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Macron is building a new European society while the U.S. is abolishing the fundamental rights of women

27-6-2022 |

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

Reuters: Russia slips into default zone as payment deadline expires

Russia looked set for its first sovereign default in decades as some bondholders said they had not received overdue interest on Monday following the expiry of a key payment deadline a day earlier.

Russia has struggled to keep up payments on $40 billion of outstanding bonds since its invasion of Ukraine on Feb. 24, as sweeping sanctions have effectively cut the country off from the global financial system and rendered its assets untouchable to many investors.

The Kremlin has repeatedly said there are no grounds for Russia to default but it is unable to send money to bondholders because of sanctions, accusing the West of trying to drive it into an artificial default.

Russia's efforts to avoid what would be its first major default on international bonds since the Bolshevik revolution more than a century ago hit a insurmountable roadblock in late May when the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) effectively blocked Moscow from making payments.

"Since March we thought that a Russian default is probably inevitable, and the question was just when," Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel, told Reuters. "OFAC has intervened to answer that question for us, and the default is now upon us."

While a formal default would be largely symbolic given Russia cannot borrow internationally at the moment and doesn't need to thanks to plentiful oil and gas export revenues, the stigma would probably raise its borrowing costs in future.

The payments in question are $100 million in interest on two bonds, one denominated in U.S. dollars and another in euros , Russia was due to pay on May 27. The payments had a grace period of 30 days, which expired on Sunday.

With no exact deadline specified in the prospectus, lawyers say Russia might have until the end of the following business day to pay the bondholders.

Rodrigo Olivares-Caminal, chair in banking and finance law at Queen Mary University in London, said clarity was needed on what constituted a discharge for Russia on its obligation, or the difference between receiving and recovering payments.

"All these issues are subject to interpretation by a court of law, but Russia has not waived any of its sovereign immunity and has not submitted to the jurisdiction of any court," Olivares-Caminal told Reuters.

In some ways, Russia is in default already.

A committee on derivatives has ruled a "credit event" had occurred on some of its securities, which triggered a payout on some of Russia's credit default swaps - instruments used by investors to insure exposure to debt against default. This was triggered by Russia failing to make a $1.9 million payment in accrued interest on a payment that had been due in early April.

The OFAC had issued a temporary waiver, known as a general licence 9A, in early March to allow Moscow to keep paying investors. It let it expire on May 25 as Washington tightened sanctions on Russia, effectively cutting off payments to U.S. investors and entities.

The lapsed OFAC licence is not the only obstacle Russia faces as in early June the European Union imposed sanctions on the National Settlement Depository (NSD), Russia's appointed agent for its Eurobonds.

President Vladimir Putin signed a decree last Wednesday to launch temporary procedures and give the government 10 days to choose banks to handle payments under a new scheme, suggesting Russia will consider its debt obligations fulfilled when it pays bondholders in roubles.

"Russia saying it's complying with obligations under the terms of the bond is not the whole story," Zia Ullah, partner and head of corporate crime and investigations at law firm Eversheds Sutherland told Reuters.

"If you as an investor are not satisfied, for instance, if you know the money is stuck in an escrow account, which effectively would be the practical impact of what Russia is saying, the answer would be, until you discharge the obligation, you have not satisfied the conditions of the bond."

France24: Is Macron’s ‘European Political Community’ a realistic prospect?

France’s presidency of the EU ends on June 30 with Emmanuel Macron’s new big idea, a “European Political Community”, hanging in the balance.

This community would encompass EU membership candidates like Ukraine and possibly ex-member Britain.


Photo:

For some observers, the French president’s idea offers a way to bring countries into the European project while the long accession process takes its course. Others argue that Macron’s plan offers few clear objectives.

EU leaders discussed – but did not advance – Macron’s vision for this new European structure at their summit in Brussels on Thursday, which capped France’s six-month presidency of the EU.

This proposed Community would be a framework for EU members and democratic, European non-members to discuss shared interests. Its overriding goal would be “stabilising the European continent”, Macron said on a trip to Moldova earlier this month.

Macron put forth the idea in an address to the EU Parliament in early May, arguing that this was necessary to square a circle and allow Ukraine, Moldova, North Macedonia, Albania, Serbia, Bosnia and Kosovo to join the European fold even if they are not yet ready for EU membership. But the organisation would be open to all democratic European countries, so Norway (a single market member), Iceland (also in the single market), Switzerland (linked to the EU by a plethora of bilateral deals) and the UK (famously an ex-member) could join. The group could also encompass the former Soviet republics of the Caucasus, Georgia, Armenia and Azerbaijan.

“Ukraine, through its combat and its courage, is already today a member of the heart of our Europe, of our family, of our Union,” Macron said.

