Corporate DispatchPro
Issue No.11 | September 2020
Corporate DispatchPro The Journal of CI Group
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Issue No.11 | September 2020
Corporate DispatchPro The Journal of CI Group
EDITORIAL TEAM Managing Editor - Jesmond Saliba Editor – Nathanael Muscat
CONTENTS CONTRIBUTORS Dasha Afanasieva Denise Grech George Hay Keith Zahra Lawrence Hurley Pete Sweeney Swaha Pattanaik Tonio Galea
Front Page Story
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Editorial
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Week Highlights
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Imagine Malta without the EU
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SOTEU20 23 Malta Insights
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The Formosa Strait
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CommuniqEU 39
PRODUCTION ASSISTANT Laura Grima Shirley Zammit
Navalny cloud may yield silver lining
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Angst-ridden end to 2020
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Mulan flounder previews scare
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DESIGN TEAM Matthew Borg Nicholas Azzopardi
SOURCES
Published By
ADDITIONAL SOURCES
Design Produced
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Corporate DispatchPro LAWRENCE HURLEY VIA REUTERS BREAKINGVIEWS
Front Page Story
U.S. Supreme Court’s Ginsburg, a liberal dynamo, championed women’s rights Ruth Bader Ginsburg became a heroine to the American left after overcoming entrenched sexism in the legal profession to ascend to the U.S. Supreme Court, where she championed gender equality and other liberal causes during 27 years on the bench.
Ginsburg, who died on Friday at age 87 of complications from pancreatic cancer, was a fierce advocate for women’s rights - winning major gender-discrimination cases before the Supreme Court - before being appointed to the top U.S. judicial body by Democratic President Bill Clinton in 1993. The diminutive dynamo became the court’s leading liberal voice. Rising from a working-class family in New York City’s borough of Brooklyn, Ginsburg overcame hostility toward women in the maledominated worlds of law school and the legal profession to become just the second woman ever to serve on the nine-member Supreme Court. During her final years on the court, Ginsburg became something of a pop icon for American liberals, the subject of the 2018 feature film “On the Basis of Sex,” the 2018 Academy Award-nominated documentary “RBG” and sketches on the popular TV show “Saturday Night Live” even inspiring an action figure. Her small stature - she stood 5-foot, 1-inch tall (155 cm) - and frailty in later years belied an outsize persona and clout. Fans called her “The Notorious R.B.G.,” inspired by the late American rapper The Notorious B.I.G. 3
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“I ask no favor for my sex. All I ask of our brethren is that they take their feet off our necks,� Ginsburg said in the documentary, summing up her lifelong work toward gender equality. Ginsburg was a reliable vote in favor of liberal causes on the court on other issues as well including defending abortion rights, expanding gay rights, preserving the Obamacare healthcare law, and advancing the rights of racial minorities the poor and disenfranchised. Her death gives Republican President Donald Trump the opportunity to make his third appointment to the court and expand its conservative majority to 6-3.
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Ginsburg had experienced a series of health issues. In July she disclosed she had a recurrence of cancer after bouts with pancreatic cancer in 2019 and 2009. She also survived bouts with lung cancer in 2018 and colon cancer in 1999. Even amid these health scares, she remained vigorous,
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Corporate DispatchPro seen in the 2018 documentary working out and lifting weights with a personal trainer while donning a blue sweatshirt emblazoned with the words “SUPER DIVA.” President Jimmy Carter made Ginsburg a federal appellate judge in 1980 and Clinton elevated her to the Supreme Court 13 years later. She joined Justice Sandra Day O’Connor, who became the first woman justice in 1981, on the bench. During her tenure, two more women were named to the high court: Sonia Sotomayor and Elena Kagan. When asked how many women there should be on the court, Ginsburg, with an impish smile, always gave the same answer: “Nine.” Before joining the judiciary, Ginsburg was an intellectually fierce lawyer in New York and New Jersey who endured the death of her mother shortly before her high school graduation and went on to be elected to the law reviews at both Harvard and Columbia Law Schools. In the 1970s, she won five of six gender discrimination cases she argued before the Supreme Court, in fields as varied as military and Social Security benefits, property tax and rules governing jury duty.
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Corporate DispatchPro Editorial
Europe comes into view When the new EU Commission was unveiled in late 2019, a media storm erupted over the appointment of a commissioner for the promotion of the European Way of Life. Critics across the bloc were up in arms, denouncing a role that smacked of exclusivity, racism, and misplaced self-importance. Others went even further and claimed that Ursula von der Leyen’s decision to forge ahead betrayed enduring imperialist undertones among the leaders of European nations. The question about what makes a way of life ‘European’ and whether there ought to be an EU Commissioner promoting it has all the right components to generate a heated – probably inconclusive – debate. And that opportunity has not been wasted. But controversies about notions of europeanisms miss the wood for the trees. The more profound issue here is not which traits, habits, and conditions require preservation, but which values, attitudes, and systems the EU wants to champion in an increasingly fragmentary-yet-interlinked global community. These very qualities were to rapidly rise to the surface a few months after the inauguration of the new Commission, in the world crash caused by the coronavirus pandemic. The EU’s commitment to interdependence presented a stark contrast with regions and nations that espoused isolationism; the European Commission was a firm voice for global equality in the distribution of treatments and vaccines, while member states showed a natural preference for working with worldwide bodies rather than mounting unilateral propaganda campaigns. The European Commission, European Parliament, and Council of Ministers demonstrated a refreshing determination to finally click into coordinated action and deliver a sound, visionary plan that turns the crisis into a generational opportunity for the European family.
