Aurelia Butler

Liz Truss, the UK’s new Brexit negotiator, will be faced with exactly the same dilemma as her predecessor, Lord David Frost: compromise with Brussels or risk a trade war, diplomats in Brussels have said.Several welcomed Prime Minister Boris Johnson’s decision to hand his foreign secretary the role in the hope that she and her team would try to forge a broader, more positive relationship with the EU. But they warned that to achieve success would require a more emollient British approach. “It’s good the Foreign Office is getting involved again,” said one EU diplomat. “Let’s give her the benefit of the doubt but I fear more of the same.” Weeks of talks over the Northern Ireland protocol, which governs trade with the region, remain unresolved, with Frost repeatedly warning he could trigger Article 16 of the protocol to suspend large parts of it, which would spark retaliation by the EU.Officials in Brussels have said this could range from tariffs on British goods entering the bloc to the suspension of the post-Brexit trade deal.“Our position . . . particularly on the protocol, does not change depending on who is holding the position on the other side,” European Commission chief spokesman Eric Mamer told reporters on Monday.The EU believes its proposals to cut customs and health checks on goods moving between Great Britain and Northern Ireland would substantially reduce trade disruption, caused by both sides’ wish to avoid a trade border on the island of Ireland. It also maintains that the UK should implement a deal it agreed only two years ago, rather than undermine it.“We do hope for a constructive partner who re-establishes trust in the UK,” another diplomat said. “At the same time, we need to be prepared for a Frost 2.0 style of confrontation.”“She is a politician where Frost was not, so perhaps she can get something out of a space where he was more destructive,” said another EU official. “But Boris Johnson calls the shots, so domestic UK politics will always dictate what happens.”Johnson only last week approved a big climbdown in the UK position that diplomats say could pave the way for a deal.He accepted that the European Court of Justice would continue to play a role in the operation of the protocol in return for a scaling back of checks at Irish Sea ports in Great Britain for trade with Northern Ireland.In a separate dispute, the UK gave French boats more licences to fish in its waters, although Paris said it was too few and it would ask Brussels to take legal action. Truss, who was handed the Europe portfolio the day after Frost resigned on Saturday, said on Twitter that she would talk to EU negotiator Maros Sefcovic on Tuesday — despite talks being paused until January 10. Some Tory Eurosceptics believe that Truss, a former Remainer with prime ministerial ambitions, will take a tough stance in negotiations to prove her mettle to the Tory rightwingers who could ultimately decide who succeeds Johnson as prime minister.“She’ll be no less tough than Frost,” said one Tory MP. A Whitehall insider added: “Liz has been one of the most hawkish ministers on the protocol.”Asked if Truss’s appointment would see a change in the UK position, Downing Street declined to comment.

Other Tory MPs said Truss would stick to the course set by Johnson and that, as foreign secretary, she was aware that US president Joe Biden’s administration would react badly to any further ructions on the Northern Ireland issue.“She’s got no choice but to compromise,” said one former minister. “We can’t afford to have another year of toxic messing around.”George Osborne, former chancellor, said of his former ministerial colleague: “The capable Liz Truss now has the tools to be the most powerful foreign secretary for many decades.”While Truss will have broad responsibility for EU relations, Tory Eurosceptics believe most of the line-by-line negotiating on the protocol will be done by her newly appointed deputy, Chris Heaton-Harris, who becomes Europe minister.Heaton-Harris, a former MEP and former chair of the pro-Brexit European Research Group of Conservative MPs, is viewed by Tory backbenchers as a brake against any significant new concessions in negotiations.Peter Bone, a Tory Eurosceptic, said Heaton-Harris was “a determined Brexiter” and, as a part-time football referee, would be “more than willing to show the EU a red card if necessary”. More

