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  • N. Korea says it will remain 'threat' to US, slams Pompeo

    N. Korea says it will remain 'threat' to US, slams PompeoNorth Korea on Friday launched a scathing attack on US Secretary of State Mike Pompeo, calling him a "diehard toxin" and saying it was "sceptical" whether it can negotiate with him. Pyongyang also vowed to remain the United States's "biggest 'threat'" and said annual US-South Korea joint military drills had "complicated" nuclear talks between the two countries. "We are ready for both dialogue and stand-off," North Korea's foreign minister Ri Yong Ho said in a statement.


  • Putin promises 'symmetrical response' to US missile test after end of nuclear treaty

    Putin promises 'symmetrical response' to US missile test after end of nuclear treatyVladimir Putin has promised a “symmetrical response” to the US test of a missile banned under a nuclear weapons treaty rubbished this month by the Trump administration amid fears of a new arms race. A new land-based version of the navy's Tomahawk cruise missile fired from an island in California struck a target more than 310 miles away on Sunday, according to the Pentagon. The recently defunct 1987 US-Russian intermediate-range nuclear forces treaty banned land-based missiles with ranges between 310 and 3,410 miles. On Friday, Mr Putin told his security council that the test just 16 days after the treaty's demise proved that the United States had long been developing weapons in violation of the agreement, while accusing Russia of the same as part of a “propaganda campaign”. He argued that the use of an Mk41 launcher on Sunday confirmed Russia's longstanding complaints that US missile defence installations in Romania and Poland could be repurposed to fire offensive weapons. By leaving the agreement, Washington wanted to “untie its hands for the deployment to different regions of the world of missiles that were previously banned,” Mr Putin said. “American politicians at a high level are saying that the deployment of new systems could start in the Asia Pacific region, but that also touches on our vital interests, since this is all close to Russia's borders,” he said.  He ordered the defence and foreign ministries to “analyse the level of the threat to our country created by the aforementioned actions of the United States and take exhaustive steps to prepare a symmetrical response”.  The US defence department on Sunday tests a land-based cruise missile that would previously have been banned  Credit: Scott Howe/Department of Defence/UPI/Barcroft While he did not say exactly what that would be be, it was reported in February that Russia could begin producing a land-based version of its Kalibr cruise missile with a range of 1,600 miles by the end of the year.  “For a symmetrical response, it would be enough to take Kalibr and put it on land and conduct a launch,” defence analyst Alexander Golts told The Telegraph. “That wouldn't take a huge effort.” Donald Trump's announcement in February that he would withdraw from the INF treaty, which ended the deployment of US ballistic missiles to Europe and of Soviet nukes targeting them, raised fears of a new arms race. European leaders persuaded Mr Trump to give Russia six months to end its 9M729 missile programme, which the United States had said was in violation of the treaty. Moscow denied this and accused Washington of undermining the agreement with its missile defence plans.  The Pentagon has claimed that the Mk41 launcher used in Sunday's test was not the same as the Aegis Ashore missile defence system in Romania, which is also being deployed to Poland. In his statement, Mr Putin insisted Russia would not be drawn into an “arms race that is destructive for our economy”. But he also noted that Russia was developing weapons “with no equivalent,” a reference to prospective arms announced last year including a hypersonic glider warhead, underwater nuclear drone and nuclear-powered cruise missile.  The tit-for-tat “response” announced by the president could also include tests of these weapons, according to Mr Golts. “We can assume that everything Russia has to demonstrate its power will be moved out under the guise of symmetrical measures,” he sad.  While the Kinzhal hypersonic ballistic missile is already in deployment, the United States has claimed that tests of the nuclear-powered cruise missile ended in crashes.  The mysterious engine test explosion that killed at least five and caused a radiation spike in northern Russia this month was believed by some to be related to this programme.


  • As G7 leaders gather in Biarritz, the group is more divided than at anytime in its 45 year history

    As G7 leaders gather in Biarritz, the group is more divided than at anytime in its 45 year historyThis weekend's G7 summit is unlikely to produce a joint communique amid deepening divisions between the world's seven richest nations over everything from Brexit to trade, climate change, and how to deal with China, Iran, and Russia.  It will be the first time the forum of leading economies has failed to produce a statement of common intention and agreement since it began as the Group of Five in 1975, in the latest blow to the post-Cold War consensus of free trade, democracy, and globalization that it once represented.  Emmanuel Macron will host Boris Johnson,  Donald Trump, Angela Merkel, Japanese prime minister Shinzo Abe, Canada's Justin Trudeau, and Italy's prime minister Giuseppe Conte for the 45th summit of the world's leading industrialized nations in the surfing resort of Biaritz this weekend.  An early sign of trouble came last week, when Donald Trump repeated his call for Russia to be readmitted to the group. Vladimir Putin has been persona-non-grata at G7 meetings since he annexed Crimea and sent troops to support a separatist uprising in eastern Ukraine in 2014.  Mr Macron immediately shot that down, warning it would be “strategic error” to let Russia back into the club while it continued to fuel the war in east Ukraine.    Vladimir Putin's banishment from the G7 has become a point of contention between Mr Trump and the other leaders Credit: Alexei Druzhinin/Kremlin/ REUTERS “I think to say that without any conditions Russia can return to the table would be signing off the weakness of the G7,” he said.     Boris Johnson, widely seen as a rare European ally of Mr Trump, was equally lukewarm on Russia returning: “Given what happened in Salisbury,” he noted after meeting Mrs Merkel this week,  “the case has yet to be made.”   But differences over how to handle Mr Putin are only the tip of the iceberg.  Mr Macron has made the forest fires in Brazil the top priority for the summit, and has also said he wants to use the summit to push for an overhaul a “crazy” global tax system that sees tech giants like Google, Amazon, and Facebook get away with paying minimal taxes no matter where they operate.  Winning over Mr Trump, who leads by far the biggest economy in the room and enjoys considerable influence with other populists, including Brazil's Jair Bolsonaro, is key to achieving those goals.  But Mr Trump has a much more sceptical attitude to climate change than his G7 colleagues, and sees the notion of a “digital tax” as an attack on US flagship businesses. He has threatened to slap tariffs on French wine in retaliation. The seven are also divided over rising strategic challenges.  U.S. President Donald Trump meets French President Emmanuel Macron in Paris in 2018 Credit: CARLOS BARRIA/REUTERS In 2018 Mr Trump pulled the United States out of the 2015 nuclear agreement with Iran and adopted a policy of maximum economic pressure intended to force Tehran to accept tighter nuclear restrictions and end its ballistic missile program and backing for armed groups across the Middle East.  The European members of the club, including Britain, remain committed to the agreement and have attempted to continue to trade with Iran in a bid to keep the deal alive, despite US pressure.  Ironically, Mr Macron may be relying on that French wine - among other delicacies - to raise the mood at what are expected to be contentious talks.  The Elysee palace has hired five Michelin-starred local chefs to prepare Basque specialties for the lunches and dinners where the most serious talking will be done.  The G7, consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, began in the 1970s as an annual meeting of the leaders of the world's largest developed economies.   Russia joined as a full member in 1998, making it the G8. It was suspended following the annexation of Crimea in 2014 and left permanently in 2017.


  • 'You won't get any trouble': Jair Bolsonaro's pledges to prospectors blamed for apocalyptic Amazon fires

    'You won't get any trouble': Jair Bolsonaro's pledges to prospectors blamed for apocalyptic Amazon firesDuring a recent visit to the Amazon where he proposed opening up mining in an ecological reserve the size of Denmark, the Brazilian president Jair Bolsonaro summarised his approach to the rainforest. “Let’s use the riches that God gave us for the well-being of our population,” Mr Bolsonaro said, before adding to any would-be prospectors: “You won’t get any trouble…” Ever since he took office in January this evangelism, populism, and total disregard for the vital ecological role the Amazon serves have been the hallmarks of Mr Bolsonaro’s tenure. The apocalyptic wildfires of recent days – more than 9,000 individual blazes have been recorded across the Amazon in the past week alone – are being blamed largely on the approach taken to the world’s largest rainforest by the man nicknamed ‘Captain Chainsaw’. To put the destruction into context: this year there have been more than 70,000 wildfires recorded in Brazil, an 84 per cent increase on the same period last year. In the past month alone some 1,000 square kilometres (386 square miles) of the rainforest has been engulfed by wildfire.  Official data has shown an 84 per cent increase in wildfires in the Amazon this year Credit: Ueslei Marcelino/Reuters During the dry season in Brazil – the largest country in Latin America which contains 60 per cent of the Amazon – it is common for wildfires to occur in the rainforest but experts say the current rate is unprecedented and the direct result of demons unleashed by Mr Bolsonaro in his pledges to turn a blind eye to environmental degradation in the name of economic progress. “It is absolutely clear those who are starting these fires are doing so because they feel empowered by the rhetoric they have heard from the Brazilian president,” says Mike Barrett, WWF-UK’s executive director of science and conservation. Mr Bolsonaro, a 64-year-old former army captain, was elected on the back of the country’s worst recession in history. During his controversial campaign he successfully courted the support of Brazil’s powerful evangelical churches - who were attracted by his ultra-conservative messages - and ran on a ticket of removing environmental red tape and attracting development to previously protected parts of the country.  Lands belonging to Brazil’s indigenous tribes have in particular provoked his ire. Mr Bolsonaro has decried the fact that 15 per cent of Brazil’s territory is reserved for indigenous tribes despite their numbers adding up to fewer than 1m people. “Let us together integrate these citizens and bring value to all Brazilians" he tweeted in January.  The previous month he had bluntly told reporters: “Why in Brazil do we have to keep them as inmates in reserves, as if they were animals in a zoo?” The president has suggested Brazilian tribes should be taken out of reserves and "integrated" into society Credit: Ueslei Marcelino/Reuters Since taking office Mr Bolsonaro has handed control of the country’s indigenous affairs to its Ministry of Agriculture and slashed the budget of Brazil’s environmental protection agency by 24 percent.  There have been numerous accounts of unpermitted development and land grabs on indigenous reserves, while the environmental regulatory issued fewer fines than at any point since 1995 during the the first two months of his presidency. In a statement released on Friday, the Coordination of Indigenous Organisations of the Brazilian Amazon (COIAB) expressed its “extreme concern” about the rapid destruction of the Amazon rainforest, adding: “Loggers are taking our land and irresponsible landlords are taking advantage of the weakening of environmental surveillance to advance into our homes.” In July. a tribal chief from the Amapa region was murdered. According to media reports, witnesses saw a number of gold miners enter the protected reserve of the Wajãpi community, then stab their leader to death. In response to the incident the United Nations High Commissioner for Human Rights, Michelle Bachelet, decried the killing and characterised it as part of a larger issue of “encroachment on indigenous land".  Mr Bolsonaro’s response was typical, suggesting the victim may not have been murdered at all.  Mr Bolsonaro has claimed NGOs may be responsible for setting the fires in order to tarnish Brazil's image, but has provided no evidence when pressed Credit: Rio Branco Firefighters/REX Such pugnaciousness is a hallmark of a president determined to face down any perceived criticism. Earlier this month the director of Brazil’s National Space Research Institute (INPE) – which has provided the data showing the rise in deforestation – was fired by Mr Bolsonaro who dismissed its findings as “lies” designed to harm Brazil.  Striking a similarly aggressive tone, this week he has sought to blame the wildfires on NGOs operating in the Amazon whom he has previously accused of “sticking their noses into Brazil”. When pressed he admitted he could not provide any evidence to confirm his claims. As the forest burns, and miners, loggers and cattle ranchers move in to exploit the land, Mr Bolsonaro has also reopened the door to a series of new hydroelectric dam projects in the Amazon, reversing a decision taken by the previous administration due to the feared ecological impact on the forest. Yet it is wrong to blame all the Amazon’s current woes on Mr Bolsonaro. Certainly the recent deforestation is a problem is far from confined to Brazil.  After a decade or so of gradual progress, deforestation has suddenly exploded across the Amazon, which spans nine countries containing 40 per cent of earth’s rainforest and 10-15 per cent of all its terrestrial species. Weather satellites have shown the extent of the wildfires from space Credit: NASA/NOAA/Reuters Cattle ranchers are believed to account for roughly 80 per cent of deforestation in the region, with Brazil's Amazon one of the world's largest exporters of beef. Experts warn a tipping point could soon be reached where the deforestation becomes irreversible and much of the Amazon turns into dry savannah, transforming from a vital sink for global emissions to releasing an estimated tens of billions of tonnes of carbon into the air. Last week the Telegraph reported from the Colombian Amazon where deforestation has rapidly increased from 124,000 hectares in 2015 to 197,000 hectares in 2018, 66 per cent of which is concentrated in the Amazon region. There, as in Brazil, starting fires is deemed the quickest way of levelling swathes of land to turn into cattle pastures. The animals are left to graze among charred stumps standing as headstones to the pristine forest that once stood there. Despite rising international condemnation of the destruction, Mr Bolsonaro’s approach remains resolute. “Brazil does not owe the world anything when it comes to environmental protection”, he said in March. The Amazon, Captain Chainsaw insists, is his to do with as he pleases.


  • Israeli teen dies of wounds in West Bank attack, 2 wounded

    Israeli teen dies of wounds in West Bank attack, 2 woundedAn explosion Friday near a West Bank settlement that Israel said was a Palestinian attack killed a 17-year-old Israeli girl and wounded her brother and father, Israeli authorities said. Initially, three Israelis were reported wounded in the blast on Friday near the Dolev settlement, northwest of Jerusalem. Israeli Prime Minister Benjamin Netanyahu offered condolences to the family and vowed to pursue the perpetrators and "strengthen" Israeli settlement in the occupied West Bank.


  • Revealed: Felix Sater Did Extensive Work for U.S. Intelligence

    Revealed: Felix Sater Did Extensive Work for U.S. IntelligencePhoto Illustration by The Daily Beast / Photos Getty/APBefore appearing in the Trump-Russia probe, Felix Sater traveled throughout Central Asia gathering intelligence on the Taliban for the U.S. government, according to a decade-old court filing unsealed Friday. In 1998, the Russian-American businessman began cooperating with the U.S. government after pleading guilty to participating in a $40 million stock-fraud case involving New York mafia figures. After entering his plea, Sater spent years working hand-in-hand with the CIA and the FBI to target New York organized crime families and Al Qaeda, according to a 2009 letter filed by prosecutors requesting a reduced sentence for Sater due to his cooperation. The judge obliged, assigning him a $25,000 fine and no prison time. “[T]he agents who worked with Sater found him to be dependable, insightful, and hard-working,” the letter said.Sater drew immense public interest during Special Counsel Robert Mueller’s investigation of links between the Trump campaign and Russia because Sater helped President Donald Trump’s former lawyer Michael Cohen negotiate a deal to build a Trump Tower in Moscow. Those talks unfolded secretly in the heat of the 2016 presidential campaign, even as Trump publicly claimed he had “nothing to do with Russia.” In an eye-popping email, Sater even told Cohen that Russian President Vladimir Putin could help Trump win the election if the deal went through.Sater, unsurprisingly, drew scorching criticism for this activity. But he has defended himself by claiming to be a patriot who worked closely with American spies at great personal risk. The filing by federal prosecutors, known as a 5K1 letter, indicates there is some truth to those claims.Benton Campbell, the then-U.S. attorney for the Eastern District of New York, sent the letter on August 27, 2009 to Judge Leo Glasser, who presided over Sater’s case. Felix Sater: The Crook Behind the Trump-Russia ‘Peace’ PlanU.S. officials have alluded in the past to Sater’s cooperation. In her Senate confirmation hearing to be attorney general in 2015, for instance, Loretta Lynch praised his work with the Justice Department. But the newly unsealed letter is the most detailed statement from the feds on Sater’s work for Uncle Sam.  The letter begins by describing a serendipitous find: In an abandoned storage unit that police seized in January 1998, someone had left loaded guns and documents detailing the criminal enterprise that Sater was involved in. Sater was overseas at the time. When he learned law enforcement were looking for him, he immediately contacted American intelligence officers, and, in an effort to shore up goodwill, offered information about Afghanistan’s Northern Alliance, which was fighting the Taliban. U.S. intelligence officials took him up on the offer, and he spent the spring and summer of 1998 traveling through Central Asia and gathering information about the Northern Alliance, including details on their interest in selling Stinger anti-aircraft missiles to the U.S. (including those missiles’ serial numbers), as well as information about the Taliban and Al Qaeda leader Osama bin Laden.That year, he got in touch with an ex-KGB officer-turned-arms dealer who had information about threats to the U.S. emanating from Central Asia and Afghanistan. Sater shared the arms dealer’s information with the CIA and the FBI. The contact told Sater about the missiles, as well as what was believed to be bin Laden’s satellite phone number and information about the people who supplied the terrorist leader with weapons.Sater also worked with a precious stones dealer who had Taliban contacts. The FBI paid for a phone that Sater sent to the dealer, according to the letter. The two used it to stay “in constant contact.” That individual shared ample information with Sater that he passed on to the U.S. government, including details on bin Laden’s location after the September 11 attacks, information on Al Qaeda’s structure and finances, the purported location of Taliban leader Mullah Omar, details on the casualties of U.S. airstrikes, details on a plot to assassinate President George W. Bush, and information on North Korea’s nuclear capabilities.The letter notes that Sater traveled to dangerous parts of Central Asia to gather much of this information.  In December 1998, Sater returned to the U.S., surrendered, entered a guilty plea, and explained to prosecutors the significance of the storage unit’s contents. And he kept cooperating. Sater shared detailed information with the prosecutors about organized crime in New York. Most importantly, prosecutors said he helped them secure the conviction of Frank Coppa Jr., a member of the Bonanno crime family. A footnote in the letter notes that Coppa then began cooperating, which led to the conviction and cooperation of Joe Massino, the boss of the Bonanno crime family. Massino’s subsequent cooperation with the feds was historic: one federal judge said he “may be the most important cooperator in the modern history of law enforcement efforts to prosecute the American Mafia.”Sater also helped the feds investigate access device fraud and money-laundering schemes that started in Russia, according to the letter. The letter concludes with a full-throated endorsement of Sater’s work. “Felix went above and beyond what is expected of most cooperators and placed himself in great jeopardy by so doing,” it said.Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.