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YOUR PURPOSE IS YOUR BIGGEST ASSET
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The swift, though not uncomplicated, process of the Multi-annual Financial Framework, channelling the ambitions of the EU Green Deal, was a truly remarkable accomplishment that promises to crystallise into the starting point of a new era of European optimism. Power in the international community is often wielded through economic might and military capability, but the European Union shows that global leadership is set by moral standards and common purpose. The EU’s long-standing goal of achieving net zero emissions by 2050, for example, is now shared by partners including Japan and the UK. Meanwhile, the proposal has also become a main plank of Joe Biden’s platform heading into the US presidential elections. At 70, the union of European citizens has outgrown the status of experiment and is now a programme, a collective project to build a future that accommodates human diversity in its wholeness. European influence on the global stage means the promotion of the many ways and the many lives that find comfort in the strength of unity. JESMOND SALIBA 9
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RUSSIA’S NEW COVID CASES ABOVE 6,000 FOR SECOND DAY IN A ROW Russia reported 6,148 new coronavirus cases on Sunday, the second straight day when the daily number of cases exceeded 6,000, taking the national tally of infections to 1,103,399.
VIKING LINE’S FERRY AMORELLA RUNS AGROUND IN FINLAND A handout photo made available by the Finnish Coast Guard shows Vinking Line’s ferry Amorella after running aground in the Aland archipelago in Aland, Finland, 20 Septemper 2020 (issued 21 September 2020). Nearly 300 people aboard were evacuated.
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Corporate DispatchPro BRITISH HEALTH MINISTER WARNS COUNTRY IS AT COVID-19 TIPPING POINT Britain is at a tipping point on coronavirus, health minister Matt Hancock said on Sunday, warning that unless people follow the government rules, the virus will spread, and further restrictions will be needed.
AC MILAN, FLORIANA, RANGERS AND TOTTENHAM REACH THIRD QUALIFYING ROUND OF EUROPA LEAGUE Floriana rewrote the clubs’ history books on Thursdsay night after they edged past Linfield at Windsor Park to reach the third qualifying round of the Europa League. Mathias Garcia was Floriana’s hero as the Argentine midfielder fired home the winner after only ten minutes of play to hand his team a place in the next round where they will face Estonian side Flora Tallinn. Hibernians’ run in the Europa League ended in the second qualifying round after they succumbed to a 1-0 defeat at the hands of Fehervar.
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BIG WEDDING IN SICILY FUELS CORONAVIRUS SPREAD The Sicilian town of Corleone has ordered schools closed and a limited lockdown after a spate of coronavirus infections were tied to a big wedding there last week. The city administration told all 250 guests at the Sept. 12 wedding and anyone who lives with them to self-isolate and inform their doctors and city health authorities while awaiting virus tests.
TWO DEAD AS DESTRUCTIVE STORM HITS CENTRAL GREECE Two people have died as a hurricanelike storm pounded central Greece, flooding streets and homes, the authorities said.Cyclone Ianos, known as a medicane (Mediterranean hurricane), uprooted trees and caused power cuts on the Ionian islands and the western Peloponnese. It swept through central Greece, hitting areas in and around the cities of Karditsa and Farsala.
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Corporate DispatchPro LANDLORDS IN THE UK SLASH RENTS BY UP TO 20% AS THE NUMBER O F INTERNATIONAL STUDENTS PLUMMETS In the UK private rents in some parts of London have tumbled by up to 20% as tenants quit the capital, the number of international students plummets and companies put relocation plans on hold. Data released by estate agent Hamptons this month showed that demand from people looking to rent in city locations across Britain is down 23%.
AMAL CLOONEY RESIGNS AS UK’S SPECIAL ENVOY IN PROTEST TO GOVERNMENT’S BREXIT “LAWBREAKING” PLAN Amal Clooney, the famous human rights lawyer, resigned as the UK’s special envoy on media freedom on Friday in protest at the Government’s plan to break international law with the Internal Market Bill.
