The faces of the next College of Commissioners?

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Ursula von der Leyen’s future College of Commissioners is beginning to shape form as all but two – Italy and the UK – of the European Union’s 28 members have nominated candidates for the EU Executive.

Von der Leyen has begun interviewing her future Commissioners and has signalled that this process will not be done in the full view of the media, meaning without readouts for the press. The names that will pass to the next stage of the process – which will include Parliament hearings in September and an MEP vote in October – will be announced as soon as von der Leyen completes her tête-à-têtes with all of the candidates.

It remains to be seen if the von der Leyen Commission will be as political as that of Jean-Claude Juncker. While the EU is no longer in full crisis mode – as it has been for several years, Europe’s most pressing issues, which need immediate action, are remain highly political in character and require a respective approach in their handling.

Austria

Johannes Hahn

Incumbent Enlargement Commissioner Johannes Hahn from the European People’s Party (EPP) has been proposed by his government to serve for a third term with the EU executive. Hahn previously served as the Regional Policy Commissioner.

 

 

Belgium

Didier Reynders

Current Foreign and Defence Minister Didier Reynders of Renew Europe (RE) was in the running to be Commissioner under Jean-Claude Juncker, but passed over for outgoing Employment Commissioner Marianne Thyssen to maintain a gender balance.

 

Bulgaria

Mariya Gabriel

European Commissioner for the Digital Economy and Society Mariya Gabriel (EPP) has been tapped by Prime Minister Boyko Borissov as an obvious choice.

 

 

 

Croatia

Dubravka Šuica

Dubravka Šuica (EPP), a former mayor of Dubrovnik and a vice-president of the EPP, is hoping for an economic or enlargement portfolio.

 

 

Cyprus

Stella Kyriakides

An ex-president of the Council of Europe’s Parliamentary Assembly, Cypriot MP Stella Kyriakides (EPP) is expected to unseat the sitting European Commissioner for Human Aid, Development and Civil Protection, Christos Stylianides. She is a clinical psychologist by training and a long-standing campaigner for breast cancer and has worked on health policy issues in Cyprus’ legislature.

The Czech Republic

Věra Jourová

Věra Jourová (RE) is set for a second term at the European Commission after serving on Juncker’s College as the Justice, Consumers and Gender Equality Commissioner. Jourova was also in charge of applying pressure to social media platforms such as Facebook to respect the EU’s rules on data protection and platforms such as YouTube to take down channels promoting hate speech and fake news.

Denmark 

Margrethe Vestager

Margrethe Vestager (RE) could either keep or expand her current portfolio as a First Vice-President and the EU’s antitrust chief in the next Commission.

 

 

 

Estonia

Kadri Simson

Kadri Simson (RE), currently serving as a substitute Commissioner without a portfolio after Andrus Ansip’s MEP election, has hinted that she would like to take an economic portfolio after her meeting with von der Leyen on Wednesday.

 

Finland

Jutta Urpilainen

The nomination of Jutta Urpilainen from the Socialists and Democrats (S&D) is a former finance minister and has already met with von der Leyen.

 

 

 

France

Sylvie Goulard

Sylvie Goulard (RE), an ex-MEP, briefly served as a defence minister before resigning over a scandal involving European Parliamentary assistants. Goulard has hinted that she would like to become the new Directorate-General for Defence.

 

Germany 

Ursula von der Leyen

Ursula von der Leyen (EPP) is set to replace Juncker as the president of the European Commission on 1 November, becoming the first female head of the EU executive.

 

 

Greece

Margaritis Schinas

Juncker’s ex-spin doctor Margaritis Schinas (EPP) is new Prime Minister Kyriakos Mitsotakis’ choice to represent Greece in an unspecified capacity during von der Leyen’s term.

 

Hungary

László Trócsányi

László Trócsányi (EPP), an ex-Justice Minister for Viktor Orbán and a current MEP, is expected to have a difficult series of talks during the hearings, due to the Hungarian government’s poor relations with Brussels. No portfolio allocation has been yet decided for Trócsányi, despite his meeting with von der Leyen on 28 August.

 

Ireland

Phil Hogan

The current European Commissioner for Agriculture Phil Hogan (EPP) is set to serve for a second tern in Brussels under a different portfolio. Taking into account his contribution in FTA negotiations that involved complicated agricultural files, Hogan is set to become the bloc’s new Trade Commissioner.

Latvia

Valdis Dombrovskis

The current Vice-President for the Euro, Valdis Dombrovskis (EPP), has been chosen to return to the College of Commissioners.

 

 

 

Lithuania

Virginijus Sinkevičius

28-year-old Virginijus Sinkevičius (Greens/EFA) could end up being an independent member of the College due to his own political beliefs, which have been at odds with the Greens’ leader, Ska Keller.

 

 

Luxembourg

Nicolas Schmit

MEP Nicolas Schmit (S&D) has already had two meetings with von der Leyen, which suggest that the talks have been constructive. Schmit previously served as Minister-Delegate for Foreign Affairs and Immigration, working under Jean Asselborn as Minister for Foreign Affairs.

 

Malta

Helena Dalli

While the precise portfolio still remains unclear, Karmenu Vella’s successor is set to be Helena Dalli (S&D), who was already interviewed by von der Leyen on 27 August. She is the second most elected woman in Maltese political history and drafting of the Gender Equality Bill with the assistance of the United Nations Development Programme.

The Netherlands

Frans Timmermans

Frans Timmermans (S&D) has secured a second term as a First Vice-President of the Commission. Dutch sources suggest that the country would like to keep a similar portfolio to Timmermans’ current mandate, eyeing rule of law.

 

 

Poland

Poland’s initial candidate, Krzysztof Szczerski of the European Conservatives and Reformists(ECR), as well as the head of President Andrzej Duda’s cabinet, withdrew his candidacy after his first meeting with von der Leyen after the latter said she would offer him an agricultural portfolio. Szczerski acknowledged his lack of experience in this field, leaving Janusz Wojciechowski (ECR), who previously served as Vice-Chair of the European Parliament’s Committee on Agriculture and Rural Development, as Warsaw’s candidate to become Agriculture Commissioner.

Portugal

Elisa Ferreira

Elisa Ferreira (S&D) was proposed by Portugal in an effort to meet von der Leyen’s call for a gender balanced College of Commissioners. An economist by training, she is the current Vice-Governor of the Bank of Portugal.

 

 

Romania

Dan Nica
Rovana Plumb

Bucharest has tabled two names, Dan Nica and Rovana Plumb (both of the S&D) as candidates to replace Corina Creţu. Nica is a former Minister of Communications and Information Technology and Minister of Administration and Interior; Plumb is vice-chair of the S&D Group and Minister of Labour, Family, Social Protection and Elderly. 

Slovakia

Maros Šefčovič

The Commission’s current Vice-president for Energy, Maroš Šefčovič (S&D), has secured a second term in the EU Executive.

 

 

 

Slovenia

Janez Lenarčič

From diplomacy to the Commission, Janez Lenarčič, Slovenia’s ambassador to the EU is the country’s pick for the College. A career diplomat, Lenarčič will not be politically affiliated as a Commission member.

 

Spain

Josep Borrell

Josep Borrell (S&D) has been nominated to serve as the High Representative of the Union for Foreign Affairs and Security Policy. A Catalan who is known as an outspoken opponent of regional secessionism, Borrell is expected to handed additional responsibilities involving humanitarian aid, support of development policies in Africa, and the external dimension of immigration.

Sweden

Ylva Johansson

Set to take over from current Commissioner Cecilia MalmströmYlva Johansson (S&D)  is one of Sweden’s most experienced ministers having served as Minister of Labour and Employment where she was responsible for one of the government’s top priorities.

Violence, fabricated news, and responsible media

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In history no medium of any kind has evolved as the way media has. From radio broadcasting to large box-sets, to today’s social media networks and online viewing capabilities.

In 1946, Darryl F. Zanuck, a powerful Hollywood producer at 20th Century Fox, said that television wouldn’t last because “people will soon get tired of staring at a plywood box every night.” Today we can only smile with amazement at the sheer inaccuracy of this prediction.

Another prediction by British journalist, publisher, and politician C.P. Scott was slightly truer when he proclaimed, “Television? The word is half Latin and half Greek. No good can come of it.” While it is not true that no good comes of media, it wouldn’t be a far-fetched call to assert that modern day mass media exposes society to violence, degradation, and vulgarity.

The effect of media is profound and far-reaching. It influences our values, our daily routines and even our thinking with our deep-seeded ideologies and beliefs. Also today media is much more accessible. Media is in our homes and our mobile phones.

It is through TV and internet that our communities are introduced with extreme visions of violence. Social media brings forth a steady stream of live atrocities at the touch of a finger. Video games teach our young how to handle weapons they would otherwise never even heard of. We must, therefore, take extra precautions to ensure that our families and communities do not get contaminated from this toxic fallout.

Among the most pressing problems affecting the media today is how the proliferation of media violence can affect society as a whole. It is believed that constant and chronic exposure to violence through mass media can erode the core values of individuals. Especially at a young age, the sponge-like minds of children absorb everything that surrounds them. This influx of media violence makes them easy targets in terms of manipulation and causes victimization.

Media violence is working towards desensitizing the masses. Sometimes this insensitivity can even push small children to the point of committing atrocities. Unfortunately, the subject of the adverse effects of media arises only when there is a school shooting or a surge in homicide or peculiar suicides, but subsequent interest quickly dies down. We cannot let our attention wane when it comes to such an important issue.

However, today, the issue is not that black and white. Powerful corporations have enormous influence on mainstream media. This, in turn, affects what is and is not covered. Stories can end up being biased or omitted so as not to offend advertisers or owners. Mainstream media also wields disproportionate amounts of power compared to their accountability. Rescinding concentrated ownerships of media is a must if we’re to tackle the violence and putrefaction spewing from media outlets.

As Nobel prize winning French author and philosopher Albert Camus put it, “A free press can, of course, be good or bad, but most certainly without freedom, the press will never be anything but bad.” 

Fabricated and fake news is the latest level of malady that is slowly dragging our world into chaos. Through context and through technological tricks, news fabrication is sinister and is poisoning societies, crippling political discourse, and disrupting economies. At no time in history has the basic concept of truth been under such pressure. Distorted, fabricated, or fake news can easily muddy the mind and challenge the truth. 

I have experienced being a victim of fabricated news. On the December 17 and 25, 2013, two post-modern coup attempts were staged in Turkey. Then, some media outlets and some judges coordinated a concerted attack on select government officials and individuals.

Controlled by a cult called FETO, the same sinister organizer of the July 2016 defeated coup, media and judicial pawns staged various acts to shape the perception of Turkish and international public opinion. 

I was also a target of this sinister campaign through doctored sound recordings. The media organisers of this illegal attack knew that anything that looked like a ‘news item’ and sounded sensational would easily spread. Unfortunately, their plan partially worked as intentional malicious fake news also spread to unsuspecting media outlets. Some outlets also failed in verifying and carried further fabricated news. My family and I were unfairly and illegally targeted.

Truth once again was the victim 

Fabricated news is the enemy. Ultimately sophisticated propaganda campaigns are waging illegal wars against basic rights and democratic freedoms. Highly divided politicised societies are applauding when ‘the other side’ is targeted by fake news. However, there’s no winner when this evil mentality takes stage.

The intersection of freedom of speech, responsible journalism, and the public’s right to know is very congested these days. Truth needs to be defended and defended by laws. Media and journalism must always yield to the laws and regulations that the rest of society does.

It is with great conviction that I call for more accountability and a greater checks and balances with regard to media. Acceptable guidelines for safe entertainment and journalism must be established if, in the future, we are to hold the fabric of society together. More often than not, this can be shaped merely and simply by the consciences of individuals in the media sector. 

My call should not be taken as a crusade against a free press and free speech, but rather a call of responsibility by a civil servant, a worried father and most of all a world citizen.

Kim’s Laundromat

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Elvira Nabiullina, the governor of the Russian Central Bank, has reportedly been reforming the bank sector and cracking down on financial institutions engaged in illicit behaviour.

“Nabiullina’s has made some impressive achievements in cleaning up the banking system, which include better monitoring of large banks and withdrawal of licenses from smaller institutions involved in a variety of shady and semi-legal operations,” Vladimir Tikhomirov, the chief macroeconomist at BCS Financial Group in Moscow, told New Europe. “In most cases, the latter were cash and FX dealings with criminal connections.”

