Tag Archives: Brussels

Italy election: Populist surge prompts political deadlock

Italy’s voters have turned to right-wing and populist parties in an election that is set to leave the country with a hung parliament.

The Eurosceptic, anti-establishment Five Star Movement was the biggest party with almost a third of the vote.

But a coalition of the far-right League and centre-right of ex-Prime Minister Silvio Berlusconi is set to win most seats in the lower house of parliament.

Forming a government may now take weeks of negotiation and coalition-building.

One of the biggest winners was League leader Matteo Salvini who declared his party had the “right and duty” to govern at the head of a right-wing coalition.

Results showed the League conquering broad swathes of Italy’s north, while Five Star saw its strongest show of support in the south.

Continue reading Italy election: Populist surge prompts political deadlock

Visegrad 4 cools on Europe, and each other

Doubts grow on how bloc of 65 million can function at critical time in EU history.

Central Europe’s unity is cracking.

The common purpose the region rediscovered during the refugee crisis has frayed in recent months amid differences over matters large and small, concerning everything from regulatory fine print to the future of Europe.

Continue reading Visegrad 4 cools on Europe, and each other

EU court dismisses Hungary, Slovak case against taking refugees

LUXEMBOURG (Reuters) – The European Union’s top court dismissed complaints on Wednesday by Slovakia and Hungary about EU migration policy, upholding Brussels’ right to force member states to take in asylum seekers.

In the latest twist to a divisive dispute that broke out two years ago when over a million migrants poured across the Mediterranean, the European Court of Justice found that the EU was entitled to order national governments to take in quotas of mainly Syrian refugees relocated from Italy and Greece.

Continue reading EU court dismisses Hungary, Slovak case against taking refugees

George Soros Higher education Europe European Union Italy news

Financier says his Central European University is still under threat folllowing Viktor Orbán’s curbs on foreign ownership

George Soros has accused the Hungarian prime minister Viktor Orbán of building a “mafia state”, as he warned the fate of the Central European University he founded still hangs in the balance.

Continue reading George Soros Higher education Europe European Union Italy news

Tillerson To Push NATO Allies On Military Spending, Press Russia On Ukraine

U.S. Secretary of State Rex Tillerson has arrived in Brussels to attend a March 31 NATO meeting that was rescheduled to allow him to attend.

A senior State Department official told reporters that Tillerson will push alliance members to increase their defense spending and will work with allies to press Russia to abide by the Minsk agreement to end the crisis in Ukraine.

Continue reading Tillerson To Push NATO Allies On Military Spending, Press Russia On Ukraine

Parts of UK that voted for Brexit may be hardest hit, study finds

Researchers say Wales and north-east are among areas most vulnerable to loss of funding, tariffs on exports and shortage of European workers

Wales is more dependent on EU grants than other areas and faces the possibility of high tariffs on its exports, such as lamb, the analysis found. Photograph: Ben

Several parts of Britain that voted to leave the European Union are among the most vulnerable to the economic impact of Brexit, according to new research published as the government prepares to trigger article 50.

Continue reading Parts of UK that voted for Brexit may be hardest hit, study finds

EU threatens UK with astronomical £500BILLION Brexit DIVORCE BILL

THE EUROPEAN Parliament’s top Brexit negotiator has said Britain could face a £500billion (€600bn) Brexit divorce bill – ten times the figure initially expected.

Late last year it was widely reported Eurocrats were planning on slapping the UK with a £50billion (€60billion) exit bill as punishment for voting to abandon Brussels in the June referendum.

The EU defended the demand as it argued Britain had unpaid budget commitments, pension liabilities and loan guarantees to honour.

Continue reading EU threatens UK with astronomical £500BILLION Brexit DIVORCE BILL

Malta raises alarm on Russia in Libya

A Russia-backed Libyan warlord could start a “civil war” in Libya, increasing refugee flows to the EU, Malta has warned.

The danger comes as the Libyan commander, Khalifa Haftar, advances on Tripoli, the seat of the UN-recognised government, Malta’s foreign minister, George Vella, told press in Valletta on Friday (12 January).

Continue reading Malta raises alarm on Russia in Libya

EXCLUSIVE: Belgian Intelligence Had Precise Warning That Airport Targeted for Bombing

Attack in subway likely also known in advance by Belgian and Western agencies; attack plan was formulated at de-facto ISIS capital of Raqqa, in Syria.

The Belgian security services, as well as other Western intelligence agencies, had advance and precise intelligence warnings regarding the terrorist attacks in Belgium on Tuesday, Haaretz has learned.
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The security services knew, with a high degree of certainty, that attacks were planned in the very near future for the airport and, apparently, for the subway as well.

Despite the advance warning, the intelligence and security preparedness in Brussels, where most of the European Union agencies are located, was limited in its scope and insufficient for the severity and immediacy of the alert.

