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U.K.-EU:160619:(21-JUN-16): Brexit Campaigns Resume. 1

CO:160619:(21-JUN-16):Greece: Orthodox Church Council Convenes In Crete, Russia Absent 1

EGE-RU:160619:(21-JUN-16):Germany: Phase Out Sanctions On Russia If Peace Talks Progress, Foreign Minister Says  1

US-MSA:160618:(21-JUN-16):US-Saudi tech, security and economic ties get a reboot 2

UK-EU-EGE:160617:(21-JUN-16):Walesa: Germany should lead ‘new EU’ after possible Brexit 3

UK-EU:160620:(21-JUN-16):Brexit: EU prepares for the morning after 3

IS-TU:160620:(21-JUN-16):Israel, Turkey poised for decisive meeting on normalisation. 5

DISASTER:160620:(21-JUN-16):U.N.: Refugee Numbers Reach Record High. 5

CO-RUK:160615:(21-JUN-16):As Orthodox leaders gather in Crete, Ukraine calls for an independent church. 5

UK-EU:160618:(21-JUN-16):What if?. 6

UK-EU:160619:(21-JUN-16):Tracing the global market thread that could be unravelled by Brexit 7

UK-EU:160620:(21-JUN-16):After Brexit 8

RU-EU:160617:(21-JUN-16):To the first, the spoils: Western investors venture back to Russia. 9

DISASTER:160620:(21-JUN-16):Global migrant tide swells to record 65 million. 10

RU-CV-EU:160621:(21-JUN-16):Russian, Vatican’s diplomats discuss situation in Europe, Ukraine crisis. 11

MSY-MIN-IS:160621:(21-JUN-16):Assad’s survival, Iran’s ‘radical axis’ called primary threat to Israel 11

TIS-MSY:160621:(21-JUN-16):ISIL expands its footprint in southeast Syria with consolidation. 12

TIS-MSY-CO:160621:(21-JUN-16):Christian militias fighting ISIL in Iraq hope for U.S. support 13

EU-RU:160621:(21-JUN-16):EU Diplomats Agree To Extend Sanctions Against Russia. 13

EU-RU:160620:(21-JUN-16):EU to extend Russia sanctions, divided over next steps. 14


U.K.-EU:160619:(21-JUN-16): Brexit Campaigns Resume

Stratfor 19-Jun-16


The campaign to decide the United Kingdom’s membership of the European Union restarted on June 19 after a three-day hiatus following the killing of lawmaker Jo Cox on June 16, Reuters reported. The campaign to stay in the European Union has urged voters to consider the economic impact that leaving the 28-member bloc would have. The rival ‘Leave’ campaign, meanwhile, has said leaving would actually improve Britain’s economic position. Immigration is one of the public’s chief concerns ahead of the referendum, tapping into fears that EU freedom of movement threatens national security and strains public services.


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CO:160619:(21-JUN-16):Greece: Orthodox Church Council Convenes In Crete, Russia Absent

Stratfor 19-Jun-16


A gathering of Orthodox Churches called the Holy and Great Council has opened on the Greek island of Crete on June 19, despite the absence of four denominations including Russia’s, BBC reported. The Russians decided to stay away after the Churches of Antioch, Bulgaria and Georgia refused to take part after disputes about the meeting. Disagreements included recent efforts to reconcile with the Vatican. The council will run until June 27. The Russian Church’s decision to stay away potentially highlights geopolitical tensions, as the Russian Orthodox Church has often been a way for the Kremlin to expand its influence. There is a struggle for power between Russia and Turkey’s Ecumenical Patriarch of Constantinople, Bartholomew I, considered the driving force behind the meeting. Moscow also fears that Patriarch Bartholomew will give support to the Ukrainian branch of the Church, as negotiations in the country’s conflict continue.


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EGE-RU:160619:(21-JUN-16):Germany: Phase Out Sanctions On Russia If Peace Talks Progress, Foreign Minister Says

Stratfor 19-Jun-16


The European Union should gradually phase out sanctions imposed against Russia over the Ukraine crisis if there is substantial progress in the peace process, German Foreign Minister Frank-Walter Steinmeier said June 19, Reuters reported. His comments reflect divisions in Germany’s ruling right-left coalition over policy toward Russia. Steinmeier’s Social Democratic Party supports a more conciliatory stance toward Moscow than Chancellor Angela Merkel’s conservative bloc. Merkel has repeatedly said that sanctions can only be lifted once the peace agreement to end the conflict in Ukraine is fully implemented, not only partially. On June 17, the European Union extended for a year a ban on business dealings with Crimea, which Russia annexed from Ukraine in 2014. In addition, the bloc is expected this week to extend until the end of 2016 its broader economic sanctions on Russia over its role in the crisis in Ukraine. Steinmeier has also criticized NATO’s decision to stage military maneuvers this month in Eastern Europe, warning that such moves could worsen tensions with Russia.


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US-MSA:160618:(21-JUN-16):US-Saudi tech, security and economic ties get a reboot

Al Arabah News 18-Jun-16


Saudi Deputy Crown Prince Mohammed bin Salman’s significant visit to the United States cannot be understated. This week, he is heading to California for the second leg of his American tour, following a trip to Washington.

His visit to San Francisco seeks to boost links between Silicon Valley and the Kingdom with new high-tech projects and solutions. The aim is to create one of the most advanced technology sectors in Saudi Arabia itself. The Kingdom seeks to be the number one importer of US high technology, in addition to making the best use of American know-how in the high-tech sector to help meet the goals of Vision 2030’s digital economy. It also stimulates other industrial sectors such as industrial equipment, communications and information technology, which in turn aims to create more job opportunities in the Kingdom.

Prince Mohammed US tour is a defining moment not only for American-Saudi relations, but also the deputy heir to the throne’s introduction to Washington DC’s elites. His message is simple: The Kingdom is open for major investments on a strong, robust, bilateral footing. It’s not a reset; it’s a reboot to a new upgrade.

Friday’s meeting between Prince Mohammed and US President Barack Obama was no exception. During the encounter in the White House’s Oval Office, Obama expressed his country’s commitment to continue cooperation with Saudi Arabia and for the two nations to work together to support the security and stability of the Middle East region, and the challenges the region faced. The two also discussed Saudi Arabia’s Vision 2030 economic diversification plan.

Obama had previously described Prince Mohammed as “extremely knowledgeable, very smart” and “wise beyond his years.” This ringing endorsement from a US President, who had been criticized as ineffective in the Middle East, sets a positive tone for the next presidential administration and its management of US-Saudi relationship. On Friday, following the Obama-Prince Mohammed meeting, Saudi Foreign Minister Adel al-Jubeir said as much: “Saudi Arabia will have strong ties with the future US president.”

Jubeir also said Saudi Arabia supports a more aggressive approach against Syrian President Bashar al-Assad’s government, including imposing a no-fly zone and arming rebels with surface-to-air missiles. Finally, the Saudi foreign minister expressed the Kingdom’s determination to handle Iran’s aggressive behavior.

At the Pentagon on Thursday, US Secretary of Defense Carter noted that his meeting with Prince Mohammed, who is also the kingdom’s defense minister, showed a productive and close security relationship between the two countries. Carter noted plans to expand bilateral coordination on special operation forces, as well as security and intelligence cooperation on a variety of issues including Yemen, the fight against ISIS, operations against al-Qaeda and “countering Iran’s belying influence.”

Clearly, US-Saudi financial deals and future contracts are setting a new pathway forward between the two countries. The future King of Saudi Arabia seeks to go beyond the concept of a “reset” to a “reboot” to a new understanding between the two countries based on economic security


Prince Mohammed is spending more than 10 days in America. His tour to Washington, Silicon Valley and New York are a roadshow of the Kingdom’s hope for the next generation, their aspirations, and a Saudi desire to interact with the world with innovation and expansion of industries through private partnerships.

Context is important. The visit is occurring roughly one week after the Saudi cabinet was briefed on Saudi Arabia’s National Transformation Plan (NTP), a pivotal metric program to measure progress on the “Vision 2030” reforms announced on April 25. In addition, deals with American company’s GE and Uber before Prince Mohammed’s Washington visit stand out as a harbinger of transactions to come between the two countries.

