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Australia bans flip-flops, while Britain deals with the Brexit aftermath

8-7-2022 |

Fresh - freshly squeezed news from the international press. We prepare it 3 times a week.

The Guardian: Johnson has left behind a mess of problems for a new PM

Boris Johnson’s apparent double miracle was to break the parliamentary impasse that tormented his predecessor Theresa May when trying to pass her withdrawal agreement and then to successfully negotiate a trade deal with the EU in the following 10 months.

“This deal means a new stability and a new certainty in what has sometimes been a fractious and difficult relationship,” Johnson had said on Christmas Eve 2020 as the ink was drying on the new trade agreement.

Johnson certainly achieved a political feat in uniting his party after removing May from office and then forming an unlikely electoral alliance in the wider country – despite misleading the Queen, in the opinion of a Scottish court, as he sought to threaten recalcitrant MPs with a no-deal exit back in the dark days of 2019.

But recent polling suggests support for Brexit in the UK has collapsed – and the outgoing prime minister’s critics might confidently argue today that Johnson leaves a mess of issues behind rather than the “certainty and stability” that he claimed to have secured 18 months ago.


Photo: EFE

For all of the talk in 2019 of having struck a great deal, the government has in recent weeks threatened to unilaterally rip up a hard won and crucial agreement over the post-Brexit arrangements for Northern Ireland if the EU does not agree to a fundamental overhaul – despite the Conservative manifesto on which Johnson formed his government committing to no renegotiations.

The problem Johnson has found is that the withdrawal agreement has – as the government’s own impact assessment had said it would at the time, along with everyone else who understood the deal – drawn a regulatory border down the Irish Sea, making it more expensive to import from Britain to Northern Ireland.

May, after all, had rejected the approach taken by Johnson largely on constitutional grounds, saying to the House of Commons that no British prime minister could consider drawing borders between the four nations of the UK. The Democratic Unionist party agreed then with that position, as it does today. It is why it is refusing to allow power-sharing institutions to function in Northern Ireland.

Meanwhile, the trade deal has left Britain’s fishing communities screaming betrayal, unhappy with their paltry gains and facing expensive barriers to export what they have caught. The arrangements are simultaneously a cause of constant friction with the French government, at a time when cooperation on security between the two big beasts of European defence arguably could not be more important.

There has been a “steep decline” in the number of trading relationships Britain has with the EU as small businesses have become bogged down in the new red tape, according to a study by the London School of Economics.

The Office for Budget Responsibility, the government spending watchdog, said earlier this year that Brexit “may have been a factor” in the UK lagging behind all other G7 economies in its post-pandemic recovery.

But most worrying of all for those who are protective of Johnson’s Brexit legacy is the changing face of public opinion. The latest YouGov poll has found that every region of the UK now believes Brexit was an error, with 55% of those questioned believing that Brexit has gone badly compared with 33% who say it has gone well.

Few in Westminster, beyond the Liberal Democrats, are suggesting that the UK is poised to rejoin the EU. But the very manner in which Brexit was “done” appears to have left it brittle, the polls suggest. Britain’s relationship with the 27 EU member states remains a stubbornly open question. For those who believe that Britain’s destiny remains as free-wheeling country outside the EU’s single market and customs union, there can be little confidence that anything on that front has been settled.

The payoff for this autonomy from the EU’s rules and regulations was to be a welter of trade deals around the world that offered greater access for British goods in emerging markets, along with a bonfire of regulations in the City of London that would make it more competitive.

But such has been the lack of progress on such aims that Jacob Rees-Mogg, the Commons leader, felt forced during Johnson’s prolonged fight to stay in Downing Street to warn Tory MPs thinking of voting no confidence that Brexit might yet be thwarted. Perhaps more significantly, the lack of a Brexit dividend since 23 June 2016 has led others sympathetic to Brexit to reconsider whether the deals struck really are optimal. Tory MEP Dan Hannan mused recently that retaining membership of the single market may have been a better option.

Those who worked alongside Johnson in government, and in opposition to him at the negotiating table, point to the cause of this mess of issues being not only the substance of what was negotiated but that it was done with a misplaced boosterism.

Georg Riekeles, diplomatic adviser to the EU’s chief negotiator, Michel Barnier, during the withdrawal agreement and trade negotiations, said Johnson never appeared on top of the details but his decision to disavow the arrangements for Northern Ireland so soon after signing the agreement them astonished even the hardest-nosed officials in Brussels.

“He certainly pushed the boundaries of what one could expect a British prime minister to do very, very far,” Riekeles said. “He negotiated, signed an international agreement and had the House of Commons ratify it one day, only to walk back on it the next.”

The former Tory MP Gavin Barwell told the Guardian that Johnson had won over MPs for his solution to Northern Ireland due to “brazenness and the desperation of people in parliament to find a way out of the deadlock” but that he would be “surprised” if the type of relationship Johnson designed with the EU would last.