Greg Treverton used to be America’s forecaster-in-chief. As chair of the National Intelligence Council, he oversaw the US government’s quadrennial Global Trends report. His 2017 report contained a cautious acknowledgment of America’s own weaknesses. It noted “rising inequality” and “highly polarised politics”. But the report concluded optimistically that America’s “inclusive ideal . . . remains a critical advantage”.Four years on Treverton, now in academia, takes a dramatically more pessimistic view. Last week, he published an article, co-written with Karen Treverton, headlined “Civil War is Coming”. It argues that the divisions between red and blue America are now so extreme that some sort of split is inevitable. The division could be peaceful, involving “a much looser federation”. But it also could be violent. The Trevertons note ominously: “Republicans are more than twice as likely to own guns as their Democratic counterparts.”If this were just an isolated view, it might not carry much weight. But other prominent American analysts are coming to similarly dystopian conclusions. Next month sees the publication of How Civil Wars Start by Barbara Walter of the University of California, a leading academic authority on the subject. She argues that America fits the criteria of a country on the brink of violent internal conflict. In her view this would be characterised by a “fairly consistent stream of terrorist attacks”, rather than clashes between standing armies. Even scholars who are not explicitly focused on political violence are increasingly gloomy. Thomas Edsall, who follows trends in social science for the New York Times, noted last week that political scientists are increasingly arguing that a “return to traditional democratic norms (in America) will be extremely difficult, if not impossible”.This kind of alarm and despondency is not confined to “blue” America. Republicans are even more likely than Democrats to say that the country’s democracy is in danger — a reflection of Donald Trump’s insistence that the 2020 election was stolen from him. Civil war talk is also common on the American right. Senator Ted Cruz mused last month about Texas seceding from the union. Michael Anton, who served on Trump’s National Security Council, recently compared today’s America with the state of the country before the civil war and argued that: “Americans are more divided, not less, than we were on the eve of that great conflict.”The deep gloom of the US elite is connected to a broader sense of national decline. One of the few things that Republicans and Democrats agree upon is that America should now treat China as a serious and dangerous global rival. Until recently, most Americans assumed that, whatever its other problems, the US would retain a technological edge over China. But that can longer be taken for granted. In a recent article, Graham Allison of Harvard University and Eric Schmidt, the former chief executive of Google, argued that “China will soon lead the US in tech.”The mood of near-despair in America is nurturing the opposite emotion among the Chinese elite — a growing conviction that their country is outperforming the US and will eventually displace it as the world’s dominant power. In a recent speech, Xi Jinping, China’s leader, proclaimed that “the east is rising and the west is in decline”. The fact that America has suffered 800,000 deaths as a result of the Covid-19 pandemic, while China claims to have had a death toll of below 5,000, is frequently cited as evidence of the superiority of the Chinese system. China’s rising confidence is spilling over into official exchanges between the two countries. When Antony Blinken, the US secretary of state, condemned Chinese actions over Hong Kong and Taiwan, his Chinese counterpart Yang Jiechi reacted with theatrical scorn, arguing: “The US does not have the qualifications to say that it wants to speak to China from a position of strength.”Of course, in a closed system such as China’s, it is hard to know if official rhetoric about the superiority of the Chinese system reflects genuine confidence. Outspoken critics of Xi often end up in prison. Zhang Zhan, a citizen-journalist who cast doubt on official versions of what happened in Wuhan, where the pandemic originated, was sentenced to four years in prison. But foreign observers and journalists who travel widely outside Beijing report that the central government’s self-confidence and nationalism seems to be widely shared among local Communist party cadres, as well as the wider population.The current combination of a crisis in American democracy — and the rising confidence of authoritarian powers — is reminiscent of the 1930s. The Great Depression convinced many in America and the wider world that liberal democracy was fatally flawed. The one-party states of the Soviet Union, Mussolini’s Italy and Nazi Germany proclaimed their superior efficiency to their own people — and to political pilgrims from the west.As it turned out, the gleaming images of the authoritarian powers of the 1930s disguised their deep problems, while America’s surface weakness obscured its deeper resilience. Those who still look to the US as the global guardian of political liberty have to hope that history is repeating [email protected] article has been corrected to reflect that Donald Trump claimed the 2020 election had been stolen from him, not 2016. More

The World Economic Forum has scrapped its plans to hold an in-person annual meeting in Davos next month, extending a two-year run of enforced changes of plan for the high-octane networking event amid continued uncertainty over the Omicron outbreak.The annual gathering of executives, world leaders and activists had been due to take place between January 17 and January 21 in the Swiss ski resort that has become known for elite agenda-setting. A statement from the WEF said it would be replaced by a series of online sessions, with another in-person event planned for some time early in the summer of 2022.The forum’s last in-person annual meeting took place in January 2020, just as Covid-19 was hitting the consciousness of its international attendees. Since then, the WEF had already been forced to change its meeting plans at least six times, scrapping alternative dates and locations from Singapore to the banks of Switzerland’s Lake Lucerne as the pandemic extended. “Current pandemic conditions make it extremely difficult to deliver a global in-person meeting,” the forum said on Monday. “Despite the meeting’s stringent health protocols, the transmissibility of Omicron and its impact on travel and mobility have made deferral necessary.”The plans for January’s meeting had been drawn up with strict safety protocols in mind. All participants had been told that they must be fully vaccinated against Covid and would need to take a PCR test 72 hours before arriving, another test to activate the badges that grant them access to the main event areas and hotels, and further tests every 48 hours. With concern growing about Omicron’s risks to health and international travel, registrations had been running below the usual levels. As of last week, about 2,000 people had registered for the January meeting, about two-thirds of the number who attended the 2020 event.A seven-page health and safety document had advised would-be Davos-goers to “avoid physical contact, including hugs and handshakes” and stipulated that only FFP2 masks, which protect against fine aerosol particles, would be accepted inside the event’s security zone, where “buffet concepts” would be replaced by individually packaged food portions. Had the meeting gone ahead, any attendee who tested positive for Covid would have had their badge access deactivated and been forced to isolate until contacted by local authorities.“The deferral of the annual meeting will not prevent progress through continued digital convening of leaders from business, government and civil society,” said Klaus Schwab, WEF’s founder and executive chair. “Public-private co-operation has moved forward throughout the pandemic and that will continue apace. We look forward to bringing global leaders together in person soon.” More

