Economy
Climate damage: Europe’s next big fiscal headache
The cost of the damage caused by Europe’s increasingly volatile weather will have to be borne by someone, and with the majority of those economic losses uninsured, the burden is likely to fall on the public purse unless immediate measures are taken.
This year’s wildfires in Southwestern Europe and the severe flooding that hit Spain in 2024 and Germany and its neighbors in 2021 show how climate damage is adding to a list of strains on Europe’s finances that already includes higher defense spending and rising costs associated with an aging population.
“The problem is that they’re becoming more recurrent,” Federico Barriga-Salazar, head of Western Europe sovereign ratings at Fitch, said of catastrophes until now largely viewed as costly budget one-offs rather than as a regular expense.
“If a government is already fiscally tight, it means that it does create some policy trade-offs,” he said of the pressure that such economic losses put on other spending items. If the current scale of the fiscal hit is arguably quite small, there is a growing acceptance that it will only get bigger in a region which is the world’s fastest-warming continent.
Weather- and climate-related extremes caused economic losses of an estimated 822 billion euros ($953 billion) in the European Union between 1980 and 2024, according to the European Environment Agency – with a quarter of that damage inflicted in just the last four years.
Public deficits across the eurozone already average around 3% of GDP. Barriga-Salazar cited estimates that the Spanish 2024 floods – Europe’s worst flooding event in five decades – imply reconstruction costs of 0.7 percentage points of output from 2024 to 2026.
Moreover, only a quarter of climate-linked catastrophe losses are insured in the EU, with coverage in some countries below 5%, the EU estimates. Some fear that level of insurance coverage will only get smaller as a proportion of overall costs as extreme weather events occur more regularly.
“I do think this just means the more you have these risks, the less they will be insured,” said David Zahn, head of European fixed income at Franklin Templeton. “This is a big issue, and it will impact some of the countries by 1% to 2% of GDP.”
Economic think tank Bruegel calculated that, while most of the 2021 flood damage was covered by insurance in Belgium, the low level of insurance coverage in Germany meant it had to draw on public funds of 30 billion euros for the bulk of damages.
Adapting, sharing risks
With the European Union due to release proposals for climate resilience and risk management this autumn, attention is focused on possible solutions.
Greece, whose tourism-dependent economy is notably exposed to the risk of heatwaves and wildfires, is looking at ways to boost insurance coverage while making water and energy infrastructure more robust in tourist hotspots.
Following huge floods in early 2026, Portugal has announced plans to introduce mandatory home insurance backed by a natural disaster and earthquake disaster fund and a solidarity mechanism to guarantee universal access.
A possible stopgap measure for some could be recourse to so-called catastrophe bonds under which investors can receive handsome returns but also lose part or all of their principal if a predefined event, such as a hurricane or earthquake, occurs.
Franklin Templeton’s Zahn noted that for the sovereign, this could amount to an expensive gamble: “If the event happens, it pays off immediately. But you could also have five years with nothing, and you just paid out 8% per year.”
Heather Grabbe, senior fellow at Bruegel, said governments needed to put in place arrangements more systematic than one-off emergency spending, which risks creating the perverse incentive for households and businesses not to take out insurance.
“All governments across Europe need to assess their exposure and make comprehensive plans to reduce future damage through adaptation investments, as well as pooling risks across borders,” Grabbe said.
Numerous studies highlight how early investments in making economies more resilient to climate change can over time save money – and avoid what a 2025 Oxford University study called an “adaptation investment trap,” where repeated climate disasters raise debt and so leave less money for protection measures.
Spanish Prime Minister Pedro Sanchez has argued that green investments worth 0.1% of GDP could prevent economic losses totaling eight times that, and avoid tax revenue losses amounting to three times the original investment.
The European Central Bank (ECB) has proposed a joint EU public-private reinsurance scheme pooling private risks from natural catastrophes, backed up by an EU fund for public disaster financing.
But the question is whether this summer’s heatwaves will generate the political will to take on some of the upfront costs of such action – both at government and EU level.
A European Commission spokesperson said the EU executive was looking into ways to address the climate insurance protection gap as part of a package of measures due to be adopted by the end of the year.
The price of an average 100-square-meter (about 1,076-square-foot) home in Istanbul approached a record high in dollar terms in the third quarter, while its value measured in grams of gold fell significantly from its 2023 peak.
That’s according to data released Tuesday by the Central Bank of the Republic of Türkiye (CBRT), which highlighted a widening gap between the two benchmarks.
The preliminary third-quarter data showed a 100-square-meter home in Istanbul was worth around $189,800, close to its historical peak.
