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Eurozone cuts interest rate for first time in 5 years

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The European Union has become the second major economy this week to reduce its lending rate, indicating progress in addressing inflation. The European Central Bank (ECB) cut its main interest rate from a record high of 4% to 3.75%, following Canada’s decision to lower its official rate on Wednesday. This decision coincides with EU-wide elections, reflecting public discontent over living costs.

ECB President Christine Lagarde stated that the inflation outlook has significantly improved, allowing for the rate cut. However, she cautioned that inflation would likely remain above the 2% target “well into next year,” averaging 2.5% in 2024 and 2.2% in 2025. Lagarde emphasized that the ECB would maintain a restrictive interest rate policy as needed to achieve the 2% target, without committing to a specific rate trajectory.

Lindsay James, investment strategist at Quilter Investors, noted that the rate cut was anticipated but still a relief for European consumers and businesses. She mentioned that the ECB’s move precedes potential cuts by the Bank of England and the US Federal Reserve, providing needed economic stimulus.

Despite a slight increase in inflation in May to 2.6% from 2.4% in April, the ECB decided to reduce rates. This follows Canada’s reduction from 5% to 4.75% after their inflation fell to 2.7%. Sweden and Switzerland have also made similar rate cuts.

Lagarde provided a positive economic outlook for the eurozone but warned of challenges such as geopolitical tensions and climate-related risks that could impact growth. Katherine Neiss, chief European economist at PGIM, expressed confidence in further ECB rate cuts over the summer or autumn, potentially lowering eurozone rates to 3.5% or less by year-end. She cited sluggish economic recovery, slowing inflation, and easing wage growth as justification for additional cuts.

In the UK, speculation exists that the Bank of England might reduce rates as early as this month, with inflation down to 2.3% from its peak over 11% in late 2022. The International Monetary Fund recommended cutting UK rates from 5.25% to 3.5% by year-end. However, George Godber from Polar Capital suggested that the upcoming UK election could complicate the Bank’s rate decision on June 20, as political considerations might influence the outcome.

The US Federal Reserve is also expected to reduce rates soon, with the current US inflation rate at 3.4%. Godber predicted that the Fed would act before the November election.

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Georgia parliament overturns veto on foreign agents law

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Georgia’s MPs have overturned a presidential veto on the controversial “transparency on foreign influence” bill, commonly referred to as the “foreign agents law,” after several weeks of protests in Tbilisi. The law mandates that media and NGOs receiving over 20% of their funding from abroad must register as “organisations acting in the interest of a foreign power,” undergo stringent audits, or face heavy fines. The vote in a plenary session on Tuesday saw 84 MPs, primarily from the governing Georgian Dream party, in favor, with four votes against and the opposition abstaining.

Thousands of Georgians protested outside parliament, waving Georgian and EU flags. The law, initially passed on May 14 and then vetoed by pro-Western President Salome Zourabishvili, is set to take effect in 60 days. The Georgian government argues that the law will enhance transparency and protect against foreign interference. However, opponents, calling it the “Russian law” due to its similarity to existing Russian legislation, believe it aims to suppress dissent ahead of October’s parliamentary elections.

The EU expressed deep regret over the parliament’s decision, warning that the bill could hinder Georgia’s progress within the bloc. Georgia achieved candidate country status in December 2023. Many NGOs have declared they will not comply with the legislation, describing it as “insulting” and “factually incorrect.”

As MPs debated the bill, protesters gathered outside parliament under heavy police presence. Following the vote, demonstrators shouted “slaves!” and “Russians!” Police have frequently used force against protesters, with reports of beatings and intimidation. Despite this, many demonstrators, predominantly young, continue to protest, viewing their future as dependent on aligning with Europe.

Observers believe the passing of the foreign agents law has become crucial for the survival of Georgian Dream, alienating many traditional partners. The US joined the EU in warning of repercussions, with the US State Department announcing travel restrictions on those undermining democracy in Georgia and their families. However, authorities dismissed these warnings, with Tbilisi Mayor Kakha Kaladze asserting that there would be no compromise against national interests.

With limited options left to halt the bill, President Zourabishvili presented a new charter on Monday to move Georgia towards Europe, calling for a new political reality, different elections, and significant reforms to depoliticize the justice system and security services. She invited all opposition parties to sign the charter by June 1 and unite for the parliamentary elections in October.