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GERMANY DECLARES REGIONS IN 11 EUROPEAN COUNTRIES HIGH CORONAVIRUS RISK Germany added regions in 11 European countries to the list of destinations it classifies as coronavirus risk zones, dealing a further blow to hopes for a revival of tourism as many countries brace for a possible second wave of the pandemic. Regions newly listed by the Robert Koch Institute health agency included major tourist destinations such as the French regions of Centre-Val de Loire, Brittany and Normandy, as well as the coastal region Lika-Senj in Croatia and the upland Primorsko-notranjska region in Slovenia.
CHINESE WARPLANES ENTER TAIWAN AIRSPACE According to Taiwan’s Defence Ministry, 19 Chinese warplanes crossed the central line in Taiwan Strait on the morning of 19 September 2020. Taiwan reportedly deployed warplanes to chase them off. This is the second day that Chinese jets cross the central line in Taiwan Strait to enter Taiwan’s ADIZ, after 18 Chinese jets entered Taiwan air space on 18 September 2020.
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Corporate DispatchPro RUSSIAN WARSHIPS ENTER SWEDISH TERRITORIAL WATERS Sweden has protested to Russia after two warships entered its territorial waters without permission, a defence department spokesman said on Wednesday, as Sweden agreed with two neighbouring countries to deepen military cooperation. The spokesman said Sweden had called in Russian diplomatic representatives to protest the breach on Sept. 14 by “two Russian corvettes which entered territorial waters near Gothenburg”. The Swedish military has also reported that a Danish military vessel entered Sweden’s territorial waters without permission on Sept. 16.
CORONAVIRUS FOUND ON IMPORTED SQUID PACKAGING IN CHINA Authorities in China’s northeastern Jilin province have found the novel coronavirus on the packaging of imported squid, health authorities in the city of Fuyu said on Sunday, urging anyone who may have bought it to get themselves tested. One of the packages had arrived in the city via the provincial capital Changchun, Fuyu city’s health office said on its official WeChat account on Sunday.
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Corporate DispatchPro DENISE GRECH INTERVIEWS DR ELENA GRECH
Could you imagine Malta without the EU during the pandemic? EU member states were frozen when the Coronavirus pandemic first hit, European Commission Representation head Elena Grech said. The European Commission was now ensuring that the EU is better prepared in case of a second wave, she added. Dr Grech described the onset of the pandemic like throwing a big rock at sea, she explained. Fish around it first freeze, then scramble to get away. Countries were also initially stunned by the unpredictability of the health emergency, then rushed to contain the spread. The European Commission was now ensuring that the EU is better prepared in case of a second wave, she added. A Commission proposal ensured countries had to clearly communicate and coordinate any future decisions to close borders. The EU institution also raised €7.4 billion to develop a vaccine. The moves, Grech added, ensured EU action in case of a second wave was coordinated and harmonised among the 27 member states. Malta had also been given loans and grants from the European Commission. It had also worked with other countries to bring expats back via joint repatriation flights. “Could you imagine Malta without the EU during the pandemic?” ON COVID-19 Further plans on how to tackle the Covid-19 pandemic are expected to be unveiled during today’s State of the European Union address. The annual event sees the European Commission President update 17
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Corporate DispatchPro the European Parliament on the Commission’s objectives and priorities. This year, Commission President Ursula von der Leyen is expected to address climate change, youth unemployment, migration flows and the economic recovery following Covid-19. ON BREXIT The Commission Representation chief expressed her disappointment on the UK’s move to propose changes to the Brexit withdrawal agreement. Earlier this week, the UK’s House of Commons debated changing part of the its withdrawal agreement with the EU. “The UK is not playing ball,” Grech said. The EU had offered the best possible deal it could, but the UK was now reneging. All this meant no deal with the EU was the most likely outcome. How can the EU trust the UK – once a close partner – when it was showing negotiations were not worth the paper they were written on, she asked.
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Corporate DispatchPro ON MIGRATION Grech fears solidarity within the EU shines when the bloc faces a crisis. Greece had long needed solidarity from other member states to deal with an overwhelming number of asylum-seekers and refugees. Last week, fires in Greece’s Moria refugee camp left more than 12,000 refugees without shelter. Germany announced 10 member states have now made pledges to take in children left homeless after the fires. But Grech says more needs to be done. One way to tackle migration influxes is to support communities at the country of origin, she suggests. “Resettlement is not a solution- it is a last resort,” she said. The EU could make trade agreements with countries in Africa, just like it made agreements with other countries outside of Europe. This could help populations on the ground, she said. The European Commission just unveiled a new Migration Pact. European Commissioner Vice-President for Promoting the European Way of Life Margaritis Schinas said that the proposal will be based on three levels. It will firstly prioritise strong external agreements with third countries. It will also support a stronger Frontex – the EU’s border and coast guard agency. Finally, the the third level of the plan will revolve around a “system of permanent, effective solidarity”, which will seek to distribute migrants fairly and equally across the EU’s member states. Grech hopes the Commission now has firmer ground to discuss migration solidarity among member states. However, she notes, it is important to pre-empt further crises.
