Frosty relations between the United States and its European allies should not be blamed on U.S. President Donald Trump — that’s according to a diplomat who represents one of the countries with whom Trump has been feuding.

“The impression is that if we have a crisis in the transatlantic relationship, it’s because of one person  —the president,” French Ambassador to the U.S. Gerard Araud said Tuesday in Washington. “It’s something that I don’t believe to be true.”

Instead, the French envoy believes the fraying ties are the result of an underlying fragility in the U.S.-European alliance and the lack of a true, existential enemy.

“We don’t have a common threat anymore to face — Russia is not USSR [the former Soviet Union],” Araud told an audience at the Carnegie Endowment for International Peace. “We need to define a common agenda.”

Tensions at G-7

The French ambassador’s comments come in the wake of last week’s G-7 Leaders Summit in Canada, during which Trump sparred with U.S. allies over trade and ultimately refused to endorse the summit’s communique.

“Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore,” Trump tweeted.

Trump’s tweets and his behavior drew a sharp response from French President Emmanuel Macron, who called Trump’s refusal to sign the G-7 communique a display of “incoherence and inconsistency.”

“International cooperation cannot be dictated by fits of anger and throwaway remarks,” Macron added.

Macron also criticized Trump ahead of the G-7 summit, telling a news conference, “Maybe it doesn’t bother the American president to be isolated, but it doesn’t bother us to be six if need be.”

Mutual concerns

Still, Araud sought Tuesday to make the differences between the U.S. and European allies like France less about a clash of personalities and more about concerns shared by people on both sides of the Atlantic, despite Trump’s “unusual way of conducting foreign policy.”

“President Trump is raising a real issue with trade,” Araud said, as an example.

“We have simply believed that free trade in and of itself was globally good. We forgot that globally means you have pluses and minuses,” he said. “Our citizens are sending the message that enough is enough.”

Despite such underlying issues, Araud said the U.S. and its European allies do have a shared interest in revitalizing their relationship, but that it will require focusing on shared goals moving forward.

“We have a real question, which is why [do we need] a strong, really, transatlantic relationship, and how? And to do what?” he said.

“It will be a mistake to enter into a sort of tweet against tweet,” he warned. “What matters at the end of the day is the substance.”

North Korea

Despite some substantive policy differences, the French diplomat said France is supporting Trump’s efforts to denuclearize and bring peace to the Korean Peninsula.

“On North Korea, we have all supported our American allies,” Araud said. “We are supporting the America demarche.”

But he refused to speculate on whether the recent summit in Singapore would lead to lasting success.

“Let’s wait and see,” he said. “Previous policies have not been very effective.”
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Another hearing was postponed on Tuesday in the Serbian trial dealing with the 1995 massacre of 8,000 Muslims from Srebrenica, further delaying the landmark proceedings that opened over a year ago.

The trial of eight former Bosnian Serb policemen charged with killing hundreds of Bosnian Muslim prisoners is seen as a test of Serbia’s resolve to help punish those responsible for Europe’s worst crime since World War II.

The proceedings have been constantly delayed and were suspended for several months last year because the indictment was filed while Serbia did not have a chief war crimes prosecutor.

Serbia’s war crimes court rescheduled Tuesday’s hearing for July after one of the eight suspects failed to show up. In another setback, judges said one witness has decided not to testify, citing threats to himself and his family.

Murat Tahirovic, from a Bosnian victims’ association, said the group could ask the Bosnian legal authorities to reclaim the trial which was initially handed over to Serbia as part of regional cooperation.

“It is dragging on and on,” Tahirovic said. “There is no point for us to come here or for the proceedings to go on the way they do.”

Serbia’s President Aleksandar Vucic, a former ultranationalist who now says he wants the country to join the European Union and make peace with its neighbors, has faced accusations of stalling in his promises to punish war criminals of the 1990s.

The trial in Belgrade focuses on the killing of hundreds of Muslims in a warehouse in Kravica, a village outside Srebrenica, as they tried to escape the Serb onslaught. They were crammed into the warehouse and killed with grenades and machine guns in an all-night rampage.

The suspects have been allowed to remain free as the trial continues.