WASHINGTON (Reuters) – Senate Majority Leader Chuck Schumer on Monday vowed to vote on President Joe Biden’s Build Back Better plan early next year despite opposition from a key Democratic senator that drew White House rebuke, and to bring forward voting rights legislation.”The Senate will, in fact, consider the Build Back Better Act, very early in the new year so that every Member of this body has the opportunity to make their position known on the Senate floor, not just on television,” Schumer wrote in a letter to colleagues. On Sunday, moderate Democrat Senator Joe Manchin dealt a potentially fatal blow to Biden’s $1.75 trillion domestic investment bill, telling Fox News he would not vote for the measure..The Build Back Better plan codifies many of Biden’s signature domestic policies, aiming to expand the social safety net and tackle climate change. Many Democrats have said the bill is essential to the party’s chances in next year’s midterm elections.A vote would force Manchin to publicly record his objection to the bill ahead of the elections, in which Democrats seek to keep control of the Senate as well as the House of Representatives.Manchin’s comments prompted an angry response from the White House after months of negotiations. White House spokeswoman Jen Psaki on Sunday said the Biden administration would find a way to move forward with the legislation in 2022.Still, it was not immediately clear how or if lawmakers could salvage the full bill without Manchin’s vote in a 50-50 divided chamber that needs every Democrat on board, or whether parts of it could be adopted. “We are going to vote on a revised version of the House-passed Build Back Better Act – and we will keep voting on it until we get something done,” Schumer wrote. Schumer also said Congress’ upper chamber would consider voting rights legislation soon after returning from its holiday recess in January and would look at changing procedural rules if Republicans “continue to abuse the filibuster” to block the bill. “If the right to vote is the cornerstone of our democracy, then how can we in good conscience allow for a situation in which the Republican Party can debate and pass voter suppression laws at the state level with only a simple majority vote, but not allow the United States Senate to do the same?” he wrote.Manchin, who won re-election in a deeply conservative state that voted for former President Donald Trump in 2020, has also balked at eliminating the filibuster to take up the voting rights legislation as has fellow moderate Democrat Kyrsten Sinema. Progressive Democrats blasted Manchin following his Sunday comments and have for months urged action on Biden’s campaign promises, including voting rights.Elements of the social policy plan – such as universal preschool, an enhanced child-care tax credit and larger healthcare subsidies – are popular with voters, polling shows. More

LONDON (Reuters) – Currencies including the Australian dollar and British pound fell on Monday on fears further curbs could be imposed in Europe to contain the Omicron coronavirus variant.With last week’s slew of major central bank meetings out of the way, investors turned their focus to the rapid spread of the variant. The Netherlands went into lockdown on Sunday and local newspapers in Italy reported that new restrictions were being considered there too.”Investor risk sentiment has been undermined by further evidence over the weekend of the disruptive impact of the new Omicron COVID variant,” MUFG currency analyst Lee Hardman wrote in a note to clients.”The stricter lockdown in the Netherlands will heighten fears that similar measures will be adopted in other European countries in the coming weeks.”The “risk-off” tone was clear as European markets opened, but pulled back slightly as the session went on.The Australian dollar, which is seen as a liquid proxy for risk appetite, was down 0.2% at $0.7109 at 1230 GMT, having earlier hit its lowest in 13 days. Britain’s pound was down 0.2% at $1.32105. [GBP/]British Health Minister Sajid Javid on Sunday did not rule out the possibility of further lockdowns before Christmas.A slump in oil prices also hurt commodity-linked currencies. The Norwegian crown fell, with the euro up around 0.4% versus the crown.”I wouldn’t be surprised if sterling, the Swedish crown and Norwegian crown are the G10 currencies which suffer from being the chosen ones to sell in a risk-off environment,” said Kit Juckes, head of FX strategy at Societe Generale (OTC:SCGLY).”Sterling really is the market’s favourite to go after.”A further hit to market sentiment came from uncertainty over U.S. President Joe Biden’s domestic policy bill, known as “Build Back Better”. A moderate Democrat who is key to passing the $1.75 trillion bill said on Sunday he would not support the package, citing concerns about inflation.Goldman Sachs (NYSE:GS) cut its U.S. growth forecasts and the U.S 10-year Treasury yield fell to its lowest since Dec. 6 on Monday.The U.S. dollar index was at 96.544 at 1231 GMT, not far from last month’s peak of 96.938, which was its highest since July 2020.Speculators’ net long bets on the U.S. dollar, or bets that the dollar will rise, edged higher in the week to Dec. 14, reflecting a growing desire among market participants to hold the greenback.Elsewhere, the euro was up 0.3% at $1.12695, only partly recovering after tumbling 0.8% on Friday after the European Central Bank took tentative steps to exit its pandemic-era stimulus. China cut its lending benchmark rate for the first time in 20 months to prop up its slowing economy, sending the yuan to a 10-day low.Turkey’s lira sputtered to another record low on Monday despite $6 billion in central bank interventions this month, after President Tayyip Erdogan doubled down on his unorthodox low-rates policy by referring to Islamic usury doctrine.Meanwhile, cryptocurrencies bitcoin and ether were on track for a second consecutive day of decline. Bitcoin was around $45,765.67, having fallen far below an all-time high of $69,000 hit in November. Graphic: World FX rates https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html More