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Corporate DispatchPro KEITH ZAHRA
SOTEU 2020 A stronger Europe In her State of the Union address on 16 September 2020, President of the European Commission Ursula von der Leyen presented her vision for a Europe that emerges stronger from the pandemic and leads the way towards a new vitality.
With NextGenerationEU, Europe has a once in a lifetime opportunity to make change happen by design, she claimed. The President pledged the Commission’s determination to transition Europe towards digitalisation resilience, and a greener future, and will concentrate its efforts on: • Protecting lives and livelihoods in Europe, the health of its citizens and the stability of the European economy • Reinforcing the building blocks of the European Green Deal and raising its ambitions • Leading the digital transformation, particularly on data, technology and infrastructure • Improving the single market • Continuing to rally global response as the world awaits an accessible, affordable, and safe vaccine against COVID-19 • Building a stronger European Health Union with various measures to strengthen cross-border coordination • Responding more assertively to global events and deepening relations with EU’s closest neighbours and global partners • Taking a new approach to migration, remaining vigilant on the rule of law, and building a union where racism and discrimination have no place
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Von der Leyen described the pandemic as a painful and anxious period for millions, warning that authorities and the public must continue to stay vigilant as numbers rise again in some parts of Europe. However, the current situation also presents European nations with an opportunity to emerge stronger together. Touching the issue of migration, Von der Leyen said that the European Commission will come forward in the next days with a New European Pact on Migration. The Commission President said that this policy will take a human and humane approach and ensure that it is not only a European pact by name – but a common European solution by design. “It will be based on solidarity, both between Europeans and with refugees and on collective responsibility of national governments.� Transformation was a central theme in her address, insisting that with NextGenerationEU, Europe has the financial resources we need to take urgent and strategic action, from improving internet speeds to supporting industry. Most importantly, these funds will provide the opportunity to do more than simply repairing Europe economy, but rather they will help the continent shape a better way of living. In this context, the Commission President announced more ambitious climate targets, within the context of the European Green Deal which itself sets the goal for Europe to become climate neutral by 2050. The Commission is now proposing to increase its 2030 target for emissions reduction to at least 55% - up from 40% as it currently is. 25
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LABOUR COSTS UP BY 0.8 PERCENT IN Q2 Hourly labour costs grew by 0.8 percent in the second quarter this year in relation to the same period in 2019. The increase was the smallest compared with the previous four quarters. Eurostat figures show that the rise was driven mainly by non-wage components such as social contributions. Wage and salary costs registered a decrease of 0.1 percent year-on-year, the first time in the five quarters under review. In the EU, labour costs swelled by 4.1 percent, the highest quarterly rise over the entire period. The wage component registered an increase of 5.3 percent while the non-wage component grew by 0.1 percent. The highest rise in wage and salary in the EU was observed in Accommodation and Food Service activities (+13.5%), followed by Arts, entertainment, and recreation activities (+12.5%). At the same time, however, the two economic sectors also registered the highest decreases in non-wage costs, with a drop of 20.2 percent in Accommodation and Food Service activities and of 15.2 percent in Arts, entertainment, and recreation activities. LARGEST VACANCY RATE DECREASE IN THE EU Malta registered the sharpest drop in job vacancy posts among the EU27 when comparing the second quarter this year with the same period in 2019. Data by Eurostat shows that the job vacancy rate decreased by 1.6 percentage points, a decline larger than the EU average of 0.7 percentage points. The rate stood at 3.0 percent in Q2:19, falling to 1.6 percent in 2020. 27
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Only France experienced an increase in the rate over the year, up by 0.1 percentage points, while Bulgaria remained stable. Czechia, however, recorded the highest vacancy rate at 5.4 percent, followed by Belgium (3.1%) and Austria (2.6%). At the other end, the lowest rate was seen in Greece, reaching 0.3 percent while Ireland, Spain, Poland, Portugal, and Romania all registered 0.7 percent. The job vacancy rate in industry and construction in Malta stood at 1.5 percent between April and June, down from 3.7 percent the previous year. The rate in service activities fell by 2.3 percentage point over the period, from 3.6 percent in Q2:19 to 1.3 percent this year. In the EU, the rate within industry and construction was 1.4 percent (-0.1pp) and 1.7 in the services sectors (-0.8pp). INDUSTRIAL PRODUCTION CLIMBS FOR SECOND MONTH Industrial production in Malta increased by 1.5 percent in July, compared to the previous month, registering the second consecutive rise. The average increase in the EU reached 4.1 percent, with only Denmark (-4.9%), Latvia (-0.8%), and Belgium (-0.5%) experiencing decreases from June, according to Eurostat data. Portugal saw the highest growth of 11.9 percent, followed by Spain (+9.4%) and Ireland (+8.3%). Production was up across all industrial groupings, rising by 5.6 percent in capital goods and by 4.8 percent in durable consumer goods. The smallest increase was recorded in energy production (+1.3%) and nondurable consumer goods (+2.8%). Compared with July 2019, industrial production in the EU fell by 7.3 percent, registering a sharp decrease in capital goods (-10.2%), intermedia goods (-8.7%), and energy (-6.6%). Denmark experienced a 13.6 percent decline, the largest in the EU27, followed by Germany (-11.6%) and Portugal (-9.6%). On the other hand, Ireland (+15.6%), Poland (+0.9%), and Latvia (+0.1%) were the only countries to record a year-on-year increase. Malta registered the fifth smallest decline from July 2019, with industrial production falling by 2.5 percent. The decrease was also the narrowest recorded in 2020. 28