 
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The European Central Bank will on Thursday weigh when and how to end its bond-buying stimulus program — an exit that will have far-reaching consequences across the economy, from long-suffering savers to Europe’s indebted governments.

The bank, which sets monetary policy for the 19 countries that use the euro, has been buying 30 billion euros ($35.5 billion) a month in government and corporate bonds from banks. The purchases are slated to run at least through September, and longer if necessary.

Analysts say that decisions on the exit path, which could include several intermediate steps, might come Thursday or at the July 26 meeting. Scenarios include reducing the purchases past September, and then stopping them at the end of the year.

An end to the stimulus would be part of a major shift in the global economy. The ECB would be joining the U.S. Federal Reserve in withdrawing the massive monetary stimulus deployed to combat the Great Recession and its aftermath. The Fed is expected to raise rates at its meeting Wednesday.

The ECB’s bond purchases, which started in March 2015, pump newly printed money into the economy, which in theory should help raise inflation toward the bank’s goal of just under 2 percent. Inflation was an annual 1.9 percent in May, but the bank needs to be able to say that inflation will stay in line with its target even after the stimulus is withdrawn.

Market participants pricked up their ears last week when top ECB official Peter Praet said Thursday’s meeting would be an occasion to consider when to wind down the program. Praet supervises economics at the ECB as a member of its six-member executive board and in that capacity proposes monetary policy moves for debate and decision by the 25-member governing council. That gives his words extra weight.

The impact of the ECB’s bond-buying stimulus has been felt across the economy.

It has pushed up the prices of assets like stocks, bonds and real estate but also lowered returns for savers. It has helped keep borrowing costs low for European governments as the ECB purchases have driven bond prices up and yields down. Yields and prices move in opposite directions.

For example, the Italian government, which is burdened with the second-highest debt load in the eurozone after Greece at 132 percent of gross domestic product, pays only 2.79 percent annually to borrow for 10 years. That’s less than the 2.96 percent yield on 10-year U.S. Treasurys.

The ECB meeting will be held in Riga, Latvia, as one of the ECB’s occasional road meetings away from its Frankfurt headquarters to underline its role as a pan-European institution. A bribery investigation is expected to keep the head of the host central bank, Ilmars Rimsevics, from attending the meeting and news conference with ECB President Mario Draghi.

The ECB is continuing its slow progress toward withdrawing the stimulus despite turbulence in Italy, where the new populist government has questioned the spending and debt restrictions required of euro members. Concerns over Italian politics caused big swings in the country’s financial markets for several days last month, before easing.

Analysts Joerg Kraemer and Michael Schubert at Commerzbank said that the ECB may soon have to end its stimulus program anyway as it risks running out of bonds that are eligible for purchase. The ECB has limited itself to no more than one-third of any member country’s outstanding bonds to avoid becoming the dominant creditor of member states.

With the purchases widely expected to be stopped at the end of this year, they said, attention would now turn to how long the bank would wait after the bond-purchase exit before starting to raise its interest rate benchmarks.

“The ECB probably wants to ensure that the end of bond purchases does not unleash speculation about interest rate hikes,” they wrote in a research note. “The ECB Council… might declare that rates will not be increased for ‘at least’ six months after the end of purchases.”

Currently the short-term interest rate benchmark is zero, and the rate on deposits left by commercial banks at the ECB is negative 0.4 percent. The negative rate is a penalty aimed at pushing banks to lend that money instead of hoard it.

 
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The man at the center of a sex-abuse and financial crimes scandal that is tarnishing the academy which awards the Nobel Prize in Literature, was Tuesday charged with two counts of rape of a woman in 2011.

Swedish prosecutor Christina Voigt said the evidence “is robust and sufficient for prosecution.”

Jean-Claude Arnault, a well-known figure in Sweden who ran a cultural center, is married to poet and member of the Swedish Academy, Katarina Frostenson. He has denied this and other sex abuse allegations.

In April, the Swedish Academy said an internal investigation into sexual misconduct allegations found that “unacceptable behavior in the form of unwanted intimacy” has taken place within the ranks of the prestigious institution.

Voight didn’t name the victim as is the customary in Sweden.