  • At the G7, Trump Is One of the Popular Ones

    At the G7, Trump Is One of the Popular Ones(Bloomberg Opinion) -- Donald Trump is an unpopular president. According to the Real Clear Politics polling average as of Friday afternoon, only 43.3% of Americans approve of his performance. FiveThirtyEight, which weights polls by quality, sample size and partisan lean, puts the average at 41.6%.But as the president meets with leaders of the other G7 countries in the French resort city of Biarritz this weekend, he can take solace in the fact that he’s more popular than almost all of his peers. The lone exception seems to be Japanese premier Shinzo Abe, whose cabinet’s approval rating is 48.8% (to only 35% disapproval) in the Japan Political Pulse poll aggregator maintained by the Sasakawa Peace Foundation USA.Only 32% of Germans polled for broadcaster ARD a few weeks ago said they were satisfied with German Chancellor Angela Merkel’s government. In Canada, Prime Minister Justin Trudeau’s approval rating was 41% in one recent poll and 39% in another (and in the second poll, by Ipsos, only 33% agreed that he “has done a good job and deserves to be re-elected”). In the U.K., only 31% have a positive opinion of brand-new Prime Minister Boris Johnson, according to YouGov. Italian Prime Minister Giuseppe Conte just resigned, so while he remains in office until a new government is formed and the current governing coalition still has a majority in polls, I don’t think he can really be counted as riding on a wave of approval.Then there is French President Emmanuel Macron, the one other more or less directly elected head of state (as opposed to leader of a parliamentary government) coming to Biarritz. In so many ways, he’s the diametric opposite of Trump: young, cosmopolitan, well-spoken, technocratic. He’s the least popular of the lot, with a 28% approval rating in the most recent poll listed by the diligent editors of the “Opinion polling on the Emmanuel Macron presidency” Wikipedia page and 22% percent in the one before that.Trump’s approval rating has of course been remarkably stable, stuck since early 2018 in a narrow band between 40% and 45%. This may be the result of extreme partisan polarization — Trump remains very popular, if not quite as popular as he says he is, among Republicans — or of the personalization of the presidency. Or maybe it’s just that a reasonably healthy economy and a chaotic presidential performance have so far mostly canceled each other out. In any case, approval ratings seem to be less stable in other countries, and with the world and Europe in particular in the midst of an economic slowdown, their common direction at the moment seems to be down. Macroeconomic fluctuations aside, there also seems to be a more general dissatisfaction afoot in many rich, Western democracies that makes it tough for incumbents to remain popular.In the U.S., Trump has enjoyed both economic good times and a seemingly inalienable base of about 25% of Americans — that is, the people who say in polls that they “strongly approve” of his performance. There’s another 40% or so who “strongly disapprove” of him, though, and recent signs of economic sputtering seem be dragging Trump’s overall approval rating down at least a little. By all appearances, this is rattling the president. While in Biarritz he might want to consider chilling out and enjoying the fact that, relative to that crowd, he still counts as quite beloved.To contact the author of this story: Justin Fox at justinfox@bloomberg.netTo contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.


  • At the G7, Trump Is One of the Popular Ones

    At the G7, Trump Is One of the Popular Ones(Bloomberg Opinion) -- Donald Trump is an unpopular president. According to the Real Clear Politics polling average as of Friday afternoon, only 43.3% of Americans approve of his performance. FiveThirtyEight, which weights polls by quality, sample size and partisan lean, puts the average at 41.6%.But as the president meets with leaders of the other G7 countries in the French resort city of Biarritz this weekend, he can take solace in the fact that he’s more popular than almost all of his peers. The lone exception seems to be Japanese premier Shinzo Abe, whose cabinet’s approval rating is 48.8% (to only 35% disapproval) in the Japan Political Pulse poll aggregator maintained by the Sasakawa Peace Foundation USA.Only 32% of Germans polled for broadcaster ARD a few weeks ago said they were satisfied with German Chancellor Angela Merkel’s government. In Canada, Prime Minister Justin Trudeau’s approval rating was 41% in one recent poll and 39% in another (and in the second poll, by Ipsos, only 33% agreed that he “has done a good job and deserves to be re-elected”). In the U.K., only 31% have a positive opinion of brand-new Prime Minister Boris Johnson, according to YouGov. Italian Prime Minister Giuseppe Conte just resigned, so while he remains in office until a new government is formed and the current governing coalition still has a majority in polls, I don’t think he can really be counted as riding on a wave of approval.Then there is French President Emmanuel Macron, the one other more or less directly elected head of state (as opposed to leader of a parliamentary government) coming to Biarritz. In so many ways, he’s the diametric opposite of Trump: young, cosmopolitan, well-spoken, technocratic. He’s the least popular of the lot, with a 28% approval rating in the most recent poll listed by the diligent editors of the “Opinion polling on the Emmanuel Macron presidency” Wikipedia page and 22% percent in the one before that.Trump’s approval rating has of course been remarkably stable, stuck since early 2018 in a narrow band between 40% and 45%. This may be the result of extreme partisan polarization — Trump remains very popular, if not quite as popular as he says he is, among Republicans — or of the personalization of the presidency. Or maybe it’s just that a reasonably healthy economy and a chaotic presidential performance have so far mostly canceled each other out. In any case, approval ratings seem to be less stable in other countries, and with the world and Europe in particular in the midst of an economic slowdown, their common direction at the moment seems to be down. Macroeconomic fluctuations aside, there also seems to be a more general dissatisfaction afoot in many rich, Western democracies that makes it tough for incumbents to remain popular.In the U.S., Trump has enjoyed both economic good times and a seemingly inalienable base of about 25% of Americans — that is, the people who say in polls that they “strongly approve” of his performance. There’s another 40% or so who “strongly disapprove” of him, though, and recent signs of economic sputtering seem be dragging Trump’s overall approval rating down at least a little. By all appearances, this is rattling the president. While in Biarritz he might want to consider chilling out and enjoying the fact that, relative to that crowd, he still counts as quite beloved.To contact the author of this story: Justin Fox at justinfox@bloomberg.netTo contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.


  • Boris Johnson prepares to take his place on world stage

    Boris Johnson prepares to take his place on world stageBritish Prime Minister Boris Johnson, who has endeavored to lead his country since he was a boy, will get his first moment on the world stage in his new role at the Group of Seven summit in France this weekend. The man who has said his life's ambition as a child was to be "world king" could be the shortest-serving prime minister in British history if he fails in his high-stakes gambit to force the European Union to reopen Brexit talks. As Johnson prepares to meet with world leaders, including U.S. President Donald Trump, at the seaside resort of Biarritz, opponents at home are plotting to bring him down with a no-confidence vote after Parliament returns from its summer recess next month.


  • Merkel Opposes Macron Threat to Block Mercosur Deal Over Amazon

    Merkel Opposes Macron Threat to Block Mercosur Deal Over Amazon(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Chancellor Angela Merkel believes the European Union should ratify its trade deal with the Mercosur countries and Emmanuel Macron’s threat to block the accord won’t help protect the Amazon jungle, a German government spokesman said.The French leader on Friday said he won’t approve the Mercosur deal, agreed to just eight weeks ago, because of Brazilian President Jair Bolsonaro’s persistent violations of his commitments on tackling climate change. As Group of Seven leaders begin to arrive in Biarritz, France, for a summit that starts Saturday, Macron and Bolsonaro clashed publicly over Brazil’s handling of a record surge in forest fires in the Amazon.Outraged over the Amazon fires and possibly riled up by the Brazilian leader’s personal attacks, Macron branded Bolsonaro a liar and said he won’t ratify the trade deal with the South American bloc in its current form.His comments appeared to have caught his EU allies by surprise.Merkel’s spokesman said that shooting down the Mercosur trade deal won’t slow the process of deforestation in Brazil and actually contains binding commitments on climate protection. He said threatening to block the accord is not the appropriate response to what is happening in Brazil.The rift between the EU’s most important leaders comes at the worst possible moment for the bloc, with U.K.’s Boris Johnson seeking to divide them over Brexit and Donald Trump cranking up the pressure on a host of issues from trade to Iran and economic policy.To contact the reporter on this story: Arne Delfs in Biarritz at adelfs@bloomberg.netTo contact the editor responsible for this story: Ben Sills at bsills@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • After Beating and Hernia, American Prisoner Paul Whelan Refused Hospitalization by FSB Doctors

    After Beating and Hernia, American Prisoner Paul Whelan Refused Hospitalization by FSB DoctorsKIRILL KUDRYAVTSEVMOSCOW–Paul Whelan, a U.S. citizen held in Russia on suspicion of spying, looked pale and sick when his prison guards brought him to Lefortovo court on Friday. He said he had been beaten and is suffering from a hernia, but his condition is hardly a surprise after eight months in Moscow’s Lefortovo, a prison run but the Russian Federal Security Service, FSB, and it looks like Whelan has learned only too well how incarceration there operates.Whelan is facing 20 years in Russian prison for spying, after accepting a flashcard that allegedly contains some sensitive information. His family is far away, he does not speak the Russian language, and on top of everything the 49-year-old security manager for a Michigan-based auto parts company is suffering from a painful inguinal hernia, with part of his intestine having ruptured the abdominal wall.Paul Whelan, Accused U.S. Spy Held in Moscow, Says a Russian Investigator Threatened His LifeWhen the judge suggested calling an ambulance in the middle of the hearing on Friday morning, Whelan rejected the idea, as a useless waste of time: “The nurses won’t take me to a hospital, they will only check my blood pressure, temperature, and say, ‘You are fine,’” he told the court.By now Whelan must have learned the rules and brutal methods in Russian prisons. “No ordinary ambulance can take a prisoner who is under FSB investigation to the hospital,” Alexander Cherkasov, chair of the Memorial Human Rights Center told The Daily Beast. “There is a specialized hospital 20 where they normally take sick prisoners, after a certain bureaucratic procedure.”Also, no Russian nurse working for an ambulance carries strong painkillers. (Russian doctors are not allowed to prescribe strong drugs even for people dying in agonizing pain, so Russians suffer from pain all over the country, many committing suicide.)Whelan looked and sounded doomed. He said that his health condition worsened after his prison guard beat him. The incident happened earlier this month, when Whelan was being moved from one cell to another. Whelan’s lawyer, Vladimir Zherebenkov, told The Daily Beast, “I have checked: prison guards did not know that my client had a hernia, they made him carry all his stuff himself to a different cell. The treatment in Lefortovo is inhuman.”  On Friday, Whelan told the judge, “If you call for a doctor who would hospitalize me, I don’t mind calling for the ambulance.” But just as he predicted, the nurses on call checked him right at Lefortovo Court and decided against his hospitalization.Whelan, who holds U.S., Canadian, British, and Irish passports, was arrested on December 28 in his hotel room a few steps away from the Kremlin. His lawyer Zherebenkov predicted early on the way the case was likely to develop: “They will pickle Paul for a year or more, as he is clearly just a pawn; and then they will swap him for some important Russian kept in American prison,” the lawyer told The Daily Beast in January.Almost eight months later Zherebenkov still has not seen any solid evidence establishing his client’s guilt. “The FSB  investigation has not presented us with a single solid piece of material, so our truth in this case is even stronger than half a year ago–that’s why FSB want more time,” the lawyer said.Meet Putin’s American Prisoner, Paul WhelanAccording to Media Zona, a group of journalists reporting on news about Russian prisons and court cases, at least 99 detainees died in detention centers and prisons used by investigators in 2016. Many more died in prison camps. “It is hard for us to find out what causes the deaths of prisoners—when prison guards crack somebody’s head open, they say that the detainee fell down and died in an accident,” Dmitry Shvets, a Media Zona reporter told The Daily Beast. But the problem is not just physical violence. “Lefortovo prison is famous for psychological torture by isolation. The inmates cannot communicate with each other, no prisoner has a chance to use a phone.”Whelan’s family was aware that the FSB wanted to extend the time for investigation for two more months. ”This morning's hearing was more theatrical than his previous hearings—ejecting the media, calling an ambulance—but we were not surprised by the result,” Whelan’s twin brother, David, told The Daily Beast.Read more at The Daily Beast.Got a tip? Send it to The Daily Beast hereGet our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.


  • Pompeo says Huawei CEO is not a bargaining chip in Trump-China trade war

    Pompeo says Huawei CEO is not a bargaining chip in Trump-China trade warMike Pompeo has rejected claims that detained Huawei executive Meng Wanzhou is being used for leverage in the US-China trade war. Speaking with his Canadian counterpart, Chrystia Freeland, in Ottawa on Thursday, the US secretary of state appeared to rule out dropping the extradition request for Ms Meng to ease tensions with Beijing, insisting it is a legal matter. In December, US president Donald Trump implied he might intervene in the case to help secure a trade deal with China. “Whatever’s good for this country, I would do,” he said at the time. The US alleges Ms Meng – the Chinese technology company’s chief financial officer and the daughter of its chief executive – helped  Huawei circumvent sanctions on Iran. According to Vancouver court documents released this week, she told a Canadian border official that the company has an office in Iran. The US has charged Ms Meng, 47, with bank fraud, wire fraud and conspiracy to commit both. She is currently on bail living under house arrest in one of her Vancouver mansions while her lawyers fight her extradition to the US. Asked on Thursday if she is a “bargaining chip” in US-China trade talks, Mr Pompeo replied simply: “No.” Since Ms Meng’s arrest in Vancouver airport on a US arrest warrant in December, ties between Ottawa and Beijing have fallen to a historically low ebb. Two Canadians, businessman Michael Svapor and former diplomat Michael Kovrig, were arrested and charged with espionage shortly afterwards in what is widely viewed as a reprisal by Beijing. “Our team is focussed on helping those two Canadians be released,” Mr Pompeo said later ahead of a meeting with Canadian prime minister Justin Trudeau. Mr Trump spoke directly to Chinese president Xi Jinping about their “arbitrary detention” in June, he told journalists. Mr Pompeo, 55, also slapped down a question comparing their confinement with that of Ms Meng, accusing the journalist of taking “the Chinese line”. Mr Pompeo was visiting Canada ahead of the G7 meeting in France, where relations with China will be discussed. On Friday, Beijing escalated the trade dispute, announcing fresh tariffs on US imports worth $75 billion (£61 billion).