On the other hand, the French president went on, “even if tomorrow we granted them the status of candidate for membership of our European Union […] we all know perfectly well that the process allowing them to join would take several years – in truth, probably several decades. And it is the truth to say this, unless we decide to lower the standards of this membership and therefore to completely rethink the unity of our Europe.”

The EU 27 fast-tracked Ukraine to membership candidate status on Thursday, 27 June, suggesting that Macron was stretching a point by saying “decades”. Nevertheless, Ukraine needs a lot of heavy lifting before it can join the bloc – especially in terms of tackling endemic corruption and matching EU rule of law standards.

In Brussels on Thursday for an EU-Western Balkans summit, North Macedonian Prime Minister Dimitar Kovacevski said Macron’s proposal was a good idea but emphasised that it “should not and must not be a substitute for full European Union membership”.

The UK has the most ambiguous stance of all potential members of a European Political Community. British Prime Minister Boris Johnson expressed “lots of enthusiasm” for Macron’s idea during discussions with the French president on the sidelines of Sunday’s G7 summit in Bavaria, the Élysée Palace told Agence France Presse.

However, last month Foreign Secretary Liz Truss (a frontrunner to succeed the politically damaged Johnson) scorned Macron’s idea, telling Italian newspaper Corriere della Sera:

“My preference is to build on structures that we already have that work successfully, whether it is the G7 or NATO.”

Macron's idea is likely to meet the same fate as that of François Mitterrand, who proposed the creation of a European confederation after the destruction of the Berlin Wall in 1989, - and for the same reason. So says Richard Whitman, a professor of European politics and international relations at the University of Kent:

“If you read the extensive European Council conclusions on it, what they’re saying basically nullifies the idea, because they’re saying [Macron’s proposal] shouldn’t do anything to undermine the EU or the process of enlargement – so, for those who want to be EU members, it sends out a nice message, but its purpose in not clear.”

“I especially liked what Macron said at the end of his speech setting out the idea last month – ‘act decisively, move swiftly, dream big’,” added Andrew Smith, a professor of French politics at the University of Chichester. “I think there’s a laudable idea there about an active EU that seeks to really engage with the world, instead of watching things pass by or insulating its citizens from phenomena coming from elsewhere. And engaging with the UK in a way that avoids the diplomatic spats of recent years is certainly a good thing.”

However, beneath the surface, Smith concluded, outside of France it looks like Macron’s idea is less attractive in practice than in theory: In the absence of concrete, specific goals, “the concern is that this would create a forum for political grandstanding, especially for disgruntled candidate states who are frustrated by the length of time their EU accession takes”.

Politico: ‘This is a crisis’: Politicians dig in on abortion following Supreme Court ruling

It was clear on Sunday that the Supreme Court decision to overturn decades of abortion precedent has only further cemented Republican and Democratic entrenchment in their positions on the issue.

“I am horrified … that my daughters will have fewer rights than I’ve had virtually my whole life,” Michigan Gov. Gretchen Whitmer, a Democrat, said Sunday on CBS’ “Face the Nation,” a comment reflective of the emotional response to Dobbs v. Jackson Women’s Health Organization.

Friday’s 5-4 ruling from the court’s conservative bloc to reverse Roe v. Wade and other landmark abortion rights cases and clear the way for state governments to regulate or eliminate the practice is likely to ensure that it remains a national issue for the foreseeable future, as well as fuel debates on the future of the Supreme Court.

Leaders of both parties are treating the ruling as a turning point in the country’s history that will shape state and local politics for decades — and that has already created a patchwork quilt of abortion policies across the nation.

“The right to choose should not be divvied up amongst states,” said Stacey Abrams, the Democratic gubernatorial nominee in Georgia, on CNN’s “State of the Union.” “The sinister practice of taking constitutional rights and allowing each state to decide the quality of your citizenship is wrong. Women deserve bodily autonomy. They deserve the right to make these choices.”

Abrams added that abortion is a decision that ought to be left to pregnant individuals and their medical providers, rather than “a political football where ideology of the leader of a state can determine the quality of life for a woman and her ability to make the choices she needs.”

“The president and the Democratic Party need to come to terms with, is that this is not just a crisis of Roe — this is a crisis of our democracy,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said on NBC’s “Meet the Press.”

Sen. Elizabeth Warren (D-Mass.) said the Supreme Court has “lost legitimacy” with its momentous decisions on abortion and other high-profile cases under the conservative majority, and she argued that expanding the bench was a necessary corrective.

By contrast, conservatives have hailed the decision as a victory for the “pro-life movement” and its half-century campaign against abortion.