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Corporate DispatchPro INDEX OF CONSUMER PRICES HOLDS STEADY IN AUGUST The annual rate of inflation stood a t 0.7 percent for the second consecutive month in August, as measured by the Harmonised Index of Consumer Prices. Figures by the National Statistics Office show that the twelve-month moving average rate continues its decrease from 1.6 percent in January to 1.1 percent in August, the smallest increase in the 32 months under review. The highest annual inflation rates were registered in Clothing and Footwear (+3.1%) and Health (+2.4%) whereas Transport and Education recorded the lowest rates with a decrease of 1.6 percent and 7.7 percent, respectively. Restaurants and Hotels saw the highest increase in the monthly rate at 2.5 percent followed by Transport (+2.2%) and Education (+2.1%). Clothing and Footwear decreased by 7.1 percent monthon-month, the biggest drop ahead of Communication (-0.1%). The Food and Non-Alcoholic Beverage Index rose by 0.34 percentage points in August, the largest upward impact on the annual inflation rate. The Restaurants and Hotels Index increase by 0.29 percentage points while Miscellaneous Goods and services, including hairdressing services, gained 0.15 percentage points. On the other hand, Transport and Education were the main contributors of the downward rate, declining by 0.21 percentage points and 0.16 percentage points, respectively.
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AGRICULTURAL OUTPUT OUTPACES EXPENSES IN 2019 The agricultural industry registered an increase in net operating surplus of 1.1 percent in 2019, compared to the year before, reaching a total of €74.6 million. Data by the National Statistics Office shows that generated output by the industry grew by 4.3 percent amounting to €126.4 million, higher than €65.5 million in expenses of intermediate consumption (+1.1%) which cover energy and fuels, livestock feeding and crop cultivation costs, among others. Total employee compensation bill stood at €4.5 million, up 0.4 percent, whereas consumption of fixed capital fell by 0.9 percent to settle at €6.8 million. The industry benefited from a series of EU-funded programmes which disbursed a total of €26.1 million, a decrease of 12.6 percent from the previous year. Crop products recorded a year-on-year increase of 7.9 percent, reaching an output value of €49 million. The highest increase was observed in vegetable production (+15.3%) and flowers and seeds production (+13.0%). The output value of fruits and forage decreased by 14.2 percent and 1.3 percent, respectively. 30
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Corporate DispatchPro Livestock products also registered an increase from 2018, growing by 5.5 percent and reaching a total output value of €41 million – the highest in five years under review. Production grew across all categories except pork, which dipped by 0.1 percent from the year before. The highest increase was seen in the breeding of rabbit, up by 9.5 percent. There was a 1.3 percent decrease in the output value of animal products, driven mainly by a drop of 6.9 percent in egg production. The total €29.3 million value was the second-highest since 2015. Products from secondary activities also fell by 2.0 percent, owing especially to a decrease of 11.0 percent in wine, which reached a total output value of €1.6 million – the smallest in five years. Cheese, on the other hand, registered the highest output value in the same period, amounting to €5.4 million or an increase of 1.0 percent from 2018.
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Corporate DispatchPro TONIO GALEA
The Formosa Strait coming to a simmer Now that the turmoil in Hong Kong has somewhat subsided, China is turning its attention to what it considers a rebel province – Taiwan.
Since the split from mainland China at the end of the civil war in 1949. Taiwan has been a long and burning issue for Beijing. The communist leadership vowed to integrate the democratic island with the country again, but many Taiwanese insist on a separate nation. Beijing has ratcheted up pressure after the election of President Tsai in 2016, who rejects the view that Taiwan is part of “one China”. Recent reports have registered a flurry of Chinese military activity around Taiwan. Although such activity is nothing completely new, the increased intensity is ringing alarm bells in Taipei which was even forced to scramble fighters to intercept Chinese warplanes flying towards Taiwan’s airspace. Beijing and Taipei disagree sharply on the island’s status. China is adamant that there is only “one China” and that Taiwan is an inalienable part of it. Taiwan, on the other hand, tacitly observes a 1992 agreement that it will not seek independence. But China is taking no chances. In a high-profile speech in 2019, Chinese President Xi Jinping himself declared that: “We do not promise to renounce the use of force and reserve the option to use all necessary measures.” Nor is the United States’ position on the matter reassuring to Beijing. Although Washington does not officially recognize the Taiwanese government, it has sold billions of dollars’ worth of arms to Taiwan and has refused to rule out defending the island against a Chinese attack. 33
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Corporate DispatchPro However, some observers point out that American commitments do not imply that the US would come to Taiwan’s defence in the event that it is attacked. The military commitments towards Taiwan are considered highly ambiguous and stipulate, among other things, that the American military capability in the West Pacific must be maintained to prevent intimidation and coercion against the island. Taiwan ranks among the largest recipients of arms globally, primarily from the United States, but the military gap with China is widening considerably in Beijing’s favour. And with a population of under 24 million, Taiwan is dwarfed by China. Moreover, just 15 countries around the world recognize Taiwan as an independent state and it is frozen out of international bodies like the UN and the World Health Organization. As the US election approaches, tensions between Beijing and Taipei could potentially develop into another polarising factor. Beyond the Whitehouse presidency though, unresolved questions about the China-Taiwan situation pose far graver implications for the region and the international community.