  • Syria retakes territory in NW held by rebels since 2012

    Syria retakes territory in NW held by rebels since 2012Syrian President Bashar Assad's troops seized control of a string of villages in the northern countryside of Hama province, completing their takeover of the formerly rebel-held region just south of Idlib province for the first time since 2012, the Syrian army and a war monitoring group said Friday. The army said troops seized the villages of Latamneh, Latmeen, Kfar Zeita and Lahaya, as well as the village of Morek, where Turkey maintains an observation post, pressing ahead its offensive toward Idlib. The army advance represents the latest in a series of losses for rebels who have, for eight years, fought to topple Assad.


  • Putin orders Russia to respond after US missile test

    Putin orders Russia to respond after US missile testPresident Vladimir Putin ordered the Russian military on Friday to work out a quid pro quo response after the test of a new U.S. missile banned under a now-defunct arms treaty. In Sunday's test, a modified ground-launched version of a U.S. Navy Tomahawk cruise missile accurately struck its target more than 500 kilometers (310 miles) away. The test came after Moscow and Washington withdrew from the 1987 Intermediate-range Nuclear Forces (INF) Treaty.


  • Iran's Zarif praises Macron nuclear crisis suggestions

    Iran's Zarif praises Macron nuclear crisis suggestionsIranian Foreign Minister Mohammad Javad Zarif said Friday that suggestions by French President Emmanuel Macron about defusing the crisis over Iran's nuclear drive went in the right direction, but that more work needed to be done. "President Macron made some suggestions last week to President (Hassan) Rouhani and we believe they are moving in the right direction, although we are not definitely there yet," Zarif told Agence France-Presse (AFP) in an interview after meeting Macron for rare talks in Paris. "We had a good discussion today," Zarif said.


  • Enraged Trump likens U.S. Fed chief to "enemy" China

    Enraged Trump likens U.S. Fed chief to "enemy" ChinaPresident Donald Trump reacted furiously on Friday after Federal Reserve Chair Jerome Powell linked the trade war with China to risks to the U.S. economy, asking whether the man he handpicked to run the U.S. central bank was a greater "enemy" than Chinese leader Xi Jinping. "As usual, the Fed did NOTHING! It is incredible that they can 'speak' without knowing or asking what I am doing, which will be announced shortly," Trump wrote on Twitter. It was unclear what Trump meant when he said he would work "brilliantly" with both, and the White House did not immediately respond to a request for comment.


  • Strikes on Iran-backed militias threaten to destabilize Iraq

    Strikes on Iran-backed militias threaten to destabilize IraqAn Israeli airstrike on an Iranian weapons depot in Iraq, confirmed by U.S. officials, is threatening to destabilize security in the volatile country that has struggled to remain neutral in the conflict between Washington and Tehran. It would be the first known Israeli airstrike in Iraq since 1981, when Israeli warplanes destroyed a nuclear reactor being built by Saddam Hussein, and significantly expands Israel's campaign against Iranian military involvement in the region. The July 19 attack targeted a base belonging to Iranian-backed paramilitary forces in Amirli in the northern Salaheddin province, and killed two Iranians.


  • German Chancellery Also Sees Mild Recession, Spiegel Reports

    German Chancellery Also Sees Mild Recession, Spiegel Reports(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The German Chancellery now also expects Europe’s largest economy to slip into a mild recession in the third quarter, news magazine Der Spiegel reports on Friday.Gross domestic product contracted by 0.1% in the second quarter, and Angela Merkel’s economic advisers expect a similar result in the period between July and September.Economists at the German central bank had been making the same prediction, Bloomberg News reported on Thursday. A raft of data recently pointed to a slump in German manufacturing that risks spreading to the services sector.Read more...German Suspicion of Stimulus Risks Too-Late Recession ResponseGerman Industry Hit by Perfect Storm of Trade Woes, Tech ShiftsBundesbank Sees No Need for Fiscal Stimulus in Germany Right NowConventionally, two consecutive quarters of economic contraction would be considered a technical recession.The chancellery declined to comment but referred to a news conference earlier on Friday when an economy ministry spokeswoman said Germany is not in a recession.While contingency measures are being prepared, central bankers and government officials agree that it’s premature to launch a stimulus package now. Berlin still expects a recovery toward the end of the year.Germany is prepared to defend its adherence to a balanced budget policy if it were challenged at a leaders meeting at the Group of Seven major economies in Biarritz, France, a senior government official in Berlin said on Friday.The economic slowdown from over 2% in 2016 and 2017 has prompted calls by business leaders and politicians for the Merkel administration to open the purse strings.\--With assistance from Arne Delfs and Birgit Jennen.To contact the reporter on this story: Raymond Colitt in Berlin at rcolitt@bloomberg.netTo contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Paul GordonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • Macron Opposes Mercosur Trade, Saying Brazil ‘Lied’ on Climate

    Macron Opposes Mercosur Trade, Saying Brazil ‘Lied’ on Climate(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Outraged over the Amazon fires, Emmanuel Macron branded Brazil’s president a liar and threatened to block the European Union’s trade deal with the Mercosur countries as he prepares to whip the Group of Seven leaders into climate action.The French president’s office said that it has become clear that Jair Bolsonaro wasn’t serious about his commitments on tackling climate change when he spoke to world leaders at the Group of 20 summit in Osaka earlier this year."The president can only conclude that President Bolsonaro lied to him in Osaka," at the G-20, the statement said. "Under these conditions, France is opposed to the Mercosur deal."A day before he’s due to welcome G-7 leaders to Biarritz, Macron said he would make the burning of the Amazon jungle a priority at the summit. That provoked an angry response from Bolsonaro, who accused him of acting like a colonialist."The news is really worrisome, but we need to lower the temperature, there are fires in Brazil every year," Brazilian Agriculture Minister Tereza Cristina Dias told reporters in Brasilia. "There were fires in Portugal, in Siberia, there were fires all over the world and Brazil wasn’t questioning them."Trade, ClimateThe way that an environmental dispute escalated so quickly into a new front in the global trade tensions shows the growing importance of climate as a fundamental plank of geopolitics. Even before Macron’s announcement, Ireland said it could not vote for the Mercosur agreement and Finland wants the EU to consider a ban on Brazilian beef.The EU has sought to leverage the size of its market to pressure trading partners into doing more to reduce emissions and is also concerned that its companies will be undercut by rivals operating in places with looser restrictions.But the configuration of the G-7 right now will make it difficult for Macron to make a lot headway beyond some token words. Donald Trump famously ripped up last year’s communique and does not want to be cornered. U.K.’s Boris Johnson is eager to tighten his bond with the U.S. president and at odds with European allies over Brexit. Italy is mired in a messy political crisis at home and has no prime minister. Japan is unlikely to stick its neck out -- it is more concerned about the potential fallout from the U.S. trade war with China.In fact, the run-up to the G-7 was overshadowed by China whacking the U.S. with higher tariffs on soybeans, cars and oil in retaliation for Trump’s latest planned levies.And Trump himself has signaled where his priorities lie. On waking up he began tweeting against the Federal Reserve Chairman Jerome Powell and China’s Xi Jinping -- not on the Amazon fires. A U.S. official said that the U.S. are deeply concerned about the impact of the fires while indicating the administration did not see it as part of the broader climate issue.The EU wrapped up 20 years of negotiations to seal an accord with South America’s leading customs union just weeks ago, in what was then seen as a major retort toTrump’s attacks on the global system of free trade. The deal could affect almost 90 billion euros ($100 billion) of goods and Brazil expects to see its economy increased by about $90 billion over the next 15 years.Officials on both sides are still fine-tuning the agreement and it still needs to be approved by EU governments before it can enter into force. A Brazilian official, with direct knowledge of the government’s position, said that the EU-Mercosur deal is not ready to be signed yet, and that while the deal could be rejected or put to one side, it could not be changed.The official added that France stood to lose a lot if the agreement didn’t go through, citing the presence of supermarket chain Casino Guichard-Perrachon SA and carmakers such as Renault SA and Peugeot SA.Another senior government official however said that France’s position is a cause of concern and that the Bolsonaro administration needed to change the narrative. There are signs that the president is already poised to do that.Speaking on Friday morning in Brasilia, Bolsonaro said the government is considering declaring a state of emergency in the region, allowing the president to deploy armed forces and extra funding to the region: “We discussed a lot of things and whatever is within our reach we will do. The problem is resources.”(Adds Johnson’s tweet.)\--With assistance from Arne Delfs, Alex Morales, Kati Pohjanpalo, Peter Flanagan, Rachel Gamarski, Mario Sergio Lima and Josh Wingrove.To contact the reporters on this story: Helene Fouquet in Bairritz, France at hfouquet1@bloomberg.net;Simone Iglesias in Brasília at spiglesias@bloomberg.netTo contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Ben SillsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • UPDATE 1-Trump asks who is bigger enemy, Fed Chair Powell or China's Xi?

    UPDATE 1-Trump asks who is bigger enemy, Fed Chair Powell or China's Xi?President Donald Trump reacted furiously on Friday after Federal Reserve Chair Jerome Powell spoke about the trade war with China and economic risks to the United States, asking whether his appointee to the U.S. central bank was a greater "enemy" than China's leader Xi Jinping. "As usual, the Fed did NOTHING! It is incredible that they can 'speak' without knowing or asking what I am doing, which will be announced shortly," Trump wrote on Twitter.


  • China Says U.S. Is Using Fentanyl Feud as Political Weapon

    China Says U.S. Is Using Fentanyl Feud as Political Weapon(Bloomberg) -- The U.S. is politicizing the issue of illicit Chinese exports of fentanyl and using it as a weapon against China, said the country’s narcotics regulator on Friday.Liu Yuejin, deputy head of China’s National Narcotics Control Commission, rebutted accusations from the U.S. that China is not doing enough to curb the flow of fentanyl, a highly addictive opioid painkiller, beyond its borders. Some American politicians “are up-ending the facts for their own political necessities,” Liu said in an interview in Beijing on Friday.The comments come just weeks after President Donald Trump lashed out at his Chinese counterpart in a tweet, saying Xi Jinping hadn’t stopped the flow of Chinese-made fentanyl as promised, and citing this failure as one reason that another 10% tariff would be levied on $300 billion of Chinese exports on Sept. 1.In a series of new tweets on Friday, Trump said that he would order U.S. shipping companies to search for and reject any packages containing fentanyl, from China or any other country. As an example of facts being twisted by the U.S., Liu cited three Chinese nationals whom the U.S. issued economic sanctions against earlier this week for allegedly producing and trafficking fentanyl. Liu said Chinese authorities have been closely cooperating with their American counterparts on the issue of the three men, but that the individuals’ actions occurred before China’s tightening of its laws regulating the drug in April.“It was hard to prosecute them with the law at that time and U.S. enforcement knows this very clearly,” he said. “Some U.S. politicians refuse to face the reality, upend the facts, turn black into white and muddy clear water. And they mislead Americans who may not know the truth.“Fentanyl has played a role in the opioid epidemic that’s been blamed for thousands of overdose deaths in the U.S. and been declared a public health emergency. It’s also been an issue in trade war negotiations. Last year, China’s move to tighten supervision and revise rules around fentanyl production after the two presidents met at the Group of 20 summit in Argentina was talked up by Trump as a major concession.But earlier this month, he tweeted that “my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die!”The three Chinese nationals, Zheng Fujing, Zheng Guanghua and Yan Xiaobing, were added to the U.S. Treasury’s “Specially Designated Nationals List” earlier this week for running what the agency said was “an international drug trafficking operation that manufactures and sells lethal narcotics, directly contributing to the crisis of opioid addiction, overdoses and death in the U.S.” The move allows the government to freeze their U.S.-based financial assets.“These actions by the U.S. are not constructive and will hurt the good relationship between the two countries’ law enforcement organs,” said Liu. He added that China is still open to working with the U.S. on the fentanyl problem.China has repeatedly pushed back against the U.S. claim that it is responsible for the fentanyl problem, arguing that the epidemic is due to the U.S.’s own lax regulation over the prescription of addictive opioids to patients. Liu pointed out that China doesn’t have a domestic opioid abuse issue because of its strict regulation over the use of painkillers.(Updates with new tweet by President Trump in fourth paragraph)\--With assistance from John Liu.To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net;Tom Mackenzie in Beijing at tmackenzie5@bloomberg.netTo contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Jeff Sutherland, Timothy AnnettFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • Report: West, Central Africa violence closes 9,000 schools

    Report: West, Central Africa violence closes 9,000 schoolsThen people fired guns, shooting at and killing at least one of his teachers in his northern Burkina Faso village. "I used to love school, to read, to count and to play during recess," the boy, identified only by his first name, told the United Nations Children's Agency. More than 9,000 schools have closed and more than 1.9 million children in West and Central Africa have been forced out of school because of increasing violence in the region and attacks specifically targeting education facilities, UNICEF said Friday, saying it's triple the amount closed in 2017.


  • Russia says isotope in doctor's tissue caused by diet, not accident

    Russia says isotope in doctor's tissue caused by diet, not accidentRussian authorities said on Friday that a doctor who treated those injured in a mysterious accident this month had the radioactive isotope Caesium-137 in his body, but said it was probably put there by his diet. The deadly accident at a military site in northern Russia took place on Aug. 8 and caused a brief spurt of radiation. Russian President Vladimir Putin later said it occurred during testing of what he called promising new weapons systems.


  • The Latest: Cleric issues edict forbidding US troops in Iraq

    The Latest: Cleric issues edict forbidding US troops in IraqA leading Shiite Muslim cleric followed by some Iraqi militants has issued a public religious edict forbidding the presence of U.S. troops in Iraq. The fatwa issued Friday by Iran-based Grand Ayatollah Kazim al-Haeri comes after Iranian-backed Shiite militias in Iraq accused the United States of being behind recent attacks on their bases and weapons depots in Iraq.


  • Turkey vows to tackle violence after woman's brutal killing

    Turkey vows to tackle violence after woman's brutal killingTurkey's ruling party has vowed to tackle violence against women and children after the brutal killing of a woman in front of her 10-year-old daughter appalled the country. Emine Bulut, 38, was stabbed in the neck by her former husband at a restaurant in Kirikkale, in central Turkey, on Aug. 18. Bulut's final words "I don't want to die" have been trending on social media, with users calling for harsher measures to tackle domestic violence.