According to the Saudi Press Agency, the kingdom intends to build the biggest sovereign wealth fund in the world through nationalization of key sectors and offering IPOs (Aramco for instance) and other instruments such as bonds.

Right now, rules in Saudi Arabia regarding green cards and 100 percent ownership in the retail sector shows the Kingdom moving quickly to open up to the world. Dow Chemical received the first ever foreign company business license in the Kingdom.

Clearly, US-Saudi financial deals and future contracts are setting a new pathway forward between the two countries. The future King of Saudi Arabia seeks to go beyond the concept of a “reset” to a “reboot” to a new understanding between the two countries based on economic security.


Significantly, the Saudis are embracing their youth as part of Vision 2030. As Prince Mohammed landed in Washington D.C., back in Riyadh, King Salman decreed that 3000 male and female students who are studying in the United States to be put immediately on scholarship.

The youth factor here is important: Prince Mohammed’s visit shows the young face of the new Saudi Arabia. Saudi Arabia is effectively creating a healthier environment for creativity for the country’s youth so that Saudi graduates of American universities help to build the Kingdom’s future generations by returning home after completion of their academic studies.

The solution to the Kingdom’s youth bulge is to be put to work based on advances in American technology, innovation, and training plus education. The signing of an agreement between Babson College and Saudi partners to establish the Prince Mohammed Bin Salman College of Administration and Entrepreneurship is a first step.

Overall, the Prince Mohammed’s visit to Washington DC is a rousing success. It appears a new understanding between America and Saudi Arabia has arrived in time to be partners in a number of key areas especially Vision 2030. That’s a real upgrade.


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UK-EU-EGE:160617:(21-JUN-16):Walesa: Germany should lead ‘new EU’ after possible Brexit 17-Jun-16


Poland’s freedom icon Lech Walesa believes powerhouse Germany should lead either a deeply reformed, or an entirely rebuilt European Union, in the wake of a possible Brexit.

Walesa’s comments come as a series of opinion polls show a growing lead for the campaign rallying British voters to leave the 28-nation EU in a landmark referendum on 23 June.

“Germany in particular must calculate what would be better for development (of the EU): do we create a completely new organisation… or do we fix the old EU?” Walesa told AFP during an interview in Gdansk, the cradle of Poland’s 1980s anti-communist Solidarity movement.

“It’s up to the Germans to decide because they are the leaders and they must also decide with whom they want to build” the new EU, he added.

The Nobel Peace Prize winner — renowned for negotiating a bloodless end to communism in Poland in 1989 — also insisted that Germany, along with EU partners France and Italy, “should have a contingency scenario prepared to put in place 15 minutes after the EU falls apart.”

“After the current European Union falls apart, a new union must be created, but it must be thought out much better in order to avoid the kind of problems we have now.

“Whoever wants to join it, can join, while those who don’t, can just say ‘no thanks’,” Walesa said.

The 72-year-old veteran Polish statesman believes the crisis gripping the 28-member European Union is rooted in its lack of shared values.

“Europe, this European construction has no foundation.

“We rejected Christianity, we rejected ideologies like communism and now, there’s nothing left. What can we expect from societies when each of them has different foundations?”

Solid foundations?

An ardent globalist, Walesa also believes it is high time for a more federal Europe based on greater political and economic integration.

“Changing mindsets is the most difficult thing. Our mindsets are still strongly anchored in the old divisions between states.

“But the notion of the state as the most important, is something from the past: Germany, Poland, no, that’s finished. Europe is the overarching value.”

The former shipyard electrician, who as the Solidarity union leader was central to changes that saw Poland shed communism in favour of capitalism in 1989, believes that repairing the EU is preferable to rebuilding it from scratch.

“I’m rather more in favour of repairing what we already have. What’s the use of starting all over again?

“But we need to do it (repair the EU) in a more efficient and transparent way. We have to explain things better to people; they need to understand what we’re doing and why it (the EU) exists.

“What we’ve got now is mistrust, suspicions, bureaucracy, dissatisfaction and trickery, because we don’t have any solid foundations!”

Poland and other eastern EU members are particularly keen to see Britain to stay.

Some 800,000 Poles and hundreds of thousands of Czechs, Slovaks and Hungarians have migrated there seeking jobs and a better life since the EU’s eastward expansion in 2004.

In the event of a Brexit, Walesa believes his own country should continue to be firmly anchored in European structures.

“Regarding Poland, either we get involved in this Union straight away, or we’ll be sidelined and after 50 years we’ll join it anyway.”


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UK-EU:160620:(21-JUN-16):Brexit: EU prepares for the morning after

EUObserver 20-Jun-16


EU leaders have been saying for weeks that there is no plan B if British voters chose to leave the EU in Thursday’s (23 June) referendum.

But if they wake up Friday morning with the unprecedented reality of a member state quitting the club, they will have to react quickly to contain markets instability and political uncertainty, as well as to prepare the first steps of the divorce process.

EU leaders will take the political decisions to address the situation at a EU summit on 28-29 June. (Photo: Council of the European Union)

“There are two ways to divorce: an orderly one and a messy one,” an EU official said. Although no one in EU circles wants to speak of a divorce, the main institutions believe that the initial reaction could be crucial to avoid the messy type.

The clock will start ticking between 5AM and 7AM British time, when the final results come out. The political decisions at the EU level will then be taken at an EU summit on 28 and 29 June.

But one can expect the following from the European Commission, Council, Parliament and European Central Bank in the next few days.

Central Bank

In case of Brexit, the first institution to be tested would be the European Central Bank (ECB).

Global markets will follow the counting all night and the risk is that European banks could face a shortage of liquidity. Plans on how to cope have been laid down in recent months between the ECB, the Bank of England, eurozone national banks and all concerned banking establishments.

“For each bank that is likely to be impacted, we have a plan,” the head of the ECB’s supervisory body, Daniele Nouy, told MEPs at a hearing last week.

“We challenge these plans. We make sure that they are adequate to the headwinds that might be coming from the market,” she said.

A source with knowledge of the plans told EUobserver that banking authorities think “there is enough liquidity” available. But in case of a problem, central banks would open so-called swap lines: the Bank of England would provide British banks with euros while the ECB would provide eurozone banks with sterling.

Several other central bank governors also pledged to provide additional liquidity if needed, the source said.

“It’s difficult to know how all players [markets and political leaders] will act,” the source added. “We will need to pass on reassuring messages and to coordinate all efforts”.

ECB president Mario Draghi will speak in Sintra, Portugal, at an ECB forum which takes place on 27-29 June.

But if the post-Brexit vote market reaction requires it, he could take to the podium earlier and say he would be ready to “do whatever it takes” – the expression he used at the height of the eurozone debt crisis in 2012.


On Friday morning, European Commission president Jean-Claude Juncker will host a meeting with Donald Tusk and Martin Schulz, his counterparts from the European Council and Parliament, as well as with Dutch prime minister Mark Rutte, whose country chairs the Council of the EU until 30 June.

The meeting will be the first coordinated effort by institution leaders in Brussels to prepare the next steps – implementation of the agreement on EU reform reached in February between the EU and the UK, or the Brexit process.

Their decisions and comments will set the tone of the following days and weeks.

In the Berlaymont building, the European Commission HQ, seven people will be ready to act whatever the result of the referendum is.

The Task Force for Strategic Issues related to the UK Referendum, which was put in place last year, helped to draw up the agreement on EU reform reached in February between the EU and the UK. It would be in charge of implementing it if the UK remains in the EU.

The commission will not say what Juncker would propose in case of Brexit, nor whether the task force is also preparing to participate in an eventual Brexit process.

But an official who was in close contact with the commission during the EU-UK agreement process told this website he would “be surprised” if the commission really had no plan B.


In the highest floors of the EU parliament, Friday will kick off at 8.00AM with an extraordinary conference of political group leaders and Schulz.

A parliament official said the meeting would be to determinate the EP’s position on the referendum result before Schulz goes to the meeting with Juncker, Tusk and Rutte.

