Wednesday, March 23, 2016

Europe faces a perfect storm of crises on a scale not seen since World War Two. Endless streams of migrants are testing political cohesion. The euro zone crisis remains deeply unresolved, with the richer north and poorer south eyeing each other suspectly. A resurgent Russia provides an external threat in a way not seen since the Berlin Wall fell. Ukraine is a stark reminder that limited conflicts are not unthinkable.  But major, widespread European conflagration? It might remain unlikely, but no longer as unthinkable as it once was.  Some even predict it. In recent months, several current and former U.S. and European officials have told me they privately believe a major European war is no longer unthinkable. One even said he actively expected it to happen.  My own country, Britain, faces its own rather raw choice in June this year, deciding whether or not to remain a member of the European Union. The UK will probably stay in, informed opinion says — although there is also a consensus that the worse the news flow from the continent, the more likely it is to leave. It is difficult to predict how events will unfold, or even what the greatest risks might be: the effects of mass migration, the dangers of growing tensions with a resurgent Russia, the ongoing lingering threat that the euro might unravel. The worst-case scenario might be all of the above happening at once, prompting a collapse into chaos and violence that could be extremely difficult to manage or recover from. Worries over the effect of the migrant crisis skyrocketed after the November Paris attacks, and perhaps even more after reported New Year’s Eve mass sexual assaults in Cologne and other German cities, some blamed on migrants. Russia, meanwhile, is increasingly accused by some U.S. and European officials of deliberately exacerbating tensions in Europe through propaganda and disinformation. At the end of February Philip Breedlove, NATO’s military chief and head of the U.S. European Command went so far as to accuse Moscow of “weaponizing” refugees by stoking the Syrian war to undermine European institutions and resolve. Russia’s agenda remains extremely opaque — particularly since this week’s announcement by Moscow of a withdrawal from Syria. Vladimir Putin could be trying to push Bashar al-Assad towards the negotiating table by threatening to cut support — or simply trying to muddy the waters still further. For sure, the unraveling of the EU — and even more so, the North Atlantic Treaty Organization — would offer Moscow considerable short-term advantage. It would also be a catastrophe for vulnerable Northern European states such as the openly nervous Baltics. Ultimately, though, a truly chaotic collapse in Europe could threaten Russia’s interests as much as anyone else.

Tuesday, March 22, 2016

"I am concerned this Government I want to succeed ... it has become too focused on getting the deficit down."  He added that he chose to step down because he felt "semi-detached, isolated in a sense".  And he claimed he began to lose the ability to make the case for his way of doing things and felt he was losing his influence. "I progressively got more and more depressed that we were running to an arbitrary agenda with a welfare cap in it", he added.  "My concern as I have said ... it's all about how we are perceived and how that balance is right. My deep concern has been that this very limited narrow attack on working age benefits means we simply dont get that balance, we lose the balance of the generations."  "I would not need to do anything on Europe because I have as much freedom as I like ... Europe has nothing to do with this, that is a deliberate attempt to put something out there that discredits me" IDS tells Sky.  "If I was restrained on Europe this might have some logic but it does not ... I recognise this would happen, there would be an attempt to besmirch my ... it's not about Europe."   "I went through a lot of tough decisions last year," IDS adds, mentions tax credits, taper among other things. He says he realised he did not have the power to oppose "raids" on his DWP budget and says Number 10 briefing that the PIP cuts were to pay for tax cuts for middle earners were "wrong". That appears to have been the final straw.

Monday, March 21, 2016

The UN warned that Greece's capacity to assess asylum claims needed to be strengthened for the deal. Implementation was "crucial", the organisation said. But rights group Amnesty International was scathing, calling the agreement a "dark day for humanity".  An EU source told the BBC up to 72,000 Syrian migrants living in Turkey would be settled in the EU under the agreement.  They added that the mechanism would be abandoned if the numbers returned to Turkey exceeded that figure.  Also on Friday, Turkish officials said they detained 16 people smugglers and almost 1,800 migrants.  The operation was part of efforts to stop migrants reaching the Greek island of Lesbos, Reuters reported....European Council President Donald Tusk said there had been unanimous agreement between Turkey and the 28 EU members. It is hoped the plan will deter people from taking the often dangerous sea crossing from Turkey to Greece.  Mr Tusk stressed the deal was no "silver bullet" and was just one part of the EU's response to a crisis that has sharply divided the bloc's members. Mrs Merkel said she was satisfied but added "I have no illusions that what we agreed today will be accompanied by further setbacks". Prime Minister David Cameron has welcomed the deal, saying it could "significantly" reduce numbers of migrants crossing the eastern Mediterranean to enter Greece by boat.

