0.7% and 1.6%.



Medical care costs increased 0.7% on the month, propelled by a 1.9% increase in dental services, the largest monthly change ever recorded for that sector in data that goes back to 1995.



Airline fares were one of the few areas seeing a decline, falling 1.8% in June though still up 34.1% from a year ago. The meat, poultry, fish and eggs category also fell 0.4% for the month but is up 11.7% on an annual basis.



The increases marked another tough month for consumers, who have been suffering through soaring prices for everything from airline tickets to used cars to bacon and eggs.



<h2 class="wp-block-heading" id="h-real-incomes-fall-further"><a></a>Real incomes fall further</h2>



For workers, the numbers meant another hit to the wallet, as inflation-adjusted incomes, based on average hourly earnings, fell 1% for the month and are down 3.6% from a year ago, according to a separate BLS release.



Policymakers have struggled to come up with answer to a situation that is rooted in multiple factors, including clogged supply chains, outsized demand for goods over services, and trillions of dollars in&nbsp;<a href="https://www.cnbc.com/coronavirus/">Covid</a>-related stimulus spending that has made consumers both flush with cash and confronted with the highest prices since the early days of the Reagan administration.



Federal Reserve officials have instituted a series of interest rate increases that have taken benchmark short-term borrowing costs up by 1.5 percentage points. The central bank is expected to continue hiking until inflation comes closer to its 2% longer-run target rate.



The inflation reading could push the Fed into an even more aggressive position.



Traders upped their bets on the pace of interest rate increases ahead. While a 0.75 percentage point hike is still considered most likely at the July 26-27 meeting, a full percentage point move now has a 37% chance of happening, according to the CME Group’s FedWatch tool.



White House officials have blamed the uptick in prices on Russia’s invasion of Ukraine, though inflation was already moving aggressively higher before that attack in February. President Joe Biden has called on gas station owners to lower prices.



The administration and leading Democrats also have blamed what they call greedy corporations for using the pandemic as an excuse to raise prices. Corporate profits, however, have increased just 1.3% in aggregate since the second quarter of 2021, when inflation took hold.



However, there is some reason to think the July inflation numbers will cool.



Gasoline prices have come down from their June peak, with a gallon of regular falling to $4.64, a 4.7% drop for the month, according to Energy Information Administration data.



The S&amp;P GSCI commodities index, a broad-based measure of prices for multiple goods, has fallen 7.3% in July, though it remains up 17.2% for the year. That has come as wheat futures have fallen 8% since July 1, while soybeans are down 6% and corn is off 6.6% during the same period.



<h2 class="wp-block-heading" id="h-view-from-the-trucking-industry"><a></a>View from the trucking industry</h2>



“I see a light at the end of the tunnel,” said Brian Antonellis, senior vice president of fleet operations for Fleet Advantage, a leasing and asset management company for the trucking industry based in Fort Lauderdale, Florida.



Antonellis expects production capacity to ramp up gradually, helping to create a more competitive environment for an industry that has felt the strain of rising fuel prices, a historically tight labor market and the supply chain issues that have hampered the ability to get products to shelves.



“For probably 10 to 15 years before the pandemic, the industry fell into a stable routine where costs up across the board somewhere between 1 to 3 percent a year. It was easy to budget, it was easy to forecast, it was easy to build into rates,” he said. “The challenge we face today is it’s not that 1-3 percent anymore, it’s 10 to 20 percent depending on what cost bucket you’re talking about.”



Still, he said trucking companies are managing to get through with pricing power and creative financing.



“I do think people honestly are not trying to overcharge the customer,” Antonellis said. “They’re not being predatory about it. But they are trying to find that fine line. What do we pass forward? How do we look at the costs coming in?”



With the U.S. economic picture getting increasingly cloudy, he acknowledged that the industry is not “recession-proof.”



“There are going to be challenges,” Antonellis said. “I don’t think it’s all negative. I do think there will be challenges for the next six months. But I do think we’re on an upswing.”

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Inflation rose 9.1% in June, even more than expected, as price pressures intensify

LONDON — The U.K.’s ruling Conservative Party has begun its race to find its next leader, and the country’s next prime minister, with eight candidates now in the running for the top job.



The candidates all had to win the initial backing of at least 20 of their fellow Conservative lawmakers in order to proceed to the first round of voting which takes place Wednesday.



In order to whittle the number of candidates down to just two, more votes will now take place – beginning Wednesday – with the 358 Conservative MPs asked to choose their favorite candidate to take over the party.



Any candidate receiving less than 30 votes from his or her fellow MPs will be eliminated in the first round of voting. Then in the second round, the candidates with the fewest votes are eliminated. These rounds of voting continue until two candidates remain, which is expected to happen by the end of this week.



When two candidates remain, all the members of the Conservative Party (some 200,000 people) are asked to vote by postal ballot on their favorite candidate. The winner is expected to be announced on Sept. 5.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16.jpeg" alt="" class="wp-image-418414" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107087892-1657690092507-gettyimages-1241854442-220712_sunak_speech_16-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Rishi Sunak makes a speech to launch his bid to be leader of the Conservative Party on July 12, 2022 in London, England. The former Chancellor was the second high-profile minister to resign from Boris Johnson’s cabinet last week setting in motion the events that saw Johnson step down as Conservative Party Leader. Carl Court | Getty Images News | Getty Images</figcaption></figure>



The eight candidates include well-known faces, such as former Finance Minister Rishi Sunak — one of the favorites to win — and Foreign Secretary Liz Truss and new Finance Minister Nadhim Zahawi, as well as those with less high-profiles such as Tom Tugendhat, Suella Braverman and Kemi Badenoch.



Former Health Minister Jeremy Hunt is also in the race, as well as Penny Mordaunt, international trade minister, another of the favorites who’s popular with grassroots party activists. Sajid Javid, former health secretary, withdrew from the leadership race on Tuesday.



Showing some division among Tory MPs and those among the more grassroots Conservative Party members and activists, Penny&nbsp;Mordaunt, a former defense secretary, topped a poll of Tory party members this week on who should be the next leader, with 20% of the vote.



