Thursday 31 May 2018

JAPAN TIMES Brexit Headlines: 1 May - 31 May 2018

The Japan Times
Brexit Headlines
Cambridge Analytica ex-boss admits getting Facebook data from researcher

BUSINESSJUN 7, 2018

The former head of Cambridge Analytica admitted on Wednesday his firm had received data from the researcher at the center of a scandal over Facebook users' personal details, contradicting previous testimony to lawmakers. Cambridge Analytica, which was hired by Donald Trump in 2016, has denied ...

EU defense structure after Brexit starting to take shapeWORLD | ANALYSISMAY 7, 2018

BY ROBIN EMMOTT
A broad European military strategy involving Britain after Brexit has started to take shape with France at its center, often in negotiations far from the Brussels spotlight and, in one top-level EU meeting, without the U.K. defense minister. Despite an impasse over how to start ...

WORLD / POLITICS   MAY 4, 2018

Prime Minister Theresa May's Conservative Party avoided a wipeout in London local 
elections and eked out gains in Brexit-supporting regions elsewhere, early results on 
Friday showed, although her Labour opponents did gain ground in the capital. The 
elections are viewed as a gauge of public ...





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Italy to swear in first populist government

Italy’s populists have put an end to three months of political gridlock and formed a government, staving off the threat of new elections that could have become a referendum on the euro.
The anti-establishment Five Star Movement and right-wing League are to swear in their Cabinet later Friday, after reaching agreement with Italy’s president to drop a eurosceptic economy minister and give birth to western Europe’s first populist government.

https://www.graphicnews.com/en/pages/38009/Key_government_appointments


By COLLEEN BARRY

May. 31, 2018



MILAN (AP) — Italy’s anti-establishment 5-Star Movement and the right-wing League succeeded Thursday in forming western Europe’s first populist government, which will be headed by a political novice whose first try was rejected four days earlier as too risky for the Italian economy.

What changed was the willingness of 5-Star leader Luigi Di Maio and League leader Matteo Salvini to shuffle the proposed roster of government ministers amid a financial market scare. They moved an 81-year-old euroskeptic economist vetoed by Italy’s president from overseeing the economy ministry to a European affairs Cabinet post.

After the fits, starts and financial turbulence of recent days, the realization of a 5-Star-League coalition government put its populist posture on full display in Salvini’s first public remarks. He returned from Rome to address a crowd of supporters in his northern home region of Lombardy.

“I want to make Italy a protagonist in Europe again. With good manners and without creating confusion. But I am fed up of governments with the hat in their hand,” Salvini said to cheers. “We are second to no one.”

Just a short time earlier, President Sergio Mattarella’s office announced that the new premier, University of Florence law professor Giuseppe Conte, and his ministers would be sworn in Friday afternoon.

It was a stunning comeback from Sunday evening, when Conte — the premier-designate at the time — left a meeting with Mattarella empty-handed and returned to his teaching job.
Emerging from a similar meeting with a different ending Thursday night, Conte read off his Cabinet list and pledged that “we will work with determination to improve the quality of life of all Italians.”

The Cabinet includes Di Maio— architect of the government’s proposed basic income for struggling Italians — as welfare minister and Salvini — who has pledged to expel hundreds of thousands of migrants — as interior minister.

The new economics minister, Giovanni Tria, is a mainstream economist at Rome University, while the foreign ministry goes to Enzo Moavero Milanesi, a former European Union official in Brussels who was European affairs minister in former Premier Mario Monti’s two-year technical government.

In his remarks to supporters, Salvini pledged to make sending migrants back to their home countries a priority.

“My commitment will regard the security of 60 million Italians,” Salvini said.

Di Maio kept his comments to a brief Facebook post thanking supporters and declaring “the government of change is reality.”

An inconclusive parliamentary election in March produced months of stalemate before the Italian political machinery went into overdrive this week. After rejecting Conte’s first attempt, Mattarella tapped a former International Monetary Fund official to head a possible interim government of technocrats to see Italy through to an early election.

But investors, fearing the vote would be a referendum on the euro, revolted, sending Italian stocks plummeting and increasing the cost of borrowing to cover Italy’s stubbornly high sovereign debt of 132 percent of GDP. Just the prospect of a political government calmed markets Thursday.