Another source told EUobserver that in case of Brexit, the parliament could propose a resolution saying that article 50 of the Lisbon treaty should be seen as having been triggered as soon as British prime minister David Cameron informs other EU leaders about the result of the vote.

Article 50 is the article that organises a country’s exit from the EU. It is applied when the member state which decides to withdraw notifies the European Council of its intention.

With the resolution, the parliament would ask EU leaders not to wait for a formal notification but instead to use the mere notification of the vote’s result to start the process.

This is to avoid letting Cameron – or his successor if he resigns – delay the notification and to try to use the delay to obtain more favourable term in the UK’s future relationship with the EU.

The resolution would be put to the vote in an extraordinary plenary session, probably on 28 June just before the start of the EU summit.


All meetings and declarations from Friday will be part of preparations for the summit, where EU leaders will set the direction for what has to be done.

At their last meeting on Wednesday (15 June), EU states’ ambassadors worked on the other issues on the summit agenda but did not mention Brexit.

”The idea is to have all other issues agreed so leaders can focus on the UK” when they meet, an EU source told EUobserver, referring to migration, economy and external affairs.

The first discussion at a political level between the 28 countries will be on Friday morning in Luxembourg at a Europe ministers’ meeting, known as the general affairs council.

The EU ambassadors will then meet once or more to include the UK in the draft summit conclusions.

But the most important discussions ahead of the summit will be between EU capitals and the leaders’ sherpas or aides.

In case of Brexit, “the main goal will be to avoid cacophony” between the remaining 27 member states, a diplomat told EUobserver, adding that it would be almost impossible to reach an agreement by the summit on how to proceed.

He said that France and Germany had taken the lead in discussions between the six EU founding countries – together with Italy, Belgium, Netherlands and Luxembourg – to present a proposal that other countries could rally round.

Last week, after a meeting with his French counterpart Jean-Marc Ayrault, German foreign minister Frank-Walter Steinmeier said that “whatever the UK decides,” the two countries “will jointly take on the responsibility of ensuring that the European Union continues and can function”.

Sources from other countries and in Brussels said the June summit would not be ripe for a Franco-German initiative.

Real discussion

When leaders meet on Tuesday (28 June), they could have a quick first discussion on the outcome of the referendum, before moving to other issues on the agenda and spending the dinner talking more extensively about the UK, a source said.

If Brexit happens and article 50 is triggered, they could spend the second day of the summit in a group of 27 only, without Cameron.

“The real discussion would be at 27,” the source said. “The question will be: what do we want with the Union now?”.

But there would be no deal on the table to agree on, just a political direction to lay out.That means that a second summit in July, after more discussion and preparatory work on how to proceed with the Brexit process, would be possible, the source said.

“But it’s pure speculation,” he said, using a word journalists have heard from all institutions recently.

“Don’t forget that the UK staying in is still a possibillity,” another EU official said.


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IS-TU:160620:(21-JUN-16):Israel, Turkey poised for decisive meeting on normalisation

BICOM (Britain Israel Communication & Research Centre 20-Jun-16


Media reports suggest that Israel and Turkey could reach agreement on normalising ties within the coming week, following several rounds of reconciliation negotiations.

It is thought that several sticking points remain, including Turkey’s demand for a relaxation of Israeli restrictions on the Gaza Strip and Israel’s request that Turkey close Hamas’ office in Istanbul. However, an unnamed Israeli official indicated that agreement is close, telling YNet: “We have finalised almost every single aspect of the negotiations, there are only a few details outstanding, but 95 per cent of the agreement is there. It should be a matter of days.”

Meanwhile, Haaretz reports this morning that a decisive, final meeting between the two sides will take place in an unnamed European capital on 26 June. A similar scenario was also reported by Channel One. Turkey’s new Prime Minister Binali Yildirim also addressed the talks with Israel over the weekend and said: “I don’t think there’s a lot of time left till we reach a reconciliation agreement with Israel.”

Over the past several weeks there have been a number of indications of warming bilateral ties. For example,  Dore Gold, director general of Israel’s Foreign Ministry, led a delegation at the recent United Nations’ Humanitarian Summit in Istanbul. Meanwhile, for the first time in several years, Turkey sent senior foreign ministry officials to an Independence Day reception at the Israeli Embassy.

In 2010, the previously warm relationship between Israel and Turkey deteriorated and diplomatic relations were ceded after the deaths of ten Turkish citizens who were killed whilst trying to prevent Israeli commandos taking over a Gaza-bound protest ship, the Mavi Marmara. In 2013, Israel’s Prime Minister Benjamin Netanyahu paved the way for reconciliation by issuing an apology. It is thought that arrangements were made in 2014 over a compensation deal for the families of those killed aboard the Mavi Marmara. Subsequent talks resumed last year and have been ongoing, which have included a meeting between representatives in London in April.


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DISASTER:160620:(21-JUN-16):U.N.: Refugee Numbers Reach Record High

Stratfor 20-Jun-16


The U.N. refugee agency said June 20 that the number of people in the world displaced by conflict has reached more than 65 million, the highest it has ever been, BBC reported. That means that roughly one in 113 people throughout the world is either a refugee, an asylum seeker or an internally displaced person. One-third of these people come from Afghanistan, Syria or Somalia, according to the United Nations. Moreover, despite the media’s heavy focus on Europe’s refugee crisis, the vast majority of those displaced by war — around 86 percent — are currently living in low- and middle-income countries such as Turkey and Pakistan.


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CO-RUK:160615:(21-JUN-16):As Orthodox leaders gather in Crete, Ukraine calls for an independent church

Economist 15-Jun-16


ONLY a few hours ago, Orthodox Christian bishops from many countries were preparing smoothly enough for an historic gathering in Crete which although diminished by some last-minute withdrawals will still be a huge landmark in the history of eastern Christianity. As I explain in this week’s print edition (see article), preparations for the Holy and Great Council, the first of its kind for many centuries, were disturbed by the late pullout of four of the 14 participating churches: those of Bulgaria, Georgia, Antioch (based in Syria) and finally the Patriarchate of Moscow, which is the biggest.

But bishops from such countries as Romania, Serbia, Poland, Greece, Cyprus and Egypt were still converging on the Greek island; and the meeting’s host, Patriarch Bartholomew of Constantinople (pictured), insisted that the Council’s authority would not be diminished by the absentees. He urged the nay-sayers to relent and attend after all. The Council, whose main business will begin after Pentecost celebrations this weekend, is due to issue pronouncements on topics such as marriage, fasting and Orthodoxy’s relations with the wider Christian world.

This morning, however, another political bombshell reached the ears of the Cretan gathering. Parliamentarians in Ukraine formally called on Bartholomew I (who, as Ecumenical Patriarch, is Orthodox Christianity’s first among equals) to recognize and help establish a fully independent Orthodox church in that country. A resolution backed by 245 legislators, comfortably above the required minimum of 226, urged the Istanbul-based Patriarch to facilitate a “unification council” for Orthodox Christians in Ukraine, out of which a single, internationally recognized national church would emerge.

Such a turn of events would be greeted with deep dismay both in the Kremlin and the Patriarchate of Moscow, which is now accepted by most other Orthodox bodies as the legitimate church authority in Ukraine. When communism collapsed, the Patriarchate of Moscow had more active parishes in Ukraine than in Russia. After Ukraine became independent, a breakaway “Kiev Patriarchate” proclaimed itself the new Orthodox authority in the country, and it controls thousands of parishes. But it has won very little international recognition.

According to the Ukrainian parliamentarians, granting the country an independent, recognized church would simply be righting an historical wrong: the fact that in 1686, the metropolis (ecclesiastical authority) of Kiev was transferred from Constantinople to Moscow. In other words, the fact that Russia religiously annexed Ukraine. But Muscovite religious scholars have a very different reading of church history and insist that their own hierarch, Patriarch Kirill, is the legitimate spiritual leader of the eastern Slavs.

Patriarch Kirill of Moscow has already warned Patriarch Bartholomew that any move to detach Ukraine from Muscovite authority would be devastating for the relationship between Orthodox Christianity’s two most important sees, those of Constantinople and Moscow.

