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Brexit Alarm Bells Ring in The UK and Asia

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With the date of the UK’s exit from the European Union now looming large – and with no negotiated leaving deal in sight – Asian businesses and UK-based commentators are growing increasingly concerned about their future.

“We are absolutely worried about the whole situation,” Taha Coburn Kutay, Chair of the UK-Asian Business Council, told Asia Times. “There’s no clarity, and when people ask me at conferences about Brexit, I find I don’t know how to come up with a single argument for
why it’s a good thing.”

Fears that the UK will find going-it-alone on future trade deals a lot more difficult than anticipated are coupled with concerns that a British rupture with Europe will sever key supply chains and disrupt businesses.

Meanwhile, the UK’s preoccupation with immigration is making the country less attractive to Asian students, residents and workers – as is the deterioration of services resulting from overseas citizens leaving. Yet, working the other way around, the economic impact of Brexit on Asia seems likely to be far less dramatic.

“It’s not such a big issue for Asia,” Gareth Leather, Senior Asia Economist for Capital Economics, told Asia Times. “The current trade war between China and the US – and the Chinese economic slowdown – are much more pre-occupying.”
Trading history

The UK’s trading relationship with Asia goes back centuries, with the region once the source of much of the British Empire’s wealth. India, Pakistan, Sri Lanka, Bangladesh, Myanmar, Singapore, Brunei, Malaysia and Hong Kong all have this historical connection, as well as Australia, New Zealand and Pacific states, such as Fiji and the Solomon Islands.

In more recent years, however, Britain’s presence in Asia has been far less imperial and more modestly commercial and financial.

In 2017, UK trade with India amounted to some £12 billion, according to the UK’s Office of National Statistics (ONS), while trade with China was about £61 billion, with Japan at £15.8 billion and South Korea £10.8 billion. Trade with Hong Kong totaled £15.6 billion, while Singapore was another major trading partner, recording about £8.5 billion in total trade in 2017.

The services sectors in these two cities are particularly strong, with service exports to the UK from Hong Kong worth 2.3% of Hong Kong’s GDP and 2.8% of Singapore’s in 2016.

“However, across the Asia region as a whole,” said Leather, that year “exports to the UK accounted for just 0.7% of GDP.”

Since then, when the UK voted by a narrow margin to leave the EU, advocates of the change have argued that post-Brexit, the UK would be able to boost these numbers with a string of trade deals. These would be free of the restrictions on London’s freedom of action that result from EU membership.

UK Trade Secretary Liam Fox is already discussing informal, post-Brexit arrangements with about a dozen countries, worldwide, while also suggesting the UK might seek membership of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

This suggestion was welcomed by Japanese Prime Minister Shinzo Abe in August last year. Meanwhile, in a speech in January this year in Singapore, Britain’s foreign secretary, Jeremy Hunt, also claimed that Brexit would “strengthen ties” between the UK and Asia.

Fox is also engaged in talks with the World Trade Organisation (WTO) over the UK’s post-Brexit status. In these, the UK is seeking to replicate the conditions it now has as an EU member of the WTO, with as little change as possible.

Likewise, the UK also hopes to ‘roll over’ existing EU trade agreements with other countries, allowing the UK to continue to enjoy the customs and tariffs arrangements it now has with third parties, via an EU trade deal.

Yet, while some countries – such as South Korea – have already said they would like to roll over arrangements, in order to provide continuity and clarity for businesses, “there is no reason to suppose that the UK will always get this,” James Putzel, Professor of Development Studies at the London School of Economics, told Asia Times.

“The EU as a block is in a much better position to negotiate future trade deals with the Asia-Pacific than the UK on its own. The UK will have very little leverage, by comparison,” he added.

Indeed, the EU is now engaged in negotiations for a free trade deal with ASEAN, while it also signed a deal with Singapore at the end of 2018 and with Japan a few months earlier.