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Corporate DispatchPro KEITH ZAHRA
ENVIRONMENT
Upgrade of Single European Sky regulations on the cards The European Commission is proposing an upgrade of the Single European Sky regulatory framework which comes on the heels of the European Green Deal. The objective is to modernise the management of European airspace and to establish more sustainable and efficient flightpaths. This can reduce up to 10% of air transport emissions. The proposal comes as the sharp drop in air traffic caused by the coronavirus pandemic calls for greater resilience of our air traffic management, by making it easier to adapt traffic capacities to demand. To secure safe and cost-effective air traffic management services, the Commission has put forward a number of proposals, targeted to: • strengthen the European network and its management to avoid congestion and suboptimal flight routes; • promote a European market for data services needed for a better air traffic management; • streamline the economic regulation of air traffic services provided on behalf of Member States to stimulate greater sustainability and resilience; • boosting better coordination for the definition, development and deployment of innovative solutions. The European Green Deal, but also new technological developments such as wider use of drones, have put digitalisation and decarbonisation of transport at the very heart of EU aviation policy. However, curbing emissions remains a major challenge for aviation. The Single European Sky therefore paves the way for a European airspace that is used optimally and embraces modern technologies. It ensures collaborative network management that allows airspace users to fly environmentallyoptimal routes. And it will allow digital services which do not necessarily require the presence of local infrastructure.
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Corporate DispatchPro KEITH ZAHRA
HEALTH AND SAFETY
Better protection against cancer-causing chemicals Each year, about 120,000 work-related cancer cases occur as a result of exposure to carcinogens at work in the EU, leading to approximately 80,000 fatalities annually. To improve workers’ protection against cancer, the Commission has proposed today to further limit their exposure to cancer-causing chemicals. This fourth revision of the Carcinogens and Mutagens Directive sets new or revised limit values for three important substances: acrylonitrile, nickel compounds and benzene. Estimates show that more than 1.1 million workers in a wide range of sectors will benefit from improved protection thanks to the new rules. The new proposal is the first initiative of the Commission’s commitment to fight cancer under the upcoming Europe’s Beating Cancer Plan. Nicolas Schmit, Commissioner for Jobs and Social Rights, said: “A workplace should be a safe place and yet cancer is the cause of half of the deaths linked to work.” He said that the revisions being proposed to the Carcinogens and Mutagens Directive show that the EU is determined to act and will not compromise on workers’ health. “In the backdrop of the major health crisis due to Covid-19, we will redouble our efforts to ensure that workers in Europe are protected. We will look into concrete ways on how to achieve this via the future occupational safety and health strategic framework”, he added The Carcinogens and Mutagens Directive is regularly updated in line with new scientific evidence and technical data. Three previous updates have addressed workers’ exposure to 26 chemicals. The new proposal adds new or revised occupational exposure limits for the following substances: Acrylonitrile (new limit); Nickel compounds (new limit), and Benzene (limit revised downwards).
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Corporate DispatchPro KEITH ZAHRA
MIGRATION
New migration pact launched The European Commission proposed a significant overhaul in its migration policy, with the key intention to remedy the continent’s oft-broken migration and asylum rules.
It sets out improved and faster procedures throughout the asylum and migration system and it sets in balance the principles of fair sharing of responsibility and solidarity. This is crucial for rebuilding trust between Member States and confidence in the capacity of the European Union to manage migration. At the same time, The EU will seek to promote tailor-made and mutually beneficial partnerships with third countries. These will help address shared challenges such as migrant smuggling, will help develop legal pathways and will tackle the effective implementation of readmission agreements and arrangements. While the new system is based on cooperation and flexible forms of support starting off on a voluntary basis, more stringent contributions will be required at times of pressure on individual Member States, based on a safety net. The proposals include a legal obligation on each state to host some refugees – something eastern nations including Poland and Hungary are dead against – as well as helping in other ways under “mandatory solidarity”. Each state would receive €10,000 ($11,750) per adult taken in, funded from the bloc’s budget.