The same property, however, was equivalent to 2,034 grams of gold, down substantially from 2,911 grams in 2023.
The average price of a 100-square-meter home in Istanbul stood at around $100,000 in 2010, before falling to $88,900 by the end of 2021.
Prices subsequently climbed rapidly, reaching $188,200 in 2023.
The figures show that Istanbul housing has regained and slightly surpassed its previous dollar-denominated peak.
The picture is markedly different when housing prices are measured against gold.
A 100-square-meter Istanbul home was equivalent to 2,911 grams of gold in 2023.
Compared to this year’s third quarter, it represents a decline of roughly 30% in the property’s gold-denominated value.
That suggests that while Istanbul housing has become more expensive in dollar terms since 2022, it has failed to keep pace with gold.
For investors holding gold, this means residential property in Istanbul has become relatively more affordable, despite the rise in its dollar price.
Surging copper prices have helped Australian mining titan BHP post a solid rise in annual profits, according to financial results shared by the company on Tuesday.
Copper is a key metal for the global energy transition and artificial data centers.
Net profit climbed 9% from a year earlier to $9.8 billion in the financial year to June 30, said the resources group, the world’s biggest miner by market value.
Revenue rose 14.6% to $58.8 billion.
BHP is the world’s biggest copper producer and plans to expand output of the red metal by about 40% by 2035, the group said in a statement.
The miner also reported record iron ore production and a strong result in coal, but copper was the star commodity and expected to remain so.
“Copper is the engine that is driving BHP’s growth,” chief executive Brandon Craig said.
Copper prices were 26% higher on average in the 2026 financial year, the company said.
The metal has eclipsed iron ore as the biggest earner for BHP, generating more than half of the group’s operating profit for the first time.
Global copper demand is expected to grow to more than 50 million tons by 2050, it said.
As economies expand, copper will be required to build electricity networks for the transition away from fossil fuels, and to create data centers for artificial intelligence, BHP said.
“We also see a looming global copper supply challenge, as existing copper mines age, and with the pipeline of potential projects less healthy than in previous cycles.”
The group said it would pay shareholders a four-year record high dividend of of $1.72 a share, equal to $8.7 billion.
BHP shares climbed 3.3% to AU$64.24 ($45.63) in morning trade.
What began on a July weekend has grown into a month-long wave of attacks stretching from Moscow and St. Petersburg to cities in the south and all the way to the Ural Mountains. But the targets were not refineries, ports or arms factories, but warehouses that keep online shopping running across Russia.
Ukraine’s drones have pummeled the giant depots belonging to Wildberries, Russia’s biggest online retailer, burning billions of dollars’ worth of merchandise and bringing the war home to the broad public.
The attacks on about 20 Wildberries facilities have underlined Kyiv’s ability to strike far and wide inside Russia and posed a new challenge to President Vladimir Putin nearly four-and-a-half years into his full-scale invasion of Ukraine.
They have badly shaken the empire built by Tatyana Kim, the country’s richest female entrepreneur, whose fortune has been estimated at $8.1 billion.
Hundreds of thousands of individual sellers have lost their merchandise, sending shock waves across Russia’s economy. Wildberries has drawn massive loans from VTB and other banks as it expanded and likely will have trouble repaying them, putting more pressure on the financial system.
Online giant began in Moscow apartment
Kim, 50, was born in Grozny, the capital of the province of Chechnya, to an ethnic Korean family of an engineer and a teacher. She launched Wildberries in 2004 from her Moscow apartment soon after giving birth to her first child while working as an English teacher.
“The idea was born from my own needs, and turned out to be needed by hundreds of thousands,” said Kim, now a mother of seven. “If a product or service makes your own life easier, you’re on the right track.”
Wildberries initially sold clothing before expanding to appliances, household items, cosmetics, books and more. The platform with its distinct purple logo has become an undisputed leader in e-commerce, accounting for about half of all online orders in Russia. Businesses big and small use it to store, ship and deliver merchandise across the country’s 11 time zones.
An estimated 500,000 to 800,000 sellers use Wildberries, often described as Russia’s Amazon. After Western brands fled following the war in Ukraine, online retailers filled the void with merchandise from China, Turkey, the United Arab Emirates (UAE) and elsewhere.
The company also acquired a bank, expanded to tourism and even considered buying an airline.
In 2024, Kim divorced her husband, Vladislav Bakalchuk, triggering a fight for control of the company. Bakalchuk sought the support of Chechen leader Ramzan Kadyrov and his feared paramilitary forces but eventually lost the battle, which peaked in a shootout at a business center near the Kremlin that left two people dead and several wounded.