Patriarch Bartholomew will certainly not act hastily over a change which could have huge strategic repercussions. But thanks to Moscow’s last-minute withdrawal from the Cretan Council, Patriarch Kirill has lost a bit of leverage over his Istanbul-based counterpart. Patriarch Bartholomew has hitherto walked a delicate line over Ukraine. When he visited that country in 2008, he accepted the legitimacy, for now, of Moscow’s religious authority but also expressed understanding for many Ukrainians’ wish for an independent church. We can all expect to hear more about the ecclesiastical tug-of-war between Moscow, Kiev and Istanbul.


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UK-EU:160618:(21-JUN-16):What if?

Economist 18-Jun-16


The aftermath of a vote to leave the European Union will depend on unpredictable responses in all sorts of places. It is unlikely to be pretty

BEFORE the campaigning for Britain’s referendum on the European Union hit its stride, some people quaintly imagined that it might settle things once and for all, lancing the boil of an argument that has been festering for the best part of a generation. Fat chance. A victory for Remain would leave Britain divided, the losers embittered and political life coarsened (see article). A victory for Leave, which is what the latest opinion polls predict, would see economic turmoil and political strife as the winning side learned that, for all it might have talked of taking back control, it remained at the mercy of economic forces and the members of the union it had spurned.

David Cameron says that if Britain votes to leave he will immediately invoke Article 50 of the Lisbon treaty, which sets out the rules for negotiating a member state’s departure. That would give the two sides two years to finalise a deal—a timetable that can be extended only with the consent of all concerned. If no agreement were reached Britain would have to fall back on trading with the EU under World Trade Organisation (WTO) rules, which would imply tariffs and no special deal for financial services.

Mr Cameron also says he will stay on as prime minister and represent Britain in those negotiations; some in the Leave camp, such as Michael Gove, the justice secretary, say that they, too, would like him to stay. But it is hard to imagine that the victorious Leavers would really be happy seeing the leader of the Remain campaign negotiating Britain’s new deal with the EU. The odds are that the Tories would be looking for a new leader within days.

All or nothing at all

What sort of deal might that new leader try to get? Some want no deal at all. A group called Economists for Brexit (EFB) suggests simply abolishing all import tariffs. The ensuing rise in trade, it says, would boost GDP by 4%. Yet this prediction relies on small changes in trade costs having implausibly large effects on how much trade goes on, say researchers at the London School of Economics. Besides, the EFB assumptions are politically implausible.

At the other end of the range of options is a deal in which Britain, while leaving the EU in accord with the will of its people, remains part of the EU’s single market. This is the arrangement Norway has, by dint of the European Economic Area; Switzerland, though not a member of the EEA, has something similar. In Norway’s case the deal means accepting the free movement of labour and observing almost all EU regulations while having no say in writing them. And it contributes heavily to the EU budget for this privilege.

The Leave campaign’s strongest cards are the public’s distaste for immigration, its desire for self-determination and its dislike of sending money to Brussels (see article). This suggests that the Norwegian option would be unacceptable to the pro-Leave majority of the Tory rank and file, who will get the final say in the choice of the next party leader. The prospective leader who wins their support is likely to have to promise blocks on the free movement of labour. That probably means getting nothing more than a bespoke free-trade deal for some sectors at best, with WTO rules the fallback option.

Once that leader becomes prime minister, though, he or she will have to deal with the will of Parliament. Fewer than 150 Conservative MPs and only a handful from Labour are openly backing Leave; even if some others are playing a waiting game, that suggests a large majority for Remain among the 650 members of the House of Commons. Those MPs might well prefer a Norwegian option to WTO rules. If push came to shove—and the campaign has shown a marked tendency for pushing and shoving—a Tory leader committed to a right-out-of-the-single-market version of Brexit might not be able to win a vote of confidence. An autumn general election could then follow.

Whether MPs go that far will depend in part on how dire the economic response to a Leave vote turns out to be; the worse things look, the more important it will seem to try and stay in the single market. Estimates of Britain’s economic growth this year have already dropped to 2%, barely above what is expected of the euro-zone (though were Brexit to come about, the euro-zone’s growth would be hit, too). Investors have been selling sterling assets at the fastest rate since the financial crisis of 2007-08; the pound has dropped by 7.5% over the past 12 months. This is part of a broader move into safer assets (see article), but it also reflects Brexit fears.

The National Institute for Social and Economic Research (NIESR), a think-tank, predicts a 2.9% fall in GDP in the short run and worse in the long run, brought about by factors like lower trade and falling foreign direct investment. The knock-on effects would hit productivity and wages; a further fall in sterling would push up prices. Tighter controls on migration would make things worse.

Wonks are poor forecasters, say Brexiteers. Indeed, the Leave camp claims that recent data suggest Brexit might help the economy. In April exports rose to their highest level for three years in nominal terms. A Brexit-induced slump in sterling, the argument goes, would boost the economy further. This is not necessarily true. Foreign orders do not respond instantly to depreciation—which also raises the cost of imported inputs. The hit to confidence and credit from Brexit would hurt exporters more than a weak pound would help. In 2008-09, when sterling slumped, exports barely responded.

On June 14th George Osborne, the chancellor, said that in light of these likely effects a Leave vote would necessitate an emergency budget to raise taxes and cut spending. Mr Osborne’s announcement feels more like an attempt to frighten voters—or perhaps a scorched-earth strategy—than a politically plausible plan. But at some point a deficit swollen by Brexit would have to be dealt with.

The severity of the prompt economic fallout may determine what sort of deal Britain tries to get. But the results of any negotiations will depend on how generous its EU partners would be. The terms of any new trade deal would have to be agreed on unanimously, which could make the complexity of the negotiations overwhelming. Donald Tusk, president of the European Council, says it might easily take seven years. And the three biggest economies, Germany, France and Italy, while all wanting Britain to remain, are not willing to let it leave unscathed.

France is the foremost scold. Although its president, François Hollande, has kept quiet during the referendum campaign, for fear of provoking greater pro-Brexit feeling, he made his views clear at a Franco-British summit in Amiens in March. “I don’t want to scare you,” he said, but a Brexit vote would have “consequences”.

The kindness of soon-to-be strangers

French politicians see playing hardball in the negotiations rather as Voltaire saw the execution of Admiral Byng following his loss of Minorca; the sort of thing that has to be done “pour encourager les autres”. The worse Britain does on its own, the more it will encourage others to stick with the EU. This includes the others at home; France’s populist National Front is promising voters their own referendum. In 2005 the French voted down the draft EU constitution, shocking their political leaders. Today they are second only to Greece in their Euroscepticism. A new Pew poll finds that 61% of French voters have an unfavourable view of the EU; the British figure is just 48%.

The French government is also working on ideas to breathe life into the European project that will focus on defence and security co-operation. There is irritation in Paris that the government has put European initiatives on hold for many months to avoid upsetting British voters. “This can’t go on for ever,” says one minister. France wants to present these ideas to the European Council at the end of June and hopes for Germany’s support. Thomas de Maizière, the German interior minister, sat in on a French cabinet meeting on June 15th; Mrs Merkel was due to watch the Germany-Poland football match with Mr Hollande at the Stade de France the next day.

Like the French, German politicians are cautious in discussing Brexit for fear that foreign warnings could boost the Leave campaign. But the country is keen for Britain to stay. Germany wants the EU to move in a broadly Anglo-Saxon direction (see article). It would like it to concentrate on cutting bureaucracy, returning powers to governments (while limiting state intervention) and co-operating more in foreign policy rather than pushing deeper integration. “In Berlin everyone’s keeping fingers crossed,” says David McAllister, a German member of the European Parliament who has a Scottish father. If Brexit wins, he says, he will cry for days.

Wolfgang Schäuble, Germany’s finance minister, has warned that Britain cannot expect favourable treatment after an exit vote. “In is in. Out is out,” he says. But many expect Germany, which has a big trade surplus with Britain and would not want to damage its own exporters, to take a softer line than France. “Germany will play the good cop, and France will play the bad cop,” says Yves Bertoncini, director of the Jacques Delors Institute. But this does not mean Germany will truly be on Britain’s side, any more than good cops really side with crooks. The National Front and Frexit frighten Germany, too.