Some Russian banks have reportedly been accused of assisting North Korea in evading international sanctions, putting Russian banks and their European customers at risk.

On 19 June, the United States sanctioned Russian Financial Society for allegedly helping North Korea evade financial sanctions by assisting a company linked to Pyongyang’s primary foreign exchange bank, Reuters quoted the US Treasury Department as saying.

American officials targeted the Russian financial institution and accused it of opening multiple bank accounts for Dandong Zhongsheng Industry & Trade Co. Ltd, which is owned and controlled by North Korea’s Foreign Trade Bank.

“Treasury continues to enforce existing US and UN sanctions against individuals and entities in Russia, and elsewhere, who facilitate illicit trade with North Korea,” the news agency quoted Sigal Mandelker, US Treasury’s Under Secretary for Terrorism and Financial Intelligence, as saying.

Justin Urquhart Stewart, director at Seven Investment Management in London, told New Europe on 16 August that the DPRK allegedly uses deceptive tactics to launder money through Russia.

“It’s not just the Russian banks that are doing this high-risk stuff and the Russian banking system is not renowned for its security. I suspect we’re lucky to find a financial system in North Korea, but what is fascinating is that now it has changed over the past few years in terms of the attitude towards Russian companies investing elsewhere. The level of trust is so low and the control of money-laundering operations so tight, that the Russians will find it increasingly difficult to invest in the EU,” he said, adding that some Russian financial entities may be involved in high-risk operations in North Korea, putting Russian banks and their customers at risk.

“It’s shaky, but you have to understand that most Russian banks are effectively being supported by the state. I think it’s highly likely that the Russian banks will act a little like the German banks and allow the government to step in to force a merger or something. They are not developed Capitalists to the extent of being able to manage losing banks. It would not be orderly. It would be very disorderly, so I think they have to be very careful with that,” Urquhart Stewart said.

Russian officials have reportedly taken steps against North Korea, but the job remains incomplete. “It’s an interesting issue to see what action the authorities will take. The answer I suspect will be very little. What we need to be aware of in the West, in terms of the Russian banks, is that this is only going to get higher, so we could be in a position where we’re heading for another credit crunch. This time around, we don’t have the rescue facilities that we had in 2008. Could we do another round of quantitative easing on that scale, the answer is probably not. That means that if a Russian bank is used, the story is not so much about the banks themselves, but about the effect it would have on the rest of the markets. It’s relatively small, but if it’s handled badly you could end up with a Lehman-type style meltdown,” Urquhart Stewart said.

With some Russian government support, Nabiullina has been reportedly reforming the banking sector, which is critically important. “If they were taking action against other banks that would actually further tarnish the Russian image on lack of compliance and control, the question then would have to be, ‘Do they have the ability to do this in a managed manner to be able to handle this?’, or ‘Do they and let it go?’ The latter would be very dangerous for Europe and the banking system,” said Urquhart Stewart.

When it comes to US sanctions against Russian financial institutions who are allegedly helping North Korea launder money through the Russian and European banking system, the London-based analyst added, “The Russians are masters at that and, of course, they’ve got more alternatives and pipelines now.”

Urquhart Stewart argued that Moscow and Beijing may boost joint “Sino-Russian linkages to combat what they see as an aggressive US policy,” adding, “They can’t judge the Americans because they don’t know what he (Donald J. Trump) is going to do next, which you can say is a good way to try to manage it, but it will destroy the one word that runs any economy – particularly economies trying to recover from 2008 – and that is ‘confidence’. If they don’t have confidence in the banking system structure, and your counterpart’s risk in the banking system is not secure, that’s how you end up with a sudden crisis developing almost overnight.”

Evidence that the North Korean government is engaged in widespread money laundering activities continue to mount. Earlier in the summer, a US appeals court ordered heavy against three large Chinese banks – the Bank of Communications, China Merchants Bank, and Shanghai Pudong Development Bank – that allegedly helped finance North Korea’s nuclear weapons programme.

American prosecutors suspect that North Korea’s Foreign Trade Bank used a Chinese front company to export “hundreds of millions of dollars” in coal and other minerals to China and other destinations who paid for the raw material in dollars, which Pyongyang later used to buy materials vital to Kim Jong-un’s illegal nuclear weapons programme.

Washington had already blacklisted the North Korean bank from the US’ financial system for using another Chinese company, Mingzheng International Trading Ltd, as a front to launder $1.9 billion. By taking the necessary steps to stymie the bank’s activities, the US government prevented it from freely being able to make or receive dollar-denominated payments.

In addition to the moves carried out by the Americans, the United Nations recently filed a report stating that North Korea has perfected the hacking technology needed to break into financial systems and divert billions of dollars worth of laundered funds into accounts that help finance its nuclear weapons programme.

The politics of AI in the financial markets

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epa07759902 A pedestrian is reflected in a stock market indicator board in Tokyo, Japan, 07 August 2019. Despite overnight gains in Wall Street, Tokyo stocks lost ground mainly due to a strong yen. The 225-issue Nikkei Stock Average lost 68.75 points, or 0.33 percent, to close at 20,516.56. EPA-EFE/FRANCK ROBICHON

Technology is and has always been a crucial part of finance.

From the first promissory notes in the Netherlands and China, there was a race with counterfeiters that parasitically undermined trust. As in any political communication, technology is the message rather than merely a tool when it comes to money. Trust is not just instrumental, it is fundamental.

With cashless payments being the norm and social media platforms weαving an additional layer of involvement in our social data web through Amazon, Google, Facebook, Apple, et al, Artificial Intelligence is already in our wallets, our businesses, and our financial affairs.

In a non-Western setting, one may refer to the Chinese social rating system that allows the state to value and evaluate the social behaviour patterns of an individual and thus create a link to their credit rating.

The Chinese Communist Party’s approach is a far-reaching “Panopticon” structure that would be unthinkable without AI. The centre of this political discussion is moving to Asia and the Pacific as it gravitates towards new money and markets that are beginning to radically shape global society and our own politics.

After graduating from Cambridge, Maurizio Raffone cut his teeth in institutions that included Credit Suisse, Deutsche Bank, and UniCredit before moving to Tokyo on behalf of Commerzbank. Now he is his own boss as the head of Finetiq, an advisory firm that is part of the Japanese startup scene. New Europe sought out Raffone in Japan to ask him about the political implications of deploying AI in international finance.

Financial Technology, or FinTech as it is commonly known, refers to a financial service sector with technology at its core. Much like cell power is at the heart of the emerging car industry, AI and blockchain technologies power FinTech development.

AI is about enhancing productivity and customer experience by automating the processes and making sense of the vast amount of available data. It is also about power.

Raffone’s Finetiqhelps firms in Japan and Hong Kong situate themselves in this transforming financial ecosystem by harnessing their power. Tokyo is an interesting place to be, given that the government wants the city to be an innovation centre. Tokyo is a cosmopolis, with strong local firms, strong international presence, technical know-how, and educated investors.

Maurizio Raffone at the office of his firm, Fintetiq, in Tokyo.

New Europe (NE): AI appears to be an accelerator of the decision-making time to maximise profit. How do you preserve financial accountability in such a lightspeed framework?

Maurizio Raffone (MR): This is actually a crucial requirement of financial services, like Europe’s MiFID2 regulations. I don’t see speed, in itself, as an issue, but rather the potential black-box nature of some of the analytics behind AI’s decision-making processes. Regulators are aware of this potential risk and are making provisions to ensure ultimate accountability is retained by the regulated financial firms in all circumstances.

One of the Korean companies we work with – Knowru – is engaging finance machine learning specialists, embedding tools in their software that is specifically designed to provide a strong and clear audit trail that can be traced back to a source. This is a nice feature as if a consumer is denied a credit card, they can be told why. This feature achieves more than that. It allows us to understand the value drivers of AI decision-making and is able to calibrate their models and parameters continuously. They are building “the character” of their company.

This is why the narrative is changing to some extent and these days there is much more talk of developing AI tools for decision-enhancing purposes rather than decision-making, which incidentally reinstates the significance of humans in the process.

NE: AI has been recently implicated in political campaigning, as in the Cambridge Analytica – the Facebook scandal in the UK and the US. Can you imagine a situation where artificial intelligence can be weaponised in the financial markets to induce something along the lines of a sovereign debt crisis?

MR: Algorithmic trading is a form of AI that has been blamed in the past for financial misdoings, such as the Flash Crash of 2010. And, yes, some AI technology can be malicious and be used to engineer a sovereign debt crisis or any sort of distressed market situation.

However, financial gains from smarter-than-the-next AI are in my opinion totally legitimate, both legally and morally. There are strong regulations that aim to prevent market manipulation, which was essentially the issue behind the Flash Crash, but often the tools available to financial watchdogs are not as sophisticated as those used by malicious perpetrators.

A man walks past the logo of financial service company Visa at a booth during the FinTech Festival in Singapore.EPA-EFE//WALLACE WOON

Where I see potentially more issues is in the unregulated markets or grey zones. Technology companies moving into financial services and the decentralisation of finance make it very hard for regulators to ensure preventive actions. For example, the peer-to-peer lending market is one that in many countries flies under the radar of regulators. In practice if not officially. AI is often used to perform underwriting decisions. Malicious use of technology could hurt a country’s economy, particularly in some of the emerging markets.

Lastly, I see AI potentially being weaponised to launch mass-scale fraud. Bernie Madoff’s scandal was a very low tech affair. Just think what he could have done if he used AI to manipulate the books and move cash faster to keep his Ponzi scheme alive.

Nevertheless, I do not want to give the impression that we are sitting on the software-equivalent of a nuclear weapons arsenal. AI can be used just as much in alerting, preventing, and reacting to malicious intent. The recent focus in SupTech, technology applied to the supervisory role of financial regulators, is a testament to the efforts being made to ensure AI and other emerging technologies are kept in check.

NE: AI is now deployed by multinational firms in a global financial system. If we find it difficult to tax multinationals, can we really tame their robotic capability? Is AI an accelerator of inequality between workers, firms, and ultimately nations?

MR: AI is a productivity-enhancing tool and if done correctly it would bring more business, lower costs and/or increase revenues. Enhanced corporate performance should feed into the issue of taxing multinationals and the growing inequality gap. Therefore, I do not see the taming of the robots as a solution to the problem, except as a potentially palliative measure at best.

In my mind, the solution is political and requires cooperation in dragging fair, efficient, and global taxation regimes. This is an area where AI can actually be a very useful tool and help tax auditors track the correct money trail of financial transactions to its rightful source.

At the consumer level, AI algorithms could actually provide individuals with know-how and access to financial services previously only accessible to the few. Robo-advisory is a sub-set of the FinTech industry looking to bring investment management expertise to the masses at a fraction of the cost of a private banker.

Finally, with regards to people working in the financial industry, AI inevitably will have an impact on jobs, just like many other technologies have done in the past and will do, inevitably, in the future. Smarter government policies will focus on supporting the affected individuals re-tool themselves for a different job market and more clever companies will actually support that process as it will improve employee productivity, retention and, ultimately, happiness.

NE: What do you think of taxing automation to fund a transition to a new labour market?

MR: I believe that promising technology should not be stifled with taxes as it will distort its use. I think spending to support education, labour upskilling, and flexible working practices like side hustles should be the priority of any government and incentives should be offered to companies that retains, trains, and supports employees’ transition into the fourth industrial revolution.

I go back to the basic concept that companies need to earn money and do well in order to pay taxes and have policies that help with the improvement of corporate practices and productivity. This should ultimately feed into a healthier balance sheet for sovereign entities as well.

There are, however, specific areas where a different approach is worth considering and where tax raising can be channelled more effectively. With the ageing population issue, especially in Japan, there is a growing need for senior citizens’ services around financial management. The Bank of Japan came out in June with an initial roadmap on how to support FinTech development as well as financial literacy to address exactly this issue.

NE: You have experience in operating both in the European and Asian financial markets. Does AI have different ethical and cultural barriers, similar to humans?

MR: The application of AI in financial services is a highly sensitive subject everywhere because it taps into people’s fear of losing control of their finances. However, there are certainly regional and country-specific ethical considerations that are important when developing a business model that focuses heavily on AI. For example, privacy concerns in Japan are very high and there is little data sharing among companies. This makes the development of AI algorithms a more challenging proposition compared to the US or even to Europe, as the algorithms rely on large and deep datasets to optimise their predictive power.

