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Talking about Tackling Climate Change, Fertilizer Prices, Israel’s Budget, Algeria Cuts off Morocco and Week in Review

Blog / Weekly Review

Talking about Tackling Climate Change, Fertilizer Prices, Israel’s Budget, Algeria Cuts off Morocco and Week in Review

Talking about tackling climate change. The 26th UN Climate Change Conference of the Parties is being held in Scotland until November 12th. The Glasgow Financial Alliance for Net Zero (GFANZ) claims the UK and Italy have helped raise over $130 trillion of private capital to transform the global economy for net-zero carbon emissions. The money will be allocated to 24 different initiatives, each attacking a different aspect of climate change.

What it means: Even in a profession where cynicism often requires questioning such promises – a 2009 pledge of several countries to spend $100 billion annually on climate change, for example, has fallen well short of its promises – $130 trillion is a figure large enough to command our attention. This is also an example of the rise of “climate politics.” In our report, “Geopolitical Forces Shaping the 2020s,” we noted that, “Climate politics will become a major political force in the decade ahead, not just at the domestic political level but in relations between nations….by the end of the decade, climatism may take its place alongside populism and nationalism as one of the most effective political ideologies to unite domestic populations and focus geopolitical policies.”

Fertilizer prices. Last year around this time, fertilizer prices were approaching their lowest levels in a decade. Fast forward 12 months, and fertilizer prices are now at decade highs, increasing to levels last seen in the wake of the 2008 financial crisis. Meanwhile, Russia will impose a six-month quota on nitrogen and complex fertilizer exports. According to Interfax, the quotas are “slightly below the average” level of Russian exports over a six-month period.

What it means: Russia is the top exporter of fertilizers in the world. Between China imposing restrictions on phosphate exports in September and now Russia limiting nitrogen exports, fertilizer markets are facing a sudden headwind of protectionism. That is bad news considering food prices continue to climb, with the UN’s Food Price Index increasing 3 percent in October and at its highest level since July 2011.

Israel passes a budget. Israel passed its first budget in 3.5 years by a narrow 61-59 margin in the Knesset.

What it means: It is a measure of just how dysfunctional Israeli politics has been in recent years that passing a budget is a cause for celebration. The budget includes major increases in social spending, but the aspect that is most striking to us is the elimination of import taxes on produce and several other agricultural reforms. The measures are designed to lower food prices and increase competition but have met with bitter opposition from Israeli farmers. Whether the reforms will achieve their desired ends remains to be seen, but Israel is facing many of the same food security challenges as the rest of the Middle East, and realizing the status quo may not be sustainable.

Algeria cuts off Morocco. Algeria halted natural gas exports to Spain via the Maghreb-EU pipeline, which traverses Moroccan territory.

What it means: Spainimports roughly half of its natural gas needs from the Maghreb-EU pipeline. Spain also imports natural gas from Algeria directly via the Medgaz pipeline and is already exploring options to increase imports from Medgaz, but even in a best-case scenario, Medgaz’s natural capacity would still leave Spain with a 4 bcm/year shortfall – just as Spain heads into winter. The rest of the EU, remember, is already facing record-high natural gas prices, uncertain supply from Russia, and the potential for still more price spikes if the coming winter is a cold one.

Honorable mention

THE ATLANTA BRAVES WON THE WORLD SERIES. REJOICE AND BE GLAD! #solerpower

The U.S. Federal Reserve will begin tapering its purchases of bonds and other assets by $15 billion in both November and December.

Brazilian truck drivers called for a work stoppage on Monday. For more, LatamPolitik has you covered. Click here.

The U.S. and the EU reached an agreement that will see the U.S. lift tariffs on some steel and aluminum imports from Europe effective December 1st.

Japan’s Liberal Democratic Party performed impressively in Japanese elections.

The Indian government reduced taxes on petrol and diesel, which will create a revenue loss for the government between $7-8 billion.

Mexico detained over 41,000 migrants last month, the highest total since it started keeping official data in 2001.

North Macedonia Prime Minister Zoran Zaev resigned after his Social Democratic Union performed dismally in local elections.

Saudi Arabia recalled its ambassador and banned all imports from Lebanon.