Matteo Renzi, the Italian prime minister, has played down Brexit, saying that it would be a disaster for the British, but not a huge drama for Italy and the EU. But Italy would definitely like Britain to stay. For one thing Mr Renzi often finds himself on the same side as Britain in the council; he would feel more isolated without it. There is also scarcely a middle-class family in Italy’s big cities that does not have a child working or studying in Britain.

And, as in France, there is a fear that Brexit would encourage Euroscepticism at home, both in the xenophobic Northern League and the populist Five Star Movement. Given the sick state of Italy’s economy, which has barely grown since it joined the euro, they might easily be convinced to leave.

Would Mr Renzi’s government join others in taking a tough line? “We are not particularly tough. It is not in our DNA,” says Marta Dassu at the Aspen Institute, who is also a former junior foreign minister. “But I think we would wish to align our positions with those of France and Germany. We would want to stay in the core.”

If Brexit means that this core fears for its continued cohesion, or is unable to persuade all the other members of the EU to accept a new trading arrangement, the chances of Britain getting a good deal from its former partners will be slim indeed.


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UK-EU:160619:(21-JUN-16):Tracing the global market thread that could be unravelled by Brexit

Reuters 19-Jun-16


If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed.

The invisible thread that links assets as diverse as gold, bank stocks, the Japanese yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks “adverse spill-overs to the global economy”.

With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets.

So why will the will of one country’s people in one referendum have such a profound impact on global markets?

The answer is partly how interconnected global markets are, and partly timing – the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support.


Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the U.S. Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory.

Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks.

Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JPMorgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years.

They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly “safe haven” assets.

But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further.

They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession.

If “core” bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone “periphery” countries like Greece, Italy and Spain.


Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated.

Euro zone banks are down 30 percent this year, Japanese banks 35 percent, UK banks 20 percent, and U.S. banks 10 percent.

Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash.

It may even become cheaper for banks to put billions of yen, euros or francs of their customers’ cash in vaults — a possibility German lender Commerzbank is examining.

As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly.

In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 percent much harder to achieve, in turn putting its credibility under even greater scrutiny.


Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system’s plumbing.

Banks have recovered from 2007-08 but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for dollars over yen in the cross currency basis market is its highest in years.

Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors’ perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero.


World stocks are in their longest bull run in history that began on 9 March, 2009. But Wall Street’s peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles.

European stocks are down 13 percent this year, Japan down 20 percent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile?


Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the dollar.

Dollar credit to non-U.S. banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies.

Japan’s yen, another safe-haven currency, would probably rise too, perhaps as much as 14 percent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts.


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UK-EU:160620:(21-JUN-16):After Brexit

German Foreign Policy 20-Jun-16


Initial outlines of Berlin’s possible reaction to Britain’s EU exit (“Brexit”) are beginning to seep out to the public. According to a report, government circles, who themselves see no reason to fear the turbulences of the financial markets, are hoping that these will persuade a sufficient number of the British to vote in favor of “remaining.” If this does not work, and the British opt for the Brexit, drastic measures should not be excluded. To avoid negative effects on the German economy, some members of the administration are pleading in favor of granting the UK an EU-associate status, similar to that of Norway. However, “a front should be established” to prevent other EU members from following suit and converting to an associate status. The transition to a “core Europe” remains an option and a discussion of it could be initiated at the end of this week. The foreign ministers of the six EU founding countries have planned an exclusive meeting to discuss the consequences of the British referendum.

Forecasts, not Advice

While Berlin continues to discuss adequate reactions to a possible Brexit, representatives of business and finance are seeking a last minute change of course. In Great Britain, advice from abroad is not at all appreciated, and threatens to have the contrary effect. Therefore, it should not be voiced. Hence, interested circles operate using forecasts. Martin Wansleben, Chief Executive of the German Chambers of Industry and Commerce (DIHK), for example, predicts that, in the case of a Brexit, three fifths of the German enterprises, currently active in Britain, would slow down their business. In turn, British companies, now active in Germany, could also encounter more problems.[1] However, British experts point out that Germany profits far more from trade with the UK than vice versa. Threats that common accords for prosperous economic exchange outside the EU would become impossible, should, therefore, not be taken seriously.

Desired Turbulence

Threats are also arriving from the financial sector. Andrea Enria, Chair of the European Banking Authority (EBA), announced that in the case of a Brexit, his institution would leave London. “If the British should decide to leave the EU, we actually would have to move to another European capital.”[2] Berlin is taking note with satisfaction of recent turbulence on financial markets, just prior to the Brexit referendum. “The Brits will get a foretaste of what is in store after Brexit. Perhaps, they will reconsider,” an unnamed member of the German government was quoted saying.[3] However, the German government is not really worried. Central banks in London and Frankfurt have taken all necessary precautions to stabilize the markets if needed. “A bit more panic” on the financial markets prior to the referendum would be welcomed, because it could possibly improve the perspective of a “remain” vote.[4]

Project Fear

However, the effects of these forecasts and threats to attempt to influence the results become dulled with time. The experience in Denmark is a confirmation. ( reported.[5]) Also in Britain, these attempts have been dubbed “project fear” and are being taken seriously to a dwindling degree. Even if this time “project fear” would be effective, the EU establishment’s possibilities for orienting future referendums are continuing to subside.

“Germanophobe Brexit Advocates”

In light of the uncertainties, as Thursday’s referendum approaches, there is a possibility that an EU-level crisis meeting will be held. It has been reported that Chancellor Merkel has “prudently planned no public appearances” for Friday. In case there is a “remain” victory, she – for example, with her participation in the Bundestag – can “demonstrate business as usual.”[6] In any case, a meeting of the foreign ministers of the six EU founding nations has been announced for Friday or Saturday, to make clear that the “European Project” still stands, according to reports. The fact that, at such a possibly decisive historical moment, the meeting will be limited to only six of the 28 EU countries is an indication of plans, which have not yet been officially made public. The reason given for keeping the plans under wraps is that “no one wants to provide additional arguments to Great Britain’s Germanophobe Brexit advocates.”[7]

Isolated Case

There are two aspects to the plan. On the one hand, according to the chancellery, it is not out of the question that, following Britain’s exit, it still could remain in association with the EU – on a basis similar to that of Norway. This continuation of intact business relations with the United Kingdom would, in fact, accommodate Germany’s massive economic interests.[8] However, that other EU countries also opt for a looser association with the EU, must be prevented according to the German Ministry of Foreign Affairs. “We must immediately establish a front under the motto, No Cherry Picking.”[9] Any eventual EU association agreement with Great Britain would strictly be an isolated case.

Core Europe

On the other hand, some in Berlin’s establishment – including Finance Minister, Wolfgang Schäuble – are currently calling for a change of course toward a “core Europe.” Recently former Vice President of the EU Commission, Viviane Reding (Luxembourg) and, Jean Asselborn, Luxembourg’s Foreign Minister, made declarations pointing in this direction. “We need a core Europe, this must be imposed quickly,” Reding declared.[10] Asselborn was a bit more diplomatic in his formulation, saying that although “a core Europe, wherein a number of countries would be excluded, … is not the ideal solution,” nevertheless, “a debate on how we define solidarity among ourselves will in any case have to be held.”[11] That debate could be initiated, when the six foreign ministers of the EU’s founding member countries – Germany, France, Italy, Belgium, The Netherlands and Luxembourg – meet at the end of the week. With these six countries, the EU’s innermost kernel of prosperity would be set. The broader point of orientation would be the Euro zone. However, those countries, that have not adopted the common currency, will be completely left out, and must comply with decisions handed down by the EU’s core.

For more on this theme: The Brexit Summit Show, Project Fear, and No Social Europe.

[Footnotes to articles in German removed] [5] See Project Fear.


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RU-EU:160617:(21-JUN-16):To the first, the spoils: Western investors venture back to Russia

Reuters 17-Jun-16


Western investors are jostling with each other for position in Russia in anticipation of the moment when sanctions imposed over the Ukraine crisis are softened and they can do lucrative business again.