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Corporate DispatchPro KEITH ZAHRA
BREXIT LINK
No thaw in EU-UK relations While another two weeks have gone by without any breakthroughs in the impasse between the United Kingdom and the European Union, the European Commission said that it will, over the next few days, start looking into legal remedies if Britain does not adjust the parts of a domestic bill which breaches the Withdrawal Agreement agreed last year.
EU Commission Vice-President Maros Sefcovic said that the EU executive was asking London to withdraw the contentious parts of the bill by the end of September. “After that we would look into the question of legal remedies,” he told a news conference. A new crisis in EU-UK talks had emerged in recent weeks after Johnson brought forward legislation which would jeopardise the Agreement. “We will continue to engage with the UK in good faith, building on progress already achieved,” he added. Similar pressure was also placed by Germany’s Europe Minister Michael Roth, who urged Britain to drop these plans as time was running out for a trade deal to be reached. “Please, dear friends in London, stop the games, time is running out, what we really need is a fair basis for further negotiations and we are ready for that,” Roth said.
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Corporate DispatchPro KEITH ZAHRA
FINANCIAL SERVICES
Covid-19 have heightened liquidity challenges in financial services sector The three European Supervisory Authorities (EBA, EIOPA and ESMA) have issued their first joint risk assessment Report of the financial sector since the outbreak of the Covid-19 pandemic. The Report highlights how the pandemic has led to further amplified profitability concerns across the board and heightened liquidity challenges in segments of the investment fund sector. It particularly points to economic and market uncertainty as a key challenge going forward. The impact of the crisis on EU banks’ asset quality is a key concern as significant uncertainty about the timing and size of a recovery persists. The ESAs see a risk of decoupling of financial market performance from the underlying economic activity, and , a prolonged lower for longer interest rate environment which is expected to weigh on the profitability and solvency of financial institutions, as well as contributing to the build-up of valuation risks. Directly following the Covid-19 outbreak in Europe, the ESAs’ actions provided for regulatory flexibility, fostered operational resilience, and highlighted the importance of consumer protection. Considering ongoing uncertainties on the recovery from the Covid-19 pandemic, regulatory and supervisory cooperation between the ESAs, the European Systemic Risk Board (ESRB) and the European Commission remains key. In particular, the ESAs highlighted the need to implement the following policy actions monitor risks and perform stress testing, foster flexibility where and when needed, support to the real economy and supervise digital transformation. 47
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Corporate DispatchPro KEITH ZAHRA
POLITICS
EU Summit postponed after Council President goes into quarantine European Council President Charles Michel was forced to call off a summit of EU leaders scheduled for mid-September and delay it until the start of October, after coming in contact with an infected security guard, his spokesman said.
Michel, who chairs EU summits, tested negative for Covid-19 on Monday, but according to Belgian regulations, he is required to go into isolation. “The president today learned that a security officer, with whom he was in close contact early last week, tested positive for COVID,” Michel’s spokesman said. “The president is tested regularly and tested negative yesterday. Respecting Belgian rules, he has gone into quarantine as of today.” A potential deal on Turkey and approval for economic sanctions on Belarus in support of pro-democracy protests were expected to be the main highlights of the agenda.
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Corporate DispatchPro DASHA AFANASIEVA AND GEORGE HAY VIA REUTERS BREAKINGVIEWS
Navalny cloud may yield green energy silver lining Angela Merkel is in an unenviable position. The German chancellor suspects that Kremlin critic Alexei Navalny was poisoned with Novichok by his own government. That makes Berlin’s landmark gas pipeline partnership with Moscow, Nord Stream 2, even more controversial. The intense awkwardness may in time be seen as useful.
In an ideal world, Merkel would take a principled stand similar to her 2015 decision to allow mass Syrian immigration into Germany. She would seal off the German end of the nearly complete 1,230-kilometre pipeline, and refuse to do business with Russian President Vladimir Putin until he had cooperated with an inquiry into Navalny, who received treatment in a German hospital. That would please environmentalists, who dislike a major new fossilfuel conduit given the European Union’s ambition to cut carbon emissions by 55% by 2030. It would also delight the United States, which recently amped up Nord Stream 2 sanctions designed to prevent ever-closer Euro-Russian relations. Given Russian gas giant Gazprom’s reliance on European markets, such a stance would give Putin something to think about. In practice, Merkel is constrained. In the first half of 2020 natural gas constituted 28% of Germany’s primary energy consumption, according to AG Energiebilanzen. Nearly all of this was imported, and over a third arrived via Russian pipelines. Worse, another fifth of primary energy came from coal, lignite and nuclear power, which is being phased out. A global Covid-assisted glut that means current gas supplies are plentiful and prices low may make Nord Stream 2 seem 51
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Corporate DispatchPro unimportant. But with other big exporters like the Netherlands reducing production as fields decline, the market will tighten. At 40%, renewable energy provided the biggest chunk of domestic power in 2019, but until batteries ease wind’s intermittency problem, countries need gas on energy security grounds. Navalny’s recovery eases the pressure on Merkel to act. But the flashpoint could be of some use. Russian gas is championed by advocates of Nord Stream 2 as a cheap bridge to a zero-carbon world. The less Germany can trust Russia, the more its politicians will give renewable energy and storage technology an even greater shove to ensure they don’t have to.