Mattarella put that premier-designate, Carlo Cottarelli, on hold after the 5-Stars and the League indicated willingness to compromise on their ministers. Di Maio also backed down on threats to seek Mattarella’s impeachment over the first failure.

The two leaders canceled other engagements Thursday to meet at the parliament in Rome and hammer out a Cabinet.

With developments moving quickly, Cottarelli stepped aside and Mattarella summoned Conte, who had returned to Rome earlier in the day after turning over his morning class to a substitute.

Mattarella received a round of applause from the press room at his palace when he described the recent events as “this complex itinerary that led to the formation of a government.”

During the first attempt to put together a populist government, Salvini and Di Maio’s decision to tap an unknown lawyer to be the next premier raised eyebrows in Italy. The revelation that Conte’s resume exaggerated academic credentials at elite universities in Europe and the United States did not help.

But more fundamentally, analysts have raised questions about whether he would be at best an executor for the two leaders who put aside their ambitions to be premier in order to form a government, and at worst a mediator

Lorenzo Codogno, a former Treasury official and economic analyst, said he predicts “trench warfare” between the government and Mattarella “on matters related to Europe and the fiscal stance.”

“Still, it is well possible that the near-term financial market reaction is positive, as (the) breakthrough reduced the uncertainty and at least provides Italy with a much-needed government,” he said. 


Italy gets western Europe’s 1st populist govt on second try



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Theresa May warned by Europe's biggest businesses that time is 'running out' over Brexit

Theresa May has been warned by some of Europe's biggest businesses that "time is running out" and that a free trade deal after Brexit must be as "frictionless as with a customs union".
The Telegraph

Theresa May wearing a red hat
The Prime Minister met the European Round Table of Industrialists in Downing Street for discussions about future customs arrangements with the EU.
The business leaders, who included the chairman of Volvo, BP, Nestle and BMW, said that they need "clarify and certainty", adding that "uncertainty causes less investment".
Mrs May has ruled out keeping Britain in a customs union after Brexit and her Cabinet is split over future customs arrangements with the EU.
a man wearing a suit and tie© Provided by The Telegraph
In a statement after the meeting, the EU group of business leaders said: "We appreciate the Prime Minister's openness to ERT views and were able to express our own views and concerns.
"The uninterrupted flow of goods is essential to both the EU and UK economies. That must be frictionless as with a customs union. We need clarity and certainty, because time is running out. Uncertainty causes less investment."
Downing Street said in a statement that the Prime Minister wants to keep future trading arrangements "as frictionless as possible".
Boris Johnson, David Davis and other leading eurosceptics have rejected the Prime Minister's plans for a customs partnership with the EU. Mr Johnson has described it as "crazy" amid concerns that it could lead to Britain staying inside the customs union.
They favour "maximum facilitation", which would use technology to enable highly-streamlined checks at the border.
However leading pro-Europeans in the Cabinet including Philip Hammond, the Chancellor, have argued that the approach would damage British businesses.
A No 10 spokesman said: "The Prime Minister... underlined the importance of ensuring that our future trading arrangements with the EU are as frictionless as possible, delivering on the commitments to avoid a hard border between Northern Ireland and Ireland, and allowing the UK to pursue an independent trade policy.
"The Prime Minister recognised the necessity of providing certainty for businesses, pointing to the agreement of an implementation period at the European Council in March to provide time to allow businesses to prepare for the new arrangements."
Downing Street said that the discussion had been "open and productive", adding that the Government and business leaders agreed on the need for "robust" data sharing after Brexit.
Mrs May has split up her warring Brexit sub-committee to try and thrash out a way forward on her two proposals for a customs deal - with each working group mostly opposed to the option they are considering.
The "max fac" group will comprise Business Secretary Greg Clark and Northern Ireland Secretary Karen Bradley - who were both pro-Remain - and the pro-Leave Brexit Secretary David Davis.
By contrast, the customs partnership will be examined by two Brexiteers - International Trade Secretary Liam Fox and Environment Secretary Michael Gove - and a lone Remainer, Cabinet Office Minister David Lidington.
There is concern in Government over a lack of progress ahead of a crunch Brussels summit later this month. The Customs Partnership working group has only met once. Ministers said that the Cabinet remains deeply divided over future customs arrangements. 
"The Prime Minister will have to come to a decision," a Cabinet source said. "Whatever she decides she risks alienating half her Cabinet."
https://www.msn.com/en-gb/money/news/theresa-may-warned-by-europes-biggest-businesses-that-time-is-running-out-over-brexit/
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Wednesday 30 May 2018