As far as is known, the attacks were planned by the headquarters of the Islamic State (ISIS) in Raqqa, Syria, which it has pronounced as the capital of its Islamic caliphate.

The terror cell responsible for the attacks in Brussels on Tuesday was closely associated with the network behind the series of attacks in Paris last November. At this stage, it appears that both were part of the same terrorist infrastructure, connected at the top by the terrorist Salah Abdeslam, who was involved in both the preparation for the Paris attacks and its implementation.

Abdeslam escaped from Paris after the November attacks, hid out in Brussels and was arrested last week by the Belgian authorities.
Abdeslam’s arrest was apparently the trigger for Tuesday’s attacks, due to the concern in ISIS that he might give information about the planned attacks under interrogation, particularly in the light of reports that he was cooperating with his captors.

The testimony of the detained terrorist, alongside other intelligence information, part of which concerned ISIS operations in Syria, should have resulted in much more stringent security preparedness in crowded public places in Brussels, along with a heightened search for the cell.

As of now, the search is focused on the terrorist Najim Laachraoui, who created the explosive vests used by the bombers and escaped from the airport at the last moment.

There is concern, however, that other cells connected to ISIS in Western Europe will attempt to carry out additional attacks in the near future, either in Belgium or in other countries involved in the war against the terror organization in Syria and Iraq.

At least 31 people were killed and 260 wounded in the terrorist bombings at the Brussels airport and in the subway system on Tuesday. Responsibility for the attacks was claimed by ISIS.

Belgian authorities have named the two airport attackers as brothers Ibrahim and Khalid El Bakraoui. Laachraoui, who was photographed with the brothers at the airport and was observed fleeing the scene, is the subject of a massive manhunt.

The Belgium Question: Why Is a Small Country Producing So Many Jihadists?

Relative to its population, no other country in Europe sends as many young...

Relative to the size of its population, no other country in Europe sends as many young jihadists to Syria as Belgium does. But why? Some say one problem lies with the fractured nature of the country itself.

Chantal Lebon last saw her son at a bus stop in Brussels. That was two years ago in October “at exactly 10:25 p.m.,” she says. Abdel had driven his mother there in a car, stopped in a parking spot and lifted her suitcase onto the sidewalk.

“Au revoir, maman,” he said. “Au revoir, mon fils,” she replied. It was only months later that she would again see her son’s face — in a YouTube video. It showed him wearing a Palestinian keffiyeh and holding a Kalashnikov. The video was stamped with the flag used by the Islamic State in Syria.

Chantal Lebon is a small, energetic 64-year-old retired nursery school teacher with blue eyes and graying hair. She has come to a café to tell us the story of her son Abdel, the story of a Belgian child who became a radical Islamist fighter at the age of 23. Abdel had nothing to do with the attack plans in Belgium, his mother says. But, she confirms, her son is a jihadist.

On the way to the Brussels café, she saw the soldiers standing guard in front of police stations, court houses and the city hall. The Belgian government raised the country’s terror alert to the second highest level after officials were able to foil attacks targeting police and Jewish schools earlier this month.

At the European Parliament, events with more than 100 foreign guests have been banned and a military vehicle guards the entrance to the European Commission.

Since Jan. 15, the day two potential attackers died in Verviers during a police raid and the terror threat in the country became obvious to all, much has changed in Belgium.

Thirteen terror suspects have been arrested in the country this month, but the suspected ringleader of the alleged attack plans, a 27-year-old named Abdelhamid Abaaoud, remains at large and is thought to be in Greece. “I pray that Allah destroys all those who oppose Him,” he said in a video. Like Chantal Lebon’s son, Abaaoud also lived in Molenbeek, a district in western Brussels.

Because she is worried that her son Abdel could be behind the next terror plot in Belgium, she would rather remain anonymous and her name, as well as that of her son, has been changed for this story.

Belgian police block a street in central Verviers during the anti-terror raids...

Tiny Belgium and the Jihad

Up to 4,000 Europeans have joined the jihad in Syria, with 1,200 of them coming from France and between 500 and 600 each from Great Britain and Germany according to the most recent estimates by the International Centre for the Study of Radicalization in London.

Tiny Belgium, with its population of 11 million, has sent fully 440 young men to the battlefields of Aleppo, Homs and Damascus. Relative to population size, no other Western European country has sent more.

Abdel grew up with his family in the Arabic quarter of Molenbeek. The Brussels region provides home to people from over 100 different countries: from Congo and Morocco, but also increasingly from the Middle East or Chechnya.

New immigrants arrive in a traditionally Catholic country whose Jewish and Muslim communities are growing — and a state that has been suffering from extremely high sovereign debt levels since the mid-1980s.

Abdel didn’t grow up in poverty — his father was a teacher — nor did he have any problems in school. But because his father is from Africa, he is dark skinned and his mother said he never really felt like he belonged as a result. Furthermore, other children made fun of him.