On the other hand, digital assistants are a popular way for Japanese companies to deliver AI-powered solutions, as the generally cute-looking interface imported from the manga culture resonates very well with consumers in Japan.

Japan is, however, keen to import best practices and cutting-edge solutions from overseas and there are a number of publicly funded acceleration and localization support programmes for foreign firms that specialise in FinTech and AI to come and get to know the local eco-system.

The Tokyo Metropolitan Government runs a yearly FinTech boot camp aimed at foreign firms and provides overseas businesspeople with free advice on corporate, legal and tax matters through its Tokyo One-Stop Business Establishment Center.

Issue 1300: Kim’s Laundromat (Print Edition)

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Issue-1300-September-01-07-2019

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EU says Ukrainian pipeline still key conduit for Russian gas

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epa07306946 European Commission Vice-President for Energy Union Maros Sefcovic speaks to the press after trilateral gas talks between EU, Russia and Ukraine at the European Commission in Brussels, Belgium, 21 January 2019. Reports state that the main item on the agenda will be prospects of gas transit through Ukraine after the contract with Russia ends on 31 December 2019. EPA-EFE/STEPHANIE LECOCQ

The European Union fully supports Ukraine as a stable and reliable transit route and will do its utmost to ensure that Ukraine remains an important transit route also after 2020, a EU energy spokeswoman told New Europe on 30 August.

“Ukraine has been a reliable transit country and the EU considers the Ukrainian transit route a strategic one for our energy security,” she said.

EU Commission Vice-President for the Energy Union Maroš Šefčovič met with his Russian and Ukrainian counterparts on 21 January in Brussels. “At the end of this meeting the Vice-President tabled a proposal for both parties to reflect upon,” the spokeswoman said, noting that it covers three main parameters of a future transit agreement, namely duration; volumes; and tariffs. But it also covers other important parameters, such as investment and maintenance of the gas system; legal requirements; and technical requirements.

The 10-year gas supply and transit agreement between Russian gas monopoly Gazprom and National Joint Stock Company Naftogaz of Ukraine signed in 2009 expires on 31 December.

The EU Commission has been mediating talks between Moscow and Kyiv in the hope that the two sides will be able to agree new arrangements covering transit from 2020, avoiding a repeat of the gas crisis in 2006 and 2009 when a disruption of transit volumes caused a significant impact on the wider Central and Eastern European region. However, the EU is better prepared to withstand a gas crisis as it has diversified its gas sources and boosted interconnections between member states.

“Vice-President Šefčovič invited the Ukrainian and Russian ministers for a meeting on the 16th of September to further discuss the proposal, we have not received the confirmation yet from our counterparts,” the EU spokeswoman told New Europe.

Meanwhile, German Chancellor Angela Merkel has reportedly reiterated Berlin’s demand that Ukraine will continue to serve as a transit country for gas to Europe after the opening of the Nord Stream-2 pipeline gas pipeline from Russia to Germany that nears completion.

Merkel agreed in a phone call with Russian President Vladimir Putin on 29 August on the need to speed up talks on future gas transit agreements, Reuters quoted the German government as saying. “They stressed the urgency of speeding up negotiations on future gas transit contracts,” a German government spokesman said in a statement.

Russia has been spearheading efforts to bypass Ukraine altogether and has almost competed the Nord Stream-2 pipeline, despite opposition from the US and some Central and Eastern European member states.

Gas transit via Ukraine is seen as a crucial guarantor of its independence and security, especially as Kyiv has remained dependent on the revenues for the Russian gas transit on the way to Europe, which are reportedly around $3 billion.

Meanwhile, Ukraine under the new government of President Volodymyr Zelensky is weaning itself off of Russian-supplied natural gas. Poland’s PGNiG said on 29 August the company has sold gas that is to be regasified from a spot cargo of US LNG to its Ukraine-based partner ERU, S&P Global Platts reported, noting that the cargo is expected to arrive in Poland’s Swinoujscie terminal at the beginning of November and the regasified volumes will be delivered to Ukraine via the Hermanowice interconnector point on the Ukrainian border before the end of 2019, PGNIG said.

The cargo has been bought for domestic Ukrainian use, ERU Trading Director Yaroslav Mudry said but he did not rule out re-exporting gas in the future. “We contracted this volume for the purpose of injecting and storing it for further delivery to consumers in the winter season,” Mudry said. “This way we contribute to the country’s energy security during the uncertain, and especially risky 2019-20 winter period,” he added.

Naftogaz’ Andrey Kobolev said that, as of 29 August, Ukraine’s natural gas reserves have exceeded 18 billion cubic metres, Reuters reported. Ukraine said it plans to stockpile at least 20 billion cubic metres for the 2019/20 heating season. Kobolev has said Ukraine needs to increase its gas reserves by 18% this year to cover its winter needs and to guarantee transit to European consumers.

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WHO warns of dramatic jump of measles cases in Eastern Europe

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epa07609429 An ampoule containing a Priorix measles vaccine is placed next to a syringe on a tray at a pediatrician's practice in Munich, Germany, 27 May 2019 (issued 29 May 2019). EPA-EFE/LUKAS BARTH-TUTTAS

The World Health Organization has warned of a “dramatic resurgence” in measles with over 90,000 cases in 48 countries over the first six months of 2019.

The head of WHO’s European Regional Verification Commission for Measles and Rubella Elimination (MMR), Gunter Pfaff, is calling for increased vaccination efforts and an effort to counter disinformation campaigns about the safety of vaccines.

Ukraine, Kazakhstan, Georgia, and Russia accounted for 78% of all cases, with 60% of the cases in Ukraine alone. Meanwhile, the UK, Albania, the Czech Republic and Greece lost their “measles-free” status.

In the first half of 2019, the global number of cases tripled to 364,808, although the WHO believes that nine in 10 cases go unrecorded.

Measles is considered endemic in 12 countries, including France and Germany. It is a highly contagious airborne infection that causes fever, coughing and rashes and, in certain instances, can lead to death. The virus spreads among school-age children, especially if their parents are exposed to anti-vaccination propaganda.

The anti-vaccination movement claims, without scientific evidence, that an MMR vaccine increases the risk of autism in children.

More than 109,000 people died of measles in 2017.

Kazakhstan wants global community to fully enforce Comprehensive Nuclear-Test-Ban Treaty

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epa07608624 Former Kazakh President Nursultan Nazarbayev (R) attends a meeting with Russian President Vladimir Putin (not pictured) in Nur-Sultan, Kazakhstan, 28 May 2019. Vladimir Putin arrived in Kazakhstan to take part in a meeting of the Supreme Eurasian Economic Council which is schedules for 29 May 2019. EPA-EFE/ALEXEY NIKOLSKY / SPUTNIK / KREMLIN POOL

The Central Asian nation of Kazakhstan was once the centre of the Soviet Union’s nuclear testing ground. From 1947-1989, the then-Kazakh SSR was subjected to hundreds of under- and above-ground explosions, including hydrogen bombs, that left large swathes of eastern Kazakhstan highly contaminated and the areas around the testing grounds of Semipalatinsk as one of the most radioactive zones in the world.

With this in mind, and as the East and West inch ever-closer to a new Cold War, Kazakhstan’s former President Nursultan Nazarbayev called on the world’s nuclear-armed nations to push for the universal adoption of the for the Comprehensive Nuclear-Test-Ban Treaty.

“The world needs a real working mechanism of tough measures against possessing a proliferation of nuclear weapons. Such an agreement exists, adopted on a global scale by the UN, but the mechanism of tough measures must be supported by relevant resolutions of the UN Security Council,” said Nazarbayev, who added, “I made an official proposal to main players in this matter – the United States, Russia, China and other nuclear powers – to meet in our capital (Nur-Sultan, formerly Astana) to reach an agreement.”

Nazarbayev, who on 29 August 1991, took the unprecedented move to close the Semipalatinsk testing site months before the official dissolution of the Soviet Union, was speaking while awarding a namesake award to posthumously award the Japanese-born former IAEA Director-General Yukiya Amano and Lassina Zerbo of Burkina Faso the Nazarbayev Prize for their contributions to strengthening international security, non-proliferation of nuclear weapons, and the peaceful use of nuclear energy.

Asian economies showing signs of weakness and instability

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epa06661373 An investor watches a monitor at a stock exchange in Taipei, Taiwan, 11 April 2018. On 11 April, Asian stocks rose, lapping up positive mood after Chinese President Xi Jinping promised to further open market, cutting tariffs on some imports including cars, giving hope to avoid a US-China trade war. On 10 April, the Dow Jones soared 428.90 points, or 1.79 per cent, triggering rebound of Asian shares on 11 April. On 11 April, Hong Kong's Hang Seng rose 0.21 per cent, China's Shanghai SE Composite gained 0.56 per cent, Singapore's Strait times indext edged up 0.39 per cent and Taiwan's TAIEX rose 0.43 per cent. EPA-EFE/DAVID CHANG

The markets of Asia that allowed the EU to drive an export-led economic recovery following the 2008 crisis are now faced with a recession.

The US-China trade war is taking its toll on Hong Kong, China, Japan, India, Singapore, and South Korea, all of which are looking at deteriorating economic conditions.

China’s GDP slowed to 6% in the second quarter – the lowest since 1990 – despite a double-digit currency devaluation over the last year (12%), a deficit-driven investment programme, and accelerating credit supply.

China’s factory output is expected to contract for the fourth straight month in August. This has had a major impact on companies such as Apple, who pays a 15% import tax for products made in China. While the American company is expanding to other emerging economies, namely India and Brazil, Apple relies on China for chips, glass, aluminium casings, cables, circuit boards – all of which adds up to just over 47% of its supply chain.

As a result of Beijing’s deteriorating relationship with the White House, other Chinese manufacturers are taking steps to preemptively decouple their value chains from the US.

Huawei, which has come under intense scrutiny over the last year due to its alleged ties to the Chinese intelligence services, has announced that its next flagship phone, Mate 30 Pro, no longer needs to make use of the Android Operating System and is planning to rely on its own Harmony. The question now is whether its phone will have access to Google’s ecosystem – the Chrome browser, Google Maps, Gmail, Google Play, and YouTube.

The US accounts for roughly 20% of China’s exports. Losing access to US software and platforms, such as Google, would have a major economic impact on China and could also hinder the shipment of Chinese exports to Europe, as well.

The ongoing pro-democracy demonstrations in Hong Kong have also added to the downturn of the economy in mainland China, as the former’s GDP contracted by 0.4% over the second quarter of the year.

Reliant on financial services and high-end electronics exports, Singapore has also seen a steep 3.3% contraction of its economy in the second quarter. The slowing demand for electronics also hit South Korea, whose economy grew by 1.1% in the second quarter after a 0.4% contraction in the first.

India is growing at a five-year low of 5.8% with a negative outlook as spending has come to a standstill and the world markets remain jittery due to renewed political tensions in Kashmir.

Japan is outperforming growth projections, achieving 0.4% growth in the second quarter of 2019, far outpacing the expectations of just 0.1% growth, but the economy is expecting a shock as a new steep retail tax is introduced in October.

Online selling VAT fraud could see a Brexit headache for UK’s HMRC

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A pedestrian outside the HM Revenue & Customs building in Whitehall, London, Britain, 27 May 2009. Downing Street has said that ministers named in the Daily Telegraph "appear to have honoured their tax liabilities". More than 40 Labour ministers were reimbursed for help with tax returns. HMRC is understood to be looking at MPs' tax returns. EPA/ANDY RAIN

Officials are preparing for an uptick in VAT compliance problems as the UK leaves the European Union. Online platforms like Amazon Marketplace and eBay are already under pressure to make sellers pay their share of tax, but the authorities are struggling to cope as the scale of non-compliance grows.

Ruth Corkin of tax advisers Hillier Hopkins LLP warned that “Businesses will be facing a tax headache in the event of a no-deal Brexit, as the UK becomes a third country for VAT purposes, and businesses have to account for import VAT on goods.”