  • The EU Can Push Bolsonaro to Save the Amazon

    The EU Can Push Bolsonaro to Save the Amazon(Bloomberg Opinion) -- French President Emmanuel Macron dropped a bombshell on Friday: His office said France is opposed to the ratification of the European Union’s latest big trade deal, with the Mercosur group of South American countries, because one of the group’s members, Brazil, has shown a lack of commitment to preserving the Amazon rain forest.The deal, reached in June by the European Commission after 20 years of negotiations, still needs to be approved by each EU member state and the European Parliament. It’s a key part of the legacy of the outgoing commission, headed by Jean-Claude Juncker, the biggest deal the EU has ever struck in terms of tariffs eliminated (4 billion euros, or $4.4 billion, a year), the first major trade agreement struck by Mercosur since it was formed in 1991. It also sends a political message to a world rocked by U.S. President Donald Trump’s trade war with China: That the EU is still the major force behind free trade. But, if all of this is weighed against out-of-control deforestation in the Amazon, Macron is right and the agreement needs to be revised in a few specific ways that would make it work for, not against, climate goals.Macron is outraged about Brazilian President Jair Bolsonaro’s contemptuous attitude toward rain forest conservation, thrust into focus by reports of wildfires raging in the Amazon as deforestation has accelerated under Bolsonaro and the country’s environmental agencies have become markedly less active in trying to safeguard the jungle from illegal logging. The far-right Brazilian leader has made no secret of prioritizing agriculture over forest protection. His policies have led Germany to suspend the funding of conservation projects in Brazil; in response, Bolsonaro told German Chancellor Angela Merkel to “take your dough and reforest Germany,  OK?”That makes Merkel Macron’s potential ally in blocking the Mercosur deal as it stands. The increasingly powerful Greens are the strongest rivals of Merkel’s Christian Democratic Union party (and also potential coalition partners), and though the chancellor is strongly pro-trade, the optics of pushing for the deal’s approval now would be politically unfavorable.The deal has other potential opponents, too. Irish Prime Minister Leo Varadkar has threatened to nix it because of Bolsonaro’s attitude – and in any case, he’d rather not allow cheap Brazilian beef on the European market, where it’ll be a threat to Irish farmers.Even though European officials have defended the deal, saying it already imposed a commitment on the South Americans to follow their climate goals laid out in the 2016 Paris agreement and to avoid deforestation, it has been shown that more openness to trade increases deforestation rates in Brazil. So it’s appropriate for Macron and other European leaders to reconsider the Mercosur trade agreement in response to Bolsonaro’s behavior.There’s no need, however, to bury the deal altogether. There is a way to revise it so that it’s still beneficial for the parties without hurting the Amazon.In 2017, the  U.S. Department of Agriculture put out a report on international trade and deforestation. The main idea of the study behind it was to figure out which products are the most deleterious to forests in different countries. In Mercosur members Brazil and Argentina, according to the report, beef and soybeans contribute the most to deforestation. As things stand, the deal’s sustainability chapter relies on private initiatives to limit these commodities’ impact; it mentions the so-called soy moratorium in Brazil – a voluntary pledge not to buy soy grown on recently deforested land in the Amazon (which led to increased deforestation in Brazil’s savanna, not covered by the moratorium). But under Bolsonaro, such initiatives aren’t likely to be effective.The final edition of the trade deal should explicitly link trade quotas on forest-risk commodities, such as beef and soybeans, to keeping the forested area constant or even increasing it. It also should set up a reliable monitoring mechanism: Earlier this month, the head of the Brazilian institute that tracks deforestation was fired after Bolsonara called the institute’s data “lies.”“You have to understand that the Amazon is Brazil’s, not yours," Bolsonaro told European journalists last month. Well, he needs to understand that the European market is the EU’s to regulate as it sees fit. Increased sales to this lucrative market should only be possible against firm environmental guarantees. And if the Mercosur deal could wait for 20 years, it can certain wait some more while this matter is cleared up.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Philip Gray at philipgray@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.


  • This Old Tank was Israel's Secret Weapon to Win War After War

    This Old Tank was Israel's Secret Weapon to Win War After WarOn the Jordanian front, the Sherman-equipped units had a harder time against Jordan’s M47 and M48 Pattons. In one engagement, the Jordanians claimed 17 Shermans, destroyed around Jenin and Ya’Abad. In another fight, the Shermans came out on top, however. As a column of Jordanian M48s was retreating, it ran into a patrol of Israeli Shermans. A sharp fight broke out at point-blank range, and the Jordanians left behind 15 tanks on the field. From its inception, Zahal, the Israeli Army, has been forced to use ingenuity and improvisation to arm itself against its Arab enemies. In the first years of its life, the tiny nation of Israel, surrounded by enemies pledged to its destruction, found modern weapons few and hard to come by. Such armaments were desperately needed, and the Israelis became adept at filling the gaps in their inventory by acquiring whatever weapons they could from a variety of unusual sources. Once in hand, these weapons often had to be rebuilt or modified to remain effective. Many of them would have been considered obsolete on a European battlefield, but the Israelis made them work. They had no choice—defeat meant the annihilation of their state.One of the best examples of Israeli ingenuity is their long use of the American-built M4 Sherman tank, that ubiquitous Allied workhorse of World War II. Often decried as inferior to its German opposites because of its relatively thin armor and less effective armament, the Sherman was nonetheless rugged, reliable, and capable of being modified and improved. It was this last quality that enabled the Israelis to use it so effectively.At its birth, Israel’s military possessed a limited number of armored vehicles, mostly scout cars and truck chassis hastily converted into armored cars with the addition of armor plating and a machine gun or two. Israel’s initial tank force consisted entirely of old French Hotchkiss tanks, obsolete even in the beginning of World War II. Desperate for better tanks, the Israelis literally went to the scrap heap: junkyards in Palestine, Europe, and as far away as the Philippines together contained hundreds of tanks left over and abandoned during the recent global war.A British scrap yard in Palestine contained the salvageable hulks of one or two Shermans (sources differ). At least one more came from an Italian junkyard. These tanks were smuggled back to Israel, at times disguised or mislabeled as “tractors,” to become parts of the motley collection of weapons that could be used to preserve Israel’s newfound existence. Since these tanks came from junkyards, they were generally unserviceable and required extensive work to get them into shape for combat. Some of the tanks had been “demilitarized” specifically to prevent anyone from reusing them. Often, this was done by drilling holes in the cannon tube or other mechanisms needed for the main weapon. Repairs were made, and the Shermans returned to action with the Israeli Army.The polyglot nature of the Israeli Army meant troops often were grouped into units based on their native languages. One Sherman tank and two ex-British Cromwell tanks were grouped together in an “English Company,” so named because its members all spoke English. This company was part of the 82nd Tank Battalion that helped capture Lydda Airport during the 1948 war. It also fought at Latrun, where some of its tanks were lost to an Arab Legion 6-pounder antitank gun. Fortunately for the Israelis, the Arab forces operating against them were not particularly well-mechanized for the most part.The Improvised Sherman Tanks of IsraelAfter the United Nations cease-fire took hold in mid-1948, Israel used the breathing room to increase the size of its armored and mechanized forces. Although unable to purchase new vehicles, the Israelis had plenty of leftover World War II materiél to choose from, and this formed the backbone of Zahal’s strength. Quickly, a force of some 300 half-tracks and 50 tanks was assembled. Most of the tanks were Shermans, still being gathered from scrap yards throughout Europe and elsewhere. The collection was a varied one, including M4A1 and M4A2 models with diesel engines. Their armament was a cross-section of guns the Shermans had carried into battle in Europe a few years before: 75mm and 76mm cannon and 105mm howitzers; a few of the tanks even sported World War I-era German-built 77mm field guns made by Krupp. These were installed to replace damaged guns or demilitarized weapons Zahal ordnance workers had been unable to restore to firing condition.Recommended: Forget the F-35: The Tempest Could Be the FutureRecommended: Why No Commander Wants to Take On a Spike MissileRecommended: What Will the Sixth-Generation Jet Fighter Look Like?While the haphazard nature of the Zahal tank force meant a varied assortment of M4s was gathered, these followed the basic proportions of the Sherman tank. An M4A1 weighed in at 66,500 pounds. It was 19 feet, four inches long and eight feet, seven inches wide, and sat nine feet high. The crew of five included a commander, gunner, loader, driver, and assistant driver-hull machine gunner. The tank could achieve 24 mph on roads and 15-20 mph cross-country. Range varied from 100 to 150 miles, depending on engine type. The Shermans normally carried one coaxial and one hull-mounted .30-caliber belt-fed machine gun. While a .50-caliber M2 machine gun was usually fitted atop the turret, Zahal was at first short of these potent weapons and often fitted old German and Czech machine guns in their place. Later, when the French began to supply M2s, they were mounted in their original place. The Israelis gave the collective designation of M1 to its entire Sherman force.During the 1948 war, Zahal had used its few tanks primarily in an infantry-support role, and initially that doctrinal role was retained. However, by the early 1950s this was changing. The original 82nd Tank Battalion had merged with the 9th Commando and 79th Mechanized Battalions to form the 7th Armored Brigade. Under the leadership of Uri-Ben Ari, a more offensive mind-set and tactics were practiced. In its 1952 and 1953 war games, Israeli infantry found themselves in mock retreat from attacking Shermans. This so impressed one observer of the maneuvers, Prime Minister David Ben-Gurion, that he ordered more Shermans acquired at once.By fortuitous coincidence, Israel found France a willing seller of surplus Shermans at this point. At the time, the French were fighting a guerrilla war in Algeria, and Egypt was giving the rebels support. In retaliation, France approved military assistance to Israel. Besides training Zahal officers at French military schools, the French also sold them 100 new AMX-13 light tanks and 60 surplus Shermans. With this fresh infusion of equipment, the Israelis were able to form two more armored brigades.Shermans in the SuezIn 1956, Israel began to cooperate with France and Great Britain, which had plans to seize the Suez Canal after Egyptian President Gamal Abdel Nasser nationalized it. Israel, for its part, was upset over Egyptian border raids. With renewed fighting impending, Israel asked France to supply 100 improved Shermans known as the M50. This tank mounted a long-barreled 75mm high-velocity cannon used in the AMX-13. To accommodate the new gun, an extension was built on the turret rear and a new gun mantlet was designed. Some models used a gasoline motor for propulsion, while others employed Cummins diesel engines. These improved tanks were referred to as “Super Shermans” and had a marked increase in firepower to offset the newer Soviet T34/85s the Arab nations were then starting to receive. Only a few of the Shermans were available in time for the 1956 war. Ironically, many of the Egyptian armored vehicles initially placed in the Sinai peninsula were also Shermans, including one company of M4/FL10s, a Sherman hull that mounted an AMX-13 turret. Equivalent to the Israeli M50s, they were also French-built, although by a different company.During Operation Kadesh, as the Israelis labeled their part in the 1956 fighting, one battalion each of the 7th, 27th, and 37th Brigades were equipped with Shermans, including the few Super Shermans. The 7th fought at Abu Ageila and sent a detachment to aid Zahal paratroopers at Mitla Pass. Both the 7th and 37th Brigades fought at Um Katef, where the commonality of tanks on the two sides caused a tragic friendly-fire incident. On November 1, as Israeli units advanced against Egyptian positions from different directions, they mistook each other for the enemy. The 7th knocked out eight of the 37th’s tanks before the situation was brought under control. (The Arab troops had quietly withdrawn before the Israeli arrival.) Overall, however, the Israelis fought well, skillfully using their old Shermans.The M51 Isherman: A Fearsome Sherman Upgrade:After the war Israel, now recognizing the utility and power of its armored formations, decided to increase the number of armored brigades from three to nine and organized these units into ugdas, division-sized groups that combined brigades for specific operations. As the nations opposing Israel began to shift into the Soviet bloc, Egypt and Syria in particular started receiving more advanced tanks, including T34/85s and T54s. This caused the Western nations to agree, in turn, to supply Israel, clandestinely in some cases but later openly. American M47 and M48 Pattons and British Centurions began to trickle into Zahal’s inventory. Until enough were on hand,  Israel had to make do with its force of now-outgunned Shermans and AMX-13s. Something was needed to plug the gaps.That something was the M51, also called the Isherman. This was the ultimate evolution in Sherman battle tanks. Atelier de Bourges, the French company that developed the M50 Super Sherman, developed a 105mm cannon with lower recoil that the Sherman hull and a modified turret could withstand. These T23 turrets also had new mantlets and a rear turret extension. This potent modification made the tank heavier, and to compensate for the added weight, a new Cummins 460hp diesel engine, wider tracks and a new hydraulic system were also installed. Some 200 of Israel’s Shermans were altered, breathing new life into the old design.From Six-Day to Yom Kippur: The Sherman’s Waning UseThe tanks went into combat alongside Zahal’s newer ones in 1967’s Six-Day War. Israel, convinced that its neighbors were coordinating an all-out attack, decided to strike first, concentrating against Egypt before turning to Syria. Jordan also became involved. Shermans were used on all three fronts. A battalion of Ishermans took part in the attack on Abu Ageila, diverting the defenders’ attention while a combined infantry-airborne assault took the position.On the Jordanian front, the Sherman-equipped units had a harder time against Jordan’s M47 and M48 Pattons. In one engagement, the Jordanians claimed 17 Shermans, destroyed around Jenin and Ya’Abad. In another fight, the Shermans came out on top, however. As a column of Jordanian M48s was retreating, it ran into a patrol of Israeli Shermans. A sharp fight broke out at point-blank range, and the Jordanians left behind 15 tanks on the field. Against the Syrians, Israeli tank losses were heavy because of the intense fighting. Ironically, the Syrian Army was equipped with refurbished World War II-era Panzer IV and Sturmgeschutz IV assault guns purchased from France—the same tanks the Shermans had faced two decades earlier.Although the Shermans had done their part in the Israeli victory of 1967, after the war more modern tanks began entering the service, and the old workhorses were showing their age. The M51 models were kept, but many of the M50s were retired, a few being sold and others having their chassis converted into different types of vehicles. A few  remained operational, and during the 1973 Yom Kippur War, Sherman tanks still served, although they had been largely supplanted by newer designs.Sherman Conversions:  Stretching the Service Life of the PlatformThe Shermans’ service was not yet over, however. The chassis of the venerable workhorses were used to create new vehicles and fill other roles in the Israeli arsenal. The first was the Model 50 self-propelled howitzer. Zahal had a large number of French-built Mle50 155mm howitzers on hand; these were mated to a Sherman chassis. The engine was moved to the front of the hull and the gun mounted in an open-topped compartment in the rear. Batteries of the guns served in both the 1967 and 1973 wars before passing into reserve use. The Mle50 howitzer had a range of 11 miles. An interesting variant of the vehicle was a fully tracked ambulance for evacuating wounded soldiers under fire. The Israelis have always been protective of casualties, and make every effort to evacuate wounded troops. The ambulance could carry four wounded soldiers and a medic in a fully enclosed rear compartment. When evacuating under fire, the vehicle had the advantage of being able to park its front end toward the incoming fire. This placed its thickest armor and entire engine compartment between the enemy and the evacuees, as long as the incoming fire was not of sufficient caliber to disable the engine with penetrating fire.A second self-propelled gun also was built. The L33 conversion of the Sherman chassis mounted a Soltam M68 155mm howitzer in a large, fully enclosed armored superstructure, giving the crew protection from overhead shell bursts and fragments. The Soltam cannon had a range of 141/2 miles. They first entered service in the Yom Kippur War and also served in the 1982 war in Lebanon.Another ingenious conversion was the Makmat 160mm mortar carrier. This vehicle has an open-topped compartment forward (the engine is retained in the rear) that holds a Soltam 160mm mortar. The high-angle fire of a mortar requires an open top. The front and side panels of the compartment can be folded down to provide easier access and more room for the crew, although at the sacrifice of some protection. The mortar carrier entered service in 1968. Two further Sherman variants included a multiple rocket launcher carrying four 290mm rockets and an observation vehicle with an extendable platform in place of the turret. The platform could be raised up to 90 feet and was used along the Suez Canal as a mobile observation post.The Sherman in its various configurations filled gaps in the Zahal order of battle over the course of several decades, until the Israelis gradually were able to purchase more modern tanks. With French assistance, these Shermans were kept viable with upgrades to their weapons, engines, and hydraulic systems. When their usefulness as tanks ended, the chassis found new life as artillery and mortar carriers and a variety of battlefield support vehicles. If necessity is the mother of invention, then the Israeli Shermans are a testament to both the need and the ingenuity of the Israeli Army.This first appeared in Warfare History Network here. Image: Wikimedia Commons.(This article was originally posted last year.)


  • Trump orders US companies to leave China ‘immediately’ in extraordinary attack on Fed chief

    Trump orders US companies to leave China ‘immediately’ in extraordinary attack on Fed chiefDonald Trump has issued an “order” to US companies to withdraw from China, as he suggested his own appointment as Federal Reserve chairman was a greater threat to the economy than Chinese leader Xi Jinping.The president told firms “to immediately start looking for an alternative” or make their products in America instead as he lashed out at the central bank’s chair Jerome Powell.


  • Trump weighs in on Hong Kong to gain leverage in China trade talks

    Trump weighs in on Hong Kong to gain leverage in China trade talksDonald Trump has shifted his stance on the unrest in Hong Kong in recent days to show greater solidarity with the pro-democracy protesters after coming to view the issue as a point of leverage in trade negotiations with China.For months, Trump administration officials described the Hong Kong uprising as an internal matter for China, aware of how delicate the issue is for president Xi Jinping and other Communist Party officials.