In the aftermath of the terror raids, Belgium raised its terror threat level...

Once he got his high school diploma, he moved into an apartment of his own, though his mother came by regularly to clean. It was then that he told her that he had converted to Islam and she noticed he had begun learning Arabic. His room was suddenly full of books and his mother was initially pleased because it seemed as though her son was pursuing something worthwhile.

But Abdel’s changes became increasingly pronounced. Before long, he began wearing a djellaba, the robe traditionally worn in the Maghreb, and when visiting his mother, he would use the bathroom carpet for praying. He no longer touched his favorite food, lasagna, because the meat wasn’t halal.

On Saturdays, he would take to the streets to hand out food to the poor. “Mother, please convert to Islam too,” he often asked, she says, “so that we will meet again in paradise.”

Never Complained

His mother pulls a tablet out of her bag to show the YouTube video. Five men with the black Islamic State flag are seen standing in a parched landscape.

One of the fighters says: “God willing, we will carry the flag of victory to Jerusalem and into the White House. God willing, this man from Belgium will show us what a good Muslim is.” Abdel looks happy in the video.

Abdel’s mother says he would call from time to time, saying that he was engaged in humanitarian aid in Syria. He also told her of friends who had been killed, but he never complained, she says.

Eventually, Abdel’s mother stopped asking when he planned on returning. Her son also told her about air strikes carried out by the US. And at the end of December, he said: “Because the telephone is being monitored, it is too dangerous to talk, mama.” He then hung up and they haven’t spoken since.

In Molenbeek, where Abdel used to live, the streets are full on this evening. Groups of men stand in front of the cafés and a vegetable seller is packing up his tomatoes. Here, on the fourth floor of a narrow row house, Montasser AlDe’emeh opens the door. AlDe’emeh has become a popular interview partner of late for those wanting to know why Belgium is losing its youth to the jihad.

Twenty-six years old, AlDe’emeh was born to Palestinian parents in a refugee camp in Jordan, but grew up in Molenbeek. He majored in Islamic studies in college and is currently writing his dissertation: “Western Fighters in the Context of International Jihadism.” There is likely no other academic in Belgium who is closer to the scene than he is.

“We are living in a divided country,” AlDe’emeh says. Many young Muslims lack an identity, he says, adding that they don’t feel Belgian because Belgium as a country doesn’t really exist. Flemish, Walloons and the German minority live side-by-side, he says, carefully segregated in regions and language communities following myriad state reform efforts. “The clear structures of an Islamic theocracy are thus more attractive for many,” he says.

Belgium has been in the spotlight this month after raids on Jan. 15 broke up an...

Nutella in Turkey

Furthermore, most Muslims in the country don’t really feel as though they are represented politically. They used to vote for the Flemish Social Democrats, AlDe’emeh says, but then the government implemented a ban on wearing the burqa and niqab in public.

Today, the influx of radical Islamists is particularly significant in Flemish cities like Antwerp, Mechelen and Vilvoorde in addition to Brussels. It is precisely the same region where the right-wing populist party Vlaams Belang has spent years hounding the Muslim population.

Islam, as practiced in Belgium, is also failing to reach young people, AlDe’emeh says. There are 150 mosques in Flanders, but Arabic is spoken in almost all of them, he says, a language that second-generation immigrant youth can’t understand. Instead, they stumble across hate preachers on YouTube and see the suffering of people in Syria. “They travel to Syria to heal themselves,” AlDe’emeh says.

In June 2013, he visited a group of Belgian jihadists in Syria; a middleman brought him to the western part of Aleppo. The Belgians were living there in a villa belonging to Syrians who had fled the country. AlDe’emeh spent 15 days with the fighters, who belonged to the Islamist group al-Nusra Front.

During the day, they patrolled the front lines and afterwards they would sit on pillows holding their AK-47s and talk about the fight against Bashar Assad. In the evenings, they went swimming or snuck across the border into Turkey to buy Nutella.

The structures inside the al-Nusra Front, AlDe’emeh says, are hierarchical. There is an emir who grants permission to those, like AlDe’emeh himself, who wish to visit. Beneath him are the regional heads who are responsible for specific provinces. They, in turn, control commanders who are responsible for Syrian and Western fighters.

“Everyone knew exactly what he was supposed to do,” AlDe’emeh says. “The Belgians were in good spirits. They liked the structures.” Likely also because al-Nusra, similar to Islamic State, made young men like Abdel full-fledged members of a nation, fictional though it may be.

One of the suspects in the Sharia4Belgium trial arrives in the courthouse in...

Dreaming of Lasagna

In the search for a sense of belonging, many Muslims joined Sharia4Belgium, a terror group that is currently the target of judicial proceedings in Antwerp. Forty-six alleged members of the organization have been charged, all suspected of having recruited fighters in Belgium for the jihad in Syria or of fighting there themselves.

