Economy
EU finally unveils ‘Made in Europe’ rules for strategic sectors
The European Union unveiled new “Made in Europe” regulations on Wednesday sought to strengthen the bloc’s industries amid fierce competition from China, following months of delays caused by disputes over proposals critics call too protectionist.
Concerning strategic sectors including cars, green tech and steel, the law, called the “Industrial Accelerator Act”, is part of broader EU efforts to help local industries compete with producers abroad who do not face Europe’s strict regulations and higher energy prices.
“What I am presenting to you today is more than just a change in operating procedures; it is a change in doctrine – one that was unthinkable just a few months ago,” said EU industry chief Stephane Sejourne.
Broadly, the rules aim to ensure that public and foreign investments support manufacturing inside the 27-nation bloc, explained an EU official.
To that end, they say companies that want public money must meet minimum thresholds for EU-made parts and subject large investments from dominant foreign firms to conditions including employing EU workers.
The European Commission said the package aims to bring manufacturing’s share of EU GDP to 20% by 2035, up from about 14% in 2024.
At stake are about 600,000 jobs that Brussels predicts could be lost over the next decade if the bloc’s industrial decline continues on its current path.
What ‘Europe’?
Initially expected last year, the measures strongly backed by France were pushed back several times due to disagreements, with some arguing they run counter the EU’s pro-free-trade spirit.
Much of the discord revolved around the geographical scope of “Made in Europe.”
Skeptics, including the EU’s largest economy Germany, argued trade partners should be included in the definition under a “Made with Europe” approach.
Brussels settled for a compromise based around the principle of reciprocity.
Countries that have deals with the EU allowing for European companies to access public money on par with local firms in the sectors concerned would be brought into the fold.
Others – like Canada – that give preference to local producers will be left out unless they change tack, the official said, noting the rules would be used as a trade tool to negotiate better access for EU companies.
Ahead of publication, the plans had raised concerns among foreign partners, including Türkiye, Britain and Japan.
A full list of who was in and who was out was not yet available.
The “Made in Europe” requirements, which also seek to boost industrial decarbonization, would apply to “strategic sectors”, namely: steel, cement, aluminum, cars, and net-zero technologies.
Governments putting money behind infrastructure projects will have to ensure they include a minimum share of European low-carbon steel, cement and aluminum, among other provisions.
Electric-vehicle (EV) manufacturers will have to make sure at least 70% of their cars’ components are made in the EU to access public money.
Similar rules will apply to batteries, solar, wind, and nuclear.
Investment screening
The proposal, formally known as the “Industrial Accelerator Act”, also aims to ensure foreign companies partner with European firms if they want to set up shop in the bloc.
To do so it imposes conditions on foreign investments of over 100 million euros ($116 million) in “emerging strategic sectors” such as batteries and EVs.
These kick in when they involve an investor from a country that holds more than 40% of the related global manufacturing capacity – an implicit reference to China’s dominance in those sectors.
For such projects to go ahead, foreign investors need to meet four of six conditions including employing at least 50% EU workers, holding no more than 49% of the related EU company, and passing on technological know-how.
That was to counter instances where Chinese firms set up a European plant employing mainly Chinese workers with “very little local added value,” said the EU official speaking on condition of anonymity.
For many, the plans are necessary to boost the development of EU green tech and shield manufacturers from unfair competition from heavily subsidized Chinese rivals.
The goal is to make sure EU taxpayers’ money is “used strategically to strengthen Europe’s industrial base – rather than subsidizing Chinese overcapacity”, said Neil Makaroff of the Strategic Perspectives climate think tank.
But some experts question the EU push.
“If the policy goal is to make sure that your industry is not being destroyed by China, I think we have better instruments,” said Niclas Poitiers, an international trade specialist at the Bruegel think tank, pointing to rules giving the EU power to investigate and counteract unfair foreign subsidies.
The proposal will be subject to approval by EU states and parliament.
A draft law currently at the Turkish Parliament is expected to generate at least TL 4.2 billion (nearly $96 million) tax income from a levy on crypto assets, according to its impact analysis.
The law will generate more tax income from crypto assets but this amount cannot currently be calculated exactly as it will be applied for the first time, the analysis said.