“From a Brexiter point of view, the thing that should worry them is that this deal has not settled the argument in this country about what sort of relationship with Europe we want,” Barwell said. “If you are a Brexiter, you should be trying do something that a sufficient proportion of the population accepted so that there was no question of reopening the question. I would be surprised if we rejoined in the medium term but I would be equally surprised if a future government didn’t negotiate a closer deal.”

Brexit, he suggested, is far from done.

Reuters: Sanctions on Russia's debt entangle default insurance payouts

Investors hit by Russia's debt default may have to settle some of their positions privately if the U.S. Treasury does not green-light an auction that would allow billions of dollars of insurance to be paid out.

Russia last month defaulted on its international bonds for the first time in decades under the pressure of Western sanctions. While investors have already written down a large part of their debt holdings, an outstanding question is how they can recoup some of those losses through credit default swaps (CDS) - an insurance against defaults. A large chunk of those CDS are held by U.S. bond giant PIMCO.

"If this is not resolved for months and months, maybe there is an opportunity to settle in a private way," said Yerlan Syzdykov, global head of emerging markets and co-head of emerging markets fixed income at Amundi, who owns both Russia bonds and CDS.

An auction would normally be held to determine the price of the underlying bonds, but the Treasury's Office of Foreign Assets Control (OFAC) last month banned U.S. investors from buying any Russian securities in secondary markets. That's clouded the outlook for an auction and sent investors searching for alternatives.

Russia failed to pay $1.9 million of extra interest on a bond payment in May, which the Credit Derivative Determinations Committee (CDDC) established was a "credit event," meaning it would trigger the payment of Russian CDS.

Since then, the CDDC, which includes fund managers and banks, has issued several statements postponing a decision on how to hold an auction. On Wednesday it said it would meet again next week.

"This is unprecedented" in the CDS market, said Gregory Chartier, a senior associate at law firm Clifford Chance.

Syzdykov said his firm was working with lawyers to explore alternative plans, "and then maybe start negotiating directly with counterparties and determine some kind of a settlement solution outside of the auction process if it were not to happen."

Because it would be illegal under OFAC guidance for a U.S. seller of protection to receive Russian bonds through a so-called physical settlement, a possible solution would be a cash settlement, in which the price of the bonds is established by seeking quotes from dealers, said Chartier.

One of the largest parties exposed to CDS is PIMCO, which manages $2 trillion in assets and had "sell protection" notional exposure to Russian CDS of around $1 billion as of the end of March, meaning it could have to pay up to that amount in case of a credit event.

PIMCO also had over $1.5 billion of Russian government bonds as of the end of March, although their market value by then had dropped to roughly $180 million.

For CDS issuers the payout could have been an opportunity to get delivered bonds that are now trading at huge discounts and cling to hopes they could gain value should the Ukraine crisis find a resolution, financial sources have said.

PIMCO declined to comment.

CNBC: Russia and China are still friends

China and Russia have demonstrated “strong resilience and strategic determination” in their relationship amid a volatile global landscape, Chinese Foreign Minister Wang Yi said, according to CNBC’s translation of the Chinese foreign ministry statement.

Wang met Russian Foreign Minister Sergei Lavrov Thursday on the sidelines of the Group of 20 summit in Bali, Indonesia, said the Ministry of Foreign Affairs statement on Friday.


Photo: RUSSIAN FOREIGN MINISTRY/REUTERS

In relation to Russia-Ukraine, Beijing will continue to uphold an “objective and fair” stance, and support all efforts toward a peaceful resolution to the crisis, Wang said, according to the ministry.

Beijing has so far refused to call Russia’s attack on Ukraine an invasion. After a high-profile meeting between Chinese President Xi Jinping and and Russian President Vladimir Putin in February, a readout said there were “no limits” or “forbidden areas” of cooperation, without mentioning Ukraine.

Wang also said Beijing was willing to work with all states including Russia to execute plans from the recent virtual BRICS summit, according to the statement.

China hosted the 14th BRICS summit late last month, attended by the five member states Brazil, Russia, India, China and South Africa. The group sees itself as a voice for developing countries.

Lavrov reinforced that Russia and China would uphold their commitment to act responsibly and look toward safeguarding the UN Charter.

Russia-China relations should not be subject to “external interference” as both countries pursue further cooperation, Lavrov said, according to the Chinese ministry statement.

Lavrov said Moscow is looking toward expanding further bilateral cooperation with China.

According to the statement, Wang said many developing countries are looking to resist hegemony and unilateralism.

He said he was concerned that multilateralism was lost and that some countries were looking to uphold their own standards as opposed to those that promote international order as set through the United Nations.

Meanwhile, Wang said China will also continue to pursue Xi’s vision for global security and will work with all parties to ensure that is on track.

CNN: How a dirty flip-flop could cause catastrophe in Australia

It's winter in Australia and for the first time in three years thousands of residents are flying to the Indonesian island of Bali to spend the July school holidays basking in the sun.