The National Audit Office estimated in 2017 that the taxpayer loses between £1-1.5 billion to VAT non-compliance through e-commerce, but industry experts warn that this is a ‘very conservative estimate’. This summer, UK Parliamentarians raised the issue with ministers with questions from Faisal Rashid MP and Lord Tim Clement-Jones revealing that overseas sellers contributed to approximately 60% of the tax loss from VAT fraud and error on online marketplaces. HM Revenue and Customs have issued VAT penalties to a total of 1,059 overseas sellers, issuing penalties worth over £34 million.

Researchers at Copenhagen Economics found in 2016 that 65% of e-commerce consignments sent to the EU from outside were non-compliant. That means that more than half of all parcels arriving in the EU from marketplaces like eBay and Amazon Marketplace are failing to pay the correct amount of VAT.

Experts say that HRMC has work to do to address the problem. Richard Asquith, VP for global tax at Avalara, the software used for automated tax compliance, said “The way to reduce errors, omissions and fraud in VAT is to make it easier for firms to comply. HMRC needs to speed up its programme to make tax digital, making it easier to register for a VAT number and create a digital system for reporting transactions rather than filling out a VAT return.” Corkin adds, “HMRC are working to simplify tax reporting and to move it online, but cliff edge changes like this make it harder to distinguish between businesses trying to do the right thing and businesses engaged in tax fraud.”

The UK was among the first to legislate on the issue in 2017, but since then other member states have gone further. “HMRC acted in 2017 to make marketplaces like eBay and Amazon validate the transactions on their platforms,” notes Asquith, “Germany does much more to make the marketplaces responsible, and after Brexit, the UK could look like a soft touch for non-compliance.”

Corkin argues the measures could be extended to other players in e-commerce, saying the 2017 changes led to “Amazon and eBay deleting a huge number of non-compliant stores. Extending this responsibility to freight forwarding agents, who already check that shipments are properly documented, would put the experts in charge and would improve compliance.”

Other measures could make it easier for companies to comply. “A single ‘catch-up’ return would help firms that have not complied in the past to pay the VAT they owe from previous years” Asquith adds. “Payment providers like PayPal and the credit card companies could be made responsible for calculating and charging VAT on behalf of sellers. HMRC could also work with other countries, regardless of Brexit, to make it more straightforward to register for and report VAT across borders.”

Excluding sellers from the UK and the EU, online marketplaces are dominated by sellers from China, who can offer cheaper prices to UK consumers, but may not be complying with tax obligations. In June 2017, Amazon proactively removed thousands of Chinese sellers from its platform, as part of its deal with HRMC to validate transactions.

The problem persists, however, and the website VATFRAUD.org highlights a large number of Chinese sellers operating with dissolved companies or using VAT numbers not registered in their name. Amazon seller ShineVGift Industry Co Limited, for example, displays a VAT number that is registered to a different company (258210124). AresparkDirect EU, another Amazon seller, is, in fact, a company based in Shenzhen, China, which declines to display a UK VAT number.

Fujian Zongteng Co Ltd, a Chinese e-commerce company, has had two connected companies in the UK struck off Companies House register, TMart UK and UK Elogistics, but continues to operate through a third UK company, Super Smart Services, whose financial statements suggest it may be trading while insolvent.

MPs have pledged to investigate this issue when Parliament next sits and will be asking questions about these companies as well as calling for experts to give evidence. As the UK edges towards its Brexit deadline, businesses and governments can add VAT compliance to their long list of areas to worry about.

Gym or sofa? How to make the healthy choice

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Do you sometimes struggle to find the willpower to work out? The Aspria experts shares five top tips for staying motivated.

You’ve told yourself you’ll go to the gym this evening, but then one of your friends suggests catching up for a glass of wine or going out for dinner. Either that or you’ve simply had a long day at work, you’re tired and all you want to do is collapse on the sofa. Somehow the determination you felt this morning disappears and your gym visit is bumped to ‘tomorrow’.

Sound familiar?

This is a scenario most of us do battle with: finding the motivation to go the gym when there are so many other things we’d much rather do! The good news is, there are things you can do to help you keep your motivation levels high. Here are our five top tips:

1. Find your ‘why’ – your reason for exercising

“Motivation is fuel,” says Philippe Godin, professor of psychology of physical activity and sport at UCL in Brussels. “It’s motivation that makes you train long and hard towards your goals. That makes you resistant to pain. That encourages you to make sacrifices to move towards becoming the athlete you know you can be.”

But without a goal to work towards – whether your inner athlete is a 20k runner or simply someone who wants to shape up and lose weight – it’s hard to stay motivated. The ‘why’ of exercise is key.

So what’s your ‘why’? What’s your ultimate goal – but even beyond this, why is it important to you that you achieve this goal?

2. Monitor your progress to keep motivation levels high

Dr Paul McCarthy, a sports psychologist who’s resident at Glasgow Caledonian University in the UK, explains: “Most people come to the gym with a goal, but don’t know how to achieve it. They come with the intention and motivation but need the strategy, and then feedback, to succeed in their goals – otherwise the intention and motivation wears off.”

The strategy can come from Aspria’s wellbeing advisors and personal trainers, but what are the options in terms of objective feedback?

In fact there are many, not least Aspria Pro – Aspria’s very own in-depth health and wellbeing assessment, which covers everything from blood pressure to cardiovascular fitness – where follow-up appointments track your progress compared to previous readings.

But if you’re a member of a club that doesn’t yet have Aspria Pro, fear not: there are plenty of other ways to keep track of progress.

If weight loss is your key objective, you might like to invest in smart scales which can tell you your balance of fat versus muscle – you may not have lost weight, but if your muscle mass goes up and your fat mass drops, you’ll look better and will burn more calories even at rest.

If improvements in fitness or run times are your goal, there are now hundreds of apps and wearables out there that can complement the input from your personal trainer or wellbeing advisor: apps that show graphs of your steps walked, calories burned, time taken to run set distances and so on. You name it, there’s likely to be an app out there that will show you the exact data you want to track.

You can also go low-tech, as Lionel Gonnet – personal trainer for Aspria in Brussels – explains: “Standing on normal scales to weigh yourself makes no sense, because this doesn’t measure fat mass and can be very demotivating.

“If my clients don’t have access to body scanning and intelligent blood tests, I encourage them to learn to recognise results for themselves: simply standing in front of a mirror, for example, or feeling the change in the fit of their clothes.”

3. Find things you love doing, so it’s fun not a chore

If you’re easily talked out of going to the gym, it could quite simply be that you aren’t a gym bunny. That’s fine. Exercising doesn’t have to mean going to the gym – it’s just about moving and getting your heart rate up, in whatever way you like.

The important thing is to find something you genuinely love doing, so your workout isn’t a chore but rather something you actively look forward to and prioritise.

As Gonnet explains: “There are two forms of motivation: intrinsic and extrinsic. The former is when you’re motivated by the activity itself – by the enjoyment you derive from that activity. The latter involves being motivated by consequences of the activity: either getting positive results or avoiding negative consequences.

“In fitness, you need both: you need to see results to stay motivated, but you also have to enjoy what you do. Without this, motivation will not last.”

So, what activity will bring you intrinsic motivation? Do you enjoy going for a walk or a bike ride? Maybe swimming is for you, or tennis, or volleyball. Or perhaps there’s a class that will capture your imagination, from aerial yoga to dance to boxing.

This is where Aspria really comes into its own: with a wide array of wellbeing activities on offer, there really is something for everyone. We suggest you keep trying everything until you find the activity that puts a biggest smile on your face!

4. Find a workout buddy – someone you won’t let down

There’s nothing like feeling responsibility to another person to help you stick to your exercise promises: if you agree to train with a friend and then drop out, you’re letting not only yourself down, but them too. This can be a serious boost to motivation, not only in the short term but also longer term, as data from the UK shows: in a study by The Retention People, members who made a friend at the gym – someone to work out with – were 40 per cent less likely to lose motivation and cancel their membership than those who didn’t have a workout buddy.

5. Boredom is the enemy, so keep things fresh

If you start feeling bored in your exercise routine, your motivation is likely to drop. Variety is key and you shouldn’t let yourself get stale.

At Aspria, we recommend you refresh your workout programme regularly, so you keep progressing rather than plateauing, and so you keep having fun – both of which are vital to remaining motivated.

We’d be happy to create a new personalised programme for you whenever you feel you need one, so please ask at the wellbeing desk any time!

Presented by Aspriap23-asprialogo

Sweden bans facial recognition technology in schools

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epa07370993 A woman tests the new Caixabank's cash dispensers in Barcelona, Catalonia, Spain, 14 February 2019. Caixabank presented new facial recognition system for cash dispensers in Barcelona. EPA-EFE/ENRIC FONTCUBERTA

The Swedish Data Protection Authority (DPA) has issued a ban on facial recognition technology in schools after one of the country’s high-school students attempted to use the controversial software to keep track of attendance.

Sweden’s Skelleftea municipality now faces a 200,000 Krona (€18,500) fine for violating the privacy of the 22 students engaged in the pilot program at Anderstorp High School. Although parental consent was sought, the DPA considered the collection of sensitive biometric data, specifically facial images of minors, to be highly intrusive.

The programme’s aim was to help teachers keep track of student attendance, which could save schools 17,000 man-hours of teaching time.

Argentina’s peso is in free-fall

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epa07771452 People walk in front of a screen that informs the value of foreign currencies, headed by the US dollar, with respect to the Argentinian peso, in Buenos Aires, Argentina, 13 August 2019. The Argentinian peso again devalued against the US dollar on 13 August 2019 at the opening of the markets after the collapse the day before, while the country risk reached 1,600 basis points, which is the highest figure since the Government of Mauricio Macri assumed almost foru years. EPA-EFE/Juan Ignacio Roncoroni

The century-old saga of Argentina’s boom-bust economy has taken another ominous turn as the Argentine peso is now trading at 57.95 per US dollar on Wednesday, which is equal to a 22% loss of the currency’s value since 12 August.

Far more troubling for Argentina is that the latest development now calls into question whether Buenos Aires will be able to honour its dollar-denominated sovereign debt. The country sold $265 million of its own reserves on 28 August to support the currency, a move that Argentina has become all-too-familiar with since the mid-point of the 20th-century when it was one of the largest economies in the world.

As was the case during Argentina’s previous economic meltdown, the mass sale of reserves is weakening the country’s resilience to external shocks. Capital flight is accelerating, while the International Monetary Fund could well demand debt-restructuring, a prospect that makes the Argentine debt highly unattractive.

Buenos Aires relies heavily on the IMF’s $57 billion credit line to refinance its debt, but the country’s bond yields have reached a 14-year high and the stock market is in freefall.

The current situation was triggered last month when centrist President Mauricio Macri was trounced in a primary election by his leftist rival, Alberto Fernandez – a close ally of Argentina’s firebrand leftist former President Cristina Fernandez (no relation).

Fernandez campaigned on a populist anti-austerity platform and vowed to walk away from the IMF. Fernandez scored a double-digit lead over Macri – 47% to 32% – but his close association with Cristina Fernandez and her radical brand of leftist populism as well as her close alliances with some of Latin America’s most controversial Socialist and Communist leaders, including Venezuela’s Nicolas Maduro, Evo Morales in Bolivia, and Daniel Ortega of Nicaragua, has helped turned the presidential campaign into a major political and financial crisis.

After years of the heavy-handed and anti-business governing style of Cristina Fernandez and her late husband Nestor Kirchner, Macri was elected in 2015 on a zero-inflation commitment. His fiscal consolidation programme depressed consumption effectively reduced inflation.

There has been a social cost, however, as Macri moved to put an end to some of Fernandez’ costly social welfare programmes. 35% of Argentinians are now below the poverty line, compared to 29% in 2015, according to a study by Argentina’s Catholic University.

To his credit, Macri has taken a few highly important measures to deal with the immediate social crisis, including slashing taxes on wages and essential food items, and a freeze on mortgage payment instalments.

Inflation, however, is now just shy of 60%, adding pressure to raise wages, while the deficit is soaring. The further devaluation of the peso will trigger rapid inflation that erodes purchasing power and adds pressure on the government to raise wages.

The pace of the ongoing economic depression is likely to play a major role as Argentina heads to the polls on 27 October.