Under the draft law proposed by the ruling Justice and Development Party (AK Party), on top of a 0.03% crypto asset transaction tax, a 10% withholding tax will be collected from profits made from crypto asset transactions made on approved platforms.
The analysis report said it was not possible to calculate possible budget revenues from the tax that will be imposed on crypto asset profits.
Separately, a 20% special consumption tax set to be applied to some precious stones as part of the draft law is expected to generate some TL 1.9 billion annual income to the government budget, according to the impact analysis.
The ongoing air war with Iran could cost the country’s economy over 9 billion shekels (about $2.93 billion) per week, the Finance Ministry said on Wednesday.
Under current “red” restrictions by Israel’s Home Front Command that limit traveling to work, order school closings, and mobilization of reserve forces, economic loss is estimated at 9.4 billion shekels a week, largely starting from next week, it said.
The ministry has asked the Home Front to move to “orange” – or limited activity that is less restrictive to workplaces than “red.” In this scenario, the loss to the economy would be 4.3 billion shekels a week.
Israel and the U.S. began bombing Iran on Saturday, triggering a wave of retaliatory strikes across Israel and the Middle East and disrupting energy exports from the Gulf.
U.S. and Israeli officials said the campaign could last weeks.
Schools in Israel are closed this week. Gatherings are banned, while workforce activities are prohibited except for essential services, with most employees working from home.
Hurt somewhat by the genocidal war on Gaza, Israel’s economy grew 3.1% in 2025. In the wake of a cease-fire in October, growth was projected at more than 5% in 2026.
A proposed tax on cryptocurrency trading transactions in Türkiye is expected to generate about TL 4.2 billion (nearly $100 million) in annual revenue, according to an impact analysis of a draft bill.
The ruling Justice and Development Party (AK Party) on Monday presented the draft law to Parliament that would introduce a tax on cryptocurrency earnings, along with a transaction fee targeting crypto asset service providers.
The bill is set to be discussed in a parliamentary commission as of Wednesday.
According to the draft text, gains from the buying and selling of crypto assets would be subject to withholding tax, while transactions conducted outside authorized platforms would be taxed through declaration.
Under the proposal, crypto asset service providers would pay a 0.03% transaction tax on sale and transfer transactions they conduct or mediate.
The impact analysis projects that the 0.3% tax on crypto asset buy-and-sell transactions would yield TL 4.2 billion per year.
Under the proposal, a separate 10% withholding tax on gains from trading transactions would also be introduced. However, the analysis said revenue from this measure could not yet be calculated due to insufficient data.
The draft legislation also foresees bringing pearls, diamonds, precious and semi-precious stones under the scope of a 20% special consumption tax. This measure is projected to generate an additional TL 1.9 billion in annual revenue.
The impact of the war in the Middle East on the global economy will depend on its duration and damage to infrastructure and industries in the region, and in particular, whether energy price spikes are short-lived or persistent, the number two official at the International Monetary Fund (IMF) said on Tuesday.
IMF First Deputy Managing Director Dan Katz told the Milken Institute Future of Finance conference in Washington that if there is prolonged uncertainty from the conflict and a prolonged impact on energy prices, “I would expect central banks to be cautious and respond to the situation as it materializes.”
He said the conflict could be “very impactful on the global economy across a range of metrics, whether it’s inflation, growth, and so on,” but it was still early to have a firm conviction.
Before the U.S. and Israeli airstrikes on Iran and counterattacks across the region, the IMF had forecast solid global gross domestic product (GDP) growth of 3.3% in 2026, powering through tariff disruptions due in part to the continued AI investment boom and expectations of productivity gains.
Katz said that the economic impact from the Middle East conflict would be influenced by its duration and further geopolitical developments.
Earlier, the IMF said it was monitoring the conflict’s disruptions to trade and economic activity, surging energy prices and increased financial market volatility.
“The situation remains highly fluid and adds to an already uncertain global economic environment,” the fund said in a statement issued from Washington. Katz said the IMF will look at the conflict’s direct impacts on the region, including damage to infrastructure and disruptions to key sectors.
“Tourism is an important one. Air travel. Is there physical damage to infrastructure, production facilities, and the big industry in particular that everyone will be focused on is, of course, the energy industry,” he said.