“I don’t believe that we ought to go back to saying there ought to be a national law that’s passed,” said Arkansas Gov. Asa Hutchinson on NBC’s “Meet the Press.” “We fought for 50 years to have this returned to the states. We’ve won that battle. It’s back to the states. Let’s let it be resolved there.”

One Republican lawmaker garnered condemnation for calling the Supreme Court’s decision a “historic victory for white life” during a rally on Saturday with former President Donald Trump.

“President Trump, on behalf of all the MAGA patriots in America, I want to thank you for the historic victory for white life in the Supreme Court yesterday,” said Rep. Mary Miller (R-Ill.), who is facing fellow GOP Rep. Rodney Davis (R-Ill.) because of redistricting.

A spokesperson for Miller has said she misspoke while reading from her prepared remarks and intended to say “right to life.”

In the meantime, states that protect abortion rights are taking steps to make accessing those services easier — including anticipating an uptick in visitors from parts of the country where abortion will no longer be available.

A CBS News/YouGov poll conducted after the Supreme Court decision found that nearly 60 percent of those surveyed disapproved of the ruling, including more than two-thirds of women.

More than half also believe the case was “a step backward for America,” compared with 31 percent who said it was “a step forward.”

President Joe Biden sought to tap into that sentiment in a speech Friday, saying that “voters need to make their voices heard.”

“This fall, Roe is on the ballot. Personal freedoms are on the ballot. The right to privacy, liberty, equality — they’re all on the ballot,” he said.

CNBC: Russia’s neighbors fear NATO’s defense plans are not fit for purpose

Everything changed when Russia invaded Ukraine and NATO’s defense strategy must now account for the new security environment on Europe’s eastern flank. That’s the coordinated message from the three Baltic countries of Estonia, Latvia and Lithuania ahead of NATO’s all-important Madrid summit this week.

Bolstering the defense of the Baltic region is seen as one of the most important decisions for NATO leaders to take at the group’s June 29-30 summit.

The 30-member military alliance is poised to reflect on how the group can respond to Europe’s new security reality.

Russia’s onslaught in Ukraine, now into its fifth month, has ratcheted up fears throughout the Baltic countries that they may be President Vladimir Putin’s next military target.

All member states of both NATO and the European Union, Estonia, Latvia and Lithuania have repeatedly called on NATO to provide a substantial increase in the number of foreign troops stationed in the region following Russia’s invasion of Ukraine on Feb. 24.

That’s because, under NATO’s existing strategy, Estonia’s Prime Minister Kaja Kallas has warned that the former Soviet state and its historic capital city of Tallinn would be “wiped off the map” in the event of a Russian attack, according to The Financial Times.


Estonia’s Prime Minister Kaja Kallas
Photo: Valitsuse kommunikatsioonibüroo

Kallas told reporters last week that NATO’s tripwire approach, which involves a relatively small number of troops, would likely see Estonia overrun before NATO then took measures to liberate them after 180 days.

“There is a shared understanding that the tripwire approach is obsolete — Bucha and Irpin cannot be repeated,” a spokesperson at Estonia’s foreign ministry told CNBC.

“We need a credible military construct on the Eastern flank that will deter Putin. This should include more Allied presence.”

The U.K., which has been a NATO framework nation for the forces in Estonia since 2017, has doubled its forces in the country following Russia’s actions since the start of the year. France and Denmark, among others, have also increased their presence in Estonia in recent months.

Even though the Baltic states have been a part of NATO and the EU since 2004, with all three using the euro as their currency, their geographic location makes them vulnerable. Like Ukraine, they all share a border with Russia.

Earlier this month, Lithuania banned the transit of some EU-sanctioned goods coming from Russia to Kaliningrad, which uses rail links via Lithuania for passengers and freight. The move prompted the Kremlin to warn of “serious consequences” that would make citizens of the Baltic state feel the pain.

A spokesperson for Lithuania’s foreign ministry said Europe’s new security reality demands that NATO leaders agree on a new baseline for the alliance’s posture in the region. This means moving from “forward presence,” referred to as deterrence by punishment, to “forward defense,” known as deterrence by denial.

“We seek that NATO’s deterrence and defence adaptation takes into account geographic and geopolitical specificities of our region,” Lithuania’s foreign ministry told CNBC, citing Russia’s military superiority in the region, the Kremlin’s military integration with Belarus and the “Suwalki corridor” — a 65-kilometer strip of land in Poland along the border with Lithuania.

“After Russian aggression against Ukraine started, the strategic security environment changed irreversibly across the Euro-Atlantic area,” a spokesperson for Latvia’s foreign ministry said. “The new reality of today demands a fundamental shift in NATO’s long-term deterrence and defence posture.”

Picked and squeezed for you: Irina Iakovleva