  • UN: Ebola outbreak in Congo has killed nearly 2,000 people

    UN: Ebola outbreak in Congo has killed nearly 2,000 peopleThe World Health Organization's emergencies chief said the ongoing Ebola outbreak in Congo is approaching a "stark" milestone with nearly 2,000 people killed by the virus in the year-long epidemic. In a press briefing on Friday, Dr. Mike Ryan said that although the U.N. health agency has the vaccines and drugs that could potentially change the course of the outbreak, delivering those to the people who need them is still proving problematic.


  • Kamikaze: Japan's World War II Terror Weapon That Terrified the Allies

    Kamikaze: Japan's World War II Terror Weapon That Terrified the AlliesDeliberately crashing into an enemy target was not limited to shipping; it was used successfully against enemy planes as well. A Japanese flight sergeant rammed his fighter into a B-17 Flying Fortress bomber on May 8, 1943. He was protecting a convoy off the coast of New Guinea and made the decision to kill himself and take the American bomber and its crew with him.The deliberate crashing into enemy targets by Japanese aviators did not begin at the Battle of Santa Cruz Islands. The first suicide attack against American shipping took place at Pearl Harbor, over eight months earlier, when a bomber crashed into the seaplane tender Curtiss and set her on fire. Attacks of this kind, including the crashes into Hornet and the destroyer Smith, were known as kesshi, “dare to die tactics.”Skip-bombing and ramming were also adopted. Skip-bombing involved fitting a Zero fighter with a 550-pound bomb, which was to be released 200 to 300 yards from an enemy ship. These were not exactly suicide tactics, although they were extremely hazardous. The bomb might bounce up and hit the Zero, or the explosion of the bomb could destroy the plane. A training program for skip-bombing was carried out in the Bohol Strait, near Cebu, but all training was stopped in September 1944, when American aircraft destroyed 50 percent of the air group.Recommended: 1.2 Million Casualties: If North Korea Attacked Los Angeles with a Nuclear WeaponRecommended: Uzi: The Israeli Machine Gun That Conquered the WorldRecommended: The M4: The Gun U.S. Army Loves to Go to War WithMost Suicide Attacks Were Spontaneous ActionsDeliberately crashing into an enemy target was not limited to shipping; it was used successfully against enemy planes as well. A Japanese flight sergeant rammed his fighter into a B-17 Flying Fortress bomber on May 8, 1943. He was protecting a convoy off the coast of New Guinea and made the decision to kill himself and take the American bomber and its crew with him. Over a year later, the pilot of a two-man Nakajima Gekko night fighter (codenamed “Irving” by the Allies) used the same tactics to bring down a B-24 Liberator bomber.Most of these suicide attacks were spontaneous actions—a pilot making a heat-of-battle decision to end his own life by destroying an enemy ship or airplane. But as Japan’s chances of winning the war became less and less likely, the strategy of suicide grew in direct proportion. Informal discussions of organized suicide attack began in 1943. In March of that year, the chief of the Army Aeronautical Department, Takeo Yasuda, secretly established a Special Attack Corps training program—a forerunner of the kamikaze corps.We Must be Superhuman in Order to Win the WarThe commander of the First Air Fleet, Kimpei Teraoka, made these telling observations: “Ordinary tactics are ineffective. We must be superhuman in order to win the war.” On the subject of suicide units, he commented, “If all air units do it, surface units will also be inclined to take part.”Teraoka was right—the idea of the suicide attack unit spread. Admiral Soemu Toyoda, commander in chief of the Imperial Japanese Navy, was won over by what has been called the “vanity of heroism” and officially consented to the creation of the Special Attack Corps, or the kamikaze. The Special Attack Corp’s slogan was “One plane, one warship.”Pilots did not have to be highly trained to undertake suicide missions. In fact, suicide pilots usually received only the minimum of flight training. Kamikaze pilots sank or damaged hundreds of ships during the latter part of the war.This article is from the May 2009 issue of WWII History Magazine. If you would like to read the rest of this and other articles, visit our order page to see which digital editions we have on offer.This article by David Alan Johnson ran in Warfare History Network. Image: Wikimedia Commons.


  • As G7 leaders arrive, barricaded Biarritz leaves swimmers out in the cold

    As G7 leaders arrive, barricaded Biarritz leaves swimmers out in the coldCome rain or shine, every morning of the year Biarritz's White Urchin swimmers' club take a one kilometre swim around the Bay of Biscay. The scene comes less than 24 hours before world leaders, including U.S. President Donald Trump, arrive for a G7 summit in France's southwest surfing capital to navigate their differences on issues ranging from climate change to Iran and tariffs. "I find the G7 an aberration.


  • G-7 Is Well Timed to Fight a Recession, But Its Leaders Are Unlikely to Act

    G-7 Is Well Timed to Fight a Recession, But Its Leaders Are Unlikely to Act(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. It ought to be good news that leaders from the Group of Seven are gathering for a retreat on the Bay of Biscay as the global economy slows, trade wars escalate and major economies like Germany slide toward recession.But the allies are so divided that they may squander the chance to find a solution. Any hope for progress was complicated Friday with China’s new tariffs on U.S. goods, a central banker pushing for a rate cut and France threatening a regional trade deal over climate. At any other time in history, the expectation from such a summit would be for a coordinated response to loosen fiscal purse strings and walk away from protectionism -- an approach that came out of similar meetings called to respond to the far more dire global financial crisis a decade ago. This weekend, as France’s Emmanuel Macron hosts leaders including the U.K.’s new prime minister, Boris Johnson, along with U.S. President Donald Trump, disagreements over everything from Brexit to the future of the global trading system likely will stand in the way of unified solutions. China on Friday roiled the summit by imposing additional tariffs on $75 billion of U.S. goods in retaliation for Trump’s planned levies on Chinese imports.The best economic hope for the meetings in the Atlantic port city of Biarritz may be that divisions don’t get any worse, and that central bankers conducting their own retreat some 5,000 miles away in Jackson Hole, Wyoming, save the day.Driving that reality is Trump’s world view, which isn’t showing any signs of changing.Read More: G-7 Wonders Which Boris Johnson Will Show Up: Balance of PowerThe broad consensus from economists and other G-7 leaders is that the global economy would benefit most from an end to Trump’s trade wars. But the U.S. president has dismissed accusations that his tariff assault on China and threats to impose duties on Europe’s auto industry are contributing to any slowdown.Currency WarsMoreover, rather than seeking harmony, Trump is threatening to turn his trade wars into currency wars.“Fight or go home!” Trump told the Federal Reserve in a tweet Thursday bemoaning negative yields on German bonds and a strong dollar that he views increasingly as a threat to U.S. growth.Ahead of this weekend’s meeting, Trump administration officials insisted the U.S. economy and the president’s agenda of tax cuts, deregulation and cracking down on unfair trade ought to be envied rather than scorned, particularly in Europe where growth has slowed.And they are traveling to Biarritz with an ask for Germany’s Angela Merkel: to boost spending to head off a recession. Germany has taken tentative steps toward fiscal stimulus but so far the government is sticking to its zero-deficit principle.Read More: Johnson’s G-7 Goal: Be Serious and Get Something From EveryoneSome Trump aides argue concerns over the global economy are overblown thanks to the policy responses from the European Central Bank and others that are already underway, especially if those are paired with German fiscal action.“A stronger Europe will mean stronger demand for U.S. exports and more rapid U.S. growth,” said Peter Navarro, one of Trump’s closest advisers on trade and economic policy.“Such bullish help appears to be on the way with near certain ECB rate cuts, an increasing likelihood of a German fiscal stimulus, and a possible resolution of Brexit, which will both remove Brexit uncertainty now suppressing some investment and clear the way for a possible U.K.-U.S. trade agreement,” he said.Rate CutBold action by the Federal Reserve, such as a 100-basis-point cut in the target rate sought by Trump, would bolster the U.S. economy and the world’s too, Navarro said. Such a move is intended to shift the U.S. from “good growth in the 2% range to great growth in the 3% range,” he said, rather than reflect any fears of recession.Navarro, who is a longstanding critic of Germany’s economic policies, is far from alone in viewing German fiscal stimulus as one of the keys to a global turnaround. Yet the push also highlights that the biggest division inside the G-7 over how to respond to a slowing world economy lies between Trump and Merkel.Read More: Terms of Trade: Europe’s Shaky Union Faces Trump G-7 Stress TestWhile the Trump administration would like to see a bold German move to abandon its obsession with balanced budgets, in Berlin there isn’t much appetite to cough up cash to help prevent a global slowdown they attribute in part to Trump’s trade wars.The German government isn’t ready to commit to meaningful stimulus at home or at the G-7. Nor is it in much of a hurry. Spending money now when factory utilization is still rather high, would simply stimulate imports or savings rather than domestic output, the argument goes.Contingency plans are being drawn up and Merkel has talked about “clouds” darkening the economic outlook, however. Finance Minister Olaf Scholz said in principle Germany could muster some 50 billion euros ($55 billion) in times of a crisis and the German government is aware that the ECB has limited room to respond and that a hard Brexit could tip the balance toward more rather than less action.Recession RiskThe U.K., like Germany, is at risk of slipping into a recession after recent data showed a second-quarter 0.2% decline in gross domestic product. But Johnson’s month-old government echoes the U.S. view that delivering Brexit come Oct. 31 will end the uncertainty that has shadowed the U.K.’s economy and boost growth.In Japan, preparations are underway for an increase in government spending to counteract an October sales tax increase. Finance Minister Taro Aso also signaled Tokyo’s readiness to deploy further fiscal stimulus if it’s warranted after a G-7 ministers meeting in July.“Along with Germany, Japan is likely to add momentum toward fiscal policy in the global economy,” said Kyohei Morita, chief Japan economist at Credit Agricole Securities Asia.But there are still questions over whether Japanese households can withstand the tax hike. A similar increase in 2014 triggered a sharp contraction and this time foreign demand is unlikely to provide a buffer. Japan’s exports have fallen for eight straight months thanks to the Trump trade wars and reduced demand from China.Read More: Donald Trump Is Coming for Europe’s Most Important AllianceThat’s one reason the U.S. position and the damage being done by its trade battles is what worries some economists most. With the International Monetary Fund predicting global growth of 3.2% this year, a downgrade that nonetheless remains broadly in line with trend, and unemployment at record lows in many G-7 economies, there are reasons to be hopeful. That doesn’t reduce the risks, however.‘What’s the Panic?’“You do ask the question, ‘What’s the panic?’ Why are central banks looking to lower interest rates?” said Torsten Slok, chief economist at Deutsche Bank. “The answer to that question is that the trade war continues to linger and continues to be a huge cloud hanging over the global economy.”Years ago, leaders were able to find consensus to boost the economy. As the global financial crisis grew in 2008, then President George W. Bush called an emergency G-20 meeting at which leaders agreed to a roadmap to combat the slowdown.That November 2008 summit was followed by others at which the world’s leading economies agreed to avoid protectionism and to other coordinated actions widely seen as having helped avoid a deeper downturn.Some attending this weekend’s G-7 summit appear determined to press their case for Trump to at least modify his tactics in his bid to rebalance global trade.European Union officials say Donald Tusk, who will be the bloc’s chief representative at the meeting, will argue trade tensions are the single most important factor impeding global growth.So too will Canada’s Justin Trudeau, who is intent on selling himself as a vocal advocate of pluralism and multilateralism, with an election just weeks away.“Our government has responded to this new world by rejecting populism,” Trudeau said in a speech this week. “My message will be clear” at the G-7, he added. “We need to build a future where everyone can benefit from economic growth and where we invest to help the middle class.”(Updates with China tariffs, Fed comments, France threat in second paragraph.)\--With assistance from Theophilos Argitis, Alex Morales and Rich Miller.To contact the reporters on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net;Raymond Colitt in Berlin at rcolitt@bloomberg.net;Toru Fujioka in Tokyo at tfujioka1@bloomberg.netTo contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Justin Blum, Sarah McGregorFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • Security in Kashmir tightened following call for march

    Security in Kashmir tightened following call for marchAuthorities intensified patrols Friday in Indian-controlled Kashmir's main city after posters appeared calling for a public march to a United Nations office to protest New Delhi's tightened grip on the disputed region. Police and paramilitary soldiers re-imposed restrictions on traffic in areas where they had been eased, putting steel barricades back up and laying razor wire across roads, bridges and intersections. On Aug. 5, Prime Minister Narendra Modi's Hindu nationalist-led government revoked Muslim-majority Kashmir's decades-old special status guaranteed under Article 370 of India's Constitution and sent thousands of troops to the region, which is split between archrivals Pakistan and India and claimed by both in its entirety.


  • How U.S. Sanctions Drive America's Enemies Together

    How U.S. Sanctions Drive America's Enemies TogetherThere is perhaps no tool in Washington’s foreign-policy toolbox used as consistently as economic sanctions. Banning an individual from entering the United States, freezing a company’s assets in U.S. jurisdiction or preventing a foreign firm from accessing the U.S. financial system is a simple and relatively easy thing for policymakers to do. Barely a week goes by when an entity isn’t put on the Treasury Department’s blacklist of designated companies. President Donald Trump is a particular fan of sanctions; the law firm Gibson Dunn reported designations increasing by close to 30 percent during his first year in office.But there are times when sanctions are not only ineffective in forcing a change in a target’s behavior, but counterproductive to U.S. strategic aims. The restrictions on Iran and Venezuela, two of the administration’s favorite targets, are actually having an adverse impact on what Trump says is his most important foreign-policy objective: competing with Russia and China at a time when both nations are flexing their muscles on the international stage.Washington’s decision this May to revoke oil import waivers for Iran’s consumers and its recent announcement this month of an embargo on the Maduro regime is tanking the economies of both. The formula is logical enough: with less Iranian and Venezuelan oil going into the market, the less money both regimes will be able to collect. This part of the equation is working according to plan. Tehran’s oil exports have winnowed down from 2.5 million barrels a day in April 2018 to what could be as low as one hundred thousand barrels per day last month. China National Petroleum Corp’s cancellation of five million barrels of Venezuelan crude, likely over concerns of exposure to U.S. secondary sanctions, will contribute to an already catastrophic economic and humanitarian situation for a country that has seen four million people flee to other parts of South America.The long-term benefits of squeezing Tehran and Caracas’s finances, however, could be sunk by the costs. And the costs are quite significant; the sanctions are not only making life harder for the average Iranians and Venezuelans, but creating more opportunities for the Russians to fill a void in the market and further cementing its ties to the Chinese.Although the Chinese economy has slowed down compared to its peak double-digit growth rate in years past, Beijing still requires large and consistent energy resources to empower industry across the board. While China is still purchasing crude from Iran and Venezuela, the Trump administration’s dual sanctions campaign is forcing the Asian superpower to depend far more on its large neighbor to the north for alternative supplies. Russia was China’s top crude supplier last year, with Russian sales increasing by 40 percent at a time when Beijing’s crude imports from Iran and Venezuela declined. Worldwide Demand for Moscow’s oil has gone up as supplies from the Iranians and Venezuelans have gone down; data from Bloomberg shows that between November and July—a period when the most onerous Trump administration sanctions were levied on Tehran and Caracas—Russia made $900 million more in revenue. For Russia, a country that suffers from anemic social services, horrible public infrastructure and an economy that may enter into a recession this year, any extra cash is a godsend.National Security Adviser John Bolton may blast out tweets taunting Nicolás Maduro as a dead man walking, and State Department official Brian Hook may do the same on Iran, reminding anyone who will listen that Washington’s maximum pressure campaign is depriving the Iranian regime of billions of dollars in lost oil revenue. But if the dual pressure strategies on these two insignificant powers are freeing up buyers for Russia and solidifying a bond between Moscow and Beijing that both are becoming more comfortable in publicizing, one has to ask the obvious question: is penny-pinching the ayatollahs and bankrupting Maduro more important than preventing Washington’s two primary state adversaries from forming a unified anti-U.S. bloc? Given the principles outlined in the White House’s own national-security strategy about great-power competition in the twenty-first century and how critical it is for the United States to survive and prosper in this environment, the answer would appear to be “no.”Daniel DePetris is a fellow at Defense Priorities, a foreign-policy organization focused on promoting a realistic grand strategy to ensure American security and prosperity.Image: Reuters


  • Bavarian couple sue German government over reunification tax

    Bavarian couple sue German government over reunification taxA couple in Bavaria are suing Angela Merkel’s government over their tax bill — on the grounds that it is unconstitutional. The couple, who have not been named, are challenging a decision by Mrs Merkel’s government to retain a tax that was supposed to be a short-term measure to pay the costs of German reunification. Almost 30 years after the fall of the Berlin Wall, Germans still face a 5.5 per cent surcharge on their annual income tax bills to pay the cost of raising living standards in the former communist East to match the rest of the country. The Solidarity Surcharge, or “Soli” as it is popularly known, amounts to an extra €487 (£441) on the tax bill of some one earning €50,000 (£45,000) a year. It was originally introduced for a year in 1991 to pay the unexpected costs of reunification and the Gulf War, and was reintroduced in 1995 to pay the ongoing costs of reunification. Olaf Scholz, the German finance minister, has announced plans to keep the tax for the top 10 per cent of earners Credit: CLEMENS BILAN/EPA-EFE/REX  The legal challenge is expected to be the first of many after Mrs Merkel’s government dropped plans to scrap the controversial tax next year. Olaf Scholz, the finance minister, announced that the government will instead raise the minimum threshold for the tax so that it only applies to the top 10 per cent of earners from 2021. The Bavarian couple behind the legal challenge argue the move is unconstitutional because the tax was only approved as a temporary measure and its mandate expires this year. They are being represented in court by Michael Sell, a lawyer who was head of the finance ministry’s tax department until last year. The lawsuit is also backed by the the Federation of German Taxpayers (BdST), which says it is ready to take the case to Germany's highest court if necessary. “Because the mandate expires at the end of the year, the Soli no longer has any legitimacy,” Reiner Holznagel, the BdST president said.  “We want the politicians to live up to the promises they have been making for decades and abolish the Soli completely and for everyone by 2020.”