Most are not yet coming with money and specific deals – at least, not in the same numbers as before the crisis – so the objective instead is to win favor with the Kremlin by being the first to turn back toward Russia.

“Look how many American investors are here, not to mention the Europeans,” Sergei Chemezov, head of the state conglomerate Rostec, said at Russia’s biggest annual investor show this week, held in St Petersburg.

“They understand that we have an enormous market. And whoever comes here first, they get all the spoils,” said Chemezov, who used to work with President Vladimir Putin in the Soviet foreign intelligence service.

Two years ago, the United States and the European Union imposed sanctions on Moscow over its annexation of Ukraine’s Crimea region and its support for a separatist rebellion in eastern Ukraine.

Western governments say in public that the sanctions will not be eased until an internationally brokered peace deal on eastern Ukraine, the Minsk agreement, is fully implemented.

But many diplomats say in private that deal can never be implemented – not only through Russia’s fault but also because the conflict is intractable. At the same time, European economies are stagnating, leaving businesses anxious to get back into the lucrative Russian market.

Pressure has therefore been building inside Europe, according to officials with EU member states, for governments to move beyond the Ukraine impasse and lift some of the sanctions, perhaps within the next 12 months.

“I think the politicians do listen to business. The politicians have to find their solution,” Rainer Seele, chief executive of Austrian energy company OMV (OMVV.VI), told Reuters.


Italy had the coveted status of guest of honor at the forum in St Petersburg, where investors vie to catch Putin’s eye.

Italian Prime Minister Matteo Renzi was the only head of an EU government to attend apart from the prime minister of Malta.

Italy also had the most lavish pavilion of any foreign country at the forum, a large hall whose interior was decorated to resemble an Italian palazzo.

Italian Economic Development Minister Carlo Calenda said Rome would like to take on the role of building bridges with Russia on behalf of the rest of Europe, and Renzi echoed the sentiment when he took the stage alongside Putin during the forum. “It’s a logic of bridges, not walls,” he said.

Calenda said the two countries had a pipeline of 340 proposed investments, in areas from leather goods to agriculture, that they would work to realize over the next few months.

Italy did not have the field to itself, however.

“There are a lot of French people here,” said an executive at a major Russian company at the St Petersburg forum. “Probably we can interpret this as a signal.”

Patrick Pouyanne, chief executive of French oil major Total (TOTF.PA), said France had maintained the highest rate of investment in Russia among all Western countries during sanctions.

He said there was political rapprochement in the air, in part because France and Russia had learned to work together over the conflict in Syria.

“The forum is clearly more active this year. I’m meeting more people this year,” he said. “People are adapting.”


To be sure, Western investments in Russia are still far from being back to normal.

Several of the biggest Russian companies are subject to targeted sanctions, forcing their Western business partners to put joint projects on hold, while the financial sanctions bar many forms of lending to Russia.

Even in areas not covered by sanctions, fear of a worsening in political tensions and the hostile atmosphere over Ukraine are still keeping many investors away.

A slate of deals were unveiled at the forum, but none on the scale seen at the event in years before the sanctions.

“The mood has improved but the facts aren’t there,” said Vadim Shvetsov, majority owner of Russian automotive company Sollers.

He said for investors to return, it would take higher world prices for oil and gas, Russia’s biggest export, and a change in the Western rhetoric toward Russia.

Still, other people at the forum said Western investors were looking ahead to the future.

“Sanctions aren’t forever,” said Russian Deputy Energy Minister Alexei Texler.

In an interview with Reuters, Pavel Grachev, chief executive of Russia’s largest gold producer Polyus, said investors were coming back partly because Russia was dialing down the tension in political relations with the West.

But there was another reason.

“Given that profitability is being squeezed on Western markets, investors are coming here looking for ideas, for profits, whether it’s in shares or bonds,” Grachev said.

“Not for the first time, greed – in the positive sense of the word – is trumping caution.”


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DISASTER:160620:(21-JUN-16):Global migrant tide swells to record 65 million

Yahoo News 20-Jun-16


The number of refugees and others fleeing their homes worldwide has hit a new record, spiking to 65.3 million people by the end of 2015, the United Nations said Monday.

Europe’s high-profile migrant crisis, its worst since World War II, is just one part of a growing tide of human misery led by Palestinians, Syrians and Afghans.

Globally, close to one percent of humanity has been forced to flee.

“This is the first time that the threshold of 60 million has been crossed,” the UN refugee agency said.

The figures, released on World Refugee Day, underscore twin pressures fuelling an unprecedented global displacement crisis.

As conflict and persecution force growing numbers of people to flee, anti-migrant political sentiment has strained the willingness to resettle refugees, said UNHCR chief Filippo Grandi.

“Instead of burden-sharing, we see borders closing. Instead of political will, there is political paralysis and humanitarian organisations like mine are left to deal with the consequences and struggling to save lives on limited budgets,” Grandi told reporters in Afghanistan’s capital Kabul.

– Unprecedented risk –

The number of people displaced globally rose by 5.8 million through 2015, according to the UN figures.

Counting Earth’s population at 7.349 billion, the UN said that one out of every 113 people on the planet was now either internally displaced or a refugee.

They now number more than the populations of Britain or France, the agency said, adding that it is “a level of risk for which UNHCR knows no precedent.”

“Every 24 minutes a person is forced to choose exile from his home,” Grandi said in Kabul.

Displacement figures have been rising since the mid-1990s, but the rate of increase has jumped since the outbreak of Syria’s civil war in 2011.

Of the planet’s 65.3 million displaced, 40.8 million remain within their own country, 21.3 million have fled across borders and are now refugees, while the remainder are asylum seekers.

Palestinians are the largest group of refugees at more than five million, including those who fled at the creation of Israel in 1948 and their descendants.

Syria is next on the list, with 4.9 million refugees, followed by Afghanistan (2.7 million) and Somalia (1.1 million).

– Rising conflict, shrinking solutions –

A mixture of worrying factors has led to rising displacement and narrowing space for refugee resettlement.

“Situations that cause large refugee outflows are lasting longer,” the agency said, including more than 30 years of unrest in both Somalia and Afghanistan.

New and intense conflicts as well as dormant crises that have been “reignited” are further fuelling displacement, UNHCR said, pointing to South Sudan, Yemen, Burundi and the Central African Republic, aside from Syria.

Beyond the refugee hotspots in the Middle East and Africa, UNHCR said there were also troubling signs in Central America, where growing numbers of people fleeing gang violence led to a 17-percent rise in those leaving their homes through 2015.

Faced with an increasing need to resettle those facing persecution, the answers are not always obvious.

“The rate at which solutions are being found for refugees and internally displaced people has been on a falling trend since the end of the Cold War,” the UN agency said.

“We simply do not have the option of turning our backs and walking away,” Grandi warned in Kabul, echoing wider calls among humanitarian chiefs for world powers, especially in the West, to be more welcoming of migrants and refugees.

Turkey — which struck a controversial deal with the European Union in March to stem Europe’s migrant crisis — hosted the highest number of refugees through 2015 at 2.5 million, mostly Syrians.

Germany received the highest number of asylum requests (441,900) over the 12-month span, demonstrating the country’s “readiness to receive people who were fleeing to Europe via the Mediterranean.”


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RU-CV-EU:160621:(21-JUN-16):Russian, Vatican’s diplomats discuss situation in Europe, Ukraine crisis

Tass 21-Jun-16


Chief of Vatican’s diplomacy calls for walking in step with Russia

The situation in Europe and the Middle East, as well the Ukrainian crisis were in focus of talks between Russian Deputy Foreign Minister Alexei Meshkov and Under-Secretary for the Holy See’s Relations with States Antoine Camilleri, the Russian foreign ministry said on Tuesday.

“The talks focused on topical international problems, such as the situation on the European continent, including issues of cooperation within the Organization for Security and Cooperation in Europe (OSCE) and the Council of Europe, the crisis in Ukraine, and problems of protecting Christians in the world and the situation in the Middle East,” the ministry said.