George Soros: 'drastic' action needed for eurozone to survive

The eurozone risks lurching towards another major financial crisis triggered by austerity and populist political parties intent on blowing apart the EU, the billionaire investor George Soros has warned.
The Guardian
Richard Partington 30 May 2018
Sounding the alarm as financial markets fell into turmoil on Tuesday amid a deepening political crisis in Italy, Soros said the EU had lost its way since the 2008 banking crash and required radical transformation in order to survive.
“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said in a speech in Paris.
Having recorded the strongest period of economic growth in a decade towards the end of 2017, Europe appears to be heading for a fresh summer of political unrest for the first time in several years. Investors fear the turmoil could ultimately lead to the demise of the euro, plunging the region into chaos.
The renowned investor's amazing life story: Against all the odds, legendary Hungarian-American investor and mega-philanthropist George Soros escaped Nazi and communist oppression, and went on to create the world's most successful hedge fund. We take a look at the lucky billionaire's incredible life story.The incredible story of the penniless Nazi refugee who broke the Bank of England
Italian bonds dropped sharply on Tuesday, pushing the country’s borrowing costs to the highest levels in more than four years as concerns grew that the EU’s third-largest economy could exit the single currency.
The crisis comes after Sergio Mattarella, the country’s president, vetoed the appointment of a controversial Eurosceptic as finance minister over the weekend, laying the ground for fresh elections later this year.
In Spain, the prime minister Mariano Rajoy faces a vote of confidence on Friday that could further plunge southern Europe into political turmoil.
© Getty composite
While the fresh unrest is likely to embolden eurosceptics who believe the EU is ultimately doomed, including prominent Brexiters in the UK pushing for Theresa May to take a tougher stance against Brussels, Soros said reforms could help save the bloc.
The Hungarian-born investor said an “addiction to austerity” at the heart of Europe was harming economic development, which had in turn been exploited by populist politicians to stoke anti-EU support.
“As a result [of austerity], many young people today regard the EU as an enemy that has deprived them of jobs and a secure and promising future,” he said.
Soros, a prominent supporter of the Remain campaign, said there were still steps that could be taken to make the EU more appealing to ordinary voters, who had been let down by Brussels since 2008.
Calling for an EU-funded Marshall plan for Africa worth about €30bn (£26bn) per year, he said migratory pressures across Europe could be relieved by helping developing nations. He also called for the EU to abandon rules requiring member states to join the euro single currency, lest they eventually combine with other EU rules to “destroy” the project altogether.
Echoing a call made by David Cameron ahead of the Brexit vote, he argued for the EU to allow member states to pursue “multi-track” relations with the bloc, rather than “ever closer union”. That would enable countries to work together in certain areas and diverge in others, helping to address issues of sovereignty.
“Europe needs to do something drastic in order to survive its existential crisis. Simply put, the EU needs to reinvent itself,” he said.
QUICK GUIDE: What are the Brexit options now? Four scenarios
Staying in the single market and customs union
The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election.
The Norway model
Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules.
The Canada deal
A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far.
No deal
Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organization rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish bilateral agreements to deal with the consequences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.
https://www.msn.com/en-gb/money/news/george-soros-drastic-action-needed-for-eurozone-to-survive/
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Could Italy bring down the eurozone?

Everything you need to know about the Italian political crisis -- which is 9 years in the making and could bring about the demise of the eurozone

Will Martin
30 May 2018

 © Provided by Business Insider Inc
  • Italy's political crisis has deepened over the weekend, with a fresh election in the country now a near certainty.
  • Many commentators now believe that the turmoil in the eurozone's third-largest economy has started to pose a threat to the wider euro area.
  • Markets are spooked, with major European assets selling off aggressively.
  • Business Insider looks at how Italy got to this point of deepening crisis.
5-Star Movement's leader Luigi Di Maio© Reuters 5-Star Movement's leader Luigi Di MaioWhisper it quietly, but the eurozone may be about to plunge headlong into another crisis as the political situation in its third-largest economy, Italy, deteriorates rapidly.
Almost three months after an inconclusive election left the country without a government, Italians could be headed back to the polls imminently.
Italy's political situation is notoriously complicated, so Business Insider has tried to break down exactly what's going on and why it's all happening now.