Wildberries depots easy targets
The company has prided itself on relying on about two dozen mammoth warehouses as the core of its vast logistical network, stockpiling the goods before shipping to about 100,000 storefront distribution points nationwide.
Rival online retailers Ozon and Yandex Market use smaller depots spread over a wider network.
As Ukraine embarked on a strategy of using long-range drones to attack deep inside Russia, it has expanded from striking military bases, oil refineries and other infrastructure to Wildberries warehouses, which provided particularly soft targets.
Since the first attack July 18 in Elektrostal, just east of Moscow, and in the southwestern Tambov region, Wildberries depots burned one after another in massive fires that flooded social media.
The depots, some as big as 300,000 square meters (about 3.2 million square feet), were unprotected and easy to set ablaze. It took three days to extinguish the fire in the Elektrostal depot, the Moscow region’s main hub.
“These are not military and high-value political targets; therefore, they’re not especially secured, they’re not really built to be able to shrug off drone strikes,” said podcaster Mark Galeotti, a Russia expert who heads the Mayak Intelligence consultancy.
The strikes have stretched from the European part of Russia to Yekaterinburg, over 2,000 kilometers (about 1,250 miles) from Ukraine’s border.
There’s scarce public data, but some estimates indicate that up to 20% of the company’s total warehouse space has been destroyed, with assessments of losses running as high as $6 billion.
Kim said Wildberries’ sites have been “reinforced and strengthened” defensively, but the attacks continued. Some warehouses suffered only minor damage, and Ukraine tried to hit them again.
Wildberries said it’s rearranging supply chains to create “partner hubs” for storing merchandise – a long and challenging process, given its dependence on big depots.
Attacks’ ripple effect
Ukrainian officials have said Wildberries sells gear and technical components, including drones, to the military. Moscow denied it, but such dual-use items as drone components, flak jackets or thermal weapon sights remain available on the platform.
Mykhailo Podolyak, an adviser to Ukrainian President Volodymyr Zelenskyy, said the attacks were designed to disrupt military supplies, breed popular discontent and cause a domino effect in the Russian economy by putting stress on major banks, including VTB and Sberbank, that made massive loans to Wildberries.
Wildberries’ debts were estimated at the equivalent of about $15 billion at the end of 2025.
Russia’s small and medium businesses have already been hit hard by tax increases, regulatory hurdles and, most recently, a fuel crisis from attacks on oil refineries.
The strikes on Wildberries have further exacerbated the business environment, said Chris Weafer, CEO of Macro-Advisory Ltd. Consultancy.
“I wouldn’t say it’s a nail in the coffin because we’re not there yet, but it’s certainly another enormous difficulty on top of what has already been a very difficult situation for small enterprises,” Weafer said.
Wildberries had recently changed its seller policy, exempting it from liability for stock damaged by a “force majeure” that includes drone attacks.
Kim pledged to support sellers with discounts on storage, free transfer of goods to other sites, discounted loans and other measures. Wildberries also issued some reimbursements, but they covered only a fraction of the losses.
Russia’s Central Bank has asked lenders to restructure loans to small and medium businesses that lost merchandise.
Meanwhile, many owners of Wildberries pickup points face lost revenue amid the plunging deliveries. Some vented frustrations on social media about going out of business.
The lost goods mean tens of thousands of small businesses can’t continue to operate, service their loans or pay taxes. Many are pleading for government support.
Galeotti said the strikes reflected Kyiv’s effort to bring the war home to Russia.
“It’s not just about seeing great clouds of black smoke over your cities because of some oil refinery on the outskirts being hit,” he said. “You might be a small business whose inventory has just gone up in smoke in one of the Wildberries’ warehouses. Or else you just simply might be an ordinary consumer who just suddenly is no longer going to get the goods that you plan to buy.”
Some analysts warn that instead of provoking discontent, the attacks could fuel stronger anti-Ukrainian and anti-Western fervor.
The Wildberries attacks have played into the hands of Russian hawks who urge escalating the war, said pro-Kremlin political expert Sergei Markov.
“It strengthens the view that it’s necessary to hit Europe,” he said. “And better sooner than later.”
Former President Dmitry Medvedev sought to stir up anger at Ukraine for trying to destroy an essential part of the daily routine for millions.
“Our enemy is fighting not the Russian leadership or the army, but ordinary citizens,” he said.
U.S. President Donald Trump is vowing to increase economic pressure on Iran and Treasury Secretary Scott Bessent has said Washington would introduce measures against Tehran “never been seen” as early as this week.