Italy is heading towards a second Conte-led government

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epa07782513 Italian Prime Minister Giuseppe Conte looks on after he addressed the Senate in Rome, Italy, 20 August 2019. Conte said that the government has come to an end and that he would resign. EPA-EFE/ETTORE FERRARI

Italy is moving towards forming a second Giuseppe Conte-led government following an agreement between the 5-Star Movement and the centrist Democratic Party after Conte – who is widely regarded as a pro-business centrist and a political independent – was summoned by President Sergio Mattarella to the presidential palace on Thursday to be given the mandate to form a new cabinet that will enjoy a parliamentary majority.

Markets reacted positively, with the Italian spread rallying against the German 10-year Bund.

5-Star leader Luigi Di Maio and Democratic Party leader Nicola Zingaretti will continue to debate the government’s programme, which will have a mandate that expires in 2023. Di Maio also hailed President Donald J. Trump‘s support during the G7 summit for Conte to remain at the helm of the Italian government.

The Democratic Party initially insisted that a new prime minister would be needed to guide policies that would break from those of the 14-month-old coalition government led by 5-Star and Matteo Salvini‘s Lega.

In a surprise move, the founder of 5-Star, the comedian-turned-politician Beppe Grillo, issued a statement late on 28 August saying that the new government should be composed of technocrats and not elected politicians.

Zingaretti, however, is likely to object to Grillo’s plan as the former has put a priority on the formation of a government that will introduce politically meaningful policies, including focusing on social cohesion and environmental sustainability.

One of the Democrats’ main demands for the new government is a clean break with Salvini’s crackdown on illegal immigrants. 5-Star plans to back this particular demand by the Democrats, but Di Maio has made clear that his party’s number one priority is a cut in the number of Senators from 945 to 600.

Salvini pulled the plug on Lega’s governing coalition with 5-Star in early August and later called for snap elections to be held in October. Salvini was keen to trigger an election as national polls have indicated that Lega could form a single-party government as Italy’s most popular political party.

No-deal Brexit likely as Boris Johnson suspends parliament

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epa07798952 (FILE) - A grab from a handout video made available by the UK Parliamentary Recording Unit shows British Prime Minister Boris Johnson gives his inaugural speech at the House of Commons parliament in London, Britain, 25 July 2019. (re-issued 28 August 2019). According to reports, British government has formally requested the intervention of the Queen in a bid to suspend parliament. A government source said the government's intention is to suspend parliament and hold a Queen's speech 14 October, setting out the future plans of a post-Brexit government. EPA-EFE/UK PARLIAMENTARY RECORDING UNIT / HANDOUT MANDATORY CREDIT: UK PARLIAMENTARY RECORDING UNIT HANDOUT EDITORIAL USE ONLY/NO SALES

Boris Johnson landmark decision to suspend parliament has been nothing short of an earthquake for Britain’s political establishment. Some MPs have called Johnson out violating the spirit of the UK’s 800-year-old constitutional tradition.

Johnson, however, is one step closer to commanding electoral influence over the whole of the Brexit camp.

Conservative Party in parliament Jacob Rees Mogg flew to the summer residence of the Queen in Balmoral, Scotland to request a suspension of parliament from 10 September to 14 October.

Traditionally, British governments suspend the parliament to bring forward a new political agenda and return to announce their proposals in a speech read out by the Queen.

The last time the British public witnessed this ceremony was in 2017 when the Conservative Party’s Theresa May formed a government with the parliamentary support of the Democratic Unionist Party.

Johnson stated on 28 August that parliament would have “plenty of time” to debate Brexit after it reconvenes on 14 October, more than two weeks before the 31 October deadline from when the UK is scheduled to leave the EU.

Former Tory Chancellor Philip Hammond called the suspension “profoundly undemocratic,” while former Attorney General Dominic Grieve warned that if the opposition brings forth a no-confidence motion “this government will come down.”

The leader of the Conservative Party in Scotland, Ruth Davidson, is expected to resign on Thursday, which is politically consequential, as she made considerable inroads for the party in Scotland and is seen as the face of political opposition to Scottish independence.

US President Donald J. Trump, a fervent supporter of Johnson’s and Brexit, took to Twitter to hail the fact that it was now difficult for the UK opposition to call a vote of no-confidence against the current government. Trump intends to sign an “ambitious free trade agreement with the UK” as soon as Brexit becomes official.”

There still remains, however, little scope for the EU to consent to a last-minute deal with the UK where Brussels would abandon the Irish backstop – the safety net put in place to ensure that an open border between Northern Ireland and Ireland stays in place after the UK leaves the EU.

Ireland’s Foreign Minister Simon Coveney has repeatedly made clear that Johnson’s proposals to replace the backstop are “not even close to a viable alternative”.Irish-American political power in the US is considerable.

Macron proposes Sylvie Goulard as France’s European Commissioner candidate

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epa06034909 French Minister of the Armed Forces Sylvie Goulard (C) attends the ceremony to mark the 77th anniversary of General Charles de Gaulle's appeal of 18 June 1940, at the Mont Valerien memorial in Suresnes, near Paris, France, 18 June 2017. The appeal marks the beginning of the French resistance after the fall of France to Nazi Germany. EPA/BERTRAND GUAY / POOL MAXPPP OUT
The French president belatedly made public his proposal for a French commissioner: Sylvie Goulard, the ex-MEP to cope back to Brussels.
Emmanuel Macron’s belated announcement comes a couple of days late, as the European Commission president-elect, Ursula von der Leyen has already started interviewing the member states’ candidates. Proposing a woman for the position is another step on behalf of France to assist the German incoming Commission chief to achieve the much advertised gender balance.
On this impeccable resume, there is a shadow on the board: the case of the French Democratic Movement (MoDem) parliamentary assistants who had led Sylvie Goulard to deviate from the first Edouard Philippe government at the end of the 2017 French elections.
Goulard was appointed defence minister in 2017, when Edouard Philippe’s first government was formed, before quickly resigning, following the start of this investigation.
The 54-year-old economic expert, who worked in former Commission chief Romano Prodi’s cabinet, could be in the running to oversee a potentially new Directorate-General (DG) , that of defence. After all she does not only share the German language knowledge with Ursula von der Leyen, but also the service at the Ministry of Defense.

Finland asks EU to utilise full toolkit on Amazon fires

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epa07796050 View of a tree trunk on fire in the forest of Porto Velho, Brazil, on 26 August 2019. Seven Brazilian states have formally requested the help of the military to fight the fires burning in the Amazon. EPA-EFE/Joédson Alves

Ahead of Thursday’s Informal Foreign Affairs Council in Helsinki, Finland urges the EY to use all the tools at its disposal to stop fires in the Amazon rainforest.

The Nordic nation, which currently holds the six-month rotating presidency of the bloc, sent a letter to Federica Mogherini, the EU’s high representative for Foreign Affairs, two days ahead of the Helsinki Council meetings.

The letter says that the EU must urgently assess how it can use foreign and commercial policy as a means to stop the trend of deliberate forest fires and eliminate fires in Brazil that threaten to accelerate climate change.

“Recent actions in Brazil, in particular, could trigger a vicious spiral that leads to further destruction of the rainforest,” Finnish Minister of Environment and Climate Change, Krista Mikkonen, wrote in the letter. “The international community cannot allow development to reach a point of no return.” Furthermore, according to Mikkonen, in the longer term, the EU also needs to draw conclusions on what can be done to prevent deforestation and how to ensure that products that directly or indirectly cause deforestation do not enter the Union.

According to the Presidency holder, the fires should be taken into account in all politics, dismissing the voices to set aside climate policy when other matters are being discussed, increasing the pressure on Brazil. Still, if there is a backlash and Brazil does not take climate issues into consideration, the European Parliament will face difficulties in dealing with the EU-South America Mercosur trade agreement, according to Finland.

On the same line, French President Emmanuel Macron has even threatened to freeze the agreement Brazilian President Jair Bolsonaro refused to receive fire-fighting assistance from the G7.

UN discusses nuclear weapons-free zones at international summit in Nur-Sultan

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epa07790261 A handout still image taken from video footage and released by The Ministry of Defence of the Russian Federation on 24 August 2019 shows the launch of intercontinental ballistic missile Bulava from Russian nuclear submarines Yuri Dolgoruky at Barents Sea. As the Russian Defence Ministry report, Russian nuclear submarines Yuri Dolgoruky and Tula carried out successful training launches of Bulava and Sineva intercontinental missiles at the Arctic Ocean and Barents Sea on 24 August 2019 in accordance with the combat training plan. EPA-EFE/RUSSIAN DEFENCE MINISTRY PRESS SERVICE HANDOUT HANDOUT EDITORIAL USE ONLY/NO SALES

As the threat of a new arms race becomes increasingly likely amid worsening relations between the East and West, Thomas Markram, Director and Deputy to the UN High-level Representative for Disarmament Affairs said while in Kazakhstan’s capital Nur-Sultan on 28 August that “nuclear-free zones have enormous potential to strengthen global non—proliferation and disarmament, while acting as a powerful platform to advance the common interests of all states” who may be affected by the spread of non-conventional weapons.

“We have the long–term objective to renewing inter-sessional activities between all zone and to create a sustained platform to share practices, exchange ideas, and deepen cooperation,” said Markram while outlining his vision for what he called “interzonal cooperation”.

The is currently no institutional process to ensure comprehensive and sustainable zonal cooperation and coordination when it comes to monitoring nuclear non-proliferation, including a mechanism to fully implement treaties and objectives or to exchange relevant ideas or best practices.

“The absence of sustained communication and regular joint activities undermines the development of a collective potential of nuclear weapons-free-zones. The primary goal…is, to address the exiting challenges and discuss ways to improve coordination and achieve a more robust form of interzonal cooperation,” added Markram.

Speaking just a day before the UN declared International Day Against Nuclear Tests, Markram said Kazakhstan – a country that was the centre for Soviet nuclear test and was subjected to countless above-ground nuclear detonations at Semipalatinsk, one of the world’s most highly radioactive sites and voluntarily gave up the 1,400 nuclear warheads it inherited following the collapse of the Soviet Union in 1991 – has been one of the most tireless supporters of the Comprehensive Nuclear Test Ban Treaty. As a result, Kazakhstan continues to organise summits for nuclear-free zones and remains one of the most committed nations to the issue of nuclear disarmament.

High-ranking representatives of international organisations, experts, and five of the world’s nuclear-armed countries, who are also signatories of the Non-Proliferation Treaty – the United States, Russia, China, the United Kingdom, and France – were in attendance at the summit in Nur-Sultan.

Israel, India, Pakistan, and North Korea, all of whom possess large nuclear arsenal but are have not signed the Non-Proliferation Treaty, were not in attendance.

UK opposition reaches consensus on how to derail no-deal Brexit

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epa07796751 Leader of the British Labour Party Jeremy Corbyn leaves his home in central London, Britain, 27 August 2019. Mr Corbyn is due to host cross party talks later in the day to discuss plans to avert a no-deal Brexit. EPA-EFE/WILL OLIVER

With declining confidence on his own backbenchers, Boris Johnson does not deny that is considering the suspension of parliament (prorogation) to push through a no-deal Brexit. However, parliamentary opposition has now reached a unified strategy on how to derail the plan to push the UK out of the EU without a deal.

Professing his optimism in being able to push through a deal that will not entail the Irish backstop clause, Johnson insisted on Monday that “the job of everybody” is to deliver Brexit, including the opposition.

Holding on to his “do or die pledge,” Johnson admitted to the BBC on Sunday that the chances of a deal with the EU is “touch and go,” although he believes that delivering Brexit on October 31 is also the desire of the 27.

“Do or die” could also entail the possibility of suspending parliament. This gives rise to a constitutional crisis since it is known there is no majority for a no-deal Brexit, but no government can act against the will of the parliament.

Labour leader Jeremy Corbyn wanted to submit a no confidence in the government to prevent a no-deal Brexit. His plan entailed forming a caretaker unity government with him as a prime minister, submitting an application to delay Brexit, calling a snap election, and organizing a second referendum in which the Labour party would campaign for the UK to remain a member of the EU.

However, the consensus reached on Tuesday between all parties of the opposition, as well as Tory backbenchers is quite different. Lib Dem leader Jo Swinson had made clear that she was not willing to back an interim government backed by Corbyn.

But the opposition did unite behind the so-called “legislative way” to derail a no-deal plan. This entails an attempt by the parliament to extend Article 50 – getting rid of the October 31 deadline – by introducing an amendment to any bill that is floored by the government after the summer recess.