“ASEAN is much more interested in dealing with big blocks like China, Japan, the US and the EU as a whole,” said Professor Tim Forsyth, from the Saw Swee Hock Southeast Asia Centre in London. “As the UK represents a much smaller amount of trade, it’s likely it will have to
make a lot more concessions than these bigger players to get a deal.

Barriers to entry

Meanwhile, Asian companies operating in the UK often do so because it is also an entryway to the rest of the EU – allowing them not only to serve the UK market, but also the 27 other EU member states. Some Asian corporates have built supply chains that operate across Europe.

“Japanese and Korean car companies, for example,” said Leather, “operate just-in-time supply chains across the continent. Their UK plants would be very vulnerable if there were long delays at the ports, getting their components made in Europe into the UK.”

Such delays would certainly occur if the UK left the EU without a deal in place – something once thought unlikely, but now increasingly possible, as just over eight weeks remain to the date set for departure – March 29.

Movement of labor is also a concern. While EU citizens will no longer receive preferential immigration treatment, post-Brexit, plans unveiled by the UK last year suggest a salary limit of about £30,000 before would-be immigrants can be granted a visa.

“With this requirement to come here, plus other things, such as fluency in English, there are going to be serious labor shortages in the UK, which will affect all manner of businesses and professions,” Coburn-Kutay said. “If you want to see the impact already, just go to a [state] hospital in London. These places often rely on Asian and European doctors and nurses. Now, it’s chaos.”

Upside?

While there is still no certainty on what form Brexit will take, or indeed, if it will happen at all, a devalued British currency and falling real estate prices may make the country more affordable. Some UK companies may also look more like bargains for Asian corporate investors.

New trade deals with the UK may also bring more benefits for Asian companies, if the UK has to negotiate them from a position of weakness, relative to its competitors.

“There may be some interesting picks in the UK for Asian companies,” said Putzel. “While this may bring some advantages for them, these might be overshadowed by the disruption Brexit will also cause.”

Indeed, with the British Chambers of Commerce warning on January 26 that many of its members were already activating emergency plans for a ‘no deal’ Brexit, there is undoubtedly an increasing sense of alarm amongst UK-based companies – both Asian and non-Asian alike. ATIMES


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Why Is Central Europe Seeing Spikes in COVID-19 Cases?

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People wearing face masks wait their turn to be called for a PCR test for the COVID-19 in Barcelona, Spain on Monday Aug. 31, 2020. AP Photo/Emilio Morenatti

Central Europe in the past week has seen a spike in daily confirmed coronavirus cases, a major setback for a region that largely avoided the first wave of the virus in the spring. The Czech Republic, an E.U. member state of 10.7 million, registered a country record of 1,382 new infections on Sep. 11, bringing the country’s total cases to over 32,400. In the last week, nearby countries Hungary, Slovakia and Slovenia have also recorded their highest daily caseloads since the pandemic began.

Infections in the Czech Republic previously peaked at around 3 cases per capita (per 100,000 residents) in late March but reached 11.6 cases per capita on Sep. 13. By comparison, the U.S. had 12 cases per capita. Now, the Czech Republic has one of the highest 14-day infection rates in Europe, according to the European Centre for Disease Prevention and Control. Czech Health Minister Adam Vojtech said on Sep. 13 “nobody expected” such a spike in the country.

Governments of central European countries, keen to not impose national lockdowns and prevent further damage to their shrinking economies, have reimposed travel restrictions and renewed social distancing measures for citizens.

The coronavirus pandemic has dealt a major blow to the European economy, particularly countries that rely on tourism. The E.U. economy will decline by an average 8.3% this year, the European Commission said in July. The 27-member bloc, formed after World War II, is expected to fall into the deepest recession in its history. The economies of the Czech Republic and Hungary are predicted to drop by 7.8% and 7% respectively, compared to last year.

Where are cases rising in Central Europe?

The sharpest rise has been recorded in Czech Republic but other countries nearby, including Hungary, Slovakia and Slovenia, are also seeing worrying increases in daily case numbers.

