Brexit and Airlines

About a week before the UK government triggers Article 50, and the stories are just rolling out about taking control how difficult untangling the UK from the EU is going to be, how much business is going to head across the Narrow Sea (and to a much lesser extent, across the Irish Sea), and how very little influence the UK government is going to have on the process.

EU chiefs have warned airlines including easyJet, Ryanair and British Airways that they will need to relocate their headquarters and sell off shares to European nationals if they want to continue flying routes within continental Europe after Brexit.

The Guardian adds a little British understatement, “The ability of companies such as easyJet to operate on routes across the EU has been a major part of their business models.” Indeed.

Some airlines have started to seek headquarters within the EU and to restructure their ownerships. EU holding requirements could include “the forced disinvesting of British shareholders.” At least some business leaders were hoping the problem would go away. Because reasons, I suppose. “EU officials in the meetings were clear, however, about the rigidity of the rules, amid concerns at a senior EU level that too many in the aviation industry are in denial about the consequences of the UK’s decision to leave the bloc.”

Getting a new agreement won’t be easy, either. At present, the European Court of Justice is the final arbiter of disputes that arise under the agreements that cover air travel within Europe. The current UK government has signaled that it wants to leave the ECJ’s jurisdiction entirely. And of course undoing a multilateral agreement opens the door for some states to assert their individual interests in negotiating a new one: Spanish diplomats have said that they will not sign on to any international accord that recognizes the airport in Gibraltar. Somebody might be taking back control.

This is shaping up to be a very good couple of years for corporate relocation businesses, and possibly for people looking to sign on at the new headquarters locations replacing folks who were unwilling or unable to leave the UK when their jobs picked up and went.

Brexit and Banks

With Prime Minister May due to trigger Article 50 eight days from now, shit’s about to get real the clock is about to start ticking, not least for the huge financial center in London. Nothing in the present UK government suggests that they will be able to negotiate an amicable separation in the twenty-four months before they are unceremoniously bounced from the European Union. (Less actually, as agreements will have to be finished early enough for the relevant bodies to vote on their approval.) Hard Brexit, here we come.

Likewise, I don’t see any reason for the 27 to let London continue to have the same access to EU financial markets that it had when the UK was a member of the Union. Prudent bankers came to similar conclusions long ago, and indeed Bloomberg finds that plans to move people and capabilities into the remaining EU are taking concrete shape. Frankfurt and Dublin are the likeliest winners: Frankfurt is the largest financial hub on the continent, and home to the European Central Bank; Dublin is the only English-speaking alternative. (At least until Scotland joins the Union.) This was always the way to bet, and reporters’ talks at individual banks are adding micro details to the macro framework.

“Bank of America Corp., Standard Chartered Plc and Barclays Plc are considering Ireland’s capital for their EU base to ensure continued access to the single market, said people familiar with the plans, asking not to be named because the plans aren’t public. Goldman Sachs Group Inc. and Citigroup Inc. are among banks eyeing Frankfurt, other people said.”

Two Japanese institutions Bloomberg spoke with are considering Amsterdam; Morgan Stanley, local patriots, insisted that New York would gain as they and other institutions re-allocated resources away from Europe entirely. Brexit is going to put a huge dent into one of the UK’s most important economic sectors. Taking back control!

Their Eyes Were Watching Vlad

Occasionally, representatives of Germany’s Left party (Die Linke) will complain about being tagged as the successors to East Germany’s communist party. Well.

As part of the German parliament’s debate about the budget and foreign police, Gregor Gysi, parliamentary leader of Die Linke, spoke out forcefully against further sanctions against Russia. He called them “absolutely counterproductive.” He added that they provoked Russian countermeasures and hurt the economy. Rational policy, in his view, would be to lift the sanctions immediately.

Not to be outdone, Sara Wagenknecht, Gysi’s first deputy, said that economic warfare with Russia was damaging and “playing with fire.” She added that NATO maneuvers and EU sanctions were making the implementation of a ceasefire in Ukraine difficult.

Russia and the Russian government are, of course, utterly blameless in all of these events.

Not coincidentally, the party’s history as recounted on its English-language web site begins in 2007. If I had their background as the unreformed heirs to the Kremlin’s stooges, I’d keep it off the web site, too.

