Leaked EU sanctions memo reveals ‘clever’ targeting of Russian banks

putinrussiaEuropean Union leaders are considering a ‘clever’ sanctions strategy that will hit Russian banks without jeopardizing bilateral trade, the Financial Times reports.

Although the sanctions options prepared for today’s meeting of EU ambassadors offer five different sectors of the Russian economy for possible restrictions, two pages of the ten-page document obtained by the FT’s Brussels Blog focus on the financial sector:

As we reported here this morning, the main financial proposal would bar all “EU persons” from investing in debt or equity sales made by state-owned Russian banks, which constitute most of the largest financial institutions in the country.

As is our practice, we thought we’d provide a bit more detail on the proposal here on the Blog. The health warning that needs to be attached to this plan, however, is that the likelihood of it being actually adopted remains slim. Thus far, only a small hard-core group of EU countries have supported moving to “phase three” sanctions, which hit entire Russian economic sectors rather than just targeted individuals. Sanctions need unanimity from all 28 EU countries to be enacted.

The meat of the capital markets proposal is pretty straight forward: if a Russian bank that is more than 50 percent owned by the government issues stock or bonds, no European can participate. As part of its impact assessment, the document estimates that between 2004 and 2012, $16.4bn was raised by Russian state-owned financial institutions through IPOs in EU markets. And in 2013 alone, about 47 per cent of all bonds issued by those banks — €7.5bn out of €15.8bn – were issued in the EU.


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Arab Spring failure colors perceptions of Gaza conflict

As the conflict in Gaza enters its third week, polls show most Americans are still supportive of Israel — in part, analysts say, because of the Arab Spring’s failures to spread democracy, the New York Times reports:

A CNN/ORC International poll found that a majority of Americans — 57 percent — believe that Israel’s military actions in Gaza are justified, with only four in 10 saying that Israel has used too much force. The poll, conducted Friday through Sunday, echoed a similar one conducted earlier during the latest conflict — July 8 to 14 — in which the Pew Research Center found that 51 percent of Americans sympathized with Israel, compared with 14 percent who sympathized with the Palestinians.

Americans perceive Israelis “more or less the way they perceive themselves, as a democratic entity,” said Aaron David Miller, a former American Middle East adviser in Republican and Democratic administrations.

Mr. Miller, now a vice president at the Woodrow Wilson International Center for Scholars, said that reinforcing that bond has been the failure, so far, of the Arab Spring democracy movement.

“The region is so broken, angry, and dysfunctional that they serve as effective talking points for Israel” in comparison, Mr. Miller said.

Meanwhile, the Palestinian struggle for statehood has slipped down the agenda of priorities for the region’s people and governments, analyst Roula Khalaf writes for the Financial Times.

“The circumstances of the region are different this time. There are problems no less important than Gaza – whether in Syria, Iraq or Libya,” says Ghassan Khatib, a former Palestinian official who now teaches at Birzeit University near the West Bank town of Ramallah.

“But there’s also another sad element: that for the first time Gaza is caught up in a regional power struggle, particularly between Egypt and Qatar, and that weakens the Arab stance.”

Calling on Palestinian officials to recognise a new reality in the Arab world, Ghassan Charbel, editor of the pan-Arab daily al-Hayat, laments that the Palestinian struggle for statehood has receded as a priority.

“The war in Gaza is taking place in a different region now,” he wrote in a recent column.


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Sanctions find Russia’s Achilles heel


Sanctions directed against prominent friends of Russian President Vladimir Putin and their businesses have definitely found Russia’s Achilles’ heel, and with harsher sanctions looming in the aftermath of flight MA17, Putin is finding it increasingly difficult to craft an effective reply, says William E. Pomeranz, deputy director of the Kennan Institute at the Woodrow Wilson Center for Scholars in Washington:

Russia’s Economic Development Minister Aleksei Ulyukayev has already admitted that increased Western sanctions will have negative ramifications for Russian economic growth. Russia’s deepest fear is that Washington introduces sanctions that are targeted to sectors of the economy — particularly the banking sector.

Indeed, Russia went through all sorts of legal hoops — including amending its privacy law — just so individual Russian banks could remain in compliance with the U.S. Foreign Account Tax Compliance Act.  This extraterritorial law essentially requires foreign banks to provide information to the Internal Revenue Service about accounts held by U.S. citizens, or be forced to pay major penalties. Moscow ultimately complied with the law because it did not want to face the financial consequences of being labelled non-FACTA compliant.

“Sanctions may not be enough to persuade Putin to change course in Ukraine, nor, unfortunately, will the tragic downing of the Malaysian airliner,” Pomeranz notes. “Yet the sanctions are slowly inflicting serious damage on the Russian economy and no one knows when the next gray line will be crossed.”

“The risk premium for Russia is rising.”  RTWT

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Payá family launches new plebiscite initiative in Cuba


cubaPayá_&_Cepero_II_Aniversario_SMALL_02On the second anniversary of the death of Cuban opposition leader Oswaldo Payá, his daughter, Rosa María Payá, has announced that the Christian Liberation Movement (MCL) he founded is preparing a campaign to demand a plebiscite on the island’s future, the Miami Herald reports:

Rosa Maria Payá said that the plebiscite, based on her father’s Varela Project, would include “one single question: Do you want to participate in free and multi-party elections?”

The Varela Project gathered more than 10,000 signatures on a petition seeking a new electoral law and demanding the right to freedom of expression, freedom of the press and freedom of association, among other measures. The signatures were rejected by the legislative National Assembly in 2002 but later that year Payá won the Sakharov Prize for Freedom of Conscience, the most prestigious prize awarded by the European Union.

His daughter told El Nuevo Herald on Tuesday that since the Varela Project remains alive, “it is not necessary to collect more signatures. More than double the number required already have been handed in, even though the National Assembly has not responded to the demand.

“But the Varela Project is a citizens’ effort. Our intention with this (new) campaign is to mobilize citizens to demand their rights,” she added. “There can be no transition in Cuba unless first there’s a recognition of civil rights, of freedom of expression, of freedom of association to carry out the change we want.”

HT: Babablu blog.

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China’s labor movement, 5 years after Tonghua

chinalaborbulletinFive years ago today, Chen Guojun, a senior manager at the Tonghua Iron and Steel Works in Jilin was killed during a protest by workers angry at the takeover of the plant by the Jianlong Group, at the time China’s largest privately-owned steel company, which Chen represented, China Labour Bulletin reports.

The “Tonghua Incident” became one of the most talked about events of the year. It focused attention on the volatile state of labour relations in many workplaces in China and the need to find a more effective and peaceful way of resolving labour disputes.

But while government officials, policy makers and commentators were debating the issue, China’s workers themselves were showing everyone the way forward.

A lot has changed in China’s workplaces over the last five years, and it is the workers’ movement that has been largely responsible for generating that change. China’s workers have shown that they are not rabble-rousers: They are determined to stand up for what is rightfully theirs but crucially they are also willing to sit down with management and work out their differences in peaceful, face-to-face negotiations – as was shown just this week in the Shenzhen QLT factory strike.


China Labour Bulletin is supported by the National Endowment for Democracy, the Washington-based democracy assistance group.

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