Saturday, March 19, 2016

Even the famously myopic British media now report what Mrs Merkel says as a matter of some note.
This partly reflects the fact she has been around for ten years, longer than any other European leader. But there is another reason, which goes to the forgotten heart of the debate about the European Union.  Who is boss? Who is in charge? Whose word counts? And how to deal with the obvious, the natural answer to those questions ever since the unification of Germany in 1871.
We don't talk about it, but it matters more than most of the froth and flotsam about this debate.
It is both right and proper that in this country the debate about EU membership is about our prosperity, security and without being too pompous, our destiny.
But in or out of the EU will not change the fact that the UK will continue to exist on the edge of a large continent with which we have long had a mingled history of occasional splendid isolation and equally irritated engagement.

Friday, March 18, 2016

The EU has grown steadily from its six founding members to 28 countries. Belgium, France, Germany, Italy, Luxembourg and the Netherlands signed up to the EEC, or Common Market in 1957. Britain, Ireland and Denmark joined in the first wave of expansion in 1973, followed by Greece in 1981 and Portugal and Spain five years later. Eastern Germany joined after unification and Austria, Finland and Sweden became part of the EU in 1995. The biggest enlargement came in 2004 when 10 new member countries joined. Romania and Bulgaria joined in 2007 and Croatia was latest to sign up in 2013. The EEC started out as a trading bloc - with free movement of goods and services within the Common Market - now its interests include reducing regional inequalities, preserving the environment, promoting human rights and investing in education and research.
The EU is Britain's biggest trading partner. British citizens are free to work in any EU country and EU funding is spent on supporting farmers, boosting jobs in the UK, redeveloping rundown areas, and grants for university research. The EU has contributed to cheaper travel by challenging monopolies and boosting competition. It has reduced the cost of mobile data roaming and set water quality standards in Europe.  But giving subsidies to farmers led to over-supply of some crops and so the EU was forced to rethink its agriculture policy. Critics say the EU has taken too much power from the member governments, its regulations are costly to the members economy and without them, Countries like Britain would be able to sign other trade deals with growing economies like China and India. They also say that the EU wastes taxpayers’ money on excessive bureaucracy - citing MEPs monthly trips to Strasbourg which cost 180m euros (£136m) per year.

Thursday, March 17, 2016

For most of its short life, the European Central Bank fretted about inflation being too high. Now it has the opposite concern.  The fear of deflation explains the package of measures announced by Mario Draghi on Thursday. Three months ago, the ECB president disappointed the markets by coming up with less stimulus than he had led them to expect. This time there were no half measures.
The ECB sets three interest rates and it cut all of them. The central bank has been buying bonds in return for cash at a rate of €60bn (£47bn) a month, but will now up the purchases to €80bn a month for at least a year, and probably longer. It launched a scheme on Thursday under which commercial banks would be paid for borrowing money provided they re-cycle the funds to the private sector in the form of loans to households and companies.  And still it wasn’t enough to slake the insatiable thirst of the financial markets for more and more stimulus. The euro initially fell on the foreign exchanges but then rose when Draghi said the ECB did not anticipate the need for any further cuts in interest rates.

Tuesday, March 15, 2016

Despite the new set of panic selling hitting markets in the last minutes, Draghi is continuing to stress just how determined the ECB is fight off deflation.  He is asked if the central bank is over-reacting.  "It is not an over-reaction to low oil prices. It is a reaction to the fact conditions have significantly changed since early December. This change was due to a significant weakening of global growth prospects." He also bats away criticism that central banks are running out of tools or that their current measures don't work, highlighting that credit creation has increased after QE .  "Fragementation in the eurozone has now disappeared" he asserts. .. The euro and stocks are taking today's mega stimulus measures badly, despite the fact they exceeded all initial expectations.  It's difficult to tell just why, but Draghi's comments that rates do not need to head lower for now seems to have unleashed  a fresh round of panic for traders. However, and it is important to stress, =the Italian insisted that the ECB would be flexible in reacting when "the facts change".  Interest rates will also stay low and could head lower beyond the QE window into 2017. Before the press conference concluded, Draghi added:  "We are not in deflation" despite the -0.3pc consumer prices this year. Inflation will go up as a result of these measures, but Draghi admits it will take a long time to get near the close to 2pc target. "This is substantially difference to Japan in the 90s".