Labour leader Jeremy Corbyn agreed to join this course of action, keeping a no-confidence vote in the government reserved as a last resort.

Nigel Farage said the Brexit party may be prepared to work with the Conservatives to achieve a “clean-break” Brexit.

Brazil rejects G7 assistance in dealing with Amazon wildfires

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epa07799147 A handout photo made available by the Brazilian Presidency on 28 August 2018 shows Brazilian President Jair Bolsonaro (C) presiding a meeting with cabinet ministers and Chief of Staff Onyx Lorenzoni (L) and Defense Minister Fernando Azevedo e Silva (R), at Planalto Palace in Brasilia, Brazil, 27 August 2019. Bolsonaro and governors discussed issues related to the spreading growth of the forest fires raging in the Amazon rainforest, and its implications for the local economy. EPA-EFE/Marcos Correa / HANDOUT HANDOUT EDITORIAL USE ONLY/NO SALES

Brazilian President Jair Bolsonaro rejected €20 million pledge by the G7 summit in France to fight the Amazon forest wildfire.

The money was pledged by Italy, Canada, France, Germany, Italy, Japan, the UK and the US to support the firefighting effort while President Emmanuel Macron also offered to deploy its own military infrastructure.

The Brazilian foreign minister, Ernesto Araujo, said that UN mechanisms to fight deforestation were already in place, while President Bolsonaro accused his French counterpart of a colonialist ethos.

“Thanks, but maybe those resources are more relevant to reforest Europe,” Bolsonaro’s chief of staff, Onyx Lorenzoni,” the Brazilian daily Globo. “Macron cannot even prevent a predictable fire in the country that’s part of the world’s heritage,” Onyx added, in a reference to the fire that burned through the roof of the Notre Dame cathedral in April.

President Bolsonaro has long maintained that European countries are trying to gain access to Brazil’s natural resources and sees conservationism as an alibi for gaining a foothold in the region. “These countries that send money here, they don’t send it out of charity,” Mr Bolsonaro said last week, adding that the Amazon is not “a colony or a no-man’s land.”

Brazil says 44,000 soldiers have been deployed and military operations are underway in seven states.

Last Saturday, EU Council President Donald Tusk called into question the ratification of the EU-Mercosur agreement should Brazil fail to deal with the wildfires in an ecosystem known as the “lungs of the world,” due to its role in absorbing carbon dioxide and producing oxygen.

Johnson & Johnson partially responsible for opioid crisis by US court

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epa07796036 (FILE) - A screen shows the logo for the pharmaceutical company Johnson and Johnson on the floor of the New York Stock Exchange in New York, New York, USA, 29 May 2019 (reissued 26 August 2019) A judge in the US state of Oklahoma on 26 August 2019 found US pharmaceutical company Johnson & Johnson (J&J, JNJ) liable related to an opioid epidemic and ordered the company to pay 572 million US dollars in damages. Johnson & Johnson said they will appeal the ruling. EPA-EFE/JUSTIN LANE

Following a seven-week non-jury trial in Oklahoma, a judge on Monday ordered Johnson & Johnson (J&J) to pay $572.1 million for its responsibility in an opioid epidemic in the United States; the company is accused of aggressively marketing the addictive painkillers, with little attention to the danger of addiction, to the detriment of public health.

The state sought a $17bn compensation and, therefore, the cost for the company is significantly smaller than what markets expected. As the ruling was announced on Monday the J&J stock surged by 2%.

J&J practices were treated as “public nuisance.” Public nuisance laws are usually applied in cases where a company is thought to interfere with a right common to the general public and is traditionally applied in infrastructure, such as roads and waterways. The case sets an important case-precedent in that it is now applied to public health.

However, while judge Thad Balkman ordered the company to redress the damage by partially funding addiction treatment and prevention programs, he did not rule that the company should shoulder the responsibility alone.

From 2000 through 2011, J&J sales staff made some 150,000 visits to Oklahoma doctors, the state underscored. While admittedly a key to the epidemic was an oversupply the drug, other companies moved to strategically settle. The manufacturer of OxyContin, Purdue Pharma, settled in March for $85 million, leaving J&J alone on the stand. Last week, Endo International Allergan agreed to pay $15 million to avoid going to trial in October.

The Oklahoma case opens the way for a nation-wide wave of litigation that will affect a number of companies involved in the production and distribution of opioid painkillers, including Teva Pharmaceuticals and Endo International.

There are currently over 2,500 cases open against pharmaceuticals across the US. Opioids have caused 400,000 overdose-related deaths from 1999 to 2017, according to the U.S. Centers for Disease Control and Prevention, a number that includes 6,000 Oklahomans, which is significant in an overall population of just under four million people.

J&J argues that its main retail product, fentanyl, accounts for less than 1% of the US market, refusing to shoulder responsibility for the raw materials supplied to other companies.

“You can’t sue your way out of the opioid abuse crisis,” said J&J’s legal counsel, Sabrina Strong said on Monday, making clear that the company intends to appeal.

Oklahoma Attorney General Mike Hunter made the case that the company was directly responsible for thousands of deaths and addictions, referring to J&J as an opioid “kingpin.” The company is not targeted mainly for its role in the retail of opioid substances, as J&J supplies 60% of the opiate ingredients to other drug companies. Therefore, the state should be awarded the sum required to deal with the effects of the epidemic for two decades.

The court was not convinced, seeking responsibility among other producers and distributors. In any event, J&J contests the court’s interpretation of “public nuisance” law.

A number of legal experts compare the current wave of litigation to the tobacco industry trials of the 1990s that led to $246 billion settlement in 1998.

German business confidence drops for 11th consecutive month

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epa07274779 (FILE) - The booth of Kuka company at the Hannover Messe 2017 industrial trade fair in Hanover, northern Germany, 23 April 2017 (reissued 11 January 2019). According to media reports, robot builder Kuka plans to cut jobs after falling sales and profits. EPA-EFE/CARSTEN KOALL

A monthly executives survey of 9,000 German firms published on Monday by the Munich-based Ifo economic think tank confirms the widespread impression of a nosedive in business confidence.

For the 11th consecutive month, managers operating in Europe’s biggest economy project deteriorating conditions, holding back on investment. The business-confidence index fell to 94,3 points in August, down from 95,7 points in July.

The Sino-American trade war and the increasingly likely prospect of a disorderly Brexit are having a real effect on orders, in an economy that takes pride in being export driven. Manufacturing and trade are more severely affected, compared to the service sector.

Last week, the German central bank (Bundesbank) warned that the German economy could see a sharp contraction in the third quarter of 2019, echoing the experience of the 2009 crisis. However, Bundesbank President Jens Weidmann is calling for calm, as many of the two main  factors that weigh on business confidence are political and could be temporary.

Meanwhile, there are increasing calls for a deficit-financed economic policy which, if affected, would be seen as a U-turn in conventional political wisdom.

Kazakhstan to boost oil production over the next five years

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KAZ02-20010328-ATYRAU, KAZAKHSTAN: A worker passes by a section of the new pipeline in Atyrau after the opening ceremony, Mondy 26 March, 2001, The pipeline is to carry crude oil from the giant Tengiz oil field in resource-rich but landlocked Kazakhstan to the Russian Black Sea port of Novorossiisk to make it available to the world's markets. EPA PHOTO / ANATOLY USTINENKO

Oil production in Kazakhstan is expected to hit 90 million tonnes in 2020 and 100 million tonnes in 2024 due to the expansion of the Tengiz, Karachaganak, Kashagan fields and the commissioning of offshore fields, according to the country’s Economy Minister Ruslan Davlenov.

Davlenov also added tha Kazakhstan’s nominal GDP will amount to 75 trillion tenge (€176.4 billion) in 2020, and 106 trillion tenge (€246.8 billion) in 2024.

German economy contracts by 0.1% in second quarter

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epa05542104 A Deutsche Bank logo in front of a board with the German stock index DAX graph on the floor of the stock exchange in Frankfurt am Main, Germany, 16 September 2016. The threat of a multi-billion dollar fine for Deutsche Bank in the USA dampens the mood in the German stock market. Stocks from the bank dropped more than 8 percent. EPA/ARNE DEDERT

The German economy – the fourth-largest in the world after the US, China, and Japan – received troubling news when the country’s the Federal Institute of Statistics reported that the economy contracted by 0.1% in the second quarter, due to a drop in exports, and raising fears that Europe’s economic powerhouse is on the brink of a recession.

Analysts have attributed the decline to the precipitous drop in foreign demand for German goods and the rise of additional customs barriers as a result of the ongoing trade war between the United States and China, which has left export-driven economies, like Germany, exposed to the fall-out from the dispute between the Americans and Chinese – two nations with far larger economic clout.

Germany’s gross domestic product shrank after growing by 0.4% in the first three months of the year. The reversal of fortunes for the German economy can be tied to the overall mood on the international markets, which, for the time being, is moving towards an emphasis on domestic production.

With Germany’s economy so heavily reliant on exprts, the latest indicators point to potential difficulties in the months ahead. most economists expect a further contraction of the GDP in the third quarter, which would put the German government in the position of having to acknowledge that the country is in a recession.

Troubling signs also include a 1% drop in the number of investments in Germany’s construction sector, an overall decline in household consumption, and rising public expenditures as a result of the migrant crisis and an ageing population.

The Germany government can still look forward to a large budget surplus of €45.3 billion, the equivalent to 2.7% of GDP, as it forges ahead in the hope of avoiding a major economic downturn.

Global Fund for fight against AIDS gets €550M from EU

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epaselect epa05432404 A South African child holds Antiretroviral (ARV) drugs prior to the daily routine of medicine taking at the HOKISA childrens home in Masiphumelele, Cape Town, South Africa 19 July 2016. HOKISA stands for Homes For Kids In South Africa where children living with and affected by HIV and AIDS are cared for. When a child cannot be looked after by family members or neighbours, he or she is placed via the Magistrate?s Court at the HOKISA home. South Africa is currently hosting the 2016 International Aids Conference between 18-22 July which is attented globally by over 18 000 delegates, policy makers, HIV Workers as well as many living with HIV. South Africa has the biggest and most high profile HIV epidemic in the world, with an estimated 6.5 million people living with HIV. Over 2.5 million children in South Africa have been orphaned by HIV and AIDS and over 400,000 children aged 0 to 14 are living with HIV in South Africa. EPA/NIC BOTHMA

European Council President Donald Tusk announced during the G7 summit in Biarritz, France that the EU will pledge €550 million to the Global Fund to Fight AIDS, Tuberculosis, and Malaria.

Outgoing European Commission President Jean-Claude Juncker said Brussels hopes the international community will step up its support for the Fund in order to reach its target of eradicating these epidemics by 2030.

The Global Fund has already saved 27 million lives since it was created in 2002.

EU plans digital startup investment fund

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epa05956808 Visitors take a rest in hanging chairs at the Cube Tech Fair in Berlin, Germany, 11 May 2017. The Cube Tech Fair is presenting innovations in digital health and life sciences, infrastructure and interconnectivity and machinery and manufacturing. The fair is open from 10 to 12 May 2017. EPA/CLEMENS BILAN

EU officials have drafted a plan that envisages the creation of a sovereign wealth fund that would invest €100 billion in European digital startups.

The fund is specifically aimed at technological scouting, a move that would accelerate the growth of a European equivalent to Google, Apple, Facebook, Amazon and a direct challenger to China’s Baidu, Alibaba, and Tencent. While the EU remains a global leader in digital market regulation, the region severely lags behind in innovation and investment compared to the United States and China, particularly in developing platforms of global significance.

According to an internal European Commission document leaked to the press, the so-called “European Future Fund” has yet to gain the approval of all 28 members of the bloc. The European Commission’s Chief Spokeswoman, Mina Andreeva, recently told the press that the incoming President of the European Commission, Ursula von der Leyen, had yet to approve the plan.

Johnson says Britain will not pay Brussels for no-deal Brexit

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epa07795608 Britain's Prime Minister Boris Johnson speaks at a press conference at the G7 summit in Biarritz, France, 26 August 2019. The G7 Summit runs from 24 to 26 August in Biarritz. EPA-EFE/NEIL HALL

The UK does not intend to pay £39 billion for a divorce settlement with the EU in the event of a no-deal Brexit, British Prime Minister Boris Johnson told the press on 26 August.