Oil rose further on Tuesday as Iran vowed to attack ships passing through the Strait of Hormuz. Brent crude oil, the global benchmark, surged to $83 per barrel, up 15% from its level on Friday.
Katz said he expected central banks to “look through” a temporary rise in energy prices, given their focus on core inflation. But central banks could respond if a more persistent energy shock results in “a destabilizing of inflation expectations.”
He said the post-COVID-19 pandemic inflation spike of 2022 was influenced by energy impacts from Russia’s invasion of Ukraine, with more pass-through from headline inflation to core inflation.
“And so I’m sure central banks, as they are thinking about how the geopolitical situation is translating into energy markets, will be looking at the lessons of the pandemic and seeing if they can apply any of those lessons in setting monetary policy,” Katz said.
Türkiye’s inflation rate rose slightly on an annual basis to 31.5% in February, largely as expected, while the monthly figure cooled, official data showed on Tuesday.
The increase from nearly 30.7% in January marked the first uptick in the annual rate in months and tees up a tough rate decision for the central bank next week.
On a monthly basis, inflation cooled to 2.96%, compared to the higher-than-expected 4.84% increase in January, the Turkish Statistical Institute (TurkStat) said.
Beyond the price pressure, market turmoil due to war between the U.S. and Israel and neighboring Iran prompted emergency measures by the top institutions, including the central bank and the capital markets board.
These included some $8 billion in foreign exchange sales on Monday, resulting in a roughly 300 basis-point rise in the overnight rate to about 40%.
The renewed geopolitical risks, according to analysts, could prompt the Central Bank of the Republic of Türkiye (CBRT) to respond by officially halting an easing cycle that began in late 2024.
In January, the Monetary Policy Committee (MPC) trimmed the bank’s main policy interest repo rate by less-than-expected 100 basis points to 37%.
In February, monthly inflation was driven by housing and food costs, according to the TurkStat, marking the second month of pressure that has raised worries about a disinflation trend that began in 2024.
Food and drinks prices rose by 6.8% over the course of the month, and housing expenditure by 2.4%, the figures showed.
Geopolitical turmoil
Treasury and Finance Minister Mehmet Şimşek said he expected the recent high food price increases to be offset in the coming period, depending on weather conditions, while acknowledging the energy price rises triggered by the Iran conflict.
“We are working to limit the inflationary impact of rising oil prices due to geopolitical developments,” he wrote on the social media platform X, adding that all policy tools are being used in coordination to sustain the disinflation process.
Year-over-year, the price surges were particularly marked in education (55.7%), housing (42.3%) and food and non-alcoholic beverages (36.4%).
Şimşek said food prices rising significantly above their long-term averages caused a temporary spike in annual inflation.
“Core goods inflation receded to 16.6%. Meanwhile, service inflation, where rigidity is high, fell below 40%, the lowest level in the last 47 months. This outlook indicates that the downward trend in inflation continues,” the minister said.
The TurkStat data also showed the domestic producer price index rose 2.43% month-over-month in February for an annual increase of 27.56%.
The central bank has, in recent weeks, kept rate-cut expectations on track even as it has repeated it was ready to tighten policy if needed.
JPMorgan, which, like most analysts, had previously predicted another cut at the central bank’s March 12 policy meeting, said on Monday it now expects the bank to hold rates. It also revised its year-end inflation forecast to 25% from 24%.
Last month, the central bank nudged up its year end inflation forecast range by two percentage points to 15%-21% and maintained its interim 16% target.
But amid rising geopolitical tensions and higher oil prices, market participants have begun revising their year-end inflation forecasts upward, from levels around 22% a few months ago to 25% or higher.
For years, Dubai has been pitched with images of glittering skyscrapers, tax-free incomes, business-friendly policies and something far more intangible: the unspoken promise that whatever was happening elsewhere in the Middle East, this city was different. The conflicts that destabilized the region would somehow stop at Dubai’s borders.
Since Saturday, that all changed. Iran’s retaliatory strikes across the Gulf hit across Dubai’s key sectors, landing on airports, hotels and ports. They also hit the psychological foundations of a city that had spent four decades constructing that identity as one of the world’s most reliable places to do business in an unreliable neighborhood.