A nation in crisis

Actor, comedian and 5-Star Movement founder Beppe Grillo during a political meeting in Naples in 2013© Getty Actor, comedian and 5-Star Movement founder Beppe Grillo during a political meeting in Naples in 2013The growing crisis can trace its roots all the way back to 2009, with the foundation of the 5-Star Movement, which in less than a decade has grown to be the largest party in Italian politics, winning 222 out of 630 seats in Italy's lower house of government, the Chamber of Deputies, at March's election.
The party's policies don't fit neatly into the traditional left-right political spectrum, something it is keen to emphasise. It is variously antiestablishment, eurosceptic, anti-immigration, and pro-green. Its name refers to its five flagship issues: publicly owned water, sustainable (eco-friendly) transport, sustainable development, right to internet access, and environmentalism.
5-Star's popularity has led it to moderate its stance on certain issues and install a new leader, the 31-year-old Luigi Di Maio, who replaced 5-Star's founder, the comedian Beppe Grillo, in October.
© AP
Such political shape-shifting has allowed 5-Star to quickly grow into its position as Italy's largest and most powerful party.
But while it emerged from March's election as the biggest party, 5-Star fell well short of being able to form a government on its own.
This posed problems. For several years the party said it would not be willing to enter into a coalition government or power-sharing agreement with any other party. That is because much of 5-Star's appeal has been based on its rejection of the country's establishment parties, which it believed to be corrupt.
After the party gained a plurality in March, however, the party leader Di Maio relented, sensing the opportunity to govern the country. Over six weeks of talks with various parties followed, until eventually late last week it looked as though a government would be formed by 5-Star in coalition with the Lega Nord, a right-wing party led by Matteo Salvini.
The League, as the party is often known, previously had ties to Silvio Berlusconi's Forza Italia party, but it moved toward 5-Star when an opportunity to govern presented itself.
The League and 5-Star's alliance is an uneasy one, but the parties managed to put together a program of government that removed some of the more extreme policies from both sides - like plans to leave the euro - and just about pleased President Sergio Mattarella (who must approve any program of government) enough to govern.
Former senior International Monetary Fund (IMF) official Carlo Cottarelli arrives for a meeting with the Italian President Sergio Mattarella at the Quirinal Palace in Rome© Reuters Former senior International Monetary Fund (IMF) official Carlo Cottarelli arrives for a meeting with the Italian President Sergio Mattarella at the Quirinal Palace in Rome
Late last week it seemed as though the alliance would be governing Italy with the law professor Giuseppe Conte, a political novice, as prime minister. Mattarella had reluctantly agreed to allow Conte to form a government, and it looked as if months of deadlock were finally coming to a close.
That was until Mattarella began the process for approving the coalition's appointments to key offices within government. Under Italian law, the president can reject the appointment of an elected official.