“I think what the entire European Union understands is that if we come out without a deal then…the £39 billion is no longer legally pledged,” said Johnson.

Johnson’s new government appears willing to recognise a debt of approximately £7-£9 billion. European Commission spokeswoman Mina Andreeva responded by saying that “honouring commitments made during its EU membership” would be essential for building a new relationship, which would be “especially true in a no-deal scenario.”

The European Parliament’s Brexit coordinator, Guy Verhofstadt, was more explicit, making it clear that there would be no negotiation on a trade deal unless the UK agreed to pay the entire sum.

Talks between UK MPs on how to avoid no-deal have continued despite the push to take the UK out of the EU without a deal by 31 October. The leader of the opposition Labour party, firebrand leftist Jeremy Corbyn, is to meet the leadership of the Scottish Nationalist Party, the Liberal Democrats, Wales’ Plaid Cymru, and the Green Party.

Corbyn wants to table a no-confidence vote and, should the government fall, and form an alternative unity government that would ask the EU for another Brexit delay, call for national elections, and organise a second referendum on EU membership.

The leader of the Liberal Democrats, Jo Swinson, has made clear that her party would not get behind a Corbyn government, even if temporary.

Italy’s parties weigh options for new government or snap elections

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epa07786485 Italian President Sergio Mattarella during the first round of formal political consultations following the resignation of Prime Minister Giuseppe Conte, in Rome, Italy, 22 August 2019. EPA-EFE/ANGELO CARCONI

Italy’s centrist Democratic Party reiterated its position that it would be open to the possibility of a second Giuseppe Conte government, Senate Chief Whip Andrea Marcucci said on 26 August after his party and the senior governing partner in the ruling coalition, the leftist-populist 5-Star Movement, held negotiations about how to move forward just over a week after Conte resigned.

“There are no vetoes, we’re talking about content,” Marcucci told the public news agency ANSA, denying that the negotiation between the Democrats and 5-Star hinges solely on who will lead the next government.

Democratic Party leader Nicola Zingaretti made clear that his party wants a fresh break from the 14-month-old coalition government that included Matteo Salvini’s arch-conservative Lega party, currently the most popular political faction in Italy according to the most recent polls.

If Zingaretti is to agree to form a government with 5-Star, he has said he will not throw his party’s support behind a new Conte-led administration.

5-Star leader Luigi Di Maio has insisted that Conte remains at the helm of the new cabinet, a position that could be bolstered by Salvini’s offer to rejoin a government that he withdrew from over major policy differences if the government cuts the number of MPs from 935 to 600 and the 2020 budget is passed.

If the current stalemate is not resolved, President Sergio Mattarella will have to call a fresh election by the end of October, a demand that Salvini has made since he withdrew Lega from the coalition earlier in August.

Failure to form a government would signal a crushing defeat for 5-Star, which is polling nationally at only 16%, down from the 32% support it enjoyed when entering government in June 2018. Lega, as well as Salvini, would be the biggest winner if snap elections are held as the party is polling just under 40% in recent weeks.

The Democratic Party has seen a significant surge in the polls but currently has no apparent “winning theory,” as there is no single partner that would allow the formation of a centre-left government.

Framing the negotiations is the fact that Italian growth in the first half of 2019 appears to be the lowest among the members of the Organisation for Economic Cooperation and Development (OECD).

According to data released on Monday, Italy has experienced two successive zero growth quarters. Growth across OECD economies has dropped by 0.5% in the second quarter of 2019, just slightly lower than the 0.6% in the first three months of the year.

US and France reach bilateral digital tax deal

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epa07401464 French Finance Minister Bruno Le Maire (R) and US Secretary of Treasury Steven Mnuchin (L) prepare to give a news conference after meeting at the finance ministry in Paris, France, 27 February 2019. EPA-EFE/IAN LANGSDON

Corporate behemoths including Amazon, Facebook, and Google will be provided with a rebate after France finally gave in to American demands that the French government fit the bill for all outstanding payments that are due as a result of a unilaterally-imposed French tax on major digital providers, one which is not included as part of a planned mechanism from the Organization for Economic Cooperation and Development (OECD).

France’s decision to acquiesce has allowed American and French officials to announce that a new, broader digital tax deal has been reached. The agreement covers services provided by large internet companies and defuses the threat of a trade conflict between the two NATO allies.

Washington was angered by the French government’s decision last year to unilaterally to impose a 3% tax on digital services earned in France by digital service providers with worldwide revenues in excess of €750 million, a move that US officials said was directly targeted at American companies as their French counterparts’ returns only amount to €25 million per year.

The White House later threatened to retaliate by introducing reciprocal tariffs on French products, including wine and cheese, two of France’s biggest money-making exports to the US.

The deal between the US and the French administration was sealed on after France’s Finance Minister, Bruno Le Maire told Steven Mnuchin, the US Treasury Secretary, that Paris wanted to avoid a standoff and pay the difference between the national and the OECD tax when that comes into force.

Le Maire noted that the French government expects its digital tax to yield approximately €500 million more a year for the state coffers as it is designed to rebalance the country’s taxation practices as digital behemoths currently pay an effective rate that is 14% lower than European Small and Medium-sized Enterprises.

The potential loss, however, of the American market over a tax dispute was far too treacherous for the French government to risk. According to France’s Federation for Wine and Spirit Exporters, a bottle of American wine, with an alcohol volume of 13%, is slapped with an 11% tax in Europe, while European-made wines in the US are only levied a tax of just 5% by the American government.

The US is, as a result, one of the main export markets for wine and cheese from France, Italy, and Spain.

Kazakhstan wants to develop eco and cultural tourism

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Kazakhstan hopes to join other former Soviet republics as they actively look to move away from the five-star, all-inclusive package tours that most of the population in the region are accustomed to and come closer into line with the travel tastes of Europe and the US by focusing on the Central Asian energy giant’s potential for eco and cultural tourism.

The president of Kazakhstan, Kassym-Zhomart Tokayev, noted that his country has a lot to offer to the outside world due to its diverse history as a crossroads between the West and the East and its varied natural beauty.
There is a growing demand for visiting original places, participating in historical festivals, and reconstructing important events of bygone days,” Tokayev said while speaking at an international tourist forum in Kazakhstan, before adding, “Tourism is a very difficult field. We need to have the right kind experts, so we’ve decided to open a tourism university in order to have qualified personnel who can work in this sector.”

Kazakhstan’s authorities have already set an ambitious goal to increase the number of foreign visitors to the country to 9 million per year, which see the tourism sectors account for 8% of the nation’s GDP if fully implemented.

The government in Nur-Sultan will now look to attract foreign investors to help develop the tourism industry by having them take part in the development of catering and recreation centres, as well as the construction of suitable guest houses and other forms of accommodation around the country.

 

 

G7 to provide €17.9 million in emergency funding to combat Amazon wildfires

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epaselect epa07794634 (L-R) EU Council President Donald Tusk, Italian Prime Minister, Giuseppe Conte, Japanese Prime Minister Shinzo Abe, US President Donald J. Trump, French President Emmanuel Macron, German Chancellor Angela Merkel, Canadian Prime Minister Justin Trudeau, attend a work session during the G7 summit at Casino in Biarritz, France, 26 August 2019. The G7 Summit runs from 24 to 26 August in Biarritz. EPA-EFE/IAN LANGSDON / POOL
French President Emmanuel Macron and Chilean President Sebastián Piñera announced that the G7 nations agreed to provide €17.9 million in emergency funding to fight the Amazon fires.
he flames rolling in the Amazon, the heads of state at the G7 summit in Biarritz (F), the forced change of plan. French host of G7 Macron, who declared the Amazon fires a “global emergency” last week and pledged to use the G7 summit in Biarritz to hammer out a solution to solving them, said that the United States, Japan, France, Germany, Britain and Canada were close to agreeing “technical and financial help.”
The amount comes n addition to an air fleet to support the deletion of the package is to include also work a support plan for the reforestation of the destroyed area, a plan that is to  be submitted to the UN General Assembly in September. In Brazil, the most serious forest fires are raging currently, for years setting a record number of fires in the Amazon, with the country’s Space Research Centre revealing an 83% increase compared to a year earlier and other 80,000 in Brazil alone. Wildfires have also spread in neighbouring Bolivia.
“There’s a real convergence to say: let’s all agree to help those countries hit by these fires’,” Macron told reporters in Biarritz. Last week, the French president riled Brazil’s far-right president Jair Bolsonaro, who criticised foreign intervention in Brazil’s domestic affairs.
Macron did not hesitate to go as far as to threaten to block a trade deal between Brazil and the EU, Mercosur. It was then on Saturday, when Bolsonaro took action, agreeing to deploy the army to fight the Amazon blazes.
G7 leaders are holding their final day of talks in Biarritz on Monday.

Siemens Gamesa to install new wind turbines in India

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Siemens Gamesa Renewable Energy said the company has secured its first order in India with Alfanar for the supply of 206 units of the SG 2.2-122 wind turbines for two wind farms, totalling 453 MW. Both projects will be located in Bhuj, Gujarat, where Siemens Gamesa will supply 202 MW for one project and 251 MW for the other.

The wind farms are expected to be commissioned by 2020.

According to Siemens Gamesa, SG 2.2-122 is specifically optimised for low wind, low turbulence sites typical of the Indian market, thanks to extremely low power density and high efficiency.

“Alfanar is already our customer globally and we are happy to announce this first deal with the company in India. Repeated big orders such as this certainly boosts our confidence and demonstrates customers’ trust in our capabilities,” Siemens Gamesa in India Onshore CEO Ramesh Kymal said, noting that thus turbine has been crucial to cement Siemens Gamesa leading position in India having sold over 1 GW in the current fiscal year. “With the SG 2.2-122 – a turbine made for India, we expect to deliver better value to our customers through innovative, tailor-made solutions,” he added.

Alfanar Global Development CEO Jamal Wadi hailed the deal with Siemens Gamesa noting that this time, “for part of our 600 MW portfolio awarded under the SECI bids which we are developing in Bhuj, India. With more than 3 GW of greenfield development in the pipeline for Alfanar in India, our main goal is to provide value and benefit to the community by partnering with reliable manufacturers”.

According to GWEC India is ranked 4th in global wind power installed capacity. The onshore potential in the country is promising as it stands at 300 GW of which only 35 GW have been tapped. India’s government has established a target of reaching 65 GW of cumulative wind power capacity by 2022.

Siemens Gamesa has operated in India since 2009, and the base installed by the company recently surpassed the 6.2 GW mark.

Acquisition of Stavro Vind wind park by NAEV, Siemens and KEPCO gets EU nod

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epa02555031 The 88-meters long Gibraltar flagged cargo vessel 'Listerhav' is seen near the wind mill park 'Lillgrund' in the Oresund strait between Sweden and Denmark after it ran aground on Saturday, 29 January 2011. According to the Swedish police the helmsman is suspected of having been under the influence of alcohol when the accident happened. EPA/Stig-Ake Jeonsson / SCANPIX SWEDEN OUT

The European Commission said the EC has approved the acquisition of Stavro Vind of Sweden by NAEV SOLVENTUS, controlled by NAEV Infrastructure Funds of Germany, Siemens, and Korea Midland Power Co. (KoMiPo), a subsidiary of Korea Electric Power Corporation (KEPCO), of South Korea. The acquisition complies with EU Merger Regulation, the Commission said.

Stavro Vind has been set up for the planning, construction, financing and operation of a wind park composed of two onshore wind farm sites in Sweden. NAEV provides services regarding old-age provision for the medical profession in Germany. Siemens is active in electrification, automation and digitalisation. Through the Siemens Gamesa Renewable Energy unit, Siemens also offers solutions in the area of renewable energy, in particular wind turbines.

KEPCO is the largest electricity supplier in South Korea and is responsible for the generation, transmission and distribution of electricity and the development of power generation projects, including those in the nuclear, wind and coal sectors. The Commission said the EC concluded that the proposed acquisition would raise no competition concerns, given the companies’ moderate combined market positions. The transaction was examined under the simplified merger review procedure.