Czech Republic cases

Hungary on Sep. 12 saw its largest daily reported infections since the pandemic began with 916 people testing positive, bringing the country’s total number of infections to 11,825, according to Johns Hopkins University (JHU). Most infections have been registered in the capital city of Budapest.

Slovakia registered a record number of daily cases on Sep. 5 when 226 people tested positive for the virus, according to JHU. Slovenia recorded its highest ever daily caseload with 108 new infections on Sep. 11.

Slovakia cases

Slovenia cases

How did Central Europe fare during the beginning of the pandemic?

Central Europe avoided the full brunt of the first wave of coronavirus infections during the spring. On April 15, the U.K. had 159 cases per capita while the Czech Republic had 58 and Hungary, 16.

Luck and foresight initially helped Central Europe to shield itself from the virus, experts say. Some countries in Europe benefited from less international visitors and from going into lockdown when their transmission rates were relatively low. “Central Europe was protected by not being as well connected as international travel hubs and by heeding the warnings from other countries,” says Jennifer Beam Dowd, associate professor of demography and population health at Oxford University.

Why are infections rising in the region?

The spike is likely connected to increased travel combined with a relaxation in restrictions, experts say.

In mid-May, most of Europe began reopening its bars, restaurants and nightclubs, subject to social distancing measures. By mid-June, most of the continent welcomed back travelers from the E.U. and other countries with a stable or decreasing trend of new cases.

The Czech government reopened bars, restaurants and hotels, and allowed gatherings of up to 300 people on May 25 as new daily cases that month were below 111. Hungary reopened all shops and the outdoor sections of cafes and restaurants on May 18 when new daily infections remained under 90. By June 22, the Czech Republic and Hungary had opened their borders to visitors from the E.U. and other countries when new daily infections were below 83 and 29 respectively that month. But in late August the number of daily reported cases in these countries, as well as in Slovakia and Slovenia, began to rise.

Europe as a whole opened up too quickly, says Martin McKee, a professor of European public health at the London School of Hygiene and Tropical Medicine. “There was a great deal of optimism when cases were coming down. But we were only containing it with severe restrictions. As soon as you open up the people, you open up the virus to spread,” he says.

Residents sit to dine on a 500 meter long table set on the medieval Charles Bridge, after restrictions were eased following the coronavirus pandemic in Prague, Czech Republic, Tuesday, June 30, 2020.

Residents sit to dine on a 500 meter long table set on the medieval Charles Bridge, after restrictions were eased following the coronavirus pandemic in Prague, Czech Republic, Tuesday, June 30, 2020.

Petr David Josek —AP Photo/Getty Images

Opening up indoor, poorly ventilated spaces has been particularly dangerous. “Large gatherings, crowds in indoor and even outdoor spaces have undoubtedly contributed to the rise we’re now seeing, says Dowd. “It has a ripple effect that appears later on.”

Experts have linked local outbreaks across Europe to the opening of bars and nightclubs in the Czech Republic, France and Switzerland, among others. At the end of July, at least 98 people tested positive following an outbreak in a nightclub in the Czech capital, Prague.

What are countries doing to prevent the spread of the virus?

The Czech government reintroduced mandatory mask-wearing in taxis, public transport, shops and malls, starting Sep. 10 when daily new cases topped 1,000 for the first time. Officials also ordered bars and restaurants to shut between 12 p.m. and 6 a.m., but stopped short of bringing back other measures that could hurt businesses such as closing restaurants and non-essential stores.

Hungary’s nationalist Prime Minister Viktor Orban, who has blamed migrants and foreigners for the spread of the virus, reintroduced an entry ban on all foreigners with some exceptions. The ban went into place on Sep. 1, as the country began to see an uptick in daily cases.

In a Sep. 12 interview with a public broadcaster, M1, Orban said he is drafting a “war plan” to prevent a second wave. “We do not want to introduce a curfew; we do not want movement restrictions,” Orban said. “We want everything to happen as it normally should.” He added that measures to protect the economy and stimulate growth would be introduced in the coming weeks. In the second quarter of the year, Hungary’s GDP fell 13.6% compared to last year (the average decline among E.U. members was 14.4%).