  • Yemeni government forces rout separatists from southern city

    Yemeni government forces rout separatists from southern cityForces loyal to Yemen's internationally recognized government have taken full control of a key southern city after overnight clashes with separatists there, Yemeni security officials said Friday. Clashes over Ataq, the capital of oil-rich Shabwa province erupted late Thursday night and lasted until Friday morning, said the security officials, speaking on condition of anonymity because there were not authorized to talk to the media. The city of Ataq was previously divided between the government forces of Saudi-backed President Abed Rabbo Mansour Hadi and a separatist militia, trained and armed by the United Arab Emirates.


  • Iran's Zarif says nuclear talks with Macron were "productive" -ILNA agency

    Iran's Zarif says nuclear talks with Macron were "productive" -ILNA agencyIran's foreign minister said talks he held on Friday with French President Emmanuel Macron about a landmark 2015 nuclear deal were "productive", according to the ILNA news agency. "France had presented some suggestions and we presented some suggestions about how to carry out (the nuclear deal) and the steps that both sides need to take," the minister, Mohammad Javad Zarif, said.


  • The G7 Should Pressure China but Find a Solution with Russia

    The G7 Should Pressure China but Find a Solution with RussiaAnother G7 summit impends, in Biarritz, France, with few achievements likely. Although the gathering might avoid last year’s dramatic photo of President Donald Trump staring down the other attendees, expectations are low. No effort will be made to draft a final statement, a first for the group, which began in 1975. Given the members’ divisions, the attempt would be “pointless,” observed French President Emmanuel Macron, who blamed “a very deep crisis of democracy.” The G7 no longer has the heft it once had. Its members still dominate the world’s economy, but not to the same degree. During the 1980s, G7 members accounted for about 70 percent of the world’s GDP. That number now is below half. Moreover, the members have only about a tenth of the world’s population. And turning the G8 into the G7 by expelling Russia meant losing a member that was more important than its economic role alone would suggest.Attendees this weekend also might have trouble making their decisions stick. The newly-installed British Prime Minister Boris Johnson might be out of a job in weeks. So could Canada’s Prime Minister Justin Trudeau, who trails in polls for elections in October. Meanwhile, Italy’s ruling coalition just collapsed and Germany’s long-serving Chancellor, Angela Merkel, is a lame duck. Finally, Macron endures even lower poll ratings than Trump, who faces an election next year. Only Japanese leader Shinzo Abe seems secure politically.However, the G7 meeting offers the most important leaders of the most important Western nations an opportunity for serious discussions of important issues, conducted privately though not secretly. Indeed, this grouping has the advantage of being more personal, about the leaders, than institutional, about the countries. Members can more easily focus the meeting on what they want, irrespective of the formal agenda.Even before the summit’s start, Trump roiled the proceedings as is his want by proposing that Moscow be invited next year to the meeting hosted by the United States. Trump apparently offered this without much diplomatic preparation and—rather like his off-the-cuff comment about buying Greenland before his aborted trip to Denmark—it sparked European opposition. However, Macron commented favorably on the idea, though adding that it would be a “strategic error” to do so before resolving the Russo-Ukraine conflict.In fact, adding Russia is a surprisingly good idea. President Vladimir Putin, suspended in 2014, has not transformed himself into a liberal Western democrat. However, keeping him outside the club isn’t going to cause him to become one either. And Moscow’s permanent estrangement only serves the interest of China, an even more authoritarian, powerful, and dangerous opponent of Western liberalism to which Russia has moved closer.Inviting Putin back into the club should be part of a process to achieve peace and stability in Eastern Europe and pull Moscow back from its embrace of China. Only compromise can prevent the divide from becoming permanent. This weekend, G7 participants should chat about options to simultaneously secure Ukraine and accommodate Russia.For instance, the allies could drop plans for North Atlantic Treaty Organization expansion, limit military aid to Kyiv, and end economic sanctions. In return, Russia could abandon support for Donbas rebels in Ukraine, grant Kyiv full navigational access in contested waters, and stop using natural gas as a weapon. Both sides could eschew political interference in the other’s affairs—after all, America and Ukraine are not blame-free in this regard. Kyiv would be left to forge whatever economic ties it desired east and west. If the allies left Biarritz with a determination to reach such an agreement, its fulfillment could be celebrated with Russia attending next year’s newly-reinstated G8 enclave.Moreover, G7 members should use their forum to develop a common policy to press Xi and the People’s Republic of China to respect human rights and international norms. The back-drop of mass protests in Hong Kong makes the issue particularly pressing. Even so, it is important not to inflate the threat posed by China. The People’s Republic of China faces significant economic, social, and political challenges, and poses no direct military danger to America or Europe. The problem for Japan is greater, but still limited mostly to a handful of contested islands.However, Beijing’s widespread, sometimes brutal crackdown at home, increasingly threatening approach to both Hong Kong and Taiwan, and more aggressive stance toward territorial disputes challenge common Western interests and values. Members of the European Union and NATO, as well as the United States, have expressed concern over Beijing’s course. A united diplomatic stand by leading Western states would be more likely to temper the People’s Republic of China’s international behavior. This would especially be true if accompanied by a message of accommodation to Moscow which helped the latter see its interests better served by leaning West. Brexit is likely to be decided one way or another by next year’s meeting anyway. But, the G7 summit provides an opportunity for informal meetings on how the United Kingdom, assuming it leaves, with or without an exit agreement, relates to both America and Europe. The fabled Special Relationship may be near the end of its life, but Washington and London still have reason to cooperate closely. Nevertheless, the UK’s positions on many issues remain closer to those of Europe. Constructing a new, positive, enduring relationship with London requires that the Trump administration not squeeze the potentially fragile Johnson government too hard. Irrespective of the UK’s looming departure from the EU, Trump has made the U.S.-European relationship unnecessarily hostile. Although he is right to criticize the continent’s military dependence on America, the relationship remains important. It is in Washington’s interest to retain positive ties with Europe as well as the UK.The forum also offers an opportunity to bring together many of the combatants in President Trump’s multiple trade wars. That could allow him to set priorities. For instance, the administration continues to threaten to sanction European automobile-makers and Japanese products as part of ongoing trade talks. Yet the economic battle with China, which reflects so much more than pure commercial concerns, deserves the most attention. Furthermore, joint action by America, EU, and Japan—toward Huawei, for instance—would have a greater impact on the People’s Republic of China. Thus, summit attendees should discuss a common position on economic ties with Beijing. More broadly, these democratic and market-friendly nations should pursue a common trade agenda. Finally, a good place to start would be Trump’s idea of triple zero: no tariffs, non-tariff barriers, or subsidies. The G7 could encourage his rare pro-free trade moment. Finally, Trump should use the meeting to advance his America-first foreign policy—a particularly useful effort with an election approaching—but without trashing the allies. Instead of publicly berating the Europeans for their anemic military efforts, he should privately prepare them for upcoming U.S. force withdrawals. How they responded would be left up to them. While beginning to shed—rather than share—defense burdens, Trump should emphasize that the U.S. plans to maintain a good relationship with its international friends. The change in approach would be subtle but critical: Washington would simply decide its own policies rather than attempt to control what its allies do. If past is prologue, nothing much should be expected from Biarritz. However, it isn’t too late to use the time productively. Substantive talks would be more critical than sanitized communiques which even Macron admits that no one reads.Doug Bandow is a senior fellow at the Cato Institute and a former Special Assistant to President Ronald Reagan. He is the author of Foreign Follies: America’s New Global Empire.Image: Reuters


  • Could Iran Crush Great Britain in a War?

    Could Iran Crush Great Britain in a War?Which leaves naval and air power as the key factors. Like its tank fleet, the Iranian navy is a large hodgepodge of Russian, North Korean and indigenous designs, as well as old Western vessels from the 1960s and 1970s. But it does have dozens of missile and torpedo boats, as well as small craft equipped with rocket launchers and machine guns that could potentially overwhelm a larger but lone warship. Britain has a more conventional navy of high-tech destroyers, frigates and even a new aircraft carrier – but at 76 ships, the Royal Navy is but a shadow of its former glory.​“A comparison of the UK and Iran’s military strength shows Britain falling behind when it comes to manpower, land and naval strength and petroleum resources,” the newspaper proclaimed after Iran seized a British tanker in the Persian Gulf, in retaliation for Britain seizing an Iranian tanker at Gibraltar.The Daily Express article was based on GlobalFirepower.com, which features both statistics on the armed forces of 137 nations, and ranks those nations using a proprietary formula that apparently includes a nation’s population and military manpower, geographical size, financial strength, oil reserves, transportation infrastructure, and quantity of military hardware.(This first appeared earlier this month.)Britain ranks eighth on the “Global Firepower Index,” while Iran comes in not far behind in 14th place (the U.S. comes in first place, Israel 17th). Indeed, GlobalFirepower.com lists Iran as being stronger than Britain in several categories: 873,000 military personnel to Britain’s 233,000, 1,634 Iranian tanks to 331 British vehicles and 386 Iranian naval vessels to 76 British (Britain is credited with more airpower, with 811 military aircraft to 509 Iranian). Iran has more oil, but weaker finances.All of which proves how much statistics can be misleading. Britain and Iran are not in the same league at all.First and foremost, while Iran may or may not be developing nuclear weapons, Britain most certainly has them. And not some jury-rigged “physics package” assembled in an underground bunker, but four Vanguard-class nuclear submarines, each armed with 16 Trident thermonuclear-armed ballistic missiles. That’s enough atomic firepower to send Russia and China back to the Middle Ages, let alone Iran.However, Britain wouldn’t use nukes against Iran for political reasons, and Iran would be committing suicide to use them against Britain or anyone else. Which leaves the more immediate prospect of a limited conflict in the Persian Gulf, most likely a reprise of the 1980s “Tanker War,” in which Iran will attack or seize oil tankers in retaliation for economic sanctions, while Britain (and the U.S., and possibly Europe) will attempt to stop them.In which case, how many tanks Iran and Britain have doesn’t matter. Never mind that Britain’s Challenger 2 tanks are world-class vehicles that leave behind Iran’s larger but motley fleet of Russian, 1970s American and British, and indigenously manufactured tanks. But that’s not the point: Britain isn’t sending an armored division to invade Iran. And if it did, it would certainly be part of a multinational (mostly American) force.Which leaves naval and air power as the key factors. Like its tank fleet, the Iranian navy is a large hodgepodge of Russian, North Korean and indigenous designs, as well as old Western vessels from the 1960s and 1970s. But it does have dozens of missile and torpedo boats, as well as small craft equipped with rocket launchers and machine guns that could potentially overwhelm a larger but lone warship. Britain has a more conventional navy of high-tech destroyers, frigates and even a new aircraft carrier – but at 76 ships, the Royal Navy is but a shadow of its former glory. Currently, Britain is only sending a single destroyer and a frigate as convoy escorts in the Persian Gulf.Ditto in the air, where Iran’s museum mix of a handful of old American-made F-14 and F-4 fighters, Russian-made aircraft that fled from Iraq to Iran and were interned, and Iranian designs such as the Saeqeh, which looks remarkably like the F-5 fighters the U.S. sold to Iran in the 1970s. Britain has the advanced Eurofighter Typhoon, has now received its first F-35 stealth fighters, and can support its combat aircraft with an array of tankers, electronic warfare planes, and drones.But here is where numerical comparisons of military strength really fail. If Iran were to invade Britain, there would be no question of which party is stronger. However, in the Persian Gulf, British forces are operating 3,000 miles from the UK. Even with access to bases belonging to Iran’s hostile Arab neighbors, the British would still be operating in Iran’s home waters, where all the tools of coastal guerrilla warfare – mines, small boat attacks – would be available to Tehran.So is Britain or Iran stronger? It depends on the circumstances.Michael Peck is a contributing writer for the National Interest. He can be found on Twitter and Facebook.Image: Wikipedia.(This article was originally published earlier this month and is being republished due to reader interest.)


  • Macron Riles Bolsonaro, Setting Up G-7 Fight Over Amazon Fires

    Macron Riles Bolsonaro, Setting Up G-7 Fight Over Amazon Fires(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Emmanuel Macron said Group of Seven leaders gathering in Biarritz, France, Saturday must tackle head on the fires in the Amazon jungle, establishing the summit’s first flash point.“Our house is burning. Literally,” the French president wrote in a tweet late Thursday. “It is an international crisis.” He plans to introduce the topic in his opening remarks at the informal dinner on Saturday, and it will be the first topic of discussion on Monday.But by placing the environmental emergency at the top of the G-7 agenda, he risks a geopolitical fight he cannot win if he tries to prise a response to from Donald Trump, who has already pulled out of the Paris Climate Accord and is a long-term skeptic on threats to the environment.Brazilian leader Jair Bolsonaro, who has echoed Trump’s approach on environmental issues, has already reacted angrily. He said that discussing the fires without his country’s involvement showed a “colonial mentality that isn’t appropriate for the 21st century.”“I regret that President Macron is seeking to use the internal matters of Brazil and other Amazon countries for political gain,” Bolsonaro said in a tweet.France and Brazil have history when it comes to the Amazon. In the 1980s, Francois Mitterrand provoked outrage in South America when he suggested Brazil cede sovereignty over parts of the rain forest arguing that it was the heritage of all humanity. Brazil’s concerns about its sovereignty over the Amazon were a key turning point in environmental politics ahead of the 1992 Rio environmental summit.Brazilians are, on the whole, more accepting of international concerns these days. But with mounting criticism of the record number of fires this year, the government in Brasilia is getting defensive.While Macron is trying to rally a global response to the climate emergency, Trump has been working to roll back restrictions on CO2 emissions in the U.S. This week he attacked automakers for their opposition to a plan to ease fuel efficiency requirements.The French leader is sure to find an ally in Canada’s Justin Trudeau and Germany’s Angela Merkel. Merkel already had a run-in with Bolsonaro at June’s G-20 in Osaka after she criticized his environmental policy and cut financial aid for the Amazon. Bolsonaro told Merkel that she had an obsession with the environment and she should use the money for reforestation in Germany.German government spokesman Steffen Seibert said on Friday that Merkel backs Macron’s call because the "alarming and threatening" burning of the Amazon, is an international issue. U.K. Prime minister Boris Johnson’s spokeswoman, Alison Donnelly, told reporters in London said he is "extremely concerned" and would use the G-7 to call for a "renewed focus on protecting nature and tackling climate change.”But the configuration of the G-7 right now will make it difficult for Macron to make headway. Trump famously ripped up last year’s communique and does not want to be cornered. Johnson is eager to tighten his bond with Trump and at odds with European allies over Brexit. Italy is mired in a messy political crisis at home and has no prime minister. Japan is unlikely to stick its neck out -- it is more concerned about the potential fallout from the U.S. trade war with China.All this points to Macron winding up isolated on the issue if he tries to achieve anything meaningful on the fires. A French official, speaking on condition of anonymity, said they couldn’t pre-judge what Trump’s position will be -- or indeed what concrete action could be taken by the group.(Updates with Johnson’s spokeswoman.)\--With assistance from Ben Sills, Arne Delfs, Alex Morales and Bill Faries.To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.netTo contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Ben SillsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • Putin Needs to Bury This Relic of Stalin