Ex-local government minister Kemi Badenoch was seen with 19% of the vote, followed by Rishi Sunak on 12%, according to the poll of over 800 Tory party members on Tuesday by website Conservative Home.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc.jpeg" alt="" class="wp-image-418415" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107045260-gettyimages-1239761345-wlodarczyk-britishf220405_npoYc-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>“If Putin succeeds there will be untold further misery across Europe and terrible consequences across the globe,” said U.K. Foreign Secretary Liz Truss. Mateusz Wlodarczyk | Nurphoto | Getty Images</figcaption></figure>



Tuesday night, the eight candidates had 12 minutes each to try to convince their fellow MPs why they should be the next leader of the party and the country. Several promised to cut taxes and unite the party after the spectacular fall of Boris Johnson, who remains as prime minister but only in a caretaker role while his replacement is found.



Summing up the economic implications of the candidates expected to proceed to at least a second round of voting, Daiwa Capital Markets said that “at the time of writing, former Chancellor Rishi Sunak looked odds-on to make it to the second round. There he is most likely to face a challenger from the populist right wing — most likely Foreign Secretary Liz Truss or Trade Minister Penny Mordaunt.”



“While Sunak has argued against any further near-term loosening of fiscal policy, Truss, Mordaunt and several others have argued for unfunded tax cuts, which would arguably be inflationary and would likely lead to more monetary tightening than would be the case under a Sunak premiership,” Daiwa said in a note Tuesday.



<h2 class="wp-block-heading" id="h-wide-open-race"><a></a>Wide-open race</h2>



The leadership contest has come about after Johnson resigned as party leader last week after months of controversy over his conduct while in office. His government has been plagued by scandals over parties during Covid-19 lockdowns and several party officials have been hit with sleaze allegations.



The final straw for many MPs who had previously supported Johnson, despite his less than conventional style of leadership, was his appointment of a deputy chief whip (responsible for party discipline) who had previous sexual misconduct allegations made against him of which Johnson was aware. That led to a wave of resignations with ministers and officials saying Johnson no longer commanded their confidence.



Describing Johnson’s departure as a “Bjexit,” Ian Bremmer, president of Eurasia Group, commented this week that “near term, U.K. policy is paralyzed by the caretaker government’s lack of a mandate (whether Johnson-led or under a new temporary prime minister” and that economic, foreign and defense policy are “essentially in stasis until there’s new leadership in the fall.”



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics.jpeg" alt="" class="wp-image-418416" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>British Prime Minister Boris Johnson makes a statement at Downing Street in London, Britain, July 7, 2022.  Henry Nicholls | Reuters</figcaption></figure>



“It’s a wide open race for the fall &#8230; but either way, Johnson’s two most important foreign policy initiatives—on Europe and on Ukraine — aren’t going to change. On the former, with Brexit and euroskepticism already firmly in place for the Conservative Party, there’s no lane for a softer Europe policy, even on the contentious Northern Ireland issue, among premiership competitors,” Bremmer noted on Monday.



European leaders, and particularly France’s President Emmanuel Macron, are happy to see the back of Johnson and will have less dysfunctional personal diplomacy with his successor, but the overarching U.K.-EU relationship will remain significantly strained, Bremmer added.



“That leaves plenty of uncertainty domestically— on fiscal easing and corporate tax policy for example. But I don’t see fireworks over who leads the United Kingdom driving much drama outside of old Blighty.”

107085539-16571947812022-07-07t114857z_676551886_rc2z6v949ewi_rtrmadp_0_britain-politics

The race to replace Boris Johnson is wide open, and laying bare divisions in the Conservative Party

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950.jpg" alt="" class="wp-image-418392" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/102526990-465676950-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A financial trader monitors data on computer screens as a desktop television shows euro currency banknotes at the Frankfurt Stock Exchange in Frankfurt, Germany. Martin Leissl | Bloomberg | Getty Images</figcaption></figure>



The euro hovered close to parity with the U.S. dollar on Tuesday, as the euro zone’s energy supply crisis and economic woes continue to depress the common currency.



The euro was 0.3% lower to trade around $1.0005 at 10:20 a.m. London time on Tuesday morning.



Fears of a recession have grown in recent weeks due to rising uncertainty over the bloc’s energy supply, with Russia threatening to further reduce gas flows to Germany and the broader continent.



Russia temporarily suspended gas deliveries via the Nord Stream 1 pipeline on Monday for annual summer maintenance works.



The scheduled 10-day suspension of gas flows has stoked fears of a permanent cut to supplies, potentially derailing the region’s winter supply preparations and exacerbating a gas crisis.



The prospect of a starker economic slowdown has also cast doubt over whether the European Central Bank will be able to tighten monetary policy aggressively enough to rein in record-high inflation without deepening the economic pain.



“It is a key and obvious psychological level which is very much under threat here,” Jeremy Stretch, head of G-10 FX strategy at CIBC Capital Market, told CNBC’s “Street Signs Europe” on Tuesday.



Stretch said the prospect of the euro falling below this level was a reflection of burgeoning recession fears across the euro zone. It comes amid growing concerns about the prospect of a permanent cut to Russian gas supplies and the ECB’s slower pace of monetary policy tightening when compared to other major central banks.



“The ECB is in a very, very difficult position. You could argue that the ECB has been rather late to the party both in terms of ending their bond purchases but also considering monetary policy tightening,” Stretch said.



He added while the ECB “clearly missed a trick” at its last meeting, inflation expectations over the medium term had retreated toward the central bank’s target threshold.



“That is one sign that perhaps over the medium to longer run those inflation expectations are not necessarily becoming materially deanchored, but clearly from an ECB policy signaling perspective … the need to act and to act expeditiously is clear,” Stretch said.



Graham Secker, chief European equity strategist at Morgan Stanley, said the weakness of the euro could provide a boost for European companies ahead of the forthcoming second-quarter earnings season.



“Twelve months ago, the euro was above $1.20 and now we are obviously very close to parity so there is a pretty significant tailwind to earnings currently, but I view that as a positive offset against some of the other negative factors that are brewing,” Secker told CNBC’s “Street Signs Europe.”



“Right now, our expectation is that the second-quarter earnings season probably will end up with a net beat,” he added.

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Euro teeters on the brink of parity with the U.S. dollar on recession fears

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r.jpg" alt="" class="wp-image-418388" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/104410219-AP_17034561978611r-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>President Donald Trump talks with Tesla and SpaceX CEO Elon Musk at Trump Tower last February. Evan Vucci | AP</figcaption></figure>



Tesla and SpaceX CEO Elon Musk said Monday that he thinks former President Donald Trump should, “hang up his hat &amp; sail into the sunset.”



