Vulcan Consulting –
British – Russian diplomatic feud descends over accusations of spy poisoning
The British government has formally accused the Kremlin of poisoning a former Russia spy and his daughter in Salisbury, England last week. The target, Sergei Skripal, was part of an exchange of a spies between Russia and the UK several years ago but is now in a critical condition in hospital after being poisoned by a nerve agent called Novichok. With all indications pointing to Moscow, British Prime Minister Theresa May responded robustly by expelling 23 Russian diplomats acting as intelligence agents and suspending high-level bilateral relations.
As expected, the Russian government dismissed the accusations and promised to respond in kind by expelling British diplomats. Claiming that London has presented no evidence that indicates Russian involvement, a spokesperson for the foreign ministry described the statements made by Ms. May as ‘’completely insane’’. As the diplomatic freeze between the two nations descends, Downing Street will hope that its European and global allies will row in behind them.
With Brexit negotiations still ongoing and an ambivalent US President currently in office, the timing for the UK is far from perfect. However, Ms. May will take comfort with backing from NATO, the German government and the European Council President Donald Tusk who all laid the blame on Moscow’s doorstep. Further support came yesterday when Washington unveiled a series of sanctions against Russia over accusations that it carried out a range of cyber-attacks on US infrastructure.
While the UK has laid down its own measures against the Kremlin, attention will now turn to its traditional allies in Europe over whether their support includes firm action rather than mere words of support. The EU already has sanctions in place against Russia since its annexation of Crimea in 2014 and they are expected to be renewed in the coming months. Despite there being divisions between the EU28 relating to Russia, concerns across various member states that they could be the next target of Russian interference may in fact unite the bloc to act collectively.
EU plans retaliatory measures as it attempts to dodge incoming US tariffs
Intense dialogue continued throughout this week between Washington and Brussels as planned US tariffs set to take effect on March 23rd have left the EU trying to avoid any incoming protectionist measures. While Canada and Mexico will be granted an initial reprieve from the additional 25 per cent tariffs on steel and 10 per cent on aluminium, the EU trade commissioner, Cecilia Malmström, said that US authorities would ‘’very soon’’ release further details of how more countries can seek exemptions.
Although Brussels hopes to avoid the tariffs, it is planning backup retaliatory measures and the trade commissioner made clear that ‘’if the EU is not excluded from the measures there will have to be firm and resolute, but proportionate, response’’. The US President, Donald Trump, has been highly vocal during his time in office on America’s large trade deficit with its trading partners and has argued that ‘’trade wars are good and easy to win’’.
While the President did offer the EU a chance to avoid the planned tariffs by dropping ‘’their horrific barriers and tariffs on U.S. products going in’’, he simultaneously singled out the two European brands of BMW and Mercredes-Benz as companies he seeks to tax. US Commerce secretary and Ms. Malmström will meet next week in an attempt to try and defuse any kind of trade row but with no clear indication that Brussels will be allowed a reprieve, plans are in place for the EU to impose tariffs of up to €2.8bn on over 100 products.
Commission to introduce digital tax proposal next week
It has been revealed that the European Commission is planning to bring forward a controversial digital tax proposal next week when EU leaders gather for a two-day European Council summit in Brussels. Speaking to reporters ahead of its introduction, the European Finance Commissioner Pierre Moscovici said the proposal would include taxing ‘’for the short term some parts of digital activities with a modest rate and a very precise basis’’.
Reports indicate that the European Commission will unveil what is known as an equalisation tax which would see large internet based companies taxed on their turnover rather than their profit. Companies that had an annual global turnover of more than €750m and total taxable revenues of €50m generated within the EU would be hit with a levy on their advertising revenues, likely to be around 3%.
When asked how Brussels will respond to expected opposition from several members states such as Ireland and the Netherlands, the Commissioner noted that such complaints be directed at Paris and Berlin who have been pushing heavily for a digital tax. In a leaked draft legal text the Commission notes that digital companies, who operate often across multiple jurisdictions, pay an average of 9.5% tax as opposed to the effective tax rate of 23.3% by traditional companies.
