Negative comments from EU Brexit negotiators ‘could trigger sterling fall’

UK Secretary of State for Exiting the European Union David Davis, left and the European Commission's Chief Brexit Negotiator Michel Barnier. (Reuters)
Updated 18 July 2017

Negative comments from EU Brexit negotiators ‘could trigger sterling fall’

LONDON: Negative comments from European Brexit negotiators could trigger a decline in the value of the British currency, analysts warn, as talks between the two sides kicked off on Monday.
The UK Brexit commissioner, David Davis, began the first full round of negotiations with EU chief negotiator Michel Barnier, with the Brussels-based talks set to include issues including citizens’ rights, the ongoing EU budget commitments, and Northern Ireland issues.
Market analysts are watching the Brexit talks closely to see how they could affect their investment decisions. Harry Thompson, a market analyst at PhillipCapital UK, told Arab News that “these next few days will be an eye-opener for future trade negotiations, meaning the extent to which each party is willing to concede on certain areas may be the key driver for sterling.”
Due to the result of the UK election in June, it is possible that the UK government can no longer take a hard-line stance and David Davis’ hand in negotiations has been negatively impacted, Thompson added.
“Should we see evidence that Davis’ hand has truly been dented, we could see (the) sterling rise as the UK looks set to avoid a hard Brexit,” he said.
“For now, both parties may continue to hide behind their poker faces, with a lack of cooperation likely to send sterling lower as investors fear the possibility of a hard Brexit.”
Thompson added that investors would also be keeping a close eye on UK inflation and retail sales data this week. “The recent change in rhetoric from the Bank of England (BoE) has meant sterling has pushed to fresh highs as investors increase their bets on higher rates in the UK. Should CPI this week confirm that inflation remains at four-year highs, we could see sterling climb higher, with Brexit negotiations (taking) a back seat to the eventuality of a near-term rate-hike from the MPC.”
The pound has slumped since the Brexit referendum in June 2016, but predictions of immediate doom have not proved accurate with the UK economy estimated to have grown 1.8 percent in 2016, second only to Germany’s 1.9 percent among the world’s Group of Seven (G-7) leading industrialized nations.
Chris Beauchamp, chief UK market analyst at IG agreed that sterling has gained recent strength, with BoE Gov. Mark Carney “turning his tone on interest being enough to change the market sentiment.”
Beauchamp told Arab News he would be looking out for comments from the European contingent this week: “We would look more to the European spokespeople — they seem to have the upper hand in the conversations. So there is a risk that their comments could negatively affect the sterling,” he said.
As Britain prepares to leave the EU, the government has been eyeing closer relationships and special ties with regions outside Europe. According to Beauchamp, it is the UK’s “lynchpin” strategy to make sure it has international arrangements in place and to give the impression that it is open for business with regions like the US and the six-nation Gulf Cooperation Council (GCC).
In March, it was reported that Gulf Arab states are pressing for an early deal on free trade with Britain to secure preferential arrangements after Brexit, and could have a draft agreement ready within months, Gulf officials say.
One of the first agreements could be with the GCC. Trade between Britain and the GCC totals about £30 billion ($39.1 billion) annually.
GCC states are trying to diversify their economies and boost non-oil trade after more than two years of low global oil prices that have hurt their finances. They export mainly oil, gas and related products to Western economies while importing a wide range of goods and services.
Jason Tuvey, Middle East economist at Capital Economics, told Arab News: “In aggregate, it is unlikely that a weaker pound would have a significant impact on trade with the GCC. Trade ties are relatively small and most exports from the region to the UK are hydrocarbons, demand for which tends to less affected by swings in exchange rates.”
“That said, a weaker pound would make UK goods relatively cheaper and this could support UK industries, particularly defense, which are heavily reliant on demand from the Gulf. When it comes to discussions over trade agreements, the UK government is likely to put the defense industry front and center of talks with the GCC,” Tuvey added.
— With input from Reuters

Telegram Russia ban spurs privacy debate

Updated 21 min 6 sec ago

Telegram Russia ban spurs privacy debate

  • Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
  • A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities.

LONDON: Telegram, the messaging app that re-located from Russia to Dubai, has again fallen foul of the authorities in its mother country. So what is it about the social media platform that simultaneously has governments worldwide so concerned and freedom of speech advocates so agitated?
Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities — sparking fresh controversy around the app, which has previously been banned in countries such as Iran, Afghanistan and Indonesia.
Telegram has been under close scrutiny in Russia since legislation was passed in mid-2016 that required communication companies to hand over encryption keys to the Federal Security Service (FSB), if requested.
There was also a move to place companies on a “register of information distributors,” which requires firms to store user online communications for a set period of time and hand over data to the authorities when needed.