    Putin Needs to Bury This Relic of Stalin(Bloomberg Opinion) -- As Europe marks 80 years of the Molotov-Ribbentrop pact, which carved up eastern Europe between the Soviet Union and Nazi Germany, Russia is trying to defend the agreement again. There is no political benefit to doing this. President Vladimir Putin needs to abandon his Stalinist inheritance of a foreign policy based solely on national interest.If Moscow needed any reminder that many in eastern Europe still hold the treaty against it and still consider it a threat, plenty came on the anniversary. The governments of Estonia, Latvia, Lithuania, Poland and Romania – the countries directly affected by the pact’s secret protocol – issued a joint statement saying the document “sparked World War II and doomed half of Europe to decades of misery.”More than a million people gathered to celebrate the Baltic Chain, the 419-mile (675 kilometer) long line of people who protested Soviet rule on Aug. 23, 1989. The demonstrators didn’t pick that day at random – they, too, were making the point that the subjugation of their countries by the Soviet Union began with the Molotov-Ribbentrop pact.Russia is fighting back. In Moscow, the original of the treaty is now exhibited alongside documents relating to both the 1938 Munich Agreement, where British and French leaders sanctioned the Nazi annexation of the Sudetenland, and Poland’s subsequent invasion of part of Czechoslovakia.At the opening of the exhibition earlier this week, Russian Foreign Minister Sergei Lavrov spoke of Britain and France’s treachery: By cosying up to Hitler, they forced the Soviet Union to sign a deal with the Nazis to ensure its own security, he said. Had the Western Europeans listened to the Soviets and set up a collective security system, the bloodshed of World War II could have been averted. Lavrov was making a clear analogy with Russia’s efforts to build an alternative security architecture in today’s Europe – an idea the Kremlin hasn’t abandoned despite the rest of Europe’s lack of interest.For its part, the Russian mission to the Organization for Security and Cooperation in Europe, the group the Kremlin sees as the foundation for its alternative security architecture, tweeted on Aug. 20 that lots of other countries had signed pacts with the Nazis before the Soviet Union did.Kremlin officials can say all this until they go hoarse, but that can’t erase the undeniable fact that the Soviet Union’s security didn’t require it to grab the Baltics and parts of Poland and Romania. Poland, which tried to benefit from the Nazis’ aggression, has admitted it was in the wrong when it invaded part of Czechoslovakia. President Lech Kaczynski apologized for it in 2009.In 1989, the Soviet Union, too, officially condemned the Molotov-Ribbentrop pact – but subsequent Russian communications about it, including an entire article signed by Putin himself in the Polish daily Gazeta Wyborcza, have come with the caveat that lots of others were at it, too.These excuses are a major reason other European countries don’t trust Russia: To them, Putin and his subordinates are saying that Moscow would do something like this all over again if its interests dictated it, small countries be damned.Concern this might happen was what drove eastern Europeans into the North Atlantic Treaty Organization. The reality of the annexation of Crimea – another opportunistic move dictated ostensibly by Russian security considerations – is pushing Ukraine in the same direction.If Putin’s goal was to inspire trust and start a meaningful conversation about collective European security in an age of increasing global competition, an unconditionally apologetic stance would work much better. Refraining from invading neighboring countries would be an even more meaningful step.I suspect, however, that Putin doesn’t really believe in such goals, because, like Stalin, he thinks a deal with the devil, based on common interest rather than trust, is the best.My epiphany about the Molotov-Ribbentrop pact came when I read the long-lost diary of Alfred Rosenberg, Nazi ideologue and Hitler’s one-time minister for the Occupied Eastern Territories. Rosenberg was skeptical about the deal and recoiled in horror when fellow Nazi Richard Darre told him of Joachim von Ribbentrop’s comment that he had “felt as though among old party comrades” when meeting the Soviet leadership.Incredulously, Rosenberg recounted that during Ribbentrop’s visit, Stalin raised his glass not just to Hitler but also to Heinrich Himmler, the Nazi security chief, calling him “the guarantor of order in Germany.”“Himmler has eradicated communism, i.e. those who believed in Stalin, and this one – without any need for it – raises a toast to the exterminator of his faithful,” Rosenberg noted.For Stalin, any kind of ideology took a back seat to expediency. He was a man of interests, not values. In that sense, Putin, an avowed anti-communist who has condemned Stalin on many occasions, is following the dictator’s realpolitik. His adherence to his current Orthodox Christian brand of social conservatism is as flimsy as Stalin’s link to leftist idealism was. If Putin can do a deal that will promote what he sees as Russia’s interests, he will do it with anyone. He will wear any hat required of him while doing so, and raise any toast. He is oblivious to Molotov-Ribbentrop’s biggest lesson of all: That such agreements don’t hold.That’s why eastern Europeans, and especially Ukrainians, are so worried about the possibility of a grand bargain between Putin and a U.S. president, most recently Donald Trump. The consequences for them could be comparable to those of the Molotov-Ribbentrop pact.What’s needed from Russia isn’t an apology for carving up Europe with Hitler, but a different foreign policy is – one in which principles trump interests. Only such a change can bring closer the idealistic vision of a Europe that stretches from Lisbon to Vladivostok, a goal to which both Russian and European leaders still like to refer. And that shift shouldn’t come at a moment of weakness, as it did in the waning years of the Soviet Union. Restoring trust should be a conscious process. It will take some time.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.


  • Putin Needs to Bury This Relic of Stalin

    Putin Needs to Bury This Relic of Stalin(Bloomberg Opinion) -- As Europe marks 80 years of the Molotov-Ribbentrop pact, which carved up eastern Europe between the Soviet Union and Nazi Germany, Russia is trying to defend the agreement again. There is no political benefit to doing this. President Vladimir Putin needs to abandon his Stalinist inheritance of a foreign policy based solely on national interest.If Moscow needed any reminder that many in eastern Europe still hold the treaty against it and still consider it a threat, plenty came on the anniversary. The governments of Estonia, Latvia, Lithuania, Poland and Romania – the countries directly affected by the pact’s secret protocol – issued a joint statement saying the document “sparked World War II and doomed half of Europe to decades of misery.”More than a million people gathered to celebrate the Baltic Chain, the 419-mile (675 kilometer) long line of people who protested Soviet rule on Aug. 23, 1989. The demonstrators didn’t pick that day at random – they, too, were making the point that the subjugation of their countries by the Soviet Union began with the Molotov-Ribbentrop pact.Russia is fighting back. In Moscow, the original of the treaty is now exhibited alongside documents relating to both the 1938 Munich Agreement, where British and French leaders sanctioned the Nazi annexation of the Sudetenland, and Poland’s subsequent invasion of part of Czechoslovakia.At the opening of the exhibition earlier this week, Russian Foreign Minister Sergei Lavrov spoke of Britain and France’s treachery: By cosying up to Hitler, they forced the Soviet Union to sign a deal with the Nazis to ensure its own security, he said. Had the Western Europeans listened to the Soviets and set up a collective security system, the bloodshed of World War II could have been averted. Lavrov was making a clear analogy with Russia’s efforts to build an alternative security architecture in today’s Europe – an idea the Kremlin hasn’t abandoned despite the rest of Europe’s lack of interest.For its part, the Russian mission to the Organization for Security and Cooperation in Europe, the group the Kremlin sees as the foundation for its alternative security architecture, tweeted on Aug. 20 that lots of other countries had signed pacts with the Nazis before the Soviet Union did.Kremlin officials can say all this until they go hoarse, but that can’t erase the undeniable fact that the Soviet Union’s security didn’t require it to grab the Baltics and parts of Poland and Romania. Poland, which tried to benefit from the Nazis’ aggression, has admitted it was in the wrong when it invaded part of Czechoslovakia. President Lech Kaczynski apologized for it in 2009.In 1989, the Soviet Union, too, officially condemned the Molotov-Ribbentrop pact – but subsequent Russian communications about it, including an entire article signed by Putin himself in the Polish daily Gazeta Wyborcza, have come with the caveat that lots of others were at it, too.These excuses are a major reason other European countries don’t trust Russia: To them, Putin and his subordinates are saying that Moscow would do something like this all over again if its interests dictated it, small countries be damned.Concern this might happen was what drove eastern Europeans into the North Atlantic Treaty Organization. The reality of the annexation of Crimea – another opportunistic move dictated ostensibly by Russian security considerations – is pushing Ukraine in the same direction.If Putin’s goal was to inspire trust and start a meaningful conversation about collective European security in an age of increasing global competition, an unconditionally apologetic stance would work much better. Refraining from invading neighboring countries would be an even more meaningful step.I suspect, however, that Putin doesn’t really believe in such goals, because, like Stalin, he thinks a deal with the devil, based on common interest rather than trust, is the best.My epiphany about the Molotov-Ribbentrop pact came when I read the long-lost diary of Alfred Rosenberg, Nazi ideologue and Hitler’s one-time minister for the Occupied Eastern Territories. Rosenberg was skeptical about the deal and recoiled in horror when fellow Nazi Richard Darre told him of Joachim von Ribbentrop’s comment that he had “felt as though among old party comrades” when meeting the Soviet leadership.Incredulously, Rosenberg recounted that during Ribbentrop’s visit, Stalin raised his glass not just to Hitler but also to Heinrich Himmler, the Nazi security chief, calling him “the guarantor of order in Germany.”“Himmler has eradicated communism, i.e. those who believed in Stalin, and this one – without any need for it – raises a toast to the exterminator of his faithful,” Rosenberg noted.For Stalin, any kind of ideology took a back seat to expediency. He was a man of interests, not values. In that sense, Putin, an avowed anti-communist who has condemned Stalin on many occasions, is following the dictator’s realpolitik. His adherence to his current Orthodox Christian brand of social conservatism is as flimsy as Stalin’s link to leftist idealism was. If Putin can do a deal that will promote what he sees as Russia’s interests, he will do it with anyone. He will wear any hat required of him while doing so, and raise any toast. He is oblivious to Molotov-Ribbentrop’s biggest lesson of all: That such agreements don’t hold.That’s why eastern Europeans, and especially Ukrainians, are so worried about the possibility of a grand bargain between Putin and a U.S. president, most recently Donald Trump. The consequences for them could be comparable to those of the Molotov-Ribbentrop pact.What’s needed from Russia isn’t an apology for carving up Europe with Hitler, but a different foreign policy is – one in which principles trump interests. Only such a change can bring closer the idealistic vision of a Europe that stretches from Lisbon to Vladivostok, a goal to which both Russian and European leaders still like to refer. And that shift shouldn’t come at a moment of weakness, as it did in the waning years of the Soviet Union. Restoring trust should be a conscious process. It will take some time.To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.netTo contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.


  • The Latest: Israeli teen dies of wounds in West Bank attack

    The Latest: Israeli teen dies of wounds in West Bank attackIsrael's national rescue agency says a 17-year-old Israeli girl died of wounds from an explosion in the West Bank earlier in the day that the Israeli military has described as a Palestinian attack. Initially, three Israelis were said to have been wounded in the blast on Friday near the Dolev settlement, northwest of Jerusalem. The Israeli rescue agency, known as Magen David Adom, says the girl's 21-year-old brother was in a serious condition.


  • G7 Offers a Chance for a Truce in the Tariff Wars

    G7 Offers a Chance for a Truce in the Tariff WarsThe Group of Seven (G7) summit will convene this weekend in Biarritz. President Donald Trump’s trade policies will undoubtedly take center stage again, as they did at last year’s meeting.The topic is increasingly important to those in attendance—the leaders of the world’s seven most economically advanced countries. U.S. tariffs on China are already being felt by American companies. They are paying more for imported basic and intermediate inputs—materials needed for American workers to produce finished goods and services. And while the tariffs haven’t hit Americans too hard in the pocketbook yet, the longer and harder they are applied, the greater the likelihood that U.S. consumers will start feeling the pinch.The uncertainty surrounding trade is largely the reason for significant volatility in global financial markets in recent weeks. There are also warning signs of a potential economic slowdown in Europe—a slowdown that could be aggravated by possible U.S. auto tariffs.Now, one thing the G7 countries should be able to agree upon this weekend is the need for a united front against the predatory behavior and imperialistic ambitions of Xi Jinping’s China. All G7 members perceive the threat to the global trading system posed by China, which has gamed that system’s rules ever since being admitted to the World Trade Organization twenty years ago. In fact, one of the main reasons Trump has been unable to strike a deal with the Chinese is the difficulty of coming up with an enforcement mechanism that would assure Beijing refrains from committing what White House Trade Advisor Peter Navarro calls China’s “seven deadly sins.” Those sins include theft of intellectual property, forced transfers of technology, cyberwarfare against computer systems, and heavily subsidizing China’s state-owned enterprises. The administration is loath to scale back its tariffs without enforceable assurances that Beijing will abandon these predatory practices.Apart from the China problem, G7 member countries should be able to agree to mitigate real or threatened trade policies that could have a direct negative impact on their own economies. Trump’s call for an end to U.S. and EU tariffs, nontariff barriers, and subsidies—first issued at last year’s G7 Summit in Canada—would be a great place to start.To achieve that very difficult goal, the toughest part would be getting rid of hugely wasteful agricultural subsidies on both sides of the Atlantic. Another irritant that should be reversed is France’s recently imposed “digital services tax,” which is obviously aimed at American technology companies such as Google and Facebook.The United States and the EU could make progress on all of these goals in Biarritz. And progress could be made on bilateral issues, as well.For example, Trump could promise the Canadians that he does not intend to withdraw the United States from the North American Free Trade Agreement before Congress approves its replacement, the U.S.-Mexico-Canada Agreement.And the president should reassure British prime minister Boris Johnson of America’s commitment to a U.S.-UK free trade pact post-Brexit, and to urge European leaders to make the UK’s transition out of the EU as painless as possible.The G7 summit affords Trump an opportunity to seize the moral high ground on trade, urging other G7 leaders to join him in reaffirming the values of market-based Western democracy and economic freedom.And that high ground should not be surrounded by a protectionist moat.James Roberts is a research fellow for economic freedom and growth at The Heritage Foundation.Image: Reuters


  • Britain unlikely to change Iran stance at G7 despite Trump meeting

    Britain unlikely to change Iran stance at G7 despite Trump meetingBritain is unlikely to alter its approach on Iran despite Prime Minister Boris Johnson meeting U.S. President Donald Trump, as the 2015 deal remains the best way to ensure Tehran does not get nuclear weapons, a British diplomatic source said on Friday. "We are strong supporters of the JCPOA (Iran deal).


  • Putin vows 'symmetric response' to US missile test

    Putin vows 'symmetric response' to US missile testRussian President Vladimir Putin said on Friday he has ordered the military to prepare a "symmetric response" after Washington tested a formerly banned missile. Putin said he had ordered an analysis of "the level of threat for our country created by the actions of the US and to take comprehensive measures to prepare a symmetric response". The US Department of Defense said Monday it had tested a type of ground-launched missile that was banned under the 1987 INF agreement, which limited the use of nuclear and conventional medium-range weapons.