Writing on Twitter, where Musk has more than 100 million followers, the celebrity CEO said: “I don’t hate the man, but it’s time for Trump to hang up his hat &amp; sail into the sunset. Dems should also call off the attack – don’t make it so that Trump’s only way to survive is to regain the Presidency.”



A bipartisan House select committee is conducting public hearings to present initial findings from a yearlong investigation into the Jan. 6, 2021 riot at the U.S. Capitol by a violent mob of Trump’s supporters. The panel’s next public hearing is scheduled for Tuesday morning.



Over the weekend, Trump called Elon Musk a “bulls&#8212; artist” claiming that Musk said he voted for Trump in previous conversations between the two men. But Musk tweeted to deny that claim and hit back at Trump on Monday evening.



The Tesla CEO previously said his first vote for a Republican was for Mayra Flores, the winner of a special election in South Texas in June.



Last month, Musk also revealed that he was “leaning” toward voting for Florida Gov. Ron DeSantis, should he run for president in 2024.



Musk’s comments about Trump came after a tense day for his businesses.



SpaceX, his reusable rocket company, conducted a ground test of a rocket booster that ended in an unexpected explosion in Boca Chica, Texas.



Musk also faced a legal challenge from Twitter on Monday, after seeking to terminate an earlier deal he struck to acquire the social network for $54.20 per share. Twitter says his basis for terminating the deal was “invalid and wrongful.”



Musk’s electric vehicle maker Tesla saw shares decline on Monday after Shanghai ramped up mass-testing for Covid following reports of two dozen new cases there. The testing raised fears of a resurgence and more lockdowns that could once again hamper Tesla’s factory operations in China.

104410219-AP_17034561978611r

Elon Musk says it’s time for Trump to ‘sail into the sunset’

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900.jpeg" alt="" class="wp-image-418345" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086062-1657270998093-gettyimages-630590200-93905900-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>This 2016 photo shows then-Japanese Prime Minister Shinzo Abe at Joint Base Pearl Harbor Hickam’s Kilo Pier in Honolulu, Hawaii. Kent Nishimura | Getty Images</figcaption></figure>



Shinzo Abe, the former prime minister of Japan, died Friday after being shot while delivering a speech.



The 67-year-old, the country’s longest-serving prime minister, was shot while campaigning on behalf of the governing Liberal Democratic Party&nbsp;in the city of Nara, near Kyoto.



Gunshots were heard at around 11.30 a.m. local time, NBC reported, and Abe was taken to Nara Medical University Hospital’s emergency room.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe.jpeg" alt="" class="wp-image-418354" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086161-16572828492022-07-08t103922z_1278253707_rc2m7v9ezv07_rtrmadp_0_japan-abe-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A man, believed to have shot former Japanese Prime Minister Shinzo Abe, is tackled by police officers in Nara, western Japan July 8, 2022 in this photo taken by The Asahi Shimbun.  Asahi Shimbun | Reuters</figcaption></figure>



“When he was brought to the hospital he was in a state of cardiopulmonary arrest,” Dr. Hidetada Fukushima, who operated on Abe, said at a news conference. “They tried to resuscitate him but at 17:03 he was pronounced dead.”&nbsp;



“He had gun wounds in two locations and died of heart failure from heavily damaged arteries,” the doctor said.



One person has been apprehended in relation to the shooting, NBC reported, citing officials.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ.jpeg" alt="" class="wp-image-418355" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086122-1657279225955-gettyimages-1241772234-AFP_32E28FZ-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Pedestrians are silhouetted against a large public video screen showing an image of former Japanese prime minister Shinzo Abe in the Akihabara district of Tokyo on July 8, 2022, after he was shot and killed in the city of Nara. Toshifumi Kitamura | AFP | Getty Images</figcaption></figure>



After the gunfire was heard, a man was tackled by several people while the weapon lay on the street, according to a video that was verified by NBC.



Abe was not campaigning for a parliamentary seat himself, but was supporting the LDP ahead of elections for the country’s upper house of parliament Sunday. It is not clear whether the elections will go ahead as planned.



Current Prime Minister Fumio Kishida said the attack was “a despicable and barbaric act that took place in the midst of an election, which is the foundation of democracy,” adding that it was still being investigated.



The incident has sent shock waves through Japan, a country where gun violence is extremely rare. Gun rules are very strict in the country; handguns are banned and anyone who wants to own an air rifle or shotgun must undergo extensive training and checks.



Abe resigned as prime minister in August 2020, after serving two terms, due to his worsening health.



The former prime minister was known for his efforts to revive Japan’s economic growth through a range of stimulus policies which became known as “Abenomics.” The aim was to boost productivity, reform Japan’s corporate culture and bring down the country’s debt over the long term, although analysts have said it has had mixed results for the world’s third-largest economy.



<h2 class="wp-block-heading" id="h-international-leaders-respond"><a></a>International leaders respond</h2>



International leaders paid their respects to Abe following news of his death.



Indian Prime Minister Narendra Modi called Abe a “towering global statesman, an outstanding leader, and a remarkable administrator,” in a tweet.



In a subsequent post, Modi said Abe “made an immense contribution to elevating India-Japan relations.” The Indian leader said the country would hold a day of national mourning on July 9.



European Commission President Ursula von der Leyen called Abe a “wonderful person, great democrat and champion of the multilateral world order.”



Before the death of Abe was confirmed, Rahm Emanuel, the U.S. ambassador to Japan, said he was “saddened and shocked” by the news of the shooting.



“Abe-san has been an outstanding leader of Japan and unwavering ally of the U.S,” Rahm tweeted.



Abe has been widely credited with boosting Japan’s presence on the world stage.



He maintained relations with former U.S. President Donald Trump and even negotiated an initial trade agreement in 2019.



In 2016, he hosted Barack Obama, who was U.S. president at the time, at Hiroshima. Obama became the first U.S. president to visit there since the atomic bombings by America in 1945.



In October 2018, Abe met with Chinese President Xi Jinping, becoming the first Japanese prime minister to visit Beijing since 2011. For several decades, Japan and China have had tense and fragile relations.