Some of Russia’s large social networks are reportedly on the register and Telegram was pressurized to register in mid-2017. Other Western social media companies such as WhatsApp are not listed. WhatsApp did not immediately respond to a request for comment.
Weeks after joining the register, Telegram refused to agree to FSB requests for encryption keys, resulting in the Russian media watchdog Roskomnadzor seeking court approval this month to block the app.
On the day of the court decision, Telegram’s founder Pavel Durov tweeted: “Privacy is not for sale, and human rights should not be compromised out of fear or greed.” The company has also said it is technically impossible to transfer encryption keys.
It was not the Russian entrepreneur Durov’s first run-in with Russian authorities. Telegram — which was launched in 2013 — originally had its development team based in St. Petersburg, but had to leave the country due to local IT regulations. It is currently based in Dubai.
The messaging app prides itself in being the most secure and independent form of instant messaging that respects the need for privacy. Its “secret chats” option makes use of end-to-end encryption that ensures only users can read them. Messages cannot be forwarded and you can order messages to “self-destruct” within a set amount of time. It can also alert users if the recipient of the message takes a screenshot of the correspondence. So-called Telegram “Channels” can be used to broadcast public messages to a large audiences.
While WhatsApp — which is owned by Facebook — also provides end-to-end encryption, Telegram differentiates itself with claims it is faster and more secure.
Damir Gainutdinov is a legal analyst at Russian human rights group Agora, which represented Telegram in court. He has headed up its project on the defense of online freedom in Russia since 2010.
He told Arab News that the block placed on Russia was more of a power-play by the authorities.
“I think that Russian authorities believe that Telegram is a threat because they cannot control it.
“But I wouldn’t say that it is really the biggest threat. The attack on Telegram is more about showing that they can block any global service if they want,” he said.
Russia’s government has argued that the app helps to enable terrorist attacks in the country, saying that access to encrypted messages is a national security issue.
The FSB said a suicide bomber who killed 15 people on a St. Petersburg subway in April last year had used Telegram to plan the attack.
Voices from outside Russia have also criticized Telegram for not doing enough to clamp down on terrorists using the app. “Terrorists and extremist groups such as ISIS (Daesh) use encrypted applications like Telegram because it allows them to recruit new members, fundraise, incite to violence, and even coordinate terrorist activity without the threat of being discovered,” said executive director David Ibsen at the US-based non-government organization Counter-Extremism Project.
“ISIS also created public channels on Telegram to broadcast pro-ISIS news updates and disseminate other propaganda materials,” he told Arab News. Durov has been quoted as saying at a conference in 2015 that the right to privacy is more important to the company than “our fear of bad things happening, like terrorism.” Following the Paris attacks in 2015, Telegram did revise its policy on its public channels, but it has refused to take down private Daesh chats, according to Ibsen.
Social media sites are coming under increasing pressure from authorities worldwide to do more to limit the promotion of extremism online.
In a statement to Arab News, Twitter said it had permanently suspended 274,460 sites in the second half of last year — down more than 8 percent on the previous reporting period.
While Telegram is far from the only social media app to be criticized for its counter-terrorism policies, it is seen by some as the more reluctant player in the battle against online extremism. “Social media companies remove content regularly that violates their stated terms of service, and some of this includes extremist and terrorist videos, images and other propaganda,” said Ibsen. “However, despite the availability of technology that can identify and permanently prevent prohibited materials from being re-uploaded, the biggest social media platforms are not taking this vitally important step,” he said.
“Telegram has become a refuge app from the moment the preferred apps (Twitter in particular) started to clamp down on extremist content,” said Rik Coolsaet, a professor of international relations at Ghent University in Belgium who has written extensively on counter-terrorism efforts. “Its encryption offered a secure environment for terrorist recruiters and groomers, but at the same time limited their propaganda outreach, since it is more difficult to access. For that reason, Twitter remains their preferred app,” he added.
Russia is not the only country clamping down on Telegram. Iran restricted certain channels in December last year during the protests and there have been recent threats that restrictions could be reimposed. A estimated 40 million Iranians use Telegram’s channels and messaging services.
“In the case of Russia and Iran, the Telegram crackdown has much more to do with controlling the lives of its citizens than it does with preventing terrorist activity,” said Ibsen.
Telegram did not respond to Arab News’ request for comment.


We talk to leading world cyber terrorism expert Chris Sampson, co-author of “Hacking ISIS: How to Destroy the Cyber Jihad” and an analyst with the Terror Asymmetrics Project

Why are governments so worried about Telegram?
Telegram was launched as an encrypted messaging app. This meant that government agencies were less likely to be able to intercept messages passing across the Internet and read private conversations. However, in September 2015, Telegram also created an option for channels, which act like chat groups. This allowed like-minded individuals to essentially host a chat room. Unless the channel was set to public you couldn’t read what was discussed without being given an invitation link. Groups like ISIS began using these channels to share propaganda and information. Other groups use Telegram in much the same manner. Non-violent resistance groups around the world would also use the messaging app and channels to communicate so authorities in the countries they fear would be less likely to intercept their discussions.

Will clamping down on social media apps be effective?
As governments crack down and ban apps, others will rise and replace them with new features and focus on security from outside eyes. They will operate either within the legal construct or outside of it depending on the countries they seek to circumvent. Since laws around the world differ dramatically, what is legal in one country could be illegal in another. We’ve seen this already happen as countries sought to ban use of Telegram, WhatsApp or even Twitter. Inevitably the access to the technology remains the same and users find a way to use both encrypted messaging and social media platforms.

Does Russia’s action set a precedent?
Countries such as Indonesia, Iran, Afghanistan and others have banned Telegram. Brazil banned WhatsApp around the timing of the World Cup only to lift the ban. Such bans are largely ineffective because the majority of users are engaged in lawful communications yet want their privacy, those engaged in illegal and potentially violent activities make up a fraction of the userbase. The better solution is to know where nefarious users are lurking on the web and keep track of them in observable spaces. Banning the public’s access to messaging apps will always fail. Telegram and similar companies should deny government agencies the keys to encryption unless there is a reason given that would justify unlocking communications. If the governments are able to seize a phone and unlock it, they’ll already have access to a suspect’s communication if they haven’t erased the data.



Telegram, founded by Russian entrepreneur Pavel Durov in 2013, is an app that enables encrypted messaging, together with “self-destruct” messages. It is used by 200 million people worldwide. Authorities in a number of countries criticized it for providing secure communications channels for terrorists and criminals.