They also stand accused of having kept the US journalist James Foley prisoner. He was later decapitated by Islamic State. A verdict in the case is expected to come in February.

SPIEGEL was able to speak with one of the group’s members by telephone. His name is Younes Delefortrie, a 26-year-old who was born in Belgium and who speaks perfect English.

He says he spent two months in Homs, but insists that he didn’t kill anybody. He says he joined Sharia4Belgium because he was uninterested in an Islam that didn’t take its own rules seriously.

In Belgium, Delefortrie says, he felt discriminated against, specifically complaining that he hadn’t been allowed to pray at work.

He also said that there were so many regulations pertaining to the construction of mosques that when they were finished, they looked like garages. “If you spend years pounding on someone, it is only logical that he fights back,” Delefortrie says.

Abdel’s mother says that she now regularly meets in Brussels with 15 other mothers whose sons are also fighting in Syria. They met on the day after the attack on Charlie Hebdo in Paris. Abdel’s mother told the gathered women of a dream she had had after seeing so much blood on the television. “I saw my son walking on a street in Paris. He wasn’t carrying a weapon. He was peaceful.” In the dream, Abdel then came home. He sat down silently in the kitchen and put his hands on the table. She went over to the stove and cooked him his favorite meal. Lasagna.

EU prolongs Russia sanctions over Ukraine

The 28 EU foreign ministers have formally agreed to extend a set of punitive measures imposed against Russia over its role in the Ukraine conflict. The sanctions have been prolonged for another six months.

EU sanctions against Russia would be extended until January 31 next year, the European Union announced Monday, under efforts to force Moscow to abide by the Minsk ceasefire agreement in the Ukraine conflict.

The 28-nation bloc initially imposed travel bans and asset freezes against Russian and Ukrainian figures for their part in the Ukraine crisis. But after pro-Russian rebels allegedly shot down Malaysia Airlines flight MH17 in July last year, Brussels stiffened its punitive measures.

Since then Russian banks have been cut off from financing on Western markets, and the country’s crucial energy industry has been hit by an export ban on crucial technology.

Russia has retaliated by imposing an embargo on imports of fruit and vegetables from the EU. On Monday, Moscow again condemned the Western measures, saying they were unfounded.

Kremlin Spokesman Dmitry Peskov told reporters that “reciprocity is the basis for our approach.” According to Russian news agency RIA, Russian Prime Minister Medvedev had ordered preparations for possible retaliatory measures following the EU decision.

Crises unresolved

In March, EU leaders agreed in principle to roll the sanctions over by linking them directly to the ceasefire brokered by France and Germany that runs to December this year.

The agreement has largely held since then, but Kyiv and the rebels regularly accuse each other breaching the pact. Earlier this month fighting flared up again, in a conflict which has claimed more than 6,400 lives so far.

Already on Friday, the European Council prolonged until June 2016 sanctions imposed to punish Russia’s illegal annexation of Crimea.

The Council, which groups the bloc’s political leaders, said they continued to “condemn the illegal annexation of Crimea and Sevastopol by the Russian Federation and remains committed to fully implement its non-recognition policy.”

Russia annexed Crimea in March 2014 following the ouster of pro-Moscow president Viktor Yanukovych in Kiev, saying the peninsula had voted overwhelming in favor of returning to its Russian homeland.

The Crimea sanctions include bans on cruise ships using ports there and restrictions on exports of telecommunications and transport equipment, in addition to visa bans and asset freezes against figures said to have helped the Russian annexation.

Does extremism threaten Hungary’s standing in Europe?

Activist and sympathizers of the far-right party Jobbik, in white, show up at a campaign event of the Hungarian left-wing opposition parties in Budapest

European Union leaders face many intractable problems: what to do about Russia, the growing Islamist threat within and beyond its borders, and last but not least the populist backlash shaking the political landscape in a number of countries.

In this last respect, Hungary, and the rise in political extremism there, is a case in point.

Europe has a problem with Hungary, so much so that the European Commission President, Jean-Claude Juncker, was recently overheard calling Hungary’s leader a “dictator” upon his arrival at an EU summit.

The remark was hastily dismissed as a joke, even though it betrays wider European concerns about an apparent weakening of civil institutions and a backlash against civic groups in the country.

Hungary’s Prime Minister, Viktor Orban, is an interesting political case study.

He began as a darling of those on the side of political freedoms, with his strident anti-Communist background.

Yet that all seems a long time ago now.

He hasn’t been helped by Hungary’s economic problems.

The global economic crisis of 2008 hit Hungary hard, leading to an international bailout.

All this helped Mr Orban sweep to power in 2010.

He has presided over an impressive economic turnaround (of sorts), with measures including taxes on banks and other sectors such as energy.

The public debt is coming down slowly and the economy has returned to growth.

Prime Minister Viktor Orban
Viktor Orban delights in ruffling feathers

His supporters credit him with leading the country through the crisis.