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Baltic worries about Russia’s proposal to redraw sea borders

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Calls for calm have been issued in Finland and the Baltic states following a draft Russian decree proposing border revisions in the Baltic Sea. Latvia is seeking clarification, while Lithuania accuses the Kremlin of using the decree as an intimidation tactic. Finnish President Alexander Stubb stated that political leaders are monitoring the situation and Finland will respond calmly and factually.

The draft, issued by Russia’s defense ministry, suggested altering sea borders around Russian islands in the Gulf of Finland and the exclave of Kaliningrad. Initially reported by Russia’s Tass news agency, the draft aimed to redraw Soviet-era borders from January 1985. It was unclear if Finnish or Lithuanian waters near Kaliningrad would be affected, but the proposal included the eastern Gulf of Finland, islands near the Finnish coast, and areas around Baltiysk and Zelenogradsk in Kaliningrad.

As members of the EU and NATO, Finland and the Baltic states have the alliance’s commitment to defend their borders. Finland’s defense and foreign committees convened emergency meetings, with Prime Minister Petteri Orpo stating there is no immediate cause for alarm.

The Russian proposals were subsequently removed from public view with a “draft deleted” notice. A Russian source later confirmed no plans to alter territorial waters in the Baltic. Kremlin spokesman Dmitry Peskov directed questions to the defense ministry, noting the political landscape had changed since the 1980s and emphasizing the heightened confrontation in the Baltic region.

Charly Salonius-Pasternak from the Finnish Institute of International Affairs suggested Russia’s approach was typical: probing reactions and retreating if met with resistance. Lithuania’s Foreign Minister Gabrielius Landsbergis described the draft as an escalation against NATO and the EU, advocating a strong response.

Simultaneously, Sweden’s armed forces chief, Gen Micael Byden, warned of Putin’s ambitions to control the Baltic Sea. Byden stressed the importance of keeping the Baltic Sea out of Putin’s control to maintain peace and stability. Sweden, a NATO member since March, has reinforced its military presence on the Baltic island of Gotland, which Gen Byden believes Russia has targeted.

In response to potential migration issues, Finland, which joined NATO last year, plans to prevent large-scale asylum seeker crossings from Russia. Helsinki fears Russia might exploit migration, but the UN refugee agency warns the draft law could lead to harmful pushbacks of legitimate asylum seekers, risking severe injuries, family separations, and deaths, according to UNHCR’s Philippe Leclerc.

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Slovakia PM Robert Fico not in life-threatening condition – deputy PM

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Slovak Prime Minister Robert Fico underwent surgery after sustaining multiple gunshot wounds during an attack in Handlova. Initially in critical condition, his health has since stabilized. The incident, deemed politically motivated, has drawn widespread condemnation and raised concerns about democratic stability. Despite the suspect’s detention, the motive behind the shooting remains uncertain.

Deputy Prime Minister Tomas Taraba suggested that false narratives propagated by opposition parties may have fueled the attack, echoing previous concerns expressed by Fico about the potential consequences of such rhetoric. The shooting underscores simmering political tensions within Slovakia, sparking debates about the role of inflammatory discourse in shaping the country’s political climate.

The incident has ignited discussions about the broader implications of divisive language in Slovakian society. President Zuzana Caputova highlighted the serious ramifications of such rhetoric, emphasizing its potential to incite violence. The shooting serves as a stark reminder of the dangers posed by polarizing narratives and underscores the need for constructive dialogue and unity in the face of political differences.

Fico, known for his controversial policies, including calls to end military aid to Ukraine and efforts to abolish the public broadcaster RTVS, has faced significant opposition both domestically and within the EU since returning to power. The attack on him amplifies existing concerns about political stability and underscores the challenges facing Slovakian democracy in navigating polarized political landscapes.

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EU to tighten Iran sanctions after Israel attack

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The European Union has expanded sanctions on Iranian drone and missile producers in response to Iran’s recent attack on Israel. European Council President Charles Michel stressed the significance of further isolating Iran, highlighting the need for decisive action.

These new sanctions build upon existing measures implemented by the EU, including penalties for Iran’s involvement in supplying drones to Russia. The decision to escalate sanctions was reached during a summit in Brussels, marking the first gathering of the bloc’s leaders since the attack on Israel.

In the wake of Iran’s assault, which involved a barrage of over 300 missiles and drones from multiple countries, the international community has urged restraint to prevent the situation from spiraling into a wider conflict. Despite calls for caution, Israel has not ruled out a potential response to the aggression.