Abe’s visit aimed to boost China-Japan relations. More recently however, he had been an increasingly vocal critic of China, particularly on the issue of Taiwan, which Beijing sees as a renegade province that must be returned to the mainland. “A Taiwan emergency is a Japanese emergency,” Abe said last year, suggesting that Japan and the U.S. should not stand by if China attacked Taiwan.



Abe had also been credited with being a key figure in the formation of “the Quad,” an informal security alignment between Australia, India, Japan and the United States.

107086062-1657270998093-gettyimages-630590200-93905900

Japan’s former PM Shinzo Abe assassinated at campaign event

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-820x547.jpg" alt="" class="wp-image-416649" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/GettyImages-1236313690-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>IMF managing director Kristalina Georgieva speaks during a panel discussion at the COP26 UN Climate Summit in Glasgow on November 3, 2021. (Photo by Daniel LEAL / AFP) (Photo by DANIEL LEAL/AFP via Getty Images)</figcaption></figure>



WASHINGTON, July 7 (Reuters)&nbsp;&#8211;&nbsp;Official creditors of Zambia, Chad and Ethiopia are set to meet in July, according to International Monetary Fund (IMF) chief Kristalina Georgieva, in a bid to promote efforts to overhaul their debt burdens.



The three African nations have all signed up for debt treatment under the G20 Common Framework &#8211; an initiative launched in 2020 and designed to streamline debt restructuring efforts in the wake of poorer countries buckling under the fallout from the COVID-19 pandemic.



However, progress so far has been glacial, and IMF and World Bank officials have been blunt about the failings of the Common Framework. They are pushing for finance officials of the G20 major economies to apply more pressure on China and private sector creditors to participate.



&#8220;We expect in July to have some creditor committees for all three countries meeting, but time is not our friend,&#8221; Georgieva told Reuters in an interview. &#8220;Now is the time to show results.&#8221;



All three countries face different challenges.



In January 2021, Chad became the first country to request a restructuring of its $3 billion external debt under the Common Framework.



It struck a deal with creditor nations in June 2021, but has struggled to finalise talks with private creditors. Chad owes one third of its external debt burden to commercial creditors, and almost all of that to Glencore&nbsp;GLEN.L&nbsp;in oil-for-cash deals dating back to 2013 and 2014.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XI0N1&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL1N2QB0WE&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;The oil price going up gave reasons for Glencore and others to challenge the debt sustainability analysis, they say &#8216;Oh well, it is not so bad anymore&#8217;,&#8221; said Georgieva, adding that the situation still &#8220;requires a debt restructuring and we are pressing for that.&#8221;



Georgieva was more upbeat on Zambia, where China had agreed to co-chair official creditor committee, but added &#8220;we have to move fast.&#8221;



Zambia&#8217;s Finance Minister Situmbeko Musokotwane said last week the country&#8217;s economy would be highly compromised without external support.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2YF4EB&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



A Paris Club source said the group of wealthy creditor nations was working on providing financing assurances to the IMF that could unlock funds for Zambia.



&#8220;We hope that that can be done before the end of July,&#8221; the source added.



Ethiopia&#8217;s creditor nations held a meeting chaired by China and France in September 2021 but further progress has been held up by the country&#8217;s civil war.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2QO0H3&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The IMF said in June it wanted to start talks with Ethiopia over a funding program as soon as conditions allowed.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2Y84DW&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Georgieva said there had been close engagement with the senior leadership in China &#8211; the largest bilateral creditor to the world &#8211; on debt issues.



&#8220;We are seeing some signs that China recognizes it is actually in their own interest to prevent that crisis because they will be the first to lose dramatically if that is the case,&#8221; she said.



Beijing had now designated officials to deal with debt issues in key bodies such as the ministry of finance and the central bank, she added.



&#8220;The critical sign of seriousness is complete Zambia, complete Chad, complete Ethiopia &#8211; it is the very old saying: the proof of the pudding is in the eating.&#8221;



(Reporting by Andrea Shalal in Washington, additional reporting by Leigh Thomas in Paris, writing by Karin Strohecker; Editing by Hugh Lawson)

BRITAIN-UN-CLIMATE-COP26

IMF chief Georgieva: Creditors of Common Framework countries to meet in July

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="429" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4-820x429.jpg" alt="" class="wp-image-418338" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4-820x429.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4-300x157.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4-160x84.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4-768x402.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/HO56RUQKZFKH7BVXO47CNZANC4.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Russian Foreign Minister Sergei Lavrov meets Indonesia&#8217;s Foreign Minister Retno Marsudi at the G20 Foreign Ministers&#8217; Meeting in Nusa Dua, Bali, Indonesia, July 8, 2022. REUTERS/Willy Kurniawan/Pool</figcaption></figure>



NUSA DUA, Indonesia, July 8 (Reuters) &#8211; Indonesia urged the G20 on Friday to help end the war in Ukraine, as foreign ministers from the group met for a summit that has put some of the staunchest critics of Russia&#8217;s invasion in the same room as Moscow&#8217;s top diplomat.



The buildup to the gathering on the Indonesian island of Bali has been dominated by the war and its impact on the global economy, with top officials from Western countries and Japan stressing it would not be &#8220;business as usual&#8221; at the forum.



Shouts of &#8220;When will you stop the war&#8221; and &#8220;Why don&#8217;t you stop the war&#8221; were heard as Russian Foreign Minister Sergei Lavrov shook hands with his Indonesian counterpart Retno Marsudi at the start of the meeting.



Underlining tensions in the buildup, Retno said earlier G7 counterparts had informed her they could not join Thursday&#8217;s welcome dinner where Lavrov was present.



&#8220;It is our responsibility to end the war sooner than later and settle our differences at the negotiating table, not at the battlefield,&#8221;&nbsp;she&nbsp;said on Friday at the opening of talks.



Invoking Indonesia&#8217;s religious diversity as a example of how divergent beliefs can co-exist harmoniously, Retno urged the G20 to &#8220;find a way forward&#8221; to address the challenges rippling across the globe. She said the repercussions of the war, including rising energy and food prices, would hit low-income countries the hardest.



A senior official for the Indonesian foreign ministry told Reuters no communique was expected from Friday&#8217;s meeting.