But experts say that prioritizing economic considerations over public health can backfire. “It’s false to frame the introduction of new restrictions as a trade off between health and the economy. If you don’t get the rates down, you can open up the shops but people won’t go into them,” says McKee.

Europe can continue to expect to see a rise in infection transmission in the autumn and winter as people return indoors, experts say, but the level of cases, hospitalizations and deaths are unlikely to reach those seen in the spring peak.

“We’re in a much better place but we need to prepare for a difficult autumn and winter,” says Dowd.

 

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Top Protester Charged as Belarus President Claims U.S. Plot

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Law enforcement officers direct demonstrators during a women's rally against police brutality following protests to reject the presidential election results in Minsk, Belarus September 12, 2020. Tut.By/Handout via REUTERS

Belarus’ authoritarian leader on Wednesday sought to disparage protesters demanding his resignation for a sixth straight week following a disputed election by accusing the United States of fomenting the unrest.

In a long speech to top officials, Belarusian President Alexander Lukashenko ranted against the alleged U.S.-led plan to destabilize the country and claimed that American allies in Europe have participated in the effort that took years to prepare, part of his attempts to cast the opposition as Western stooges.

Lukashenko didn’t provide evidence to back his claim that the U.S. had any involvement in the demonstrations.

His main challenger in the election, Sviatlana Tsikhanouskaya, dismissed his comments as an attempt to divert public attention from rigging the vote and the violent crackdown on protests.

“There is just one reason behind the protests in Belarus and it’s known to everyone: Lukashenko has lost the vote, but he doesn’t want to step down,” Tsikhanouskaya told The Associated Press in a written comment. “People have denied Lukashenko their trust and support and demand that he leave.”

Protesters in Belarus have flooded the streets of the Belarusian capital and other cities denouncing Lukashenko’s landslide reelection in the Aug. 9 vote as rigged. The huge demonstrations were driven by frustration with the Belarusian strongman’s 26-year iron-fist rule, his cavalier response to the coronavirus and the worsening economy.

The U.S. and the European Union have criticized the election as neither free nor fair, and urged Lukashenko to start talks with the opposition — a call he has rejected.

“We had the vote and got the result, period,” Lukashenko said in Wednesday’s speech before top officials. “It’s time to stop stirring up society.”

U.N. Secretary-General Antonio Guterres told reporters Wednesday he hopes his repeated calls will be heeded for an inclusive political dialogue among Belarusians. He said re-establishing a national consensus “is absolutely essential for the harmonious development of the country.”

Sergei Naryshkin, director of Russia’s Foreign Intelligence Service, claimed in a statement carried by Russian news agencies Wednesday that the U.S. has funded the Belarusian opposition and encouraged the protests.

In an apparent attempt to delegitimize the Belarusian protests, Naryshkin added that his agency has information that “the U.S. is playing a key role in the current developments in Belarus.” He alleged that the U.S. has earmarked tens of millions of dollars to finance Belarus’ opposition groups, but provided no evidence.

The U.S. Embassy in Minsk had no immediate comment.

Tsikhanouskaya, the main opposition challenger who left for Lithuania a day after the vote under official pressure, rejected Naryshkin’s statement.

“It’s an internal political crisis, and the protesters’ demands contain nothing regarding relations with other countries or a shift in Belarus’ foreign policy course,” she said in written remarks to the AP. “Mr. Naryshkin should better understand that instead of airing dated propaganda cliches.”

In Wednesday’s speech, Lukashenko charged that the Czech Republic, Poland, Lithuania and Ukraine have helped fuel protests. All those countries have denied similar claims by Lukashenko in the past.

“The Belarusian 2020 scenario is a combination of the most effective ‘color’ destabilization technologies that have been tested in various countries,” he said in a reference to the color-coded protests that have ousted unpopular rulers in other ex-Soviet nations. “They obviously count on the scale and duration of protests to wear us down and exhaust our resources. We aren’t relaxing and stand ready to respond to any challenge.”