The United States, United Nations and European Union have applied sanctions, implemented trade embargos and frozen assets since the late 1970s over Iran’s nuclear program, human rights violations and support for militant groups.
Since the Iran war began in February, Washington has levied additional maritime, energy and financial sanctions and started a naval blockade.
Data from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) shows the agency has imposed sanctions on more than 1,000 people, vessels and aircraft since Trump began his second term.
Recent measures have targeted Iran’s shadow oil fleet; shipping insurers; entities and people enabling Iran’s acquisition of weapons; and digital exchanges, freezing an estimated $500 billion in Iran-linked cryptocurrency.
Experts say the Trump administration also could try these options.
Sanctions on Chinese ‘teapot’ refiners
Chinese independent refineries known as “teapots” account for a quarter of Chinese refinery capacity. They operate with narrow and sometimes negative profit margins.
China buys more than 80% of Iran’s shipped oil, according to 2025 data from analytics firm Kpler. Independent refiners absorb much of this trade, exposing them to so-called secondary measures that penalize entities helping a primary sanctions target.
Past U.S. sanctions have deterred larger independent refiners from buying Iranian oil. But the independent refineries are somewhat immune since they have little exposure to the U.S. financial system, sanctions experts say.
Sanctions on Chinese banks
OFAC has imposed secondary sanctions on smaller China- and Hong Kong-based entities accused of processing billions of dollars in Iranian oil and helping to fund weapons procurement.
Treasury has warned two larger Chinese banks they could face secondary sanctions if Iranian funds were found moving through their systems, but has stopped short of designating them.
Hitting those two banks, which U.S. officials have not publicly identified, or imposing other sanctions could have a chilling effect on bigger financial institutions, sanctions experts said, although they warned it could also trigger retaliatory actions by Beijing.
Trump administration officials have sought to play down tensions between Washington and Beijing ahead of an expected meeting between Trump and President Xi Jinping later this year.
They worry that China could curtail exports of critical minerals that are essential to advanced technology production at a time when the U.S. and Western allies are still trying to develop their own supplies.
‘Whack-a-mole’
The United States could continue targeting Iranian individuals and entities, as well as others in China and the Gulf, that are helping Tehran evade sanctions to collect revenues for its war effort.
Treasury recently issued sanctions against firms that are springing up to facilitate Iran’s trading of oil revenue for imports. But such measures amount to a “whack-a-mole” approach that has not altered Iran’s behavior, said Brett Erickson, managing principal of Obsidian Risk Advisors, noting that Tehran simply creates new entities to replace them.
Miad Maleki, a sanctions expert with the Foundation for Defense of Democracies, said Bessent was likely signaling a sharpened enforcement push against oil shippers, purchasers and currency exchangers who help Iran pay for its imports.
Further aviation sanctions were also possible, aimed at degrading Iran’s ability to move trade now that the U.S. has blockaded shipping via the Strait of Hormuz, he added.
Land blockade
Some U.S. and Israeli officials have floated the prospect of a land blockade, which would require assistance from Iran’s neighbors: Iraq, Türkiye, Pakistan, Afghanistan, Turkmenistan, Azerbaijan and Armenia.
The Trump administration has varying degrees of closeness with all those countries except Afghanistan, but that border is mountainous and extremely difficult to patrol anyway.
A land blockade could increase pressure on the Iranian people by halting their imports of food, energy and textiles, but experts say such a move would be difficult to execute and might not result in protests or internal pressure.
Secondary tariffs
Trump has repeatedly threatened tariffs on goods from countries that do business with Iran, although the Supreme Court struck down the legal basis for such taxes.
The Senate passed a sweeping Russia sanctions bill last week that included new Iran sanctions and would give Trump new tariff powers that he could potentially use against countries that aid Iran’s commerce and weapons procurement.
That legislation must still pass the U.S. House of Representatives, which could prove challenging given widespread concerns among Democrats and some Republicans about the tariff measures.
Istanbul Airport has set new records for daily flights and passenger traffic, Transport and Infrastructure Minister Abdulkadir Uraloğlu said Monday.
Türkiye’s largest airport and one of the biggest civil aviation hubs in the world handled 1,739 flights and 290,287 passengers on Sunday.
The figures marked the highest number of daily flights and passengers ever recorded at an airport in Türkiye and Europe, Uraloğlu said in a statement.
The passenger count renews Istanbul Airport’s previous peak of 289,732 reported on the same day a week ago.
The new records further strengthen Istanbul Airport’s position as a major international aviation hub, Uraloğlu said.