Further measures that would be included in next week’s proposal would include a European common corporate tax base and according to Monsieur Moscovici a more accurate definition of ‘’what is digital presence and how we can measure the presence of digital companies so that they can be taxed’’. Although the proposal would pit the larger EU nations against the smaller liberal member states, there seems to be no sign of the Commissions’ drive to bring in a digital tax abating.
EU report recommends social media firms self-regulate ‘fake news’
An independent report commissioned by Brussels has recommended that social media platforms such as Facebook and Google should combat the growing threat of fake news through self-regulation rather than tougher mandatory measures. The report entitled ‘’A multi-dimensional approach to disinformation’’ was compiled by 39 experts including journalists, academics and internet companies, and recommends that all relevant stakeholders should be involved in drawing up and monitoring the enforcement code of conduct.
The paper is part of the Commission’s overall consultation process and it is expected to bring forward its first set of rules of how EU governments and technology companies should counter the growing threat of ‘’online disinformation’’ next month. Internet companies such as Twitter and Facebook have hired more personnel tasked with combatting fake news and the chair of the new paper, Professor Madeleine de Cock Buning acknowledged that she was taken aback by the level of support and engagement from these companies in compiling the report.
Further recommendations in the paper were proposals for increased funding over the long-term for quality journalism and that social media companies share the controversial algorithms that rank and post stories to independent academics to allow them to assess it. Its publication was met with criticism from activists and MEPs who have urged Brussels to take a tougher line with these companies. With a Eurobarometer survey indicating that 87% of its respondents had been subject to fake news and 70% believing it is a threat to democracy, their disapproval comes as no surprise.
National Front re-branding process brings difficulties for Le Pen
The French right-wing political party, the National Front (FN), which only last year was challenging the eventual winner Emmanuel Macron in the French presidential election, is seeking to undergo a radical re-branding process in an attempt to restore its recently flagging fortunes. Marine Le Pen, the leader of the party, believes that the original party name is toxic in the eyes of many voters and that a rebrand would allow it to shed its ‘’far right’’ label.
Addressing a party conference this week in Lille, Madame Le Pen, proposed that the party change its name from the National Front to the Rassemblement National (RN or National Rally). The decision will now be put to party members through a postal vote but plenty of criticism has been raised of the rebrand, none more vocal than from the party founder and father of its current leader, Jean-Marie Le Pen.
Founding the party in 1972, Monsieur Le Pen, labelled the move as ‘’political assassination’’ as the original name has become an ‘’inimitable, unavoidable point of reference’’. Adding to Marine Le Pen’s woes as leader, her father claims that he used the new proposed name Rassemblement National on two separate occasions in 1985 and again in 1986. Further claims to the new name came also from the far-right politician Jean-Louis Tixier-Vigancour who stood under the RN name in the 1964 Presidential election campaign.
Marine Le Pen has dismissed her father and Monsieur Tixier-Vigancour, asserting that the FN had copyrighted the new name and would sue any ‘’fraudulent use’’ of it. While Madame Le Pen is hoping to ditch the original name, it will be difficult to fully escape the extremist image it holds and with the re-branding process throwing up links to far-right groups of the past, the party may never escape the shadow of its founder.
Dates ahead: Monday 19th March – Sunday 25th March
Tuesday 20th: EU General Affairs Council Meeting
Tues 20th & Wed 21st: US Federal Reserve Open Market Committee meeting
Wednesday 21st: ECB non-monetary policy committee meeting
Thursday 22nd: Bank of England Monetary Policy Committee meeting
Thurs 22nd & Fri 23rd: European Council Summit
Mon 26th – Wed 28th March: European Parliament Committee Meetings
Friday 30th March: Good Friday
Sunday 2nd April: Easter Sunday
Compliments of Vulcan Consulting – a member of the EACC in New York.