EU Commission says UK must pay Brexit divorce bill even at no deal scenario

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epa07223868 A currency exchange dealer sorts British Pounds, in Karachi, Pakistan, 11 December 2018. The British pound dropped to a 20-month low against the dollar over Brexit situation. EPA-EFE/SHAHZAIB AKBER

The UK must pay its Brexit divorce bill even if it leaves the EU without a deal, the chief spokeswoman of the EU said Monday, warning that future ties would be threatened if London failed to honour its commitments.

A day after British Prime Minister Boris Johnson again said that in the event of a “no-deal” Brexit on October 31, the UK would be freed by its financial obligations to the bloc, the European Commission chief spokeswoman did not leave a single window of hope for the UK’s narrative.

Asked if the EU would take the departing member state to court to recover the money, Berlaymont’s chief spokeswoman Mina Andreeva suggested that a future trade deal between Britain and the EU-27 could be under threat unless London fulfilled all financial commitments.

“As we have said many times before, all commitments that were taken by the 28 member states should be honoured, and this is also and especially true in a no deal scenario, where the United Kingdom would be expected to honour all commitments made during EU membership,” Andreeva said. “Rather than going into judicial action threat, I think it is important to make clear that settling accounts is essential to starting off a new relationship on the right foot based on mutual trust.”

“If the U.K. refuses to pay its debts to the EU, then the EU will not accept to negotiate a trade agreement with the U.K,” reiterated Jean-Claude Piris, ex-European Council’s legal services official.

At the same time, Johnson insists that if Britain leaves without a deal it will not have to pay the 39 billion pound (€43 billion ) divorce bill agreed by his predecessor. According to Johnson, the money would be “no longer, strictly speaking, owed” and his government would be left with “very substantial sums” to spend.

The anatomy of the coming recession

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epa07775484 The New York Stock Exchange with a sign for Wall Street in the foreground in New York, New York, USA, on 15 August 2019. According to many experts, global markets are experiencing volatility and uncertainty in reaction to mixed economic news today, following a 3% drop in the Dow Jones industrial average on Wednesday. EPA-EFE/JUSTIN LANE

There are three negative supply shocks that could trigger a global recession by 2020. All of them reflect political factors affecting international relations, two involve China, and the United States is at the centre of each. Moreover, none of them is amenable to the traditional tools of countercyclical macroeconomic policy.

The first potential shock stems from the Sino-American trade and currency war, which escalated earlier this month when US President Donald J. Trump’s administration threatened additional tariffs on Chinese exports and formally labelled China a currency manipulator. The second concerns the slow-brewing cold war between the US and China over technology. In a rivalry that has all the hallmarks of a “Thucydides Trap,” China and America are vying for dominance over the industries of the future: artificial intelligence, robotics, 5G, and so forth. The US has placed the Chinese telecom giant Huawei on an “entity list” reserved for foreign companies deemed to pose a national-security threat. And although Huawei has received temporary exemptions allowing it to continue using US components, the Trump administration this week announced that it was adding an additional 46 Huawei affiliates to the list.

The third major risk concerns oil supplies. Although oil prices have fallen in recent weeks, and a recession triggered by a trade, currency, and tech war would depress energy demand and drive prices lower, America’s confrontation with Iran could have the opposite effect. Should that conflict escalate into a military conflict, global oil prices could spike and bring on a recession, as happened during previous Middle East conflagrations in 1973, 1979, and 1990.

All three of these potential shocks would have a stagflationary effect, increasing the price of imported consumer goods, intermediate inputs, technological components, and energy, while reducing output by disrupting global supply chains. Worse, the Sino-American conflict is already fueling a broader process of deglobalisation, because countries and firms can no longer count on the long-term stability of these integrated value chains. As trade in goods, services, capital, labour, information, data, and technology becomes increasingly balkanised, global production costs will rise across all industries.

Moreover, the trade and currency war and the competition over technology will amplify one another. Consider the case of Huawei, which is currently a global leader in 5G equipment. This technology will soon be the standard form of connectivity for most critical civilian and military infrastructure, not to mention basic consumer goods that are connected through the emerging Internet of Things. The presence of a 5G chip implies that anything from a toaster to a coffee maker could become a listening device. This means that if Huawei is widely perceived as a national-security threat, so would thousands of Chinese consumer-goods exports.

It is easy to imagine how today’s situation could lead to a full-scale implosion of the open global trading system. The question, then, is whether monetary and fiscal policymakers are prepared for a sustained – or even permanent – negative supply shock.

Following the stagflationary shocks of the 1970s, monetary policymakers responded by tightening monetary policy. Today, however, major central banks such as the US Federal Reserve are already pursuing monetary-policy easing, because inflation and inflation expectations remain low. Any inflationary pressure from an oil shock will be perceived by central banks as merely a price-level effect, rather than as a persistent increase in inflation.

Over time, negative supply shocks tend also to become temporary negative demand shocks that reduce both growth and inflation, by depressing consumption and capital expenditures. Indeed, under current conditions, the US and global corporate capital spending is severely depressed, owing to uncertainties about the likelihood, severity, and persistence of the three potential shocks.

In fact, with firms in the US, Europe, China, and other parts of Asia having reined in capital expenditures, the global tech, manufacturing, and industrial sectors are already in a recession. The only reason why that hasn’t yet translated into a global slump is that private consumption has remained strong. Should the price of imported goods rise further as a result of any of these negative supply shocks, real (inflation-adjusted) disposable household income growth would take a hit, as would consumer confidence, likely tipping the global economy into a recession.

Given the potential for a negative aggregate demand shock in the short run, central banks are right to ease policy rates. But fiscal policymakers should also be preparing a similar short-term response. A sharp decline in growth and aggregate demand would call for countercyclical fiscal easing to prevent the recession from becoming too severe.

In the medium term, though, the optimal response would not be to accommodate the negative supply shocks, but rather to adjust to them without further easing. After all, the negative supply shocks from a trade and technology war would be more or less permanent, as would the reduction in potential growth. The same applies to Brexit: leaving the European Union will saddle the United Kingdom with a permanent negative supply shock, and thus permanently lower potential growth.

Such shocks cannot be reversed through monetary or fiscal policymaking. Although they can be managed in the short term, attempts to accommodate them permanently would eventually lead to both inflation and inflation expectations rising well above central banks’ targets. In the 1970s, central banks accommodated two major oil shocks. The result was persistently rising inflation and inflation expectations, unsustainable fiscal deficits, and public-debt accumulation.

Finally, there is an important difference between the 2008 global financial crisis and the negative supply shocks that could hit the global economy today. Because the former was mostly a large negative aggregate demand shock that depressed growth and inflation, it was appropriately met with monetary and fiscal stimulus. But this time, the world would be confronting sustained negative supply shocks that would require a very different kind of policy response over the medium term. Trying to undo the damage through never-ending monetary and fiscal stimulus will not be a sensible option.

© Project Syndicate

Italy pushing for new government by Tuesday

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epa07786486 Italian President Sergio Mattarella during the first round of formal political consultations following the resignation of Prime Minister Giuseppe Conte, in Rome, Italy, 22 August 2019. EPA-EFE/ANGELO CARCONI

Italy’s 5-Star Movement and the centre-left Democratic Party started negotiations on Friday over the weekend to form a new government following the resignation of Prime Minister Giuseppe Conte last week.

Both parties reported that progress had been made during the talks, adding that they would continue throughout Monday so long as they remain “constructive”.

The Italian 10-year bond rallied against the German Bund, with spreads shrinking amid increasing confidence that the formation of a government is possible.

Italy’s president, Sergio Mattarella, gave the country’s political factions until Tuesday to conclude consultations on the formation of a new government. The objective is not merely to form a government that will approve the new budget law, which would avert a major confrontation with Brussels, but a cabinet that will last until the next scheduled general election in 2023.

The Democratic Party of former Prime Minister Matteo Renzi has accepted a demand by the leftist/populist 5-Star Movement that the number of parliamentarians in both houses will be cut from 945 to 600.

The latter is the senior partner in a ruling coalition that includes Italy’s most popular political party, Matteo Salvini‘s Lega. The two recently split over a series of policy differences including the budget and how to work with the European Institutions on a whole range of issues from illegal immigration to Italy’s debt-to-GDP.

5-Star also wants to introduce a conflict of interest law, reform the country’s public broadcaster RAI, and bolster the minimum wage. In exchange for its support, the centrist Democratic Party appears willing to entertain 5-Star’s policy agenda, while also putting forward its own priorities when it comes to migration policy and electoral law.

The Democrats’ leader, Nicola Zingaretti, is said to be advocating for the restoration of 100% proportional representation in the Italian Senate.

Both 5-Star and the Democratic Party want to avoid a VAT hike worth €23 billion, but it remains unclear whether or not the new government would take a confrontational stance, vis-à-vis Brussels, when it comes to the deficit.

The two parties, which had been rivals until earlier this summer, appear to disagree on who would take over as prime minister.

The Democratic Party’s leadership met in Rome at the weekend to discuss its negotiating position, with Zingaretti making it clear that the two sides remain far apart on the key issue of who would be the country’s next prime minister. 5-Star favours holding on to Conte – who is widely regarded as an independent technocrat who is not connected to any political faction – but Zingaretti’s Democrats want a new government under a new leader.

A recently published opinion poll suggests that 5-Star’s national popularity currently stands at an all-time low of just over 16%, less than half the support they enjoyed when first heading the government 14 months ago.

After being trounced by Lega and 5-Star in June of last year, the Democratic Party has seen its fortune shift dramatically over the last year and is now polling nationally at roughly 24%. Both parties, however, need to appease the global financial markets by choosing an acceptable candidate to become the next prime minister before forging ahead with a bold budget plan.

Zingaretti would like to see former Justice Minister Paola Severino or Constitutional Court Vice President Marta Cartabia take the post. If either is successful in securing the nomination, Severino or Cartabia would become Italy’s first woman prime minister. This remains an open question, however, as 5-Star’s own leader – Deputy Prime Minister Luigi Di Maio – still hopes to take the country’s top job, himself, without having to consult with his parter-turned-rival, Salvini, Italy’s most popular politician.

Since he withdrew his party’s support for the Conte government, Salvini has called for snap elections. In a last-ditch attempt to salvage the relationship between Lega and 5-Star, Salvini proposed a new coalition government that would be led by Di Maio, saying the latter “Has worked well and in the interests of this country. If he wants to relaunch the government and relaunch the country we (Lega) are ready to work with him.”

Di Maio has not commented on Salvini’s overture and isn’t expected to back a new coalition with Lega. In the last several days, 5-Star has made every indication that it is willing to compromise its anti-establishment base in favour of a partnership with the staunchly pro-Brussels Democratic Party.

Johnson explores legal feasibility of suspending parliament to force through no-deal Brexit

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epa07793947 Britain's Prime Minister Boris Johnson attends the family photo during the G7 summit at Casino in Biarritz, France, 25 August 2019. The G7 Summit runs from 24 to 26 August in Biarritz. EPA-EFE/IAN LANGSDON

Boris Johnson’s government has asked attorney general Geoffrey Cox whether parliament can be shut down for five weeks from 9 September, The Observer reported on Sunday, citing a recent Memo.

Citing an If the attorney general provides the legal go-ahead, it would allow Johnson to proceed with Brexit without providing the parliament with scope for a reaction. The government thus far has neither confirmed nor denied its intention to suspend the parliament, suggesting that the legal advice sought was “a matter of routine.”

The initial legal guidance appears to be that the government may well be entitled to suspend the parliament, a process known as prorogation. The former conservative attorney general Dominic Grieve – a pro-Remain MP – suggests the move indicates contempt for the House of Commons and bad faith but does not argue that the move would be illegal.

The Conservative Commons Speaker, John Bercow, recently said that parliament could stop a no-deal Brexit and condemned speculation that the House of Commons could be prevented of intervening by being suspended.

A five-week suspension from September 9 until the eve of the last EU summit before Brexit, on October 17-18, would mean that MPs would no longer have time to avert a no-deal Brexit.

Pro-remain MPs have spent the summer recess planning how to block a no-deal outcome when the parliament returns on September 3. One of the options being considered is taking control of Commons business to legislate, forcing the prime minister to seek another extension.

On Saturday, Johnson once again urged MPs “to respect the will of the people,” avoiding any initiative that would delay the UK’s exit on October 31.

The leader of the opposition, Jeremy Corbyn, has said that he will call a confidence motion in the government when parliament returns and, if successful, would seek to become prime minister to call for an extension, elections, and potentially a second referendum.