Squaring circles: EU and Britain plot next Brexit chapter

People pass a Union flag flying on the Houses of Parliament in London. Britain and the EU have reached a historic deal on Brexit divorce terms, but Brussels swiftly warned that even harder talks lie ahead on a future relationship after the split. (AFP)
Updated 10 December 2017
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Squaring circles: EU and Britain plot next Brexit chapter

BRUSSELS: The European Commission and the British government let out an audible sigh of relief on reaching Friday’s historic Brexit divorce terms deal.
Yet numerous questions remain on the future trade relationship between the EU 27 and the bloc’s departing member as the discussions now move on to a new phase at a Dec. 14-15 Brussels summit.
The EU’s chief Brexit negotiator Michel Barnier warned “there is still work to be done” to “consolidate” the progress made to date.
The preamble to the 15-page divorce deal published after British Prime Minister Theresa May’s morning dash for talks with European Commission President Jean-Claude Juncker illustrates the still precarious nature of the deal.
“Under the caveat that nothing is agreed until everything is agreed, the joint commitments set out below in this joint report shall be reflected in the Withdrawal Agreement in full detail,” said the introduction to the text.
The conclusion notes that the deal is conditional on “an overall agreement under Article 50 on the UK’s withdrawal, taking into account the framework for the future relationship, including an agreement as early as possible in 2018 on transitional arrangements.”
Even Friday’s deal itself leaves elements open to question surrounding the thorny issue of the Irish border post-Brexit, along with the size of Britain’s divorce bill and the protection of expats’ rights.
The deal is clear on guaranteeing the post-Brexit rights of Britons already living in the bloc and of their EU counterparts based in Britain with family members able to claim residence.
But there is no mention, for example, of future spouses.
“We demand before we can give green light to the withdrawal agreement, that ... the future free movement and residence of UK citizens will also be guaranteed and this in all 27 Member States,” said Guy Verhofstadt, leader of the liberals group in the European Parliament.
It is not yet clear if British expats will be able to retain their full current rights when they move to another EU country.
Regarding citizens rights, the divorce bill text indicates Britain will bring forward a bill to incorporate them into UK law.
On adoption, the bill’s provisions in relation to citizens’ rights “will prevail over inconsistent or incompatible legislation, unless Parliament expressly repeals this Act in future.”
But it is not clear what will happen if Westminster actually one day repeals the bill.
“Any change by UK parliament to citizens’ rights will be very visible and can only happen via express repeal of treaty,” was how Stefaan de Rynck, a member of the EU negotiating team, commented on Twitter.
There are also elements of ambiguity as to the exact size of the divorce bill, despite the methodology having been agreed to determine how deep Britain must delve into its pockets.
“We cannot calculate exactly the sums in question — all these figures will fluctuate,” said Barnier, although unofficial EU estimations are in the order of €60 billion ($70 billion).
Britain puts the sum at between €40 and €45 billion, though that does not include items such as an EU-guaranteed loan for Ukraine, which could generate costs for all current EU members — Britain included.
Then there is the issue of the border between Northern Ireland and the Republic of Ireland, which almost scuppered the deal over concerns in the North that Britain was headed for a deal entailing a “hard” border separating the former from the rest of the UK.
In the agreement, the UK said it “remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border” between the two.
Britain said if that was not possible, it would propose “specific solutions to address the unique circumstances of the island of Ireland,” including alignment with the Internal Market and the Customs Union rules, while respecting the terms of the Northern Ireland peace agreement.
EU President Donald Tusk has already warned that “the most difficult challenge is still ahead.”
And Jonathan Powell, chief of staff to former British prime minister Tony Blair, suggests squaring the circle may prove a tall order.
“The language on ‘full alignment’ means different things to different people,” Powell told the Financial Times.
“A series of contradictory undertakings have been given and a new separate strand of negotiation on Ireland opened in the next stage.”
— Reuters


War-ridden Yemen’s other frontline — the central bank

Updated 18 December 2018
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War-ridden Yemen’s other frontline — the central bank

  • The Arab world’s poorest country is crippled by a humanitarian crisis
  • Many have died as a result of poverty, starvation, poor health care as the central bank is caught up in the conflict

ADEN: Cashiers sort through large stacks of money inside a ragged building that is Yemen’s central bank, another frontline in a ruinous conflict as it fights to stave off economic collapse.
The Arab world’s poorest country is crippled by a humanitarian crisis, with images of skeletal children in famine-like conditions grabbing global attention, but economic dysfunction appears to be at the heart of the problem.
Yemen is afflicted by what diplomats call a famine of jobs and salaries, with the central bank — headquartered in the government’s de facto capital Aden.
Running the economy from a building pocked with bullet holes in the southern port city, the bank is scrambling to revive a currency that has lost two-thirds of its value since 2015, exacerbating joblessness and leaving millions unable to afford basic food staples.
The central bank expects a $3 billion cash injection from Gulf donors Kuwait and the United Arab Emirates to prop up its sagging currency amid soaring inflation, its deputy chief Shokeib Hobeishy said in an interview last week, without giving a timeline.
The potential lifeline, if confirmed, would follow a $2.2 billion infusion by Saudi Arabia to the depleted reserves of a bank that appears ever more dependent on international handouts.


Hobeishy acknowledged that the bank was struggling to assert authority over its branches outside government control, including in Sanaa, which was seized by Iran-aligned Houthi militia in September 2014.
The government moved the bank’s headquarters from the capital in 2016 following suspicion that the Houthis were plundering its reserves to finance their war effort.
The relocation practically left the country with two parallel centers of fiscal policy dealing in one currency.
Yemen’s rivals reached a truce accord last week, but conspicuously absent was an agreement on economic cooperation as the Houthis rejected government calls for the Aden central bank to handle public sector salary payments on both sides, a diplomat who attended the talks told AFP.
The central bank is now “arguably the most dangerous frontline in the Yemen war,” said Wesam Qaid, executive director at Yemen’s Small and Micro Enterprise Promotion Service.
“The death toll as a result of bombings or land mines and military operations stands in the thousands,” Qaid told AFP.
“Many more have died as a result of poverty, starvation, poor health care as the central bank is caught up in the conflict.”


Yemen’s economy has contracted by 50 percent since the escalation of conflict in 2015 and inflation is projected at over 40 percent this year, according to the World Bank.
A weakened currency has diminished the purchasing power of millions and the private sector is haemorrhaging with businesses shutting down or making layoffs.
New Prime Minister Maeen Abdulmalik Saeed, appointed in October, said he was seeking to revive oil exports that once contributed about three-quarters of state revenue.
But such are the fears of insolvency that many Yemenis are afraid of putting their money in local banks.
“Banks often say: ‘We don’t have money. Come tomorrow, come next week’,” said a 54-year-old school employee in Aden.
Businesses also criticize the central bank over cumbersome processes to obtain letters of credit for vital imports — in a country that depends almost entirely on food from abroad.
In a letter sent in November to the prime minister and central bank chief, Aden’s chamber of commerce voiced concern that traders in areas outside government control were struggling to import essential goods. A central bank order requires payment in cash only.
The letter, seen by AFP, said the policy had caused a sharp decline in imports in those densely populated areas, making them prone to famine.
On the other side, businesses say the rebels are obstructing traders and banks in their areas from opening credit lines to Aden.
Central bank chief Mohammed Zemam said this month five Sanaa-based central bank employees had fled to Aden over safety fears and were immediately blacklisted by the Houthis.
“We are asking the Houthis to leave the banking sector alone,” he said in a separate interview in Riyadh.
“This is the only way to feed the people.”