“The bilateral agenda primarily included development of Russia-Vatican relations in the spheres of culture, education, science and medicine in line with the existing agreements,” the ministry said.


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MSY-MIN-IS:160621:(21-JUN-16):Assad’s survival, Iran’s ‘radical axis’ called primary threat to Israel

GeoStrategyDirect we. 21-Jun-16


Israel must seek the ouster of Syrian President Bashar Assad and take a stand against “the radical axis led by Iran that runs through Assad-controlled Syria to Hizbullah in Lebanon,” a former Israeli Air Force general said.

That axis “embraces the strategic goal of putting an end to Israel,” and “is the most concrete threat the State of Israel faces today,” Amos Yadlin wrote for The Institute for National Security Studies.

From left, Syrian President Bashar Assad, Iran’s then-President Mahmoud Ahmadinejad and Iran’s Supreme Leader Ayatollah Ali Khamenei at a technology expo near Damascus, Feb. 9, 2011. Reuters

Yadlin, who also served as military attaché to Washington, D.C. and head of the IDF Military Intelligence Directorate, said that “the axis’s current military capabilities, and the additional capabilities it can be expected to acquire, constitute the industrial and scientific potential resources of a regional power.”

Israel should coordinate with others in the Middle East and global superpowers to “prevent this problematic strategic development,” Yadlin wrote.

“Moreover, recent reports confirm suspicions regarding cooperation between the Assad regime and the Islamic State and bolster the assumption that these two extremist parties share a common interest in weakening and eliminating any moderate alternative and helping safeguard the survival of one another.

“Israel, on the other hand, remains virtually alone against the pro-Iranian radical axis and can rely on no one but itself. For this reason, it must make action against strengthening the Russian-supported axis a high priority. The bottom line is that the Islamic Republic of Iran (and its allies) is exponentially more dangerous to Israel than the Islamic State.”

The Jewish state “has a fundamental interest” to ensure that Iran and Hizbullah “will not be the forces that are strengthened within the framework of a new order in the Middle East,” Yadlin wrote.

“Gone are the days in which Israel could impartially observe the developments in Syria from the sidelines.”

Israel has mostly stayed out of the fray in Syria, occasionally striking convoys delivering arms to Hizbullah.

“The time has come for Israel to reassess its position on the civil war that rages across its border,” Yadlin said.

On May 2, Haaretz military analyst Amos Harel wrote: “Syria’s embattled Assad regime used chemical arms against ISIL east of Damascus…The regime apparently decided to use the lethal gas sarin after ISIL fighters attacked two Syrian air force bases considered vital military assets.”

Since that incident, however, Yadlin said “the international community has ignored Bashar Assad’s blatant violation of his 2013 commitment to rid his regime of its chemical weapons and cease any use of them, and as such, his defiance of universal norms and international conventions. In addition, despite the ceasefire, the Assad regime and its allies have resumed their indiscriminate killing in Aleppo, Idlib, and the Damascus region. These developments underlie the conclusion that Israel must adopt a position opposing Bashar Assad and his regime.

“The renewed use of chemical weapons reminds us that the party bearing the most responsibility for the massacre underway in Syria has yet to be punished. It also highlights Israel’s obligation to acknowledge that Assad is a murderer whose actions have led to a chilling human tragedy. Assad is responsible for 90 percent of the deaths during the war, which thus far total approximately 400,000. He is also accountable for the more than two million wounded and the 11 million refugees within Syria and neighboring countries. The outcome is a humanitarian disaster, the likes of which have not been seen since the genocide in Cambodia four decades ago and the genocide in Rwanda 22 years ago. In light of these occurrences, Israel cannot stand idly by.”

While the threat from ISIL “must not be underestimated,” Yadlin said that “contending with this issue should not prevent Israel from assigning a clear strategic preference to the Teheran-Baghdad-Damascus-Beirut challenge.

“After all, under U.S. and Russian leadership, and regardless of the involvement of Israel, the international community has mobilized to contend with the Islamic State phenomenon and has thus far succeeded in halting its advance and reducing the area under its control. Furthermore, although the Islamic State attracts some Sunnis in Syria while Assad remains in power, it is extremely likely that an end to the Assad regime and the evolution of a moderate Sunni alternative will greatly weaken the Islamic State appeal.”

Yadlin said Israel could look into establishing a “covert alliance” with Sunni forces in Saudi Arabia, the Gulf states, Turkey, Jordan, and Egypt.

“The prominent Sunni states in the Middle East and Israel have overlapping interests and seek to advance similar aims: the weakening of Iran and Hezbollah and the ousting of Assad. For this reason, they should be mobilized to promote essential processes aimed at advancing these goals. All this should be implemented in partnership with the United States and perhaps also through quiet understandings with Russia, which, unlike Iran, does not regard Assad as a necessary component of a future Syrian order.

“First, a clear political and legal process should be launched against the crimes committed by the Assad regime that will help hold it accountable for its role in the mass murder and its use of chemical weapons. Israel can help in the disclosure of most of the information regarding the killing perpetrated by Assad and Hezbollah in Syria and the use of chemical weapons.

“Second, a dialogue with the United States must be launched regarding the formulation of a strategy to remove the Assad regime, Iranian forces, Hezbollah, and the Islamic State from Syria



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TIS-MSY:160621:(21-JUN-16):ISIL expands its footprint in southeast Syria with consolidation

GeoStrategyDirect we. 21-Jun-16


The merger of three militias has enabled Islamic State of Iraq and Levant (ISIL) to expand its presence in southeast Syria, sources say.

The militias, in strategically important Deraa province, which borders Israel and Jordan, were identified as the Yarmouk Martyrs Brigade (YMB), Islamic Muthanna Movement (IMM) and Mujahideen Group. The three merged to form the Jaysh Khaled bin Al Walid Army, according to an ISIL announcement on June 17.

Members of the Yarmouk Martyrs Brigade show off tanks and other seized vehicles.  YouTube

The U.S. State Department recently designated the YMB as a terrorist group.

Jihadists who fight for the newly-merged army are mostly locals from Deraa and part of prominent tribes in the province. Members are said to consider the movement as “more extreme” than Nusra Front, Al Qaida’s affiliate in Syria.

Unlike other areas in Syria, the three militias had become loyal to ISIL voluntarily. The merger is seen as the first of its kind and gives ISIL an opening in southeast Syria after suffering several setbacks.

“For the past three years, ISIL had tried to establish a footing in southern Syria, including the mountainous Qalamoun region near the Lebanese border, but was expelled after clashes with Nusra Front and Hizbullah,” analyst Hassan Hassan, a resident fellow at the Tahrir Institute, wrote.

ISIL’s “attempts to co-opt forces near Damascus” also failed, Hassan said.

“Following its failure to grow organically, it opted last year for a pincer strategy to link up its pockets of control between Palmyra and Homs to ones in Damascus’s north east, such as Dumayr. That effort also failed since its territory in the Homs desert was largely cleared by the pro-government forces in April. The group was also expelled from the Palestinian Yarmouk camp after a brief takeover in April last year.

“Nowhere in Syria has ISIL succeeded in growing organically as it has done in Deraa. ISIL will probably seek to alter the way the new force operates. Before they unified, the three forces were in a constant conflict against rebel forces in Deraa but they rarely coordinated.”


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TIS-MSY-CO:160621:(21-JUN-16):Christian militias fighting ISIL in Iraq hope for U.S. support

GeoStrategyDirect we. 21-Jun-16


Assyrian Christian militiamen, many who speak a dialect of Aramaic, the language spoken by Christ, are looking to the United States for support as they battle for the survival of a civilization that has endured for 1,000 years in Iraq.

When Islamic State of Iraq and Levant (ISIL) spread across northern and western Iraq in the summer of 2014, Assyrian Christians were brutally targeted and thousands of members of the community were displaced from their homes, fleeing to Kurdish-controlled areas.

The militia, known as the Nineveh Plain Protection Units (NPU), is one of three Christian armed groups seeking American support after the U.S. House of Representatives called for direct assistance to be delivered to local security forces in northern Iraq.