The Catalan Vote: Why It’s Time To Start Getting Worried About Complacency In Madrid

When Barack Obama told a CNBC interviewer last autumn that Wall Street ought to be “genuinely worried about what is going on in Washington” in reference to the US government shutdown he raised more than a few eyebrows. Normally political leaders try to calm and reassure markets, so this attempt to stir them up on the part of the US President was, in its way, something of a first.

Last May the Financial Times issued a similar warning in an editorial with a clear message: right now you should be more worried than you are about what is happening in Madrid. According to the newspaper, “secessionist demands have created a rolling crisis involving Catalonia and the national government in Madrid,” a crisis which it warns could end in a “head on collision” if the issues being raised are not addressed. Continue reading

It’s not like this was a surprise

Or, why reading David Remnick is nearly always a good idea:

I spoke with Georgy Kasianov, the head of the Academy of Science’s department of contemporary Ukrainian history and politics, in Kiev. “It’s a war,” he said. “The Russian troops are quite openly out on the streets [in Crimea], capturing public buildings and military outposts. And it’s likely all a part of a larger plan for other places: Odessa, Nikolayev, Kherson. And they’ll use the same technique. Some Russian-speaking citizens will appear, put up a Russian flag, and make appeals that they want help and referendums, and so on.” This is already happening in Donetsk and Kharkov.

“They are doing this like it is a commonplace,” Kasianov went on. “I can’t speak for four million people, but clearly everyone in Kiev is against this. But the Ukrainian leadership is absolutely helpless. The Army is not ready for this. And, after the violence in Kiev, the special forces are disoriented.”

That’s from March 1.

Overtaken by events

The draft blog post said to watch out for funny business in Melitopol and Mariupol, Ukraine. Those are the largest settlements along the coast between Russia and the Crimean peninsula, and sit astride the road that runs from Rostov-on-the-Don and the Crimea. Mariupol is the second-largest city in the Donetsk region, with a population of nearly half a million. Melitopol is also a crossroads: east to Russia, south to the Crimea, north to Zaporizhia and west to Kherson.

Radio Free Europe/Radio Liberty’s daily summary noted:

By early evening there were reports of skirmishes between pro-Russia and pro-Ukraine groups in Kharkiv, a tense standoff in Zaporizhia, and the occupation by pro-Russian activists of local government buildings in Makiyivka and Mariupol. Pro-Russian activists were also reportedly moving on the Security Service building in Odessa.

So let’s go with a quick scoreboard from this weekend and last instead.

Kharkiv: occupation attempt repulsed
Zaporizhia: tense standoff
Kramotorsk: buildings occupied
Druzhkivka: buildings occupied
Yenakijeve: buildings occupied
Makiyivka: buildings occupied
Mariupol: buildings occupied
Luhansk: buildings occupied
Donetsk: buildings occupied
Slovyansk: buildings occupied
Mykolaiv: occupation attempt repulsed
Odessa: occupation attempt repulsed
Krasny Lyman: disturbances

The buildings that are being occupied are local city halls, police stations and administrative buildings. That most definitely includes any local arsenals.

This weekend has also seen the return of the “little green men,” so called during the occupation of the Crimea because their origins are so mysterious that they must be from Mars. Never mind that they wear Russian uniforms sans insignia, have equipment issued to Russian armed services, and use Russian words that are not generally used by Russian-speaking persons who live in Ukraine.

Ukraine’s acting president has not minced words. In a live televised address, Oleksandr Turchynov spoke of

war that is being waged against Ukraine by the Russian Federation. The aggressor has not stopped and continues to organize disorders in eastern Ukraine.

This is not a war between Ukrainians. This is an artificially created situation of confrontation aimed at weakening and destroying Ukraine itself.

He also said that a large-scale counter-operation would begin Monday morning. Stay tuned.