Authorities in the United Arab Emirates (UAE), a close U.S. ally, moved quickly to contain the damage to confidence as much as the physical fallout.
The UAE’s National Emergency, Crisis and Disasters Management Authority said the situation remained under control. For investors and residents watching their landmarks hit by missiles, as they stockpiled supplies, the reassurances were noted. Whether they were enough is another question.
“It’s hard to overstate the peril for Dubai’s economic model,” said Jim Krane, a fellow at Rice University’s Baker Institute.
“The physical damage may be slight, and most of the pain thus far is psychological. But Dubai’s status as a safe haven for expatriates and their businesses is in increasing doubt. The longer the war continues, the more intense the search will be for alternative locations. Dubai needs this war to wrap up now. International capital is highly mobile,” Krane noted.
In a sign of the ongoing strains, the UAE’s stock markets were closed on Monday and Tuesday, while tech outages following a hit to Amazon’s cloud computing facilities were affecting some banking operations, according to a person familiar with the situation.
Tens of thousands remained stranded in the UAE as airspaces remained largely closed, with the conflict also laying bare how heavily global air travel relies on a handful of hubs led by Dubai, the world’s busiest international airport.
Four decades after the Gulf’s trading capital set out to exploit its strategic location by setting up Emirates with two rented jets and two routes, Dubai stands at the center of a global network spanning 110 nations and 454,000 flights a year.
How Dubai built brand
Dubai’s transformation from a modest pearling and fishing port into a global financial center was a decadeslong project. The launch of Emirates airline in 1985, the opening of the Burj Al Arab in 1999 and laws in the early 2000s allowing foreigners to own property for the first time were the pillars of Brand Dubai.
Dubai’s economy is almost fully powered by non-oil sectors, with oil now accounting for less than 2% of gross domestic product (GDP). A mix of trade, tourism, high-end real estate and financial services, built on a regulatory framework that mirrored London and New York, has replaced it.
Neighboring Abu Dhabi, which holds more than 90% of the UAE’s oil reserves, remains more reliant on oil revenue for growth.
Beirut had been the region’s international financial capital until its civil war in the 1970s shattered that image. Bahrain stepped into the vacuum until Dubai’s rise rendered it a more modest player. Each succession was built on the same promise: a stable, open alternative to wherever the region’s last crisis struck. Dubai executed that promise more completely than any of its predecessors.
Dubai’s rise was itself partly built on the instability of others. With Syrians displaced by civil conflict, wealthy families rattled by the Arab Spring, and more recently, Russians fleeing because of the Ukraine war, new residents all poured capital and talent into the emirate.
The population across the UAE ballooned, from about 1 million in 1980 to 11 million in 2024. Last year, the UAE was on track to attract a record 9,800 relocating millionaires, more than any other country on earth, according to Henley & Partners.
Money has poured into real estate, propelling Dubai’s developer Emaar Properties to a record high on Feb. 25, valuing the company at about 149 billion dirhams ($40.6 billion).
The creation of the Dubai International Financial Center (DIFC) in 2004 kickstarted a push to draw financial firms. By the end of 2025, DIFC hosted more than 290 banks, 102 hedge funds, 500 wealth management firms and 1,289 family-related entities.
What Saturday changed
But vulnerabilities have remained.
The Strait of Hormuz, through which roughly a fifth of the world’s seaborne crude oil passes, runs through Dubai’s backyard. Iran, a country with the capability to destabilize Gulf commerce, sits directly across the water.
The physical damage over the weekend was stark. Dubai International Airport was hit, a berth at Jebel Ali Port caught fire and the Burj Al Arab sustained damage from interceptor fragments. Three people were killed and 58 injured, according to the UAE Ministry of Defense.
“People are afraid of what’s happening. It’s the first time they have to hide in underground places. Dubai airport, one of the biggest in the world, has to shut down for a few days,” said Nabil Milali, multi-asset portfolio manager at Edmond de Rothschild Asset Management. He reduced the firm’s exposure to stocks globally last week to prepare for the possibility of an attack on Iran.
“There’s a 70% probability we will keep a geopolitical risk premia (on the region) for a long time.”