&#8220;With Russia’s presence and participation, certainly I doubt there would be consensus on Ukraine, for example,&#8221; a senior U.S. State Department official said ahead of the summit.



Russia&#8217;s invasion has cast a cloud over Indonesia&#8217;s presidency of the Group of 20 largest economies this year, with speculation of boycotts from some members and a walkout in April at a finance ministers&#8217; meeting in Washington.



Retno said late on Thursday it was important for the host to &#8220;create an atmosphere that&#8217;s comfortable for everybody&#8221;,&nbsp;noting it was the first time since the February 24invasion of Ukraine that all major players were sitting in the same room.



Lavrov was seated between representatives from Saudi Arabia and Mexico at Friday&#8217;s meeting.



<h2 class="wp-block-heading" id="h-china-warns-risk-of-new-cold-war">CHINA WARNS RISK OF &#8220;NEW COLD WAR&#8221;</h2>



A senior U.S. State Department official said on Thursday it was important to prevent &#8220;disruptions or interruptions&#8221; to the G20 agenda, while ensuring nothing took place that could legitimise Russia&#8217;s &#8220;brutalising&#8221; of Ukraine.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YO0A0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



After discussions on the issue of Ukraine with Indian External Affairs Minister S. Jaishankar on Thursday, China’s Foreign Minister Wang Yi said Beijing opposed any act of hyping up bloc confrontation, and creating a &#8220;new Cold War&#8221;.



Russia&#8217;s invasion, which it calls a &#8220;special military operation&#8221;, has caused major disruption to the global economy, with a blockade on Ukrainian grain and sanctions on Russian oil and gas driving a food crisis and global spike in inflation.



Friday&#8217;s agenda includes a closed meeting with top diplomats of G20 countries including China, India, the United States, Brazil, Canada, Japan, South Africa, as well as bilateral talks on the sidelines. Ukraine&#8217;s foreign minister is expected to address the meeting virtually.



Lavrov met Chinese counterpart Wang Yi in Bali on Thursday, during which he praised Beijing but lashed out at an &#8220;openly aggressive&#8221; West.



For the first time in three years, the Chinese and Australian foreign ministers will hold talks on the sidelines of the meeting on Friday, signalling a thaw in relations that has soured over claims of foreign interference and retaliatory trade sanctions.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL4N2YO25L&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Absent from Friday&#8217;s meeting was British Foreign Secretary Liz Truss, who was represented by Tim Barrow, second permanent under-secretary at the foreign office. Truss had cut her Bali trip short after the resignation of British Prime Minister Boris Johnson, media reports said.



(Additional reporting by Ryan Woo in Beijing, Kirsty Needham in Sydney and Yuddy Cahya Budiman in Nusa Dua; Writing by Kate Lamb; Editing by Martin Petty, Ed Davies and Raju Gopalakrishnan)

HO56RUQKZFKH7BVXO47CNZANC4

Indonesia urges G20 to help end war in Ukraine as Russia’s Lavrov looks on

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING.jpeg" alt="" class="wp-image-418332" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Police officers at the scene where former Japanese Prime Minister Shinzo Abe was shot during a campaign event in Nara, Japan on July 8, 2022. Abe was unresponsive after the attack, shocking a nation where gun violence is rare. Kosuke Okahara | Bloomberg | Getty Images</figcaption></figure>



Former Japanese leader Shinzo Abe is in critical condition after being shot at a campaign event on Friday, Prime Minister Fumio Kishida said.



Abe, Japan’s longest-serving prime minister, had just begun a speech in the city of Nara when gunfire was heard around 11:30 a.m. local time (10:30 p.m. Thursday ET). Public broadcaster NHK, citing the local fire department, reported that Abe was in a state of cardio and pulmonary arrest, suggesting that his heart had stopped.



It said he had been admitted to Nara Medical University Hospital. Officials said that one person had been apprehended in relation to the shooting.



Speaking from his office in Tokyo, a visibly shaken Kishida said that while the attack was still being investigated, “it was a despicable and barbaric act that took place in the midst of an election, which is the foundation of democracy.”



“I condemn it in the harshest possible terms,” he told a hastily arranged news conference after returning from campaigning in the country’s north.



Elections for the upper house of the Japanese Parliament are Sunday. Abe, 67, who stepped down in 2020, was campaigning for other members of the governing conservative Liberal Democratic Party (LDP) but is not a candidate himself.



The incident sent shockwaves through Japan, where gun violence is extremely rare. Handguns are banned in the country and people must undergo extensive tests, training and background checks to obtain and keep shotguns and air rifles.



Iwao Horii, an LDP member of the upper house representing Nara, was standing next to Abe when the former prime minister was shot. “We heard two loud sounds while he was talking and he fell immediately after that,” said Horii at a news conference. He added that Abe was unresponsive when emergency medics tried to resuscitate him.



Horii said Abe’s appearance at that location had been advertised locally via faxes to the media and loudspeakers on election vans. He said he was not aware of any threats made against Abe or the LDP before the speech.



“This is something that shakes the very foundations of democracy and cannot be forgiven,” he said. “At this point we are all praying for the quick recovery of former Prime Minister Abe.”



The shooting was also condemned by the country’s main opposition party, the center left Constitutional Democrats. “This is an unforgivable act of barbarism, but the first and utmost priority is the condition of former Prime Minister Abe, and I just pray that he survives,” party leader Kenta Izumi told reporters.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2.jpeg" alt="" class="wp-image-418333" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Workers stand near the scene where Japan’s former prime minister, Shinzo Abe, was shot outside the Kintetsu Yamato-Saidaiji station square in Nara on July 8, 2022. STR | Jiji Press | AFP | Getty Images</figcaption></figure>



The U.S. ambassador to Japan, Rahm Emanuel, said that he was shocked and saddened by news of the shooting.



“Abe-san has been an outstanding leader of Japan and unwavering ally of the United States,” Emanuel said in a statement Friday. “The U.S. Government and American people are praying for the well-being of Abe-san, his family, and people of Japan.”



Secretary of State Antony Blinken, speaking from Indonesia, where he is attending a G-20 Foreign Ministers’ Meeting, expressed how “deeply saddened and deeply concerned we are by the news coming from Japan, about the attempt on the life of former Prime Minister Abe.”