Looking back at last month’s guide to revisiting the 1930s, further east:

Kharkiv, Donetsk: Sudetenland. Some real tension, mostly trumped up and stage-managed confrontations. ((Check.)) Pleas for “protection” from some parts of a particular nationality to the outside power. ((Check.)) Not fooling anyone. ((Check.)) In contrast to then, Kiev would try to defend the frontier region militarily. ((Check, as of April 14.)) (The great powers will not intervene, should it come to that.) ((Check.)) Whether that defense would succeed is rather an important question. There’s not a major defensible barrier until the Dniepr. Speaking of which…

Dnepropetrovsk, Zaporizhia: Poland. The great powers would not be able to overlook the dismemberment of a major European state. They wouldn’t be able to stop it, either.

Zaporizhia hasn’t seen much in the way of disturbances. Yet.

Also: Toomas Hendrik Ilves noted on Twitter, “After these several weeks, Europe’s M-F, 9-5 foreign policy establishment might perhaps recognise what’s happening next door weekends too.” Maybe all of the little green men and their associated crowds have day jobs, or maybe the powers-that-be on Mars have noticed that Saturday is not a big day for news, and are timing their operations accordingly. It’s not likely that they read John Scalzi’s blog, but he makes a point concerning publicity and next weekend:

But of all the Saturdays in all of the calendar year, the very worst possible Saturday to announce anything is the Saturday between Good Friday and Easter. Because it’s the Saturday between Good Friday and Easter, that’s why — the Saturday sandwiched between two major religious holidays, which means the “weekend” that week starts on Thursday and Sunday’s news cycle is swamped by the most important Christian holiday of the year — Christmas is noisier for longer, but Easter is concentrated. If you’re the Pope, Easter Sunday is great for you, news wise. If you’re not the Pope, not. …
If I were a crooked politician who had been caught murdering kittens while masturbating to a picture of Joseph Stalin, then the day I would choose to have that news go out into the world would be the Saturday between Good Friday and Easter.

That Western and Orthodox Easter align this year makes the news gap even larger. People in the wider world will not be paying attention next weekend. Don’t be surprised if the little green men are very active indeed.

Old habits die hard

Occasionally, representatives of Germany’s Left party (Die Linke) will complain about being tagged as the successors to East Germany’s communist party. Well.

Yesterday, the Parliamentary Assembly of the Council of Europe voted to strip the Russian delegation to that body of its voting privileges for the rest of 2014, as a reaction to Russia’s annexation of the Crimea. The overall vote was 145 in favor of revoking the Russians parliamentarians’ votes and 21 against, with 22 abstentions.

The German delegation voted 5-1 to revoke, with Yes votes coming from a Green, two Christian Democrats and two Social Democrats. The sole No vote? From a Left parliamentarian. Because Moscow, I suppose.

Continue reading

Right on schedule

Last night, I noted that staged takeovers of local government buildings in eastern Ukraine are

one of the shoes that everyone keeping track of the crisis has been expecting to drop (Odessa and the region that was known in the 19th century as “New Russia” is another).

This morning, Radio Liberty/Radio Free Europe reports:

RFE/RL’s Ukrainian Service quotes local media as saying around 100 pro-Russians attempting to surround a government administration building in the southern city of Mykolaiv were thwarted after police moved in late last night. There were several injuries in the ensuing clashes, which also pitted the pro-Moscow ranks against members of a pro-Ukrainian group. (From their liveblog 0923, 8 April 2014. Here’s the original report in Ukrainian.)

Mykolaiv is a city of about a half million people, a major shipbuilding center about halfway between the Crimea and Odessa, along the main road between the two.


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Let’s hope the police and local authorities in Kherson are equally loyal to Ukraine, and equally alert.

Odessa, of course, is the real prize of the southwest, and not just for the nightlife or the film nostalgia. Odessa is also just a good day’s bicycle ride from breakaway Transnistria. These lands were conquered by the Russian Empire in the late 18th century, somewhat after the American Revolution broke but before the French. The Crimean Khanate had left them sparsely settled, and homesteading in “New Russia,” as the region was known, was a major development of the 19th century. Before World War II, it was a significant area of Jewish settlement. In short, the pretexts are there, if Russian forces want to meddle.

The second act of Ukraine’s test has only just begun.