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Corporate DispatchPro SWAHA PATTANAIK VIA REUTERS BREAKINGVIEWS
Angst-ridden end to 2020 is written into options Nails bitten to the quick will soon be bitten to the knuckle. The next three months bring a U.S. presidential election, the endgame of tetchy trade talks between Britain and the European Union and more. With central bankers like Federal Reserve Chairman Jay Powell keeping bond markets on a tight leash, investors will express their angst through foreign exchange markets instead. It’s already starting to show. Two big dates could generate large market swings: the U.S. vote on Nov. 3, and the end-year deadline to replace transitional EUUK trade arrangements. Each brings its own extreme scenarios – say, President Donald Trump contesting the American election outcome, or Britain choosing an economically damaging no-deal option. Another potential source of volatility is Powell’s new policy framework for the Fed, which targets average inflation rather than the level at any given moment. Investors are still figuring out what it means for policy and inflation. Meanwhile rebounding Covid-19 infections are casting new shadows that may require yet more fiscal and monetary easing. Investors can usually express their nerves by buying and selling bonds. But they can’t do that as freely at the moment, because of the huge amount of fixed-income securities that Powell and his peers are buying to stimulate the economy. Equity markets offer another outlet, but company shares come in relatively small quantities. The more popular avenue will therefore be the vast and liquid foreign exchanges where global daily turnover is $6.6 trillion. That is reflected in the FX options market.
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The gauge to watch is the gap between implied volatility, which shows how jumpy exchange rates are expected to be in the future, and historical volatility, which reflects the scale of actual past swings. The higher the former is above the latter, the rougher the anticipated ride. For example, Brexit crunch points have previously caused the gap between implied and historical sterling volatility to widen without affecting other currencies much. Right now, however, implied-historical volatility gaps have grown across major exchange rates. While they are far from extremes seen in March when financial stress caused market mayhem, current readings are still well above a five-year average, particularly for sterling. This is not bad news for everyone: Investment banks’ trading desks tend to do well when markets gyrate. And the gap will eventually shrink – either because historical volatility will rise or because risks will dissipate and implied volatility will fall back. But the knowledge that all things pass will be slim consolation for money managers right now. 57
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Corporate DispatchPro PETE SWEENEY VIA REUTERS BREAKINGVIEWS
Mulan flounder previews Hollywood’s next red scare Mulan’s problems preview a coming red scare for Hollywood. Disney was slammed for filming the $200 million movie based on Chinese folklore in the restive Xinjiang region, where Beijing is putting Muslim ethnic minorities in camps. The movie, released this month, has been largely panned by Chinese viewers anyway. It’s a prelude to a trade-war trial for studios.
China’s fast-growing film market is the largest outside North America, worth 64.3 billion yuan ($9.5 billion) in 2019 per the China Film Association. Thanks to a domestic industry distorted by censors, imported movies have historically enjoyed around 40% of the box office take in the People’s Republic - even though Beijing only allows 34 of them to be imported each year. Tinseltown is far from printing money in China, however. U.S. studios’ take on their releases are limited to 25% of ticket revenue, and negotiations to increase the quota have stalled. A 2017 audit by PwC found that cinema sales for U.S. productions at mainland theatres were under-reported by 9% – translating into $40 million in lost revenue. Widespread merchandise counterfeiting and piracy suppresses business lines that generate more money than tickets in other markets. Although Kung Fu Panda was rapturously received in the People’s Republic, American scripts tailored for local audiences can misfire too. The “Mulan” film’s wooden plot was littered with crass misunderstandings of Chinese culture. Local houses are getting more competitive, as well. The second-highest grossing movie so far this year is Chinese war epic The Eight Hundred, earning nearly $400 million per Box Office Mojo. And Hollywood’s pandering has gotten a bit revolting; Disney thanked Xinjiang propaganda bureaus in the credits. 59
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Filmmaker Judd Apatow recently said China has “bought our silence.” There is more controversy to come, especially as U.S. studios form closer ties with their Chinese counterparts; co-productions are excluded from the quota and allow foreign studios a bigger revenue take. From Beijing’s perspective, grovelling Hollywood scripts have not noticeably helped its overseas reputation, and President Xi Jinping is pushing to lessen Western cultural influence. U.S. legislators have held hearings on Hollywood’s role in Chinese propaganda efforts. Tinseltown has barely scratched the profit surface in China, but the golden era of American movies in the country may be drawing to a close. 61
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