00:00All eyes, of course, on the U.S. brokered Israel-Lebanon talks as well taking place today
00:04in Washington. But now, as a response to the conflict, the European Bank for Reconstruction
00:09and Development has launched a conflict response package to neighbouring countries.
00:13They're also monitoring the impact the war is having on the global economy.
00:16For more, your news is Marek Gwynne-Jones spoke to the president of the EBRD, Ali Rino-Basso.
00:22So there is an impact which is directly related to energy prices. And we see that
00:29across all our countries of operation. So the increase of energy prices being oil and gas.
00:35But you also have countries which are very close to the area of the conflict,
00:42which are impacted by a drop of tourism. A big important element also is an increase of energy
00:51price. We feel inflation and this also has an impact on interest rates because
00:58the risk appetite in market has been dropping and interest rates has been increasing all over
01:06the economies. And this is this has a big impact for countries which have a high debt level
01:12deficit issues and so forth.
01:15And I know that you've recently introduced a five billion euro package to aid these countries.
01:20How soon can that money flow? Because I'm thinking of places like Lebanon, where there's still a real
01:25risk of escalation, still an active war. Can you support these countries and their economies
01:31while the situation is so volatile?
01:34So indeed, when we talk about this five billion level of investment, we are talking about we are
01:40focusing on countries which are very close to the conflict. So Lebanon, Jordan, Egypt, Turkey,
01:47Armenia, Armenia, and the idea is to continue to support them in investment. So when you have
01:54private sector banks, which are withdrawing or reducing their exposure, reducing their investment
02:01in these countries, we are stepping in in a way as a counter cyclical bank, which is there to continue
02:07to support investment.
02:08Yet, as we speak, President, talks between Iran and the US have stalled completely. We've heard
02:16President Trump saying he doesn't care about that. He's also threatening to block access to Iranian
02:21ports. Situation is very volatile. Are we on the cusp of a major global economic shock if this ends up
02:31to
02:31be a very drawn-out war?
02:33What happened in the last few weeks was already a very big economic shock. You've seen that the
02:38energy international urgency said it was the widest, biggest energy shock in the decades, in the last
02:47decades. So it was a very significant shock. The longer it lasts, and if it becomes more serious with
02:53the escalation that we see, I mean, this morning and in the last few hours, the risk is that it's
03:01become,
03:02the impact is becoming deeper. The assessment, our assessment, for example, with a barrel, oil
03:07barrel at $100 per barrel for a long period of time, the impact on the growth on our countries of
03:15operation is minus 0.4. So a drop of growth of 0.4% and an increase of inflation of
03:21around 1.5%.
03:23We're hearing some comparisons with the 1970s oil crisis. Is it that serious? Is President Trump
03:30here pushing us really to the precipice? Do you share these kind of grave concerns?
03:36I mean, it's a very significant shock. When we compare to the 1970s oil shock, the big difference
03:45is that the economies are less dependent on fossil fuels than they used to be. So we have very
03:51significantly improved the energy efficiency. And so the impact of oil prices per se, of fossil fuel
03:59prices per se, is more limited than it was in the 70s. But if the situation aggravates and stay there
04:10for
04:10long, then the economic impact is likely to be much more serious.
04:15To close briefly, President, I know that you don't invest in all European economies as an institution,
04:23but what could be the knock on effects on an Europe which is increasingly investing in defence,
04:30where borrowing costs and the cost of servicing debt is really spiralling?
04:33For Europe, the challenge will be increase of inflation will have an impact on the dynamics of the economy.
04:42The increase of energy prices also will have a dampening impact on growth. And growth in Europe was
04:48already not extremely dynamic. And so this will be a challenge in a context where the fiscal space for
04:58countries to, for example, provide some support for housing, household or businesses in London to
05:05counterweight the increase of energy price is much more limited than it was in 2022, for example, or just after
05:12COVID.
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