“Our thoughts, our prayers are with him and his family, with the people of Japan,” Blinken said. “This is a very, very sad moment, and we’re awaiting news from Japan.”



Abe hails from Japan’s political elite and as prime minister had made reviving economic growth through his “Abenomics” policies a key pillar of his time in office.



Though Abe had been praised for amplifying Japan’s profile on the world stage, his party was plagued by scandals and he was accused of mishandling the country’s response to the Covid-19 pandemic.



Abe’s resignation two years ago came amid a worsening of his ulcerative colitis, a chronic bowel condition he’d battled for years.



He made the announcement days after he set a record as Japan’s longest-lasting prime minister, having been in office for almost eight years. He previously served as prime minister from 2006 to 2007.



In a post to his Truth Social platform late Thursday, former President Donald Trump called Abe “a truly great man and leader.”



“He was a true friend of mine and, much more importantly, America,” Trump said. “This is a tremendous blow to the wonderful people of Japan, who loved and admired him so much. We are all praying for Shinzo and his beautiful family!”



Abe was the first foreign leader to meet with Trump after he became president-elect in November 2016.

Japanese Prime Minister Shinzo Abe to resign

Former Japanese PM Shinzo Abe shot at campaign event, in critical condition

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-820x547.jpg" alt="" class="wp-image-418289" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>BAKU, AZERBAIJAN &#8211; JUNE 24: Russia&#8217;s Foreign Minister Sergei Lavrov speaks during a joint news conference with his Azerbaijani counterpart inJeyhun Baramov following talks on June 24, 2022 in Baku, Azerbaijan. During the talks the ministers discussed issues related to the development of bilateral relations. (Photo by Aziz Karimov/Getty Images)</figcaption></figure>



July 6 (Reuters)&nbsp;&#8211;&nbsp;G20 foreign ministers travel to the resort island of Bali this week for a meeting that will be overshadowed by the war in Ukraine, with Russia&#8217;s attendance creating rifts in the bloc as host Indonesia tries to mediate.



The Group of 20 includes Western countries that have accused Moscow of war crimes in Ukraine and rolled out sanctions, but also countries like China, Indonesia, India and South Africa that have not followed suit.



The gathering will be the first time that foreign ministers from some of the world&#8217;s top economies meet Russian Foreign Minister Sergei Lavrov since Russia invaded Ukraine in February.



Speaking ahead of the G20 meeting that runs from Thursday to Friday, German foreign ministry spokesperson Christian Wagner said it would not be a &#8220;normal summit&#8221; nor &#8220;business as usual&#8221;.



Germany holds the presidency of the Group of Seven industrialised nations and would coordinate in Bali over how to respond to Lavrov in light of the war in Ukraine, he said.



Top officials from Britain, Canada and the United States walked out on Russian representatives during a G20 finance meeting in Washington in April.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WI15Q&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



U.S. Secretary of State Antony Blinken would be an active participant at the meeting while &#8220;also staying true to another over-riding objective, and that is the fact that it cannot be business as usual with the Russian Federation&#8221;, a U.S. state department spokesperson said.



Blinken will meet Chinese Foreign Minister Wang Yi in Bali, but no meeting is expected with Lavrov.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YM0RQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



As G20 chair this year, Indonesia has been caught at the centre of a geopolitical storm over the war, attempting to head off threats by Western countries to boycott meetings. After the foreign ministers&#8217; meeting, G20 finance ministers are scheduled to meet next week, also in Bali.



Trying&nbsp;to leverage Indonesia&#8217;s neutrality, President Joko Widodo embarked on an ambitious peace-brokering mission last week, visiting Kyiv and Moscow to meet Ukrainian President Volodymyr Zelenskiy and Russian President&nbsp;Vladimir&nbsp;Putin.



The president, who is widely known as Jokowi, has invited Ukraine to the G20 this year, attempted to convince Russia to end a blockade on grain exports that is driving a global food crisis, and offered up Indonesia as a &#8220;diplomatic bridge&#8221; between the nations.



Ukraine&#8217;s ambassador to Indonesia Vasyl Hamianin said his country&#8217;s foreign minister would give a virtual address at the Bali meeting.



<h2 class="wp-block-heading" id="h-plan-to-snub-g20-meetings-rethought">PLAN TO SNUB G20 MEETINGS RETHOUGHT</h2>



Despite early talk of snubbing some G20 meetings, Western leaders ultimately decided that ceding the floor to Russia would be counter-productive, said Max Bergmann, a Russia and Europe expert and a former senior U.S. State Department official.



&#8220;If you don&#8217;t show up, and then the Russians have the floor with some really critical countries like Indonesia, India, and others, then they&#8217;re making their arguments unopposed,&#8221; said Bergmann, who is now at Washington&#8217;s Center for Strategic and International Studies.



Ramin Toloui, U.S. assistant secretary of state for economic and business affairs, said on Tuesday that food and energy would feature prominently at the meeting.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AW1N2XZ015&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;G20 countries should hold Russia accountable and insist that it support ongoing U.N. efforts to reopen the sea lanes for grain delivery,&#8221; he said.



During a trip to Vietnam on Wednesday, Russia&#8217;s Lavrov called on all parties in the world to make efforts to protect international laws as &#8220;the world is evolving in a complicated manner.&#8221;



His comments ahead of his arrival in Bali come as Russia has been accused by Western countries of breaching international law through its invasion of Ukraine, which Moscow calls a &#8220;special operation&#8221;.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YN05S0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The reaction to Lavrov in Bali could also provide an indication of how G20 members might respond if Putin attends November&#8217;s summit meeting of the group in person, which is yet to be confirmed.



The Indonesian president, until recently not normally very active on foreign policy issues, has come to see his handling of the group&#8217;s presidency as a defining moment in his presidency, said Murray Hiebert, a Southeast Asia expert at CSIS.



&#8220;Jokowi desperately hopes to avoid a diplomatic train wreck if Putin shows up in November,&#8221; he said.



(Reporting by Alexander Ratz in Berlin, David Brunnstrom in Washington and Kate Lamb in Sydney; Editing by Ed Davies and Raju Gopalakrishnan)

Russian Foreign Minister Sergey Lavrov Visits His Azerbaijani Counterpart Jeyhun Baramov

Not ‘business as usual’ for G20 foreign ministers meeting in Bali

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331.jpeg" alt="" class="wp-image-418276" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany. Alex Kraus | Bloomberg | Getty Images</figcaption></figure>



The euro fell to its lowest level in two decades on Tuesday as fears of a recession in the euro zone ramped up, with gas prices soaring and the Ukraine war showing no signs of abating.



