Luis Garicano 🇪🇺🇺🇦 @lugaricano@respublicae.eu
Unofficial automated mirror. No copyright asserted. ∎ Economist. Back at LSE as a Professor at @LSEPublicPolicy Summer 2023. Non-resident Fellow @bruegel_org. Recovering MEP. Currently @ChicagoBooth.
Joined Apr 2022
European countries are still struggling to reach an agreement to impose an embargo on Russian oil, and have not even started discussing on gas.
To avoid this “all or nothing” debate, there is an intermediate solution: a tariff. I explain in this video how it would work👇
RT @RobinBrooksIIF: @lugaricano Agreed. Given Western export restrictions on Russia, it's not simple to translate the drop in Russian imports (blue) into how Russia's economy is doing. It's surely in recession, but hard to say how bad exactly. And it's obvious from this chart how massive the rise in exports is.
@M_C_Klein @RobinBrooksIIF Disagree:
1. You take out oil and gas exports through pipeline. 1/3 of oil exports to Europe; for gas, just Nordstream1 55 bcms compared to 150 total
2. On the rest, you force it to be transported further/more expensive
3. If forbid transport and insurance, can cut even that
@M_C_Klein @RobinBrooksIIF The question is what would they be in the "but for" world in which Russian is not getting this hard cash. My sense is that having dollars and euros (always!) helps a lot.
RT @ben_moll: Very good point by @lugaricano: imposing an immediate tariff on Russian oil (in addition to any watered down embargo measures) would not require EU unanimity so Orban can’t block it.
Absurdly optimistic view:
1.Exports 2x more important for c/a surplus than import compression. See @RobinBrooksIIF in answers
2.Hard cash always useful!E.g.:
-Trade with China and others
-Pay for weapons/mercenaries
-Pay salaries/pensions without printing money
-Store wealth!
RT @M_C_Klein: The current account surplus is (mostly) the value of exports minus imports. If you restrict what people in a country can import without limiting…
RT @RenewEurope: The report on the new EU Authority to combat anti-money laundering #AMLA is out @EP_Economics @EP_Justice
We call for a crackdown on dirty money, increased information exchange between all authorities and the creation of an effective common 🇪🇺 supervisory & intelligence system.
El 30 de junio y el 1 de julio organizamos las II jornadas Euronomics sobre políticas públicas en el Parlamento Europeo en Bruselas.
Mañana es el último día para apuntarse. Hay 50 plazas para estudiantes de economía, reserva la tuya aquí 👇
https://luisgaricano.eu/jornadas-euronomics-ii/
RT @GuyVerhofstadt: From a democratic Germany, I expect a completely different attitude.
After the horrors of the Second World War it’s their responsibility to take the lead in helping Ukraine military and financially.
It’s time to do away with Orban´s veto-- and to EU governments hiding behind the veto. It’s time to do away with Russian oil. It’s time for Europe to act as if this war really matters to us.
Link to my piece. Thanks to John Sturm @mit for help.
https://www.politico.eu/wp-content/uploads/2022/05/27/Garicano-OpEd-Russian-Oil-Tariff-EUCO.pdf
Technically, a tariff just requires a simple decision taken by a qualified majority of Member States according to article 31 of the TFEU.
Proposal not in contradiction with our demand for full embargo. The tariffs can be put in place immediately, and can be later increased progressively, making Russian oil imports prohibitively expensive to the point that very little would be sold to us
The cost to Putin?
- The lost revenue resulting from decreased exports €20bn
- plus the significant part of the tariffs that Russians would pay
- Total: between €25bn and €35bn out of his current €71bn earnings.
Some simple calculations, suppose 30% tariff
-- Last year, Russian oil exports to the EU amounted to around €71bn.
-- Under a conservative scenario, a reduction of oil imports to €50 bn.
-- 30% tariff would yield €15bn to compensate consumers for high prices.
Unlike sanctions, tariffs are taken out of the EU’s trade policy toolbox. They do not rely on the unanimity of 🇪🇺 governments.
And as an alternative to a ban, they can achieve similar results but with lower costs for our businesses, consumers and national budgets.
Orban knows this but because of the need for unanimity on EU foreign policy matters, he can extract money in exchange.
But it does not have to be this way.
There is an alternative for which unanimity is not required: tariffs.
Europe is contributing to prolong Putin´s war. Oil and gas payments account for over half of Russia’s state budget and a lot of it comes from our pockets. 🇪🇺 has sent over €50bn to 🇷🇺 since the war broke out. and one €12bn in aid to Kyiv.
https://crea.shinyapps.io/russia_counter/?tab=counter
Our dependence on 🇷🇺 energy is an opportunity. Without European buyers, Putin cannot finance his war.
Russia need us, but we do not need Russia.
We can change supplier and import oil from elsewhere
Orban is expected to veto today's EU leaders' discussion on the Russian oil ban. But Europe does not need him to agree. As I explain in Politico, a simple majority of 🇪🇺 governments can ban Russia's oil and stop hiding behind Orban's veto.
Thread👇
https://www.politico.eu/newsletter/brussels-playbook/summit-day-renews-ranks-swell-sefco-in-berlin/
¡A primera!¡Aupa Pucela!
Unofficial automated mirror. No copyright asserted. ∎ Economist. Back at LSE as a Professor at @LSEPublicPolicy Summer 2023. Non-resident Fellow @bruegel_org. Recovering MEP. Currently @ChicagoBooth.
Joined Apr 2022