But foreign investors fight shy of Mr Orban’s rhetoric and grandstanding, particularly his skirmishes with big business.

And the public have yet to feel much improvement in their purchasing power – as recent by-election defeats for Mr Orban’s Fidesz party show.

Unemployment of just over 7% has been exacerbated by a controversial government work scheme, which does little to retrain participants for the market place.

And Hungarians – the young in particular – in search of a better life are still leaving the country in significant numbers.

Since the local elections last October, Mr Orban has seen his popularity plunge and that of the radical nationalist party Jobbik soar.

His response so far has been a series of measures to win back the far-right vote.

Immigration rhetoric

Last month, his government launched an immigration questionnaire asking Hungarians whether they agreed that immigrants endangered their livelihoods and spread terrorism.

“As Brussels has failed to address immigration appropriately, Hungary must follow its own path,” Mr Orban insisted.

It is, according to critics, part of an increasingly anti-immigrant rhetoric from the Hungarian government.

Mr Orban has also spoken of the possibility of bringing back the death penalty.

There is no realistic likelihood of this, but Mr Orban glories in saying things guaranteed to irk his liberal critics.

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Viktor Orban:

  • born 31 May 1963 in the small Hungarian village of Alcsutdoboz
  • trained as a lawyer before entering politics in mid-20s
  • twice prime minister: 1998-2002 and 2010-present
  • married with five children
  • football fan and player (FC Felcsut)

Profile: Viktor Orban

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His ruling Fidesz party insists on a version of Hungarian history that stresses Hungary’s fate as a victim of World War Two – although government ministers have also acknowledged the country’s shared responsibility for the Holocaust.

All this helps garner support in Hungary itself, and not just from those who are attracted to the political extremes.

Many Hungarians approve of Mr Orban’s populist and Eurosceptic approach.

They believe Brussels has no real idea of the scale of the challenges facing the country and the institutional and social legacy left behind by decades of political and social neglect under Communist rule.

They argue that one-size-fits-all solutions and liberal orthodoxies are too simplistic and one-dimensional.

And yet, rather paradoxically, overall support for the EU remains strong among Hungarians.

That must be in part due to the financial realities.

Jean-Claude Juncker
Jean-Claude Juncker called Mr Orban a “dictator”

The EU gives more than €5bn (£3.7bn) in financial support to Budapest – some 6% of Hungarian GDP.

But the question for some is what does the EU get in return?

The Orban government, like those of Slovakia and the Czech Republic, is a sharp critic of EU sanctions against Russia over the conflict in Ukraine.

More recently, Hungary’s leader attacked fellow EU leaders for what he called their “absurd, bordering on insanity” proposals for migrant quotas.

To his European critics, Mr Orban is a serial offender when it comes to what they call European values, such as respect for human rights.

The row with Europe over the possible return of the death penalty in Hungary is just the latest example. It won’t be the last skirmish of its kind.

In the wings lurks the increasingly popular nationalist party, Jobbik, which has openly anti-Semitic supporters.

A Jobbik MP came to wider public attention a little while back for openly spitting on a Budapest Holocaust memorial.

A few years ago, another leading Jobbik figure claimed, during a debate on the Middle East, that people in authority of Jewish ancestry “pose a national security risk”.

Government rattled

The party has contributed to a worsening of relations with the Roma, Hungary’s biggest ethnic minority community.

The Roma population, which lives on the fringes of Hungarian society, has faced persecution and discrimination for centuries.

Jobbik’s success continues to rattle the government of Hungary.

As recently as April, Jobbik won a parliamentary seat previously held by the ruling Fidesz party.

Gabor Vona
Gabor Vona is trying to rid Jobbik of its extremist reputation

All in all, the political momentum appears to be with Jobbik. And as the party gets stronger and nearer to its ultimate goal of supreme power, it appears to be cleaning up its act.

The party’s leader, Gabor Vona, insists he is determined to rid the party of its unsavoury elements and reposition it as a people’s party like the German CDU or CSU, in a bid to win outright power in the next general elections, due in 2018.

He has been turning down the volume when it comes to the party rhetoric.

“Whoever has a romantic Nazi yearning… has no place in this party,” he declared at a recent political gathering.

Ronald Lauder
Ronald Lauder has warned of reputational damage

Mr Vona appears to want to shed the party’s extremist origins, stay in the EU and work with foreign businesses.

Critics say this is a sham, a cynical ploy to win votes.

In a recent speech in Budapest, the World Jewish Congress leader, Ronald Lauder, said Jobbik’s rise was hurting Hungary’s image abroad.

His voice matters: Hungary is home to one of Europe’s largest Jewish communities, but one recent poll suggested a third of Hungarians expressed anti-Semitic views.

None of this is necessarily helping Hungary’s position in the group of EU nations.

Austrian lesson

It is worth remembering what happened when a far-right party entered into a governing coalition in Austria, back in 2000.