  • Sweden 'receives indications' Iran is ready to release British tanker

    Sweden 'receives indications' Iran is ready to release British tankerSweden has reportedly received “very strong indications” from Iran that it will release the British-flagged Stena Impero oil tanker sometime in the coming days.  Sweden’s foreign ministry believes that the ship, which is operated by a Swedish firm, will be set free in the near future, according to Swedish public television.  The report emerged after Javad Zarif, Iran’s foreign minister, met with his Swedish counterpart, Margot Wallstrom, in Stockholm earlier this week. The Iranian minister also met with the chief executive of Stena Bulk, the ship’s operator.  A spokeswoman for Sweden’s foreign ministry would not confirm or deny the STV report.   “We look positively at what Foreign Minister Zarif himself has said publicly about hopes for a possible quick solution for Stena Impero, but we do not disclose what is said in the meetings,” the spokeswoman said.  The Stena Impero was seized by Iran’s Revolutionary Guard on July 19 in apparent retaliation for Royal Marines seizing the Iranian Grace 1 tanker off the coast of Gibraltar on July 4. Javad Zarif, Iran's foreign minister, met with his Swedish counterpart Credit: REUTERS/Evgenia Novozhenina/File Photo The Grace 1, renamed the Adrian Darya 1, was released from Gibraltar over the weekend. British officials hoped its release would pave the way for the release of the Stena Impero.  Iran has so far given no indication when, or if, it plans to release the British-flagged tanker.  Iranian officials initially indicated that the Stena Impero had been seized in response to the Grace 1’s seizure but now claims that the ship violated maritime rules in the Persian Gulf.  Tehran has said that a court in the southern port of Bandar Abbas will decide the ship’s fate. British officials believe Tehran is hiding behind legalism when the ship’s seizure and release are in reality in the hands of political decision makers.   The US has continued to pursue the Grace 1 after it left Gibraltar and has warned European states not to give the ship safe harbour as it sails east across the Mediterranean.  That warning has now been extended to any European shipping firms that might interact with the tanker. “The shipping sector is on notice that we will aggressively enforce US sanctions,” a US official told Reuters.


  • G-7 Leaders Squabble as World Economy Teeters

    G-7 Leaders Squabble as World Economy Teeters(Bloomberg) -- Want to receive this post in your inbox every day? Sign up for the Balance of Power newsletter, and follow Bloomberg Politics on Twitter and Facebook for more.Historians may look back at this weekend’s gathering of world leaders in the French port city of Biarritz as a squandered opportunity.The global economy is weakening, trade wars are escalating and major economies like Germany are sliding toward recession. But Group of Seven allies are so divided there’s little hope for the type of coordinated response that sprang from similar meetings a decade ago.Amid the growing financial crisis in 2008, then-President George W. Bush called an emergency G-20 meeting that yielded a roadmap to combat the worldwide slowdown. Along with subsequent multilateral actions, it’s widely seen as having helped avoid a deeper downturn.Now disagreements over everything from Iran’s nuclear program to Brexit to the future of the global trading system likely will stand in the way of unified solutions.U.S. President Donald Trump has dismissed accusations his tariff assault on China and threats to impose duties on Europe’s auto industry are contributing to any slowdown.As Shawn Donnan, Raymond Colitt and Toru Fujioka write, the brightest economic hope for this round may be just that things don’t get any worse.And while the world’s political leaders squabble, it may be left to central bankers conducting their own retreat some 5,000 miles away in Jackson Hole, Wyoming, to save the day.Global HeadlinesAmazon brouhaha | French President Emmanuel Macron’s call on the G-7 to tackle the fires raging in the Amazon jungle has set up the summit's first flash point. It’s sure to irritate Trump, who pulled out of the Paris Climate Accord, and has already riled Brazilian President Jair Bolsonaro, who said discussing the issue without his nation’s involvement reflects a “colonial mentality.”Seeds of discontent | Top Trump officials met yesterday to consider options for quelling a backlash in politically important farm states, Jennifer A. Dlouhy and Mario Parker report. The topic of discussion? Recent administration moves that would slow biofuel use. They’re trying to blunt anger in Iowa and other states critical to the president’s re-election in 2020.Trump’s former chief strategist, Steve Bannon, has produced a new film called “Claws of the Red Dragon” attacking Huawei Technologies, an attempt to steel the president’s resolve to confront China. Click here for more on why — even if Trump faces another Republican primary challenger — it’s unlikely to lead to much. Online army | The technology underpinning Hong Kong’s leaderless protests is a major reason there’s no end in sight: Online discussion groups are the movement’s backbone, and authorities who've tried to subdue it can’t simply lock up the masterminds and send everyone home. And no single leader has emerged with enough clout to call demonstrators off — or negotiate with the government. One of the biggest tests of unity will come this weekend, when netizens are again planning to disrupt airport operations.Tiring of war | From his heavily fortified compound west of Libya’s capital, Ghassan Salame has a ringside seat as two forces battle for control of the country. The United Nation’s special envoy, his mission is to end fighting between the internationally-recognized government and its chief rival, commander Khalifa Haftar, that’s been fueled by the ambitions of regional powers. His argument, writes Samer Khalil Al-Atrush? No one can win this deadlocked contest.Pyongyang criticism | North Korea’s top diplomat has blamed Michael Pompeo for stalled nuclear talks with the U.S., saying the secretary of state “casts a dark shadow” over the negotiations. Foreign Minister Ri Yong Ho said Pompeo was more focused on his own political aspirations than getting a result. It’s the latest statement from North Korea seeking a more favorable negotiating framework before Kim Jong Un restarts talks.What to WatchItalian President Sergio Mattarella gave the center-left Democrats until Tuesday to form a coalition with their long-time rivals, the anti-establishment Five Star Movement, following the government’s collapse. Trump’s lawyers will be in a New York court today trying to block Democrats’ access to financial records from Deutsche Bank and Capital One — and House Speaker Nancy Pelosi has much at stake over the outcome.And finally ... Prime Minister Boris Johnson believes a U.K. economy free of the EU will see depressed British port cities roar back into life as tax-exempt zones. He’d be well advised to have a look at the concrete bunker on the edge of Luxembourg’s airport. As Hugo Miller and Stephanie Bodoni report, the reality can be a nightmare as such duty-free facilities face growing criticism for being conduits of money laundering and tax evasion. \--With assistance from Karen Leigh.To contact the author of this story: Kathleen Hunter in London at khunter9@bloomberg.netTo contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Karl MaierFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


  • 80 Years Ago This Week, Hitler and Stalin Cut the Deal That Triggered WWII

    80 Years Ago This Week, Hitler and Stalin Cut the Deal That Triggered WWIIPhoto Illustration by The Daily Beast/GettyBy the spring of 1939 Adolf Hitler’s Third Reich and Joseph Stalin’s USSR had been “pouring buckets of shit on each other’s heads” for decades, as Stalin later said.During the 1920s and 1930s they vied for power in Europe, blaming each other for all economic and social ills, and battling through proxies in the Spanish Civil War.  Their diametrically opposed far-left and far-right philosophies and economic strategies culminated in the German-led Anti-Comintern Pact of 1936-37 creating an alliance between the Third Reich, Imperial Japan and eventually Benito Mussolini’s Fascist Italy against the spread of Communism, and more specifically the threat of a Soviet invasion.D-Day Did Not Turn the Tide in WWII. That Happened in 1941.Early on, Hitler had feared that the USSR and the Western democracies would make an anti-Nazi alliance to curtail German expansion.  He gave them three chances to do so, and they flubbed them all. In 1936 when Hitler “remilitarized” the Rhineland, an extant Russia-France pact could have been called into play and both countries could have invaded Germany. France did not insist on doing so, and its similar reluctance to pincer the Third Reich allowed Hitler’s Anschluss with Austria in early 1938 and the Nazi occupation of the Sudetenland part of Czechoslovakia that followed the Munich Accord in October 1938.  Stalin was irate at being excluded from the Munich talks.  His absence allowed Britain’s Neville Chamberlain and France’s Edouard Daladier, urged on by Mussolini, to hand the Sudetenland to Hitler without Russian objections. Stalin blamed Soviet Foreign Secretary Maxim Litvinov, a Jew born Meir Henoch Wallach of Bialystok, for being boxed out of Munich. Until then, Litvinov had done very well by the USSR and by Stalin. An old-line Communist who prior to the Revolution had spent time in jail and in exile in the party’s service, in 1921 he had been appointed by Vladimir Lenin as deputy commissar for foreign affairs, and after Lenin died, in 1930 Stalin had elevated Litvinov to the top position. He then succeeded in getting formal recognition of the USSR by the United States of America and acceptance into the League of Nations; he also birthed the non-aggression alliances with Latvia, Estonia, Lithuania, Poland, and Turkey that provided the USSR with a border of buffer states against a German invasion.But as the Nazis continued to expand the Third Reich, Stalin became convinced that the buffer states were not enough protection for the USSR at just the moment when it could not sustain a war because his purge of the Soviet military had left it too weak for large-scale combat. Hitler, for his part, had been vocally anti-Soviet until he began listening to former Champagne salesman Joachim von Ribbentrop.  Married to a wealthy woman and known for lavish spending, pretensions, and incompetence, von Ribbentrop joined the Nazi Party in 1932.  He steadily gained traction in the foreign ministry by loudly opposing the foreign minister, Konstantin von Neurath, with the aid of the Schutzstaffel, better known by the initials SS—Ribbentrop liked to wear his SS general’s uniform for diplomatic occasions, even as ambassador to Great Britain.  Hitler had steadily become disenchanted with von Neurath and a foreign ministry that slow-walked every bold stroke he attempted. So after shaking up the German military, in early 1938 Hitler upended the foreign ministry and appointed von Ribbentrop as top dog.  The salesman had already begun selling Hitler hard on the attractiveness of a pact with the USSR: in case of war it could prevent the Third Reich from having to fight on two fronts, and could assure continued access to raw materials—grains, soybeans, oil, and phosphates—in the likely event of a British and French naval blockade of Germany.Hitler’s hatred for Jews was well-known, and for some time his minions had been complaining to Stalin’s about their chief negotiator, the Jew whom they referred to as “Litvinov-Finkelstein,” implying that great progress could be made between the two countries if he was removed. Stalin sacked Litvinov on May 3.  He was arrested by the NKVD, his phones cut, his office locked, his aides interrogated. Too prominent in the West to be summarily executed, he was dispatched to Washington, D.C., as ambassador, and Stalin replaced him as foreign secretary with his most loyal protégé, Vyacheslav Molotov.  As with the name ‘Litvinov,’ ‘Molotov’ was a Revolutionary moniker.  In Russian it meant “the hammer,” and he functioned as the hammer to Stalin’s sickle. When informed that his Party colleagues called him Comrade Stone-ass for his ability to sit through interminable meetings, Molotov corrected them by saying that Lenin himself had dubbed him Comrade Iron-ass.The switch of Molotov for Litvinov was an unmistakable signal that collective security via the USSR’s alliances with buffer states and Western democracies was dead.  And Hitler had already sent another unmistakable signal: that his next target was the German-speaking area of Poland known as the Danzig Corridor.  Did the Western democracies miss these signals and the potential for a Hitler-Stalin alliance?  No, but fear of confrontation, based on the terrible experience of the Great War, and the lack of bloodshed so far in Hitler’s take-overs had lulled them into complacency.But the dictators were ready to act. On May 17, a Russian attaché in Berlin told his German counterpart that there were no foreign policy conflicts between the two countries. As von Ribbentrop would shortly put it in a missive to Moscow, “There is no question between the Baltic and the Black Sea which cannot be settled to the complete satisfaction of both [Soviet and German] parties.”London and Paris did not react as quickly. As though there were no urgency, their first delegation did not arrive in Moscow until June 15,  and it was half-hearted: military officials only authorized to make tentative commitments, subject to ratification at home. They conveyed that Great Britain and France would indeed give the USSR a free hand in the Baltic States and Finland, and the right to enter Poland and Rumania—but only if Germany invaded Poland or Rumania.  Hitler could offer the USSR the same territorial conquests, and without having to fight Nazi Germany to obtain them.  Those territory grabs were the essence of the “secret protocol” of the eventual Nazi-Soviet pact, a few paragraphs whose existence would not be acknowledged until the Nuremberg Trials of 1945, that Molotov would continue to deny until his dying day, and that Vladimir Putin shrugged off as fake news.  It gave the Soviets carte blanche in the Baltic states and the eastern half of Poland.  After three months of incremental progress produced a draft document that both sides liked, on Aug. 21 a Stalin telegram arrived in Berlin authorizing von Ribbentrop to fly to Moscow on Aug. 23. As von Ribbentrop’s motorcade was making its way from the airport to the Kremlin, he was astonished to pass through streets lined with cheering Russians waving swastika flags and other Nazi banners.  The flags and banners had been confiscated from a nearby film studio that had been making an anti-Nazi  propaganda film. The film was never completed. Negotiations went so well that von Ribbentrop was stunned.  He had to phone for instructions regarding a hitch over who would gobble up what portions of Latvia.  Hitler consulted a map and phoned back with a concession to Stalin.  Once von Ribbentrop and Molotov had signed the pact, the German phoned again to Obersalzberg, Hitler’s mountain retreat, where he was readying the Poland invasion plans with the senior military staff.  It was three in the morning. Architect Albert Speer was in the room as Hitler took the call: “Hitler stared into space for a moment, flushed deeply, then banged on the table so hard that the glasses rattled, and exclaimed in a voice breaking with excitement, ‘I have them!  I have them!’”   In the next moments, he green-lit the invasion of Poland for September 1, having earlier postponed it so that the pact with the USSR could be signed.  And he assured his generals that once they had occupied Poland and taken over France and the Low Countries, the Nazi juggernaut would overrun the USSR.Stalin, in the Kremlin, was ecstatic, breaking out the Champagne and caviar, and toasting Hitler.  Stalin had reason to gloat, for with a single stroke he had reassembled almost the entire Romanov Empire at the start of the Great War. Within months, 50 million more people in Estonia, Latvia, Lithuania, Poland, and parts of Finland would be under his control.On Aug. 24, the public part of the non-aggression pact was publicized around the world.  A few days later, Stalin managed not to mention the secret protocol part to a group of top aides when he told them that a war was about to begin “between two groups of capitalist countries for the redivision of the world, for the domination of the world!  We see nothing wrong in their having a good hard fight and weakening each other. It would be fine if, at the hands of Germany, the position of the richest capitalist countries (especially England) were shaken.”Even before von Ribbentrop returned to Berlin, an aide, Hans von Herwarth, quite upset over the secret protocol, gave a copy to his friend Chip Bohlen, then serving in the American embassy in Moscow. Bohlen reported this quickly to President Franklin D. Roosevelt, but the U.S. did not share the information with Great Britain or France prior to Sept. 1, 1939. On that date, Hitler’s forces invaded Poland, their supreme commander secure in the knowledge that Soviet forces would not oppose them.  France and Britain, although already mobilized, were nonetheless underprepared for the swiftness and ferocity of the German blitzkrieg. Other than declaring war they made rather minimal responses to the invasion of Poland, a country they had pledged to defend. Some French troops advanced east of the Maginot Line to the German border, but did not cross into Germany. British air raids did little damage. The naval blockade was begun, but did nothing to halt the advance of German troops. In mid-September, after German troops reached the Polish capital, Warsaw, Stalin gave the go-ahead for Russian troops to enter Poland. Later he said that he was worried that the Germans would simply take the remainder of Poland if Russian troops did not claim that territory. The Russian Army’s entrance prevented 200,000 to 300,000 Polish troops from escaping to the south, where they might have survived in exile and served with the forces of the democracies. When the American Press Bent the Rules to Fight HitlerWhen Britain and France learned of the Russian invasion, they pulled back the French troops from the German border to behind the Maginot Line, and ceased the air raids. By Sept. 28, 1939 Poland no longer existed. The first phase of World War II was over; the next phase would be dubbed “the phony war” because the belligerents appeared not to be engaging in active combat. That phase would end in May 1940 with Hitler’s invasion of France and the Low Countries.When von Ribbentrop had gone to Moscow, Hitler had sent along his personal photographer, Heinrich Hoffman, to record the event and to bring back a photographic record of Stalin’s earlobes—if they hung loose from his head, then he was Aryan, but if they were attached, Stalin must be a Jew.  Hoffman returned with close-ups that assured Hitler that Stalin’s earlobes were unattached—and that therefore, in Hitler’s eyes Stalin was a worthy partner, at least for the time being.  Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.