The secretive 18-member board has in recent months been embroiled in a sex-abuse scandal that investigators concluded was “not generally known.” It has led to the departure of at least six of members of the Academy and tarnished the prize’s reputation.

The academy had commissioned lawyers to investigate sexual misconduct claims from 18 women against Arnault. In April, it had decided to hand over the internal report to relevant judicial authorities.

 
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Spain announced Monday that it will allow a ship carrying 629 migrants to dock in Valencia. The rescue ship Aquarius has been in international waters since picking up the migrants from a smuggler’s vessel off the coast of Libya. Malta and Italy refused to let it dock, saying they cannot cope with more migrants and refugees. It is not clear whether the rescue ship can make the 1,400-kilometer journey to Valencia and what awaits migrants once they disembark in the European Union country.
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President Recep Tayyip Erdogan, who is campaigning for re-election, seized on the latest Turkish growth figures as a vindication of his economic policies in the face of skepticism from not only voters but international investors of the country’s economic strength.

The economy grew by 7.4 percent in the first quarter, beating expectations. “We continue to be one of the fastest-rowing countries in the world,” Erdogan said at an electoral rally in Istanbul. He also claimed victory against what he called “conspirators” whom he blamed for last month’s heavy falls of the Turkish lira.

In May, the currency fell more than 10 percent as international investors fled the Turkish market over concerns about double-digit inflation and a growing current account deficit. Financial order was only restored by a steep emergency increase in interest rates, which saw the lira recoup some its losses.

Fueling concerns

But analysts warn the strong growth figures will only fuel concerns that the government policy of priming growth by massive public expenditures is unsustainable.

“The current account deficit is more than 6 percent of GDP and inflation above 12 percent, the starting point for the rebalancing process is bad, and a prolonged commitment to a tighter policy mix after the elections will be necessary to avoid further market pressure,” economist Inan Demir of Nomura Holding wrote Monday.

Tighter economic policy usually means reduced government expenditure and higher interest rates.

Turkey’s robust economy has been the bedrock of Erdogan and his ruling AK Party’s 16 years of electoral success. But despite more than a year of sustained strong growth, opinion polls have recorded voter dissatisfaction over the government’s handling of the economy.

Fifty-one percent of voters polled cited the economy as a primary concern, according to the Metropoll polling firm. Last year, security worries topped voter worries. Other polls found that a majority of voters blamed the government for their economic concerns.

“It’s a tremendous liability for Erdogan,” analyst Atilla Yesilada of Global Source Partners said. “This is an economy that grows, but not in labor-intensive way. Employment has decreased in the second quarter (2019), and things have become more expensive, and nobody is investing into new factories because loans have increased in excess of 22 percent.

“And clearly the wealth is not trickling down, whatever wealth has been created is not be felt by people on the streets, so there is a lot of public discontent,” Yesilada added.

The unemployment rate remains about 10 percent, according to recent Turkish Statistical Institute data.

Payments ahead of elections

In May, Erdogan announced two payments of over $200 for pensioners to coincide with religious holidays. The first installment is due this week, and is part of a multibillion-dollar giveaway to voters ahead of elections.

But analyst Yesilada warned the benefits of the payments are being overshadowed by the financial pain of this month’s increase in interest rates.

“We all use loans, the middle class use loans to buy houses; businesses use loans to expand. Even before the latest (interest) hikes, they were already at a 10-year high. Banks have nearly stopped making new loans; we are going into a credit crunch. For me, the recession is inevitable,” Yesilada said.

The president’s challengers are focusing on economic fears.

“Erdogan can’t survive this economic crisis,” CHP Party candidate Muharrem İnce said during a rally in Istanbul Monday. “Turkey is heading to dark days. Don’t be surprised if the Turkish lira hits 8 or 10 to the (U.S.) dollar. When troubled days have come to countries around the world, they couldn’t get through them unless they changed leaders.”

In May, at the start of the presidential and parliamentary elections, the lira was less than four against the U.S. dollar. It now stands at over 4.5, peaking at nearly 5 against the U.S. dollar.

Erdogan’s public construction boom, including building one of the world’s biggest airports as well as some of the longest bridges and tunnels, is also now an electoral target.