The Freedom Party’s success led the rest of Europe to give Vienna the cold shoulder.

That political reality is probably one of the strongest cards left in the hands of the Hungarian leader.

His combination of nationalist populism and state control of key areas of the economy still rules the roost, for now at least.

Time to leave euro? Greece shocks IMF by failing to pay £220m debt repayment on time

Greece's Prime Minister Alexis Tsipras with Jean Claude Juncker in Greece

GREECE has delayed a key debt payment to the International Monetary Fund due today, the first time in five years that it has postponed a repayment on its 240 billion euro bailout.

The standoff between Greece and the IMF intensified as Athens informed the global lender that it plans to bundle four payments due this month into a single 1.6 billion euro (£1.2bn) lump sum, payable on June 30.

Jean-Claude Juncker puts a hand round Alexis Tsipras's shoulder
Jean-Claude Juncker puts a hand round Alexis Tsipras’s shoulder

 

“Under an Executive Board decision adopted in the late 1970s, country members can ask to bundle together multiple principal payments falling due in a calendar month,” IMF spokesman Gerry Rice said in a statement.

The drastic measure is the first time in history that a western nation has resorted to bundling IMF debt repayments.

Employees of the Stock Exchange are reflected on a display showing stock price movements in Athens
Employees of the Stock Exchange are reflected on a display showing stock price movements in Athens

The Greek Prime Minister Alexis Tsipras warned the country is set to go bankrupt unless it gets an additional bailout loan from its EU creditors.

But Mr Tsipras faces fury at home from leftist supporters who helped him into power in January on a promise to end austerity, if he accepts the current terms attached to the cash by officials.

He returned from late night talks with EU officials in Brussels to face an outcry over conditions that would breach the “red lines” his Syriza party has declared.

A woman stands in front of graffiti depicting a zero Euro coin in Athens
A woman stands in front of graffiti depicting a zero Euro coin in Athens

 

The move to delay the repayment is also likely to dent relations between Greece and its international lenders even further, at a time when leading politicians are struggling to build up trust and save the flaiing eurozone nation.

A street food vendor rests outside a polyclinic in Athens
A street food vendor rests outside a polyclinic in Athens

The Prime Minister has repeatedly said that it can’t accept “extreme proposals” from its creditors, who want reforms to pensions and labour markets in Greece.

Mr Tsipras yesterday took to Twitter and added: “Our People have suffered enough during the past five years”.

It comes after he accused EU officials of trying to create an all-powerful EU super-state that bullied entire countries into accepting its terms.

Both sides have reamined optimistic that an agreement can be reached – despite the large gaps that remain to be bridged.

However, with Greece completely out of cash, the situaton is urgent.

Athens may have bought more time to make the debt repayments to the IMF but it’s unclear how long it will be able to pay state wages and benefits without the EU loan.

Közvetlen hivatkozás a képhez

In recent weeks Greece has already struggled to pay pensions and employees on time.

And savers have started to pull cash out of accounts over fears that the government will start to dip into their money.

Hungary’s Challenge to European Values

European Commission President Jean-Claude Juncker, right, was recently overheard jokingly calling Hungarian Prime Minister Viktor Orban, left, “the dictator.”
European Commission President Jean-Claude Juncker, right, was recently overheard jokingly calling Hungarian Prime Minister Viktor Orban, left, “the dictator.”

European Union now contends with its Hungary problem

As if the European Union didn’t have enough on its hands, what with Greece on the brink of a messy default and the U.K. preparing to hold a referendum on whether to remain a member.

Last week, the EU also had to contend with its Hungary problem—one that hinges on similarly tricky questions of where the boundary lies between the powers of the EU and the sovereign rights of its member states.

Kapott már ekkora pofont Orbán Viktor?

At a specially convened session of the European Parliament to discuss the situation in Hungary—the fifth such session since Prime Minister Viktor Orban returned to office in 2010—a senior European Commission official threatened to suspend Hungary’s EU voting rights if Budapest pursued policies the Commission considers contrary to “European values.” Mr. Orban’s crime?

 

To have floated the idea that Hungary might restore the death penalty, and to have commissioned a public consultation on immigration that many say is divisive and discriminatory.

This isn’t the first time that Mr. Orban has fallen foul of Brussels over his allegedly cavalier attitude toward European values, as defined in the EU Treaties, which includes respect for democracy, human rights and the rule of law. In 2012, the EU started infringement proceedings against Budapest for limiting the independence of the Central Bank and the data protection authority, and for compulsorily retiring 274 judges.

Cink-rajzpályázat! Mi történt a következő pillanatban?

He has also been criticized for attempts to control the media, including via a controversial Internet tax, and his replacement of officials at state institutions with supporters of his Fidesz party.