After a fierce crackdown on protests in the first days after the vote in which nearly 7,000 were detained and hundreds were brutally beaten by police, Belarusian authorities changed tactics and tried to stifle dissent with selective detentions of demonstrators and jailing of opposition leaders.

Belarusian prosecutors have launched a probe against the opposition activists who created the Coordination Council to push for a new election, jailing some of its top members and forcing a few others to move abroad.

Maria Kolesnikova, a leading council member who has been in jail for more than a week after she ripped her passport to avoid the forcible expulsion to Ukraine, was charged Wednesday with making calls for the seizure of power and forcible change of the constitutional order. She could face up to five years in prison if convicted.

Kolesnikova was suffering from allergy in prison but remains in good spirits, said her lawyer Lyudmila Kazak.

“She wants to tell people that never regretted acting as she did even for a second,” the lawyer said.

German Foreign Minister Heiko Maas, whose country holds the European Union’s rotating presidency, noted that and his colleagues from other EU countries will meet Monday to consider how to proceed with sanctions.

“I will say openly that if the violence against the peaceful opposition doesn’t stop, then these measures will have to be extended to significantly more people, and then we will have to talk about Mr. Lukashenko,” Maas told the German parliament on Wednesday.

Western pressure has pushed Lukashenko to further cement ties with Russia, his main sponsor and ally. The neighboring countries have a union agreement and maintain strong political, economic and military ties.

Russian President Vladimir Putin announced a new $1.5 billion loan to Belarus when he hosted Lukashenko on Monday — a financial lifeline condemned by the Belarusian opposition, which warned Moscow that it would tarnish future ties between the countries.

In a bid to rally Moscow’s support, Lukashenko has cast the protests as part of a Western plot to isolate Russia. Earlier this week, Russian paratroopers deployed to Belarus for the drills that will run through Sept. 25 near Brest, on the border with Poland.

At a meeting with Russian Defense Minister Sergei Shoigu who visited Belarus Wednesday for talks on deepening military cooperation, Lukashenko said he hopes to get more Russian weapons and suggested planning more maneuvers in the future.

The German foreign minister noted that Russia “carries a very special responsibility” given its close ties with Belarus and warned that “with its unconditional support for Lukashenko so far and hybrid exertion of influence, Moscow will certainly lose the sympathy of people in Belarus.”

Maas also sought to allay the Kremlin fears of Belarus falling into the Western orbit.

“For us inside the European Union as well, this is not about detaching Belarus from Russia and incorporating it in the European Union,” he said. “This is simply about us standing up for people in Belarus being able to decide themselves what road they take in a free and fair election.”

___

Associated Press writer Vladimir Isachenkov reported this story in Moscow and AP writer Yuras Karmanau reported from Kyiv, Ukraine. AP writer Geir Moulson in Berlin contributed to this report.

Contact us at [email protected].

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Mafia sweep results in 46 arrests in France, Italy

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The battle against organized crime in Europe continued with another massive police raid on the continents

Nearly 600 French and Italian police took part in cross-border raids Tuesday targeting the fearsome ‘Ndrangheta mafia and French organized crime groups, resulting in 46 arrests, officials said.

The operation, the fruit of investigations that began in 2018, targeted drug and weapons smuggling that also involved associates in Belgium and the Netherlands as well as drug suppliers based in Albania, Agence France-Presse reported.

“On September 15, 450 French gendarmes and 120 Italian carabinieri arrested participants in a vast drug trafficking operation between France and Italy,” prosecutors in the French Mediterranean city of Marseille said.

The arrests “allowed the breakup of a French criminal group operating in southern France, linked in part to the Calabrian mafia, the ‘Ndrangeta,” the statement added.

Italy’s carabinieri said 14 suspects had been arrested on charges of the possession and traffic of weapons and drugs, possession of fake IDs, or helping a ‘Ndrangheta member escape justice, AFP reported.

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