“Turkey has resources, but they are in the pockets of thieves. (The government) ran up $453 billion in debt. They collected $2 trillion from your pockets. What happened in return? Did your son find a job?” İYİ (Good) Party presidential candidate Meral Aksener asked.

Critical elections

Analysts predict the two-pronged attack by Erdogan’s challengers over the economy is likely to intensify, as economic concerns are expected to continue to dominate the critical elections.

“This election cycle is happening against a background of a volatile economic environment with a lot of stress on the currency with uncertainty where the economy is heading. This is turning the election campaign into a less certain outcome,” said Sinan Ulgen, head of the Istanbul-based Edam think tank.

Opponents accuse the president of calling elections 18 months early in a bid to take advantage of the country’s strong growth. But many opinion polls now indicate Erdogan’s lead narrowing and being forced into an electoral runoff. Analysts warn the economy that was once the president’s most significant asset could ultimately be what ousts him from power.
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A rescue ship run by a European charity is headed to Spain with more than 600 migrants on board after Italy and Malta refused to accept the vessel. Italy’s new government, which campaigned on halting the flow of migrants into the country, is starting to make good on his promises.

The European Union and the United Nations refugee agency had called for a swift end to a political standoff that left 629 migrants on the rescue ship Aquarius drifting at sea. Spain has now offered to take the ship in after Italy and Malta refused.

Spanish Prime Minister Pedro Sanchez ordered authorities to allow the Aquarius to dock in the eastern port of Valencia. Sanchez’s office issued a statement saying “it is our duty to avoid a humanitarian catastrophe and offer a secure port for these people.”

More than 100 unaccompanied minors and a number of pregnant women are on board the Aquarius. Six different rescue operations took place over the weekend off the coast of Libya, coordinated by the Italian coast guard. Medical workers had said food on board the ship was going to run out by Monday night.

Italy’s new deputy prime minister, Matteo Salvini, had said the country would not allow the ship to dock in any of its ports. Italy asked Malta to provide assistance to Aquarius because it was the nearest available port. But the small island nation’s prime minister, Joseph Muscat, refused.

Salvini, who also serves as Italy’s interior minister, has promised to change immigration policies in Italy, saying the new Italian government’s efforts will be aimed at guaranteeing peaceful lives for Africans in Africa and for Italians in their own country.

On a recent visit to the southern port of Pozzallo where many migrants have been arriving, Salvini said Italy is a member of international organizations such as the U.N. and NATO. And so, he asked why is it that in the Mediterranean and in North Africa there is not more concrete intervention to defend security?

More than 600,000 migrants have reached Italy by boat from Africa in the past five years. The new Italian government led by Prime Minister Giuseppe Conte has made it clear that the EU cannot continue to leave Italy to deal with the migrant crisis on its own.
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Spain says it will allow a rescue ship carrying more than 600 migrants picked up in the Mediterranean to dock in the eastern port of Valencia, after Italy’s new prime minister, who also leads the right-wing League party, ordered Italy’s ports to refuse entry to the rescue ship. The Aquarius rescue ship run by European charity SOS Mediterranee has been drifting in international waters with 629 migrants on board. More from Sabina Castlefranco in Rome.
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Pope Francis has accepted the resignations of three Chilean bishops, including the cleric accused of failing to stop a pedophile priest decades ago.

The Vatican issued a statement Monday saying the pontiff had accepted the resignation of 61-year-old Bishop Juan Barros of Osorno. Barros was appointed bishop by Pope Francis in 2015, despite numerous objections raised by local parishioners over his connection to disgraced Father Fernando Karadima.

The 87-year-old Karadima has been punished to a lifetime of “penance and prayer” for sexually abusing children.

Barros has been accused by victims of witnessing the abuse while Karadima’s top protege, a charge he denies.

Pope Francis had defended his appointment of Barros while on a trip to Chile in January, but now says he had made “grave errors in judgement” after reading a 2,300-page report complied by two Vatican investigators that laid out in detail the true nature of the scandal.

The report prompted Francis to summon all of Chile’s Catholic hierarchy to an unprecedented summit last month, where they all offered their resignations.

The Vatican says the pope has accepted the resignations of the other two bishops for reasons of having reached the age limit of 75.
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