The euro shed around 1.3% for the session to hit $1.029 by mid-afternoon in Europe, having earlier been as low as $1.028.



Euro zone inflation hit a record 8.6% in June, prompting the European Central Bank to give markets advance notice of its intention to hike interest rates for the first time in 11 years at its July meeting.



However, growing fears of a recession may limit the central bank’s capacity to tighten monetary policy. The July Sentix Economic Index on Monday showed investor morale across the 19-country euro zone has plunged to its lowest level since May 2020, pointing toward an “inevitable” recession.



Record-high inflation in Europe has been abetted by skyrocketing gas prices over recent months.



Natural gas prices in Europe on Monday extended their relentless rise, climbing to highs not seen since early March as planned strikes in Norway added to market woes about Russian supply cuts. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen trading up 7.8% to hit 175.5 euros ($180.8) per megawatt-hour.



All of these factors have converged to hit the euro hard. The currency of the euro zone has lost over 9% of its value against the dollar since the start of the year.



The dollar’s strength continues, meanwhile, as risk-averse investors seek a safe haven, and the U.S. Federal Reserve embarks upon what looks to be an aggressive rate hike regime.



After raising benchmark interest rates by three-quarters of a percentage point in June, Fed Chair Reserve Chair Jerome Powell said the central bank could raise interest rates by a similar magnitude next month.



The euro also fell fractionally against sterling to trade at £0.8595 by mid-afternoon, and dropped by around 1.2% against the Japanese yen, itself near multi-decade lows against a resurgent dollar.



— CNBC’s Sam Meredith contributed to this report

106255443-1574240778568gettyimages-1179906331

Euro slides to 20-year low against the dollar as recession fears build

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679.jpeg" alt="" class="wp-image-418246" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>The G7 has floated the idea of an oil price cap, but experts are doubtful about how effective this would be. Picture Alliance | Picture Alliance | Getty Images</figcaption></figure>



The world’s seven-largest industrialized economies have floated the idea of a price cap on Russian oil to further squeeze the Kremlin’s ability to fund its onslaught in Ukraine and try to protect consumers amid surging energy prices.



The G-7′s pursuit of a price ceiling on Russian oil is not without its challenges, however, with energy analysts highly skeptical about the integrity of the proposal.



For its part, the Kremlin has warned any attempt to impose a price cap on Russian oil will cause more harm than good.



<h2 class="wp-block-heading" id="h-how-the-idea-came-about"><a></a>How the idea came about</h2>



The United States seems to be the biggest supporter of a price cap on Russian oil.



Back in May, U.S. Treasury Secretary Janet Yellen explained the idea to her European counterparts, saying it would work as a tariff or cap on Russian oil and help Europe in the interim period until imposing a full ban.



The EU agreed in late May to impose a gradual embargo on Russian oil until the end of 2022 — after several weeks of tough negotiations among the 27 nations.



The bloc used to receive about 25% of its oil imports from Russia and it represented one of the most important buyers for the Kremlin. Stopping these oil purchases are an attempt to hurt Russia’s economy after the unprovoked invasion of Ukraine, but they are difficult to end overnight given how some EU countries are heavily dependent on Russian fossil fuels.



U.S. President Joe Biden presented the idea of an oil price cap to the rest of the G-7 leaders over the weekend of June 25 and 26 and his counterparts agreed to look at how to do it. The G-7 is comprised of the U.S., Canada, France, Germany, Italy, the U.K. and Japan.



German Chancellor Olaf Scholz said the idea was very ambitious and needed a “lot of work” before becoming reality.



A spokesperson for the European Commission, the executive arm of the EU, said in an email to CNBC Friday: “We share the G7 countries’ concerns about the burden of energy price increases and market instability, and how these aggravate inequalities nationally and internationally.”



“In this context, as tasked by the European Leaders, the Commission will continue our work on ways to curb rising energy prices, including assessing the feasibility of introducing temporary import price caps where appropriate,” the same spokesperson said, adding the discussions are treated as “a matter of urgency.”



<h2 class="wp-block-heading"><a></a>How might a price cap work?</h2>



Energy analysts have questioned exactly how the G-7 can impose a price ceiling for Russian oil, warning that the plan could backfire if key consumers are not involved, and time may be running out to make it workable.



“I’m one of those scratching my head,” Neil Atkinson, an independent oil analyst, told CNBC’s “Squawk Box Europe” on Thursday.



“Something like this could only work if you get all of the key producers and crucially all of the key consumers working together and then finding some way of enforcing whatever plan you come up with,” he added.



“And the reality is that the biggest consumers of Russian oil, or amongst the biggest consumers of Russian oil, are China and India.”







<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT.jpeg" alt="" class="wp-image-418247" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A tanker moored in a gas and oil dock at the Port of Constanta in Romania. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



China and India have “benefitted enormously” from discounted Russian crude, Atkinson said. Russian oil has been selling at a heavy discount of $30 or more when compared to international benchmark Brent crude futures at $110 a barrel — and China and India have been snapping it up.



Atkinson also highlighted a lack of unity over Russia’s invasion of Ukraine given that China and India have failed to explicitly condemn the Kremlin.



“In any event, the Russians won’t just sit there and do nothing. They can play games with supplies of oil and indeed gas … they can mess with the G-7′s head in some respect so I think this plan is really a non-starter,” Atkinson said.



“For me, honestly the mechanism doesn’t work,” Amrita Sen, co-founder and director of research at Energy Aspects, told CNBC’s “Squawk Box Europe” on Friday.



“They haven’t thought it through, they haven’t spoken to India and China … Do we really think they are going to agree to this? And do we really think that Russia will actually accept this and not retaliate? I think this sounds like a very, very good theoretical concept but it is just not going to work in practice.”



Sen said the idea that countries around the world are on the same page as Western policymakers, particularly relating to energy security, is “the biggest misconception right now.” She added, “I think that really needs to go away.”



For Claudio Galimberti, senior vice president at energy research firm Rystad, the most direct mechanism to impose a price cap on Russian oil is via insurance.