Many Europeans are also alarmed by Mr. Orban’s attempts to promote a nationalistic version of Hungarian history that glosses over inconvenient episodes, including the cooperation of Hungarian authorities in the Nazi genocide. Neighboring countries have been unsettled by his talk of “communal rights” for ethnic Hungarian minorities.

He has been critical of the EU response to Russia’s annexation of Crimea and the crisis in Ukraine. At a summit last week, Commission President Jean-Claude Juncker was overheard jokingly calling Mr. Orban “the dictator.”

Of course, Budapest rejects the charge that it is flouting European values. Instead, it accuses Brussels of adopting narrowly defined one-size-fits-all rules that take insufficient account of the challenges faced by a country still confronting the legacy of communist dictatorship.

The EU model of a liberal market economy can’t simply be supplanted into a society with no tradition of independent institutions, and in which the state has always played a leading role. Hungary was initially very successful in attracting foreign investment after the collapse of communism, but many citizens are disillusioned that, after 25 years, gross domestic product per capita remains less than 40% of the EU average.

Fotó: Frederick Florin / AFP

Mr. Orban’s own conversion from young leader of the anticommunist movement to enthusiast for the “illiberal state” was in part shaped by Hungary’s experiences during the global financial crisis. This exposed deep vulnerabilities in its economic model, including an over-reliance on foreign capital to fund large budget and current account deficits and a banking system recklessly over-exposed to Swiss-franc denominated mortgages.

When the crisis hit, the Socialist Party was forced to turn to the International Monetary Fund for aid and a caretaker government embarked on deeply unpopular cuts to pensions and benefits and a public-sector wage freeze. In the 2010 elections, Mr. Orban won by a landslide.

orban-juncker

The lesson Mr. Orban drew from the crisis is that Hungary needed to make itself more self-reliant. His program has focused on addressing the imbalances, reducing the budget and current-account deficits and reducing the reliance on foreign capital.

A flat tax of 16% was introduced on income and capital with the aim of generating higher domestic savings to fund the government debt. He also forced banks to convert Swiss Franc mortgages into Hungarian Forint mortgages to remove a key element of exchange risk from the economy, thereby paving the way for the forint to fall and allowing the central bank to cut interest rates.

At the same time, he has pursued controversial policies aimed at bringing key parts of the economy back under domestic ownership, including the banks, utilities and media.

At one level, Mr. Orban’s policies have proved remarkably successful. The imbalances have been substantially reduced. Hungarian officials point out that the country is closer to fulfilling the criteria for eurozone membership than most current members. The mortgage conversions averted disaster after Swiss National Bank abandoned the franc’s peg to the euro this year.

More recently, the Hungarian National Bank has been able to cut interest rates, providing a welcome stimulus to the economy, which grew by 3.6% in the year to March, assisted by the recovery in Hungary’s key eurozone export markets.

Nonetheless, critics say Mr. Orban’s unpredictability is damaging the economy, driving away foreign investment. Foreign banks, hit hard by heavy losses on the mortgage conversions, are scaling back exposure to Hungary. The long and deep recession has also increased the number of Hungarians living below the poverty line to four million out of a population of 10 million.

Brüsszel tartalommal töltötte meg a tiszteletet a magyaroknakozást

Although unemployment is officially 7.8%, this partly reflects Mr. Orban’s creation of a government jobs program that has taken 400,000 off the dole queues while a further 500,000 Hungarians have emigrated. That is fuelling support for the right-wing Jobbik party, which has been gaining sharply in the polls and emerging as the main opposition ahead of a fragmented left.

Does that mean the EU’s Hungary problem is doomed to descend into a Greek or U.K.-style stand-off? Not necessarily. Even Mr. Orban’s opponents acknowledge that while milking his disputes with the EU for domestic advantage he knows when to back down. Meanwhile support for EU membership remains high.

Even Jobbik now claims to be a pro-EU party. That may have something to do with the €5 billion-€6 billion of EU funds—equivalent to 5% of GDP—that flowed from Brussels to Budapest last year. After all, that’s one European value that is universally recognized.

Debt talks on hold until Greece agrees reforms, warns Moscovici

An Anti-IMF sign outside the University of Athens

 Greece’s eurozone creditors will not discuss how to get the country’s sovereign debt back on a sustainable path until Athens agrees to a new economic reform programme that would release €7.2bn in desperately needed bailout funds, the EU’s economic chief said on Tuesday.

The talks over the reform programme, which have intensified in recent days, are at the centre of a three-month stalemate between eurozone creditors and the new radical leftist Greek government.

The Syriza administration in Athens has resisted many of the reforms in the existing bailout programme but needs the funding to fill its rapidly dwindling coffers.

Pierre Moscovici, the European commissioner for economic affairs, said debt issues “can only be discussed after we have agreed a reform programme”.

His statement reflects resistance in eurozone capitals to any form of “haircut” on Greek sovereign debt, which is now mostly held by EU governments and institutions.