Stress test

Reports from eastern Ukraine that pro-Russia (perhaps one should write pro-Putin or pro-annexation) protesters have seized local government buildings in Donetsk, Kharkiv and Luhansk. The protesters in Kharkiv seem to have been driven back. In Luhansk, they seized weapons from a local arsenal and set up barriers in the main streets; Ukrainian police have sealed off access to the town. (As well they might. Parts of Luhansk are less than 10km from the Russian border.)

In Donetsk, they have seized an administration building, proclaimed a “People’s Republic of Donetsk,” called for a referendum on sovereignty on May 11, and asked for Russian troops to come as “temporary peacekeepers.” Temporary until another annexation treaty could be printed out, one presumes.

Here is how the Russian Foreign Ministry reacted to these developments:

“If the irresponsible attitude toward the fate of the country, the fate of their own people, on behalf of the political forces that call themselves the Ukrainian government were to continue, Ukraine would inevitably face ever new difficulties and crises,” ministry spokesman Aleksandr Lukashevich said today. “Enough finger-pointing at Russia — blaming it for all the troubles of today’s Ukraine. The Ukrainian people need to hear from Kyiv clear answers to all questions. It is time to listen to these legitimate demands.” (As reported by the Radio Free Europe live blog at 1911 today, Kyiv time.)

Key phrases to note: “the political forces that call themselves the Ukrainian government” and “legitimate demands.” With these words, Moscow is again signalling that it does not recognize the interim Ukrainian government as legitimate. The Kremlin still regards Viktor Yanukovych as president of Ukraine, never mind that he now has about as much chance of holding that office as I do. As for “legitimate demands,” if you — as a government — consider someone who last won 4% of the vote the legitimate spokesperson of a region (as Russia did with Crimea), that is a very elastic reading of the word “legitimate.”

(As I write, the channel “Kharkov antimaidan” on ustream.tv is broadcasting live from the square in front of the administrative building in Kharkiv. It’s about 30 minutes past midnight, local time, and a great many people are milling about on the square. My Russian is not good enough to follow the narration of the POV broadcaster. Sometimes living in the future, as we do now, seems surreal.)

This is one of the shoes that everyone keeping track of the crisis has been expecting to drop (Odessa and the region that was known in the 19th century as “New Russia” is another). Not quite a month ago, I wrote that if Crimea was the Anschluss, the Kharkiv, Donetsk and eastern Ukraine are the Sudetenland.

Here’s my checklist from last month:

Some real tension, ((check)) mostly trumped up and stage-managed confrontations ((check)). Pleas for “protection” from some parts of a particular nationality to the outside power ((check)). Not fooling anyone ((check)). In contrast to then, Kiev would try to defend the frontier region militarily.

So that’s where we are now.

Ukraine’s acting president canceled a visit to Lithuania and described the eastern Ukraine occupations and unrests as “the second wave in Russia’s special operation against Ukraine.” US Secretary of State John Kerry told Russian Foreign Minister Sergei Lavrov that the actions did not appear “spontaneous.” The White House has suggested there is “strong evidence” that some of the pro-Moscow protesters “were paid and not local residents.” The Moscow Times reminds readers that ethnic Ukrainians account for 56.9% of the population in the Donetsk region, 70.7% in the Kharkiv region and 58% in the Luhansk region. (Caveats about ethnic identification in that part of the world duly noted.)

This is a very serious stress test both for Ukraine’s interim government — and don’t forget, they are preparing for a presidential election in less than two months — and for the European state system as it is presently constituted.

How much of a revisionist power has Putin’s Russia become? That’s the most important question hanging over Europe right now, and precious few people know the answer. If indeed anyone at all knows.

The pretexts are all there. Will the Russian government and armed forces take them up and further dismantle a European state?

Territorial integrity

The UN General Assembly declares the Crimean referendum invalid, 100-11.

Russia absorbing Crimea will be the first time since 1945 that a country other than Israel has taken over a part of a neighbouring state and formally annexed it, other than colonial outposts. Some people are maybe not appreciating what a break with international norms that is.

A few of those annexations of colonies were a lot more brutal affairs than Crimea: Ogaden, East Timor, Western Sahara. It’s still a very short list. Iraq and Kuwait was very briefly an exception and was supposed to once and for all end that sort of thing (and end history).