“The International Group of Protection &amp; Indemnity Clubs in London covers around 95% of the global oil shipping fleet. Western countries could try to impose a price cap by letting buyers keep that insurance, as long as they agree to pay no more than a certain price cap for the Russian oil on board,” Galimberti said in a note.



“However, there are many obstacles that could derail such a plan,” he added.



Among the most obvious examples, Galimberti said, was the fact that Russia could simply decide not to sell at the prices set by the cap, particularly if the benchmark is very low and close to the cost of production.



President Vladimir Putin has already shown his willingness to withhold natural gas supplies to so-called “unfriendly countries” that have refused to meet his gas-for-rubles payment demands.



China is the “next most likely obstacle,” Galimberti said, since Beijing may decide for geopolitical reasons “to lend support to Russia by accepting inferior Russian insurance and therefore facilitate a loophole for the price cap.”



“Still, a price cap is surely a measure worth considering at this stage, albeit time is running out, as the EU is determined to ban imports of Russian oil by the end of the year,” Galimberti said.



<h2 class="wp-block-heading"><a></a>How has Russia responded?</h2>



Russia has warned any attempt to limit the price of Russian oil could wreak havoc in the energy market and push commodity prices even higher.



Deputy Prime Minister Alexander Novak on Wednesday described the move by Western leaders to consider imposing a price cap as “another attempt to intervene into the market mechanisms which may only lead to market’s disbalance … which would lead to [a] price increase,” according to Reuters.



Novak said he was confident Russia would restore oil output to pre-sanction levels in the coming months, largely because a significant amount of Russian crude had been re-routed to Asian markets.

107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679

The G-7 is considering a price cap on Russian oil. But energy analysts think it’s impossible

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="529" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-820x529.jpg" alt="" class="wp-image-418162" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-820x529.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-300x193.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-140x90.jpg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-768x495.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-1536x990.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: A view shows polished colorless and yellow diamonds produced at &#8220;Diamonds of ALROSA&#8221; factory in Moscow, Russia April 30, 2021. Picture taken April 30, 2021. REUTERS/Tatyana Makeyeva/File Photo</figcaption></figure>



JOHANNESBURG, June 29 (Reuters)&nbsp;&#8211;&nbsp;Russia condemned what it called a push to &#8220;politicise&#8221; its diamonds over the conflict in Ukraine and said attempts to question its compliance with the international diamond certification scheme were &#8220;totally unfounded&#8221; and &#8220;far-fetched&#8221;.



The Kimberley Process, a coalition of governments, the diamond industry and civil society responsible for certifying diamonds as conflict-free, is split over a push by Ukraine and others to expand its definition of conflict diamonds to include those funding aggression by states.



The KP Civil Society Coalition (CSC) and some member states sought to discuss whether Russia&#8217;s diamonds were helping to fund the war in Ukraine during a KP meeting in Botswana last week.<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YB1CR&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;The Russian Federation absolutely condemns the orchestrated attempts of CSC, backed by absolute minority of some Western participants, to politicize the work of the Kimberley Process by deliberately distorting or even openly replacing its basic principles,&#8221; Russia&#8217;s finance ministry said in an emailed statement. It did not specify which principles it felt were being distorted or replaced.



The CSC did not immediately respond to an emailed request for comment.



The KP defines conflict diamonds as those that fund rebel movements seeking to overthrow legitimate governments, a narrow definition that many have sought to widen since the KP was founded in 2003.



The revision of that definition should be part of a review of the KP certification scheme due in 2023, the finance ministry said, adding that Russia, which was KP chair last year, has &#8220;championed&#8221; work on revising the definition for the past five years.



&#8220;We therefore call on our opponents to refrain from further speculative accusations, abstain from political demagoguery and concentrate on the substantive work of the KP,&#8221; the finance ministry said.



The KP makes all decisions by consensus and the rift over Russia and Ukraine could jeopardise its effectiveness.



(Reporting by Helen Reid; Editing by Emelia Sithole-Matarise)

FILE PHOTO: A view shows polished colorless and yellow diamonds produced at “Diamonds of ALROSA” factory in Moscow

Russia hits back at attempts to ‘politicise’ its diamonds

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-820x547.jpg" alt="" class="wp-image-418109" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>An Iranian Army paratrooper flies with the Iranian flag during a military exercise dubbed &#8216;Zulfiqar 1400&#8217;, in the coastal area of the Gulf of Oman, Iran, in this picture obtained on November 7, 2021. Iranian Army/WANA (West Asia News Agency)/Handout via REUTERS ATTENTION EDITORS &#8211; THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY</figcaption></figure>



DUBAI, June 27 (Reuters)&nbsp;&#8211;&nbsp;Iran has submitted an application to become a member in the group of emerging economies known as the BRICS, an Iranian official said on Monday.



Iran&#8217;s membership in the BRICS group, which includes Brazil, Russia, India, China and South Africa, &#8220;would result in added values for both sides,&#8221; Iran&#8217;s Foreign Ministry spokesperson said.



Russian Foreign Ministry spokeswoman Maria Zakharova said separately that Argentina had also applied to join the group. Argentinian officials could not be reached for immediate comment.



Argentina&#8217;s President Alberto Fernandez, currently in Europe, has in recent days reiterated his desire for Argentina to join BRICS.



&#8220;While the White House was thinking about what else to turn off in the world, ban or spoil, Argentina and Iran applied to join the BRICS,&#8221; Zakharova wrote on the Telegram messaging app.



Russia has long been pushing to forge closer ties with Asia, South America and the Middle East, but it has intensified its efforts recently to weather sanctions imposed by Europe, the United States and other countries over its invasion on Ukraine.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AR4N2XO03B&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



On Monday, the United States and other Western nations pledged unwavering support for Ukraine after 28 civilians were killed in several Russian attacks, including a missile strike on a crowded shopping centre.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YE018&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies targeting civilians in what it calls is a &#8220;special military operation&#8221; to disarm Ukraine and protect it from fascists. Kyiv and its allies in the West say the war is an unprovoked act of aggression.



(Reporting by Parisa Hafezi in Dubai and Lidia Kelly in Melbourne; additional reporting by Adam Jourdan in Buenos Aires; editing by Richard Pullin)

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