“Istanbul Airport is among the world’s leading airports with its capacity, strong infrastructure and quality of service,” he noted.
“These new records once again demonstrate that our airport is further strengthening its position as a global transfer hub.”
The gleaming glass-and-steel structure along the Black Sea coast turned into one of the most important transit centers in aviation since it became fully operational in April 2019.
The hub can handle 90 million passengers a year in the current phase. The figure is nothing compared to its potential capacity to serve 200 million after completing all phases.
Istanbul Airport served record-breaking 84.4 million passengers in 2025, making it the second-busiest airport in Europe after Heathrow Airport and the eighth-busiest worldwide. It seeks to reach the 90 million mark this year.
Sabiha Gökçen also sets passenger record
Across the city, Türkiye’s second-largest airport also recorded its highest-ever daily passenger traffic on the same day.
Sabiha Gökçen International Airport said it had handled 180,914 passengers across 958 flights on Sunday.
It said it saw new daily records for international arriving and departing passengers, domestic passenger traffic, total international flights and international departures.
The airport additionally set a record for aircraft served through Passenger Boarding Bridges (PBBs). A total of 218 aircraft used the boarding bridges on Sunday, surpassing the previous daily record of 212.
Hanita Ahmad, executive director of Sabiha Gökçen, said passenger traffic had surpassed 180,000 for the first time, reflecting both strong demand for the airport and its operational capacity.
“As Sabiha Gökçen, we will continue focusing on continuously improving the passenger experience and sustainable growth in line with our vision of becoming a regional transfer hub,” Ahmad said.
Türkiye’s central government budget swung to a deficit in July, but Treasury and Finance Minister Mehmet Şimşek said the government remains on track with its fiscal targets despite the impact of geopolitical developments.
The budget recorded a TL 378.1 billion ($7.89 billion) deficit last month, according to data from the Treasury and Finance Ministry. That follows a TL 114.2 billion surplus in June.
Budget expenditures totaled TL 1.79 trillion, while revenues reached TL 1.41 trillion in July. The primary balance posted a deficit of TL 51.3 billion, while interest payments amounted to TL 326.8 billion.
Despite the monthly deficit, Şimşek said the government was maintaining fiscal discipline and progressing in line with its budget goals.
For the January-July period, the budget registered a deficit of TL 1.32 trillion. Expenditures reached TL 10.52 trillion, compared with revenues of TL 9.20 trillion.
The government recorded a TL 470.1 billion primary surplus during the first seven months of the year, as primary expenditures totaled TL 8.73 trillion.
The primary surplus, an important indicator of the government’s fiscal position excluding interest payments, increased by TL 228 billion from the same period a year earlier, Şimşek said.
Tax revenues also continued to rise. Tax collections increased 30% year-over-year in July to TL nearly 1.24 trillion, while other non-tax general budget revenues rose 18.9% to TL 145.6 billion.
Fiscal policy to support disinflation
Şimşek said fiscal policy was being implemented with the broader disinflation program in mind.
He noted that the government had forgone a significant amount of tax revenue through the sliding-scale tax mechanism on fuel prices to help support the disinflation process. He also said the ongoing rebalancing of domestic demand had affected revenue performance.
“Despite the significant tax revenue forgone under the sliding-scale mechanism to support disinflation and the impact of the rebalancing in domestic demand on revenue performance, we are progressing in line with our budget targets,” Şimşek said.
The minister added that the government had kept its domestic debt rollover ratio at around 87%, taking financing conditions into account.
He said stronger revenue collection and tighter spending discipline had created fiscal space that would be directed toward priority areas while continuing to support the disinflation process.
“With increased effectiveness in our revenue policies and stronger spending discipline, we will continue directing the fiscal space we have created toward priority areas and supporting the disinflation process,” Şimşek said.
-
Economy2 days agoEurope’s heat waves empty cafes, expose insurance gaps
-
Sports2 days agoMakhachev defends UFC title with record 17th-straight win
-
Sports3 days agoLukaku trains with Fenerbahçe for 1st time ahead of Süper Lig debut
-
Politics1 day agoAlihan Kuriş remanded in custody as Türkiye delves into his criminal gang
-
Politics2 days agoTurkish officials highlight Erdoğan’s leadership as AK Party turns 25
-
Politics2 days agoTürkiye, Egypt urge stronger measures for Gaza, vow to boost cooperation
-
Politics2 days agoTürkiye’s AK Party sets out vision for country’s future
-
Economy2 days agoGerman companies’ investment in US falls to 3-year low in H1