But Australian officials are becoming increasingly concerned about what they'll bring home and are considering advising travelers to leave their flip-flops -- known as thongs in Australia -- in Bali.

Foot and mouth disease (FMD) is rapidly spreading through cattle in Indonesia, and on Tuesday the first cases were confirmed in Bali, a popular tourist destination with direct flights to seven Australian cities.

"Foot Mouth Disease would be catastrophic if it were to arrive in Australia," said the country's Chief Veterinary Officer Mark Schipp, who's advising the government on ways to keep the virus out.

FMD is harmless to humans but causes painful blisters and lesions on the mouths and feet of cloven-hooved animals including cattle, sheep, pigs, goats and camels, preventing them from eating and in some cases causing severe lameness and death.

The disease is considered the greatest biosecurity threat to Australian livestock and an outbreak could lead to mass culls of infected animals and shut down Australia's lucrative beef export market for years to come.

"The impacts on farmers if foot and mouth gets in are too gut-wrenching to even contemplate," said Fiona Simson, president of the National Farmers' Federation. "But it's not just about farmers. Wiping $80 billion off Australia's GDP would be an economic disaster for everyone."

Australia has started ramping up biosecurity controls at airports, checking luggage for meat and cheese products and warning tourists that dirt on their shoes could inadvertently cause Australia's first FMD outbreak in 150 years.

But one control that hasn't been rolled out yet is footbaths -- containers of potent chemicals that new arrivals step into to kill traces of the disease they may be carrying on their shoes. The problem is that footwear typically worn in laid-back Bali isn't compatible with standard biosecurity measures.

"A lot of people returning from Bali are not wearing boots, they're wearing flip flops or thongs or sandals and you can't really afford to get that chemical on your skin," said Schipp.

He said officials are considering telling tourists to abandon their shoes.

"Not to wear any shoes at all, or to leave the footwear behind," Schipp said. "If you're wearing thongs in Bali, then leave them behind in Bali."

The advice hasn't become an official instruction -- yet -- and is one of several options being considered, he added.

Indonesia outbreak

Foot and mouth is already spreading fast in Indonesia, where the first cases were detected in April. By May Indonesian authorities had alerted Australia, which -- along with New Zealand, Central and North America, and continental Western Europe -- is free of FMD.

Indonesia tried to roll out a vaccination program, but by June 27, only 58,275 of the country's roughly 17 million-strong herd had been vaccinated, Agriculture Minister Syahrul Yasin Limpo said in a tweet.

Schipp said the slow rollout reflected the logistical challenges in a decentralized country comprised of thousands of islands.

The timing of the outbreak has been disastrous in Indonesia, coming weeks before Idul Adha, the "feast of sacrifice," when animals are typically sold in large volumes for slaughter over three days from July 10. After families pray and share a meal together, they sacrifice livestock and distribute the meat to the poor.

Mike Tildesley, an expert in infectious disease modeling at the University of Warwick, told CNN it's not the slaughter that dramatically heightens the risk of infection but the "significant movement of animals in the lead up to the festivals."

"It is also possible for transmission to occur as a result of contact with carcasses, particularly in the first few hours after slaughter and that's why disposal of potentially infected carcasses has to be handled with great care," he said.

By July 7, Indonesia's outbreak had spread to more than 330,000 animals in 21 provinces, according to the Agriculture Ministry. Thousands more doses of vaccine had arrived from France, and more than 350,000 animals had been immunized.

Fine line between disease and vaccination

When foot and mouth was detected in sheep in the United Kingdom in 2001, the results were devastating. At the time, the government's contingency plans covered an infection on 10 properties, according to a government report.

Instead, the disease spread to 57 locations before it was detected, and then a lack of coordination slowed the rollout of emergency vaccinations.

In the seven months it took to eliminate the virus, more than 6 million animals were killed.

The UK was readmitted to the list of countries free from FMD the following year, but the impact went far wider than trade.

The report found that "tourism suffered the largest financial impact from the outbreak, with visitors to Britain and the countryside deterred by the initial blanket closure of footpaths by local authorities and media images of mass pyres."

The entire episode cost the government and the private sector a total of 8 billion pounds ($9.5 billion).

Other countries have learned lessons from the UK's response, and typically if an outbreak is detected, a ban on movement would be imposed before animals are culled and sites decontaminated.

For Australia, vaccinating animals is only an option once the virus gets in, because its trading partners don't differentiate between a vaccinated and a diseased animal.

"If we were to vaccinate preemptively, we would lose our animal health status as a country free of foot and mouth disease and we would lose our trade and market access," said Schipp.

Until potentially contaminated shoes are discarded or footbaths become mandatory, Schipp says the best defense is education. Advertising campaigns are being introduced in airports and on social media -- but Schipp said that doesn't mean telling tourists to stay away from cows.

Picked and squeezed for you: Irina Iakovleva