A source at a UAE-based mid-sized investment firm said their company had begun preemptively planning layoffs and halted fundraising. Demand for gold bars surged, a jewelry industry source said. International private banks, which had been expanding advisory operations in the emirate, may also reassess the scope of their presence, according to a private banker. Firms may begin to rethink serving clients locally versus from another location, the banker said.
“Historically, markets like the UAE have demonstrated resilience during crises, including COVID, supported by strong policy response and governance,” said Madhur Kakkar, founder and CEO of Elevate Financial Services.
“At this stage, a broad structural reallocation of institutional capital away from the UAE or the wider Gulf appears unlikely unless tensions escalate materially or persist for an extended period.”
There is no data yet on capital outflows. The suspension of trading on the Abu Dhabi and Dubai stock exchanges on March 2 and 3 marks an unprecedented step for UAE regulators.
“It’s really quite a big change in perceptions,” said William Jackson, chief emerging markets economist at Capital Economics. “The Gulf economies have generally been seen as safe from Iranian retaliation. I think (that) has really changed over the weekend.”
The impact will depend on how long the conflict continues, he said. “But I think this is quite a big challenge, particularly when we’re thinking about some of the diversification efforts that are underway in the region.”
Momentous task piecing network back together
Dubai now has the momentous task of handling tens of thousands of displaced passengers and piecing its network back together while trying to minimize damage to inbound flights that represent half its traffic.
Most analysts say that, barring a prolonged regional war, the Gulf hubs will recover by virtue of the momentum and the power of their networks. But the unprecedented shutdown of all three major hubs – Dubai, Abu Dhabi and Doha – coincides with growing competition from Türkiye, Saudi Arabia and India.
“That we’ve got such a well-spread geographic business model and are well spread between visitors and those in transit suggests it’s very robust and will continue to survive any geopolitical tension that exists, wherever it may be,” Dubai Airports CEO Paul Griffiths told Reuters in a recent interview.
The strikes by the U.S. and Israel and Iran’s retaliation brought such tensions to Dubai’s doorstep, including an attack on the airport itself.
“There’s no doubt at all this is temporary. They have seen major incidents before and recovered very quickly due to their importance as global hubs,” said U.K.-based travel consultant Paul Charles. “They will recover quickly, even if there is substantial uncertainty in the short term.”
Others are less certain. The whole industry bounced back from the beating taken during the COVID-19 pandemic, thanks to demand outpacing supply. This time, however, it is demand that is at risk.
“Travelers are likely to consider more direct flights rather than stop over in Dubai or Doha. All this hub traffic is likely to take a hit,” said independent aviation adviser Bertrand Grabowski.
Favorable geography
Geography and economics remain strong allies, however.
“One third of the world’s population is within four hours’ flying time and two-thirds within eight hours,” said Dubai Airports’ Griffiths.
“We’ve seen the incredible aggregation power that a hub delivers.”
But threats to the Gulf trio are brewing. Turkish Airlines (THY) could be the biggest short-term winner through its own mega-hub outside the conflict zone, said independent aviation analyst John Strickland.
Saudi Arabia is also muscling in, followed by India, with Asian carriers picking up passengers.
Advances in aircraft design – once favorable to Gulf airlines – are also beginning to work against them. Airbus last week began assembling a second ultra-long-range A350 jet to support plans by Qantas to fly directly from Sydney to London.
Greatest uncertainty?
Emirates was founded at the height of the Iran-Iraq war in 1985. Its rapid growth led to the splintering of Gulf Air – carrier for Qatar, Bahrain, Abu Dhabi and Oman at that time – as, first, Qatar, then Abu Dhabi, set up their own airlines to form what remains a trio of Gulf hubs competing for passengers.
With Dubai’s orderly reputation shaken by Iranian attacks and anti-missile shrapnel, analysts say the greatest uncertainty of all hangs over the future of traffic to the city itself.
Questions have also been raised over the timing of the already delayed expansion of a giant new airport outside the city.
Dubai destination traffic “will doubtless recover, but there is likely to be some lasting damage,” Grabowski said.
For Emirates and sister airline flydubai, that may involve using their market power to get the system running again.
“People have short memories and they might be incentivised by some bargain deals to bring people back, but I don’t think that would need to be there for long,” said Eddy Pieniazek, head of advisory at aviation and leasing consultancy Ishka.
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