American assistance “will give equality to all the ethnic groups here,” said Col. Jawat Habib Abboush, the deputy commander of the NPU. “This is our country, we had a civilization here for a thousand years and we are still citizens of this country. We cannot be marginalized.”

The House’s draft 2017 U.S. defense bill specifies that direct assistance may be provided to “local security forces, including ethnic and religious minority groups, with a national security mission.”

The wording of the bill, which still needs to be approved by the Senate and signed by the president, is vague and gives Washington considerable discretion over who to support and how.

Currently, the U.S. and other Western countries are providing direct military assistance to the Iraqi security forces and the Kurdish peshmerga, but not to groups such as the NPU.

Several militias have a presence in Iraq, including Kurds, Arabs, Assyrians and Yazidis.

Col. Abboush said the NPU formed to protect the community after ISIL’s onslaught and the collapse of the Iraqi army. Abboush said his men are currently be trained by U.S. military personnel.

“We joined to fight terrorism and Daesh, and to liberate our land, to protect our dignity and honor,” said NPU recruit Michael Rai Staef. His hometown, Qaraqosh, is still held by ISIL.

A spokesman for the anti-ISIL coalition couldn’t confirm if the NPU was receiving training from the U.S. military but said they were considering training another Christian group, known as Dwekh Nawsha.

Another Christian militia, the Nineveh Plains Forces (NPF), have received training from private American military trainers and are supported by the Kurdish peshmerga.

The Kurdish regional government and the Iraqi government in Baghdad are locked in a battle for influence over Ninevah province, which analysts say has hardened divisions between the Christian groups.

Hajar Ismail, a spokesman at the Ministry of Peshmerga, said the policy of the Iraqi Kurdish regional government was to encourage Assyrian Christians who want to fight to join the peshmerga, not to form their own armed groups.


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EU-RU:160621:(21-JUN-16):EU Diplomats Agree To Extend Sanctions Against Russia

RadioFreeEurope 21-Jun-16


EU ambassadors have agreed to extend sanctions against Russia for another six months over Moscow’s actions in Ukraine, despite some calls for a more conciliatory approach from within the bloc.

Ambassadors from the 28 member states of the European Union approved the decision in principle.

The measure will now go to EU ministers for formal approval, possibly on June 24, and EU leaders will have to okay it at a summit in Brussels next week, but diplomats said there was no doubt they would.

The sanctions, which target the energy, financial, and defense sectors of Russia’s economy, were due to expire at the end of July and will now run to January 2017.

They were first imposed in June and July 2014 after Russia’s annexation of Crimea and its support for pro-Moscow separatists in eastern Ukraine.

The EU last week rolled over for another year separate measures regarding an investment ban and other economic sanctions applicable to Crimea.

The EU has also imposed a separate set of visa-ban and asset-freeze measures against individual Russians and Ukrainians for backing the separatist cause in early 2014. These measures run until September.

German Chancellor Angela Merkel had pushed for prolonging the sanctions, with reports suggesting she convinced countries such as Slovakia, Hungary, and Italy to set aside their objections and keep sanctions in place for another six months.

RFE/RL’s correspondent in Brussels says the June 21 decision appears to be a victory for EU states that have taken a harder line on Russia, such as Poland and Lithuania, as well as European Council President Donald Tusk, who sought a decision on the sanctions well ahead of the official July 31 deadline for renewal.

Merkel has guided the bloc toward maintaining sanctions over Russia’s occupation and seizure of Ukraine’s Crimean Peninsula and its support for Russia-backed separatists in eastern Ukraine.

Ukrainian President Petro Poroshenko said on June 21 that there was no alternative to the EU sanctions to pressure Russia to implement the cease-fire agreement it signed up to in Minsk in February 2015.

“Sanctions are the only instrument left,” Poroshenko said ahead of a meeting with French President Francois Hollande. “There is no alternative to that.”

However, there are signs of divisions emerging even within Merkel’s own cabinet.

German Foreign Minister Frank-Walter Steinmeier recently suggested that the EU should gradually phase out sanctions against Russia if there were substantial progress in the peace process.

“Sanctions are not an end in [and of] themselves. They should rather give incentives for a change in behavior,” he told the RedaktionsNetzwerk Deutschland, a network of local newspapers.

French lawmakers, meanwhile, signaled that they are becoming impatient with sanctions when the approved a resolution earlier in June urging that the sanctions be gradually lifted.

But French Foreign Minister Jean-Marc Ayrault on June 20 repeated his government’s assurances that the sanctions will stay in place for now, saying that Russia and Ukraine are still not complying with their obligations under the Minsk accords.

Ayrault said the EU needed to see “real, concrete, significant progress” toward implementing the Minsk agreements, which are aimed at resolving the conflict in eastern Ukraine between Russia-backed separatists and Ukrainian government forces.

“Whatever sympathy we can have for the Russian people and for Russia, we must be clear,” Ayrault said, “the Minsk agreements must be implemented and respected.”

European Commission President Jean-Claude Juncker, speaking at an economic forum in St. Petersburg last week, said he attended the event to keep the lines of communication open with Moscow, but added that he supported ongoing sanctions.

The visit by Juncker, who was accompanied by Italian Prime Minister Matteo Renzi, would have been unthinkable a year ago.

Slovakia, one of the biggest skeptics on Russia sanctions, is due to take over the EU presidency in July and will be in that role in January when the issue of another six-month extension of sanctions is revisited.


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EU-RU:160620:(21-JUN-16):EU to extend Russia sanctions, divided over next steps

Reuters 20-Jun-16 [Britain takes a hard line, will Thurs vote stop that anti-Russian influence? Don]


The European Union was divided on Monday over how to end a stand-off with Moscow over the crisis in Ukraine, as Britain called for governments to maintain their tough stance and Slovakia said the current sanctions policy was untenable.

France reiterated the West’s position that there could be no change to the punitive sanctions on Russia’s defense, energy and financial sectors until Moscow dropped its support for separatist rebels in eastern Ukraine, although Paris wants EU leaders to also seek a rapprochement with the Kremlin.

Incoming EU presidency chair Slovakia said EU governments could not ignore the political pressure in some EU countries for a shift in sanctions policy with Russia, the bloc’s biggest energy supplier.

Slovakia’s Foreign Minister Miroslav Lajcak, whose country will help shape European policy from July to December, said it was necessary to hold talks because there was “a growing demand for a political discussion” about sanctions levied on Russia.

Diplomats said such talk was code for potentially softening the measures implemented by the West in July 2014 after Moscow’s annexation of Ukraine’s Crimea in February of that year. Italy, Bulgaria and Greece are keen to see some sanctions lifted.

“I am not calling for abolishing the sanctions. But what I don’t want to see is that we formally maintain the sanctions and behind the sanctions, everyone is signing big deals with Russia, visiting, meeting people who are blacklisted,” Lajcak said.

“This is the reality today, so I think it is fair to discuss,” he told reporters in the margins of the EU foreign ministers’ meeting in Luxembourg.

EU envoys in Brussels are set to extend the sanctions on Russia on Tuesday until the end of the year. The United States and other Western nations have imposed similar sanctions.

The West accuses Russia of directly supporting the rebels, which Moscow denies. Western governments say any relaxation of the sanctions are linked to progress on a peace deal signed in Minsk last year to end the conflict in eastern Ukraine.

The war has killed more than 9,000 people since April 2014 and NATO warned last week the internationally-monitored ceasefire in eastern Ukraine was barely holding..

That view was restated in Berlin on Monday by German Chancellor Angela Merkel, who helped negotiate the Minsk accord, following comments by her foreign minister saying he was in favor of lifting sanctions gradually if the Russian government took some steps linked to Minsk.

Britain’s foreign minister said there could be no middle ground and that the Minsk peace deal, which includes a complete ceasefire in eastern Ukraine, needed to be implemented in full.

“If you want the sanctions relaxed, deliver your commitments at Minsk, not some of them, or moving towards, or talking about, but delivering,” Foreign Secretary Philip Hammond said. “The Russians are playing a game, frankly a game of divide and rule, targeting those who are temperamentally inclined to talk about relaxation, pressuring them. It is a big mistake.”


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