Trouble with the finance minister

© GettyAll was going well until Mattarella got to the two parties' nomination for finance minister. The coalition had put forward Paolo Savona, a highly eurosceptic economist and former banker who was minister of trade and industry in the 1990s.
Savona has frequently advocated that Italy leave the euro, describing the single currency in a recent book as a "German cage." He has been highly critical of Germany in particular, saying in the book that "Germany didn't change its idea on its role in Europe after the end of Nazism, even if it abandoned the idea of imposing itself militarily."
He also claims that Italy's decision to join the euro back in the 1990s has "halved Italians' purchasing power."
© Reuters
Such assertions were enough for Mattarella, a europhile, to reject Savona's appointment as head of Italy's economic and fiscal policies.
Mattarella told reporters it was important for confidence in broader financial markets that Italy signal an intention to remain part of the euro.
"Membership of the euro is a fundamental choice for the future of our country and our young people," he said.
Mattarella's rejection of Savona as finance minister was viewed as a rejection of the mandate of 5-Star and the League to govern. This caused outrage from the two parties, with Di Maio calling for Mattarella's impeachment. Salvini, the League's head, stopped short of such calls but did criticise Mattarella's decision.
The rejection of the coalition left Mattarella with two choices: call another election or attempt to appoint his own technocratic government.
Mattarella sprung for the second option, on Monday appointing a former International Monetary Fund official, Carlo Cottarelli, as interim prime minister with a task to try to form a new government and bring order to political and constitutional turmoil.
Carlo Cottarelli, a former director at the IMF, has been asked to form a new government in Italy© Reuters Carlo Cottarelli, a former director at the IMF, has been asked to form a new government in Italy
Cottarelli is likely to struggle to form a government, as he will need to have the support of at least half of the country's 630 deputies to rule with any sort of efficacy. Given that the League and 5-Star account for 347 of those deputies and surely will not approve a Cottarelli government, it seems impossible that Italy will have a government anytime soon.
With no foreseeable path to a working government, it looks as if the only option for Italy will be to hold another election, with the most likely outcome of that election being a strengthening of support for 5-Star and the League. Indeed, a poll released on Monday evening showed the League increasing its vote share by almost 5 percentage points from the election.
The Dutch bank ING summed up the situation, with the economist Paolo Pizzoli writing to clients(emphasis ours):
"Should he [Cottarelli] manage to obtain the parliament confidence, he would try to have the 2019 budget approved, and resign before the end of 2018, taking the country to new elections in 1Q19. Instead, should he fail to get the parliamentary confidence, he would resign and remain in office as a caretaker for ordinary business, taking the country to new elections after August. We believe the chances of the government passing the confidence vote are extremely slim, and hold an autumn vote (in September or October) as our new base case.
"It is still too early to understand where the party leaders will position themselves in view of the upcoming election. Chances are that the perceived institutional wound might induce both the Northern League and the 5SM to radicalize their electoral message, but different political possibilities remain possible."
"His chances of succeeding are slim and elections are likely in September," Kit Juckes, a strategist at Societe Generale, wrote on Tuesday morning. "Which leaves us 3-4 months of uncertainty ahead of a vote that may be seen as a referendum on Euro-membership."

Markets are spooked

© RexAny such vote could be disastrous given that Italy is one of the three most crucial members of the eurozone project, alongside France and Germany.
Such an outcome seems to be something that senior figures in the eurozone are taking seriously. According to Yanis Varoufakis, who was Greece's finance minister during the height of the country's latest debt crisis, plans are being made for Italy's exit from the euro, which is being variously known as "Italexit" and "Quitaly."
"I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany," Varoufakis wrote in an editorial for the Guardian newspaper.
Perhaps the simplest way to imagine the eurozone is as a three-legged stool. Germany, France, and Italy are the legs holding up the rest of the project. Remove any one of those three pillars and the stool falls over.
Simply put, if Italy goes, it is likely to be curtains for the euro area.
This prospect has markets freaking out on Tuesday, with assets selling off sharply across a broad spectrum. Here's the full wrap from Business Insider's markets team:
  • Yields on Italy's two-year debt rose by almost 50 basis points overnight - the biggest one-day move since 2012, at the height of the eurozone crisis.
  • When European markets opened a short time ago, Italian two-year bond yields continued to rocket higher, climbing by another 70 basis points. They are now sitting at their highest level since 2013.
  • Demand for safe-haven German bonds is increasing, with the yield on both two-year and 10-year German debt falling to its lowest level this year.
  • Reflecting capital flows between Europe's periphery and core, the spread between German and Italian 10-year bond yields has soared to 261 basis points, the highest level in four years.
  • The euro has also come under pressure, dropping below 1.16 against the US dollar for the first time in 2018.
  • Italy's banking index is also getting hosed, down 3.4% at a 13-month low.
Markets do tend to be highly sensitive to euro-exit-related developments, so some of Tuesday's moves may be a knee-jerk reaction, but it certainly feels as if a crisis is brewing both politically and economically.
Analysts at the Australian investment bank Macquarie, however, urged calm for the time being.
"While we see near term market pressure, we do not think that events today are sufficient to derail the economic recovery (activity has been desensitised to political shocks in the past decade), suggesting that markets will soon present a buying opportunity," a team led by Ric Deverell wrote.
Deverell and co. were clear, however, that things could escalate. "A victory for the populist parties in a new election, while far from assured, could trigger a substantial risk-off event," they wrote.
https://www.msn.com/en-gb/money/news/everything-you-need-to-know-about-the-italian-political-crisis-which-is-9-years-in-the-making-and-could-bring-about-the-demise-of-the-eurozone/
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