Mr Moscovici’s comments come as the International Monetary Fund has suggested eurozone creditors may need to write down some of their Greek bailout loans to ensure the country’s debt levels begin to decline more sharply.

Officials involved in the talks said the IMF was not seeking large-scale debt relief immediately. Instead, it was warning that any concessions to Athens that allowed the government to post lower budget surpluses — the likely trajectory of the current talks — would require debt relief to make up the difference.

“Six months ago, we all concluded there was no need for debt relief,” said one senior official. “But if there’s a significant relaxation of the programme [targets], the IMF will want to see some debt relief.”

Without a return to sustainable debt levels — or a larger bailout from the eurozone to ensure Athens can continue to pay its bills — the IMF may be forced under its rules to withhold its share of the current bailout tranche, which amounts to about half of the €7.2bn being negotiated.

Wolfgang Schäuble, the German finance minister, has acknowledged that Poul Thomsen, head of the IMF’s European department, raised the issue of Greece’s mounting debt pile with his fellow eurozone finance ministers during a contentious meeting last month in Riga.

Other officials said Mr Thomsen specifically mentioned the possibility of debt relief during the closed-door session.

Mr Schäuble said that before the recent political turmoil in Athens — triggered in December when the previous government failed to get its presidential candidate chosen, forcing parliamentary elections — Greece was moving “more quickly” than planned to reach the bailout programme’s debt targets. Since January’s parliamentary elections, reaching such targets had become “more difficult”, he added.

Under a November 2012 agreement between Athens and its international creditors, Greece is scheduled to cut its debt levels to 120 per cent of gross domestic product by 2020 and “substantially lower” than 110 per cent by 2022. Debt relief was agreed as a possible way to reach the targets if Greece was able to run a primary budget surplus.

The European Commission’s new economic forecasts, unveiled by Mr Moscovici on Tuesday, showed Greece’s debt levels were rising again amid the renewed financial turmoil.

In February, Brussels forecast Greek debt would fall from 176.2 per cent of GDP in 2014 to 170.2 per cent this year; the new forecasts predict it will rise to 180.2 per cent this year.

EU poised to unveil antitrust charges against Russia’s Gazprom

A gas storage site in Ukraine on the natural gas pipelines linking Russia and the EU

Brussels will on Wednesday accuse Russia’s Gazprom of illegal abuse of its dominant position in Europe’s gas market, unveiling antitrust charges that threaten to inflame already difficult relations with Moscow.

Just a week after confronting Google over its market power, Margrethe Vestager, the EU competition chief, is pressing forward with a longstanding Gazprom case all but frozen by the Ukraine crisis, according to two people familiar with the situation.

The decision to send a formal statement of objections is a gamble for the European Commission.

The commission has always insisted that it is treating Gazprom as it would any other company operating in Europe, despite the geopolitical implications such a case could have. Russia sees the probe as a political weapon.

Since launching the biggest antitrust raids ever mounted in Europe in 2011, the commission has honed a case around concerns that focus on whether the Russian company thwarted competition and pushed up prices in central and eastern Europe.

Although the charge sheet has been ready since last year, Brussels held off amid fears that it could antagonise an increasingly belligerent Moscow and prompt a response, such as a gas cut-off, that dwarfed the overcharging issues the commission is trying to address.

Some people familiar with the case think Ms Vestager may seek to narrow the focus of the investigation, as she did in the charge sheet sent against Google last week.

The competition commissioner is expected to announce the decision on Wednesday. The commission declined to comment.

Gazprom told the commission this month that it wanted to renew settlement talks, which made limited progress before coming to a halt last year as the Ukraine crisis erupted.

Given its interest in reaching an accord over the concerns, any decision to unveil charges is likely to be seen by Moscow as a provocation.

Some diplomats fear the move is out of step with the EU’s efforts to build on some signs of progress in Ukraine that followed the Minsk ceasefire accord.

Acting decisively against energy companies that harm rivals, block energy flows from one EU country to another, or threaten to close the tap can help deter others – Margrethe Vestager, EU competition commissioner

As the EU’s top competition authority, the commission has the power to levy fines of up to 10 per cent of Gazprom’s global turnover and impose changes to its business model.

Once a statement of objections is sent, Gazprom is given 12 weeks to respond and can call a hearing to make its defence. It would still be able to settle the charges.

Ms Vestager has previously made clear that she sees the Gazprom case as a commercial matter unrelated to politics.

She told a Washington audience last week that “consistent enforcement” of the competition rules was vital for Europe’s hopes of building an energy union.

“Acting decisively against energy companies that harm rivals, block energy flows from one EU country to another, or threaten to close the tap can help deter others,” she said.

There are three main pillars to the Brussels investigation: that Gazprom abused its market dominance in eastern Europe to overcharge, restrict the resale of its gas and block rival sources of supply.

One particular area of concern is the big price differences seen in Gazprom contracts, which link its prices to the cost of crude oil in long-term supply contracts.