German Chancellor Olaf Scholz emphasized the importance of de-escalation following the summit, encouraging Israel to leverage diplomatic channels to strengthen its position in the region. Scholz’s remarks reflect a broader sentiment among global leaders to mitigate tensions in the volatile Middle East.

Meanwhile, Israel has appealed to its allies to take robust action against Iran, advocating for sanctions on Tehran’s missile program and the designation of the Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. However, the EU and UK have not yet followed the United States in designating the IRGC as such.

In addition to EU sanctions, the United States is also considering imposing new penalties on Iran. US Treasury Secretary Janet Yellen highlighted the potential for disrupting Iran’s terrorist financing and targeting its oil exports as areas of focus. Furthermore, US National Security Advisor Jake Sullivan affirmed that Iran’s missile and drone programs, alongside the IRGC and Iranian defense ministry, would be subject to forthcoming sanctions.

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Polish MPs debate liberalising right to abortion on demand

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Poland’s MPs recently engaged in a significant debate over potentially granting women the right to abortion on demand, marking a departure from discussions of the sort in over three decades. Despite expectations of strong emotions given Poland’s devout Catholicism, the attendance was notably sparse, with many MPs from both the opposition and government failing to show up.

Although women constitute only 29% of the Sejm, the lower house of parliament, the majority of speakers in the debate were women. The discussion revolved around potentially liberalizing one of the EU’s strictest abortion laws, which currently permits the procedure only in cases of maternal health risk, rape, or incest.

While public opinion increasingly supports expanded abortion access, politicians have been hesitant to act. The previous Law and Justice-led government, supported by the Catholic Church, had actually tightened abortion restrictions in 2020, sparking widespread protests across the nation.

The ruling by the Constitutional Tribunal, which deemed abortion due to severe and irreversible fetal abnormalities unconstitutional, led to outrage and sustained demonstrations. Several women have died in hospitals since then, as doctors refused to perform necessary abortions, even when the mother’s life was at risk.

Outside the parliament, anti-abortion protesters expressed their views in stark terms, likening liberal ministers to Adolf Hitler and employing provocative imagery. Inside, MPs presented contrasting viewpoints, with some arguing for abortion as a woman’s right, while others contended that it’s not universally supported among Polish women.

Prime Minister Donald Tusk has committed to introducing abortion on demand, but his coalition government is divided over the extent of liberalization. Various proposals, ranging from abortion up to 12 weeks to decriminalization of abortion assistance, have been put forward by different factions within the coalition.

However, achieving consensus on this contentious issue won’t be easy, with opposition from conservative elements and the potential for a presidential veto by Andrzej Duda, who aligns with Catholic beliefs. Ultimately, the fate of these proposals remains uncertain pending further parliamentary deliberation and potential presidential intervention.

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EU approves major overhaul of migration rules

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After years of negotiations, the European Parliament has approved a significant reform aimed at tightening the EU’s migration and asylum regulations. The EU Asylum and Migration Pact, which has been in development since 2015, is set to become effective in two years’ time. Its objectives include expediting the asylum process, enhancing the repatriation of irregular migrants to their home countries, and establishing a system of shared responsibility among EU member states for asylum seekers.

Last year, there was a notable increase in illegal border crossings within the EU, prompting the need for such reforms. The pact, though met with some opposition from certain member states, is expected to gain full approval by the end of April through majority voting.

Under the proposed rules, EU countries will be obligated to either accept a quota of migrants from frontline countries like Italy, Greece, and Spain, or provide additional financial aid or resources. Additionally, the pact emphasizes swift processing of asylum claims, particularly those deemed to have low chances of approval, and aims to reach decisions within a maximum of 12 weeks. Forcible returns of rejected asylum seekers to their home countries would also need to occur within the same timeframe.

The pact introduces stricter pre-entry screening procedures within seven days of arrival, including biometric data collection for migrants aged six and above. It also establishes mechanisms to address sudden influxes of migrants.

The pact received support from the two main political groups in the European Parliament, although it faced opposition from some left-wing and far-right factions, as well as NGOs. Critics argue that the agreement may lead to increased suffering for asylum seekers, particularly those with low chances of acceptance, who might undergo processing on border islands or in detention facilities with limited access to fair procedures.

Despite its imperfections, many MEPs saw the pact as a workable compromise, acknowledging its significance in addressing the challenges of migration within the EU. However, concerns remain regarding the potential consequences of expedited processes and increased detention.

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Apple, Meta and Google to be investigated by the EU

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The European Union has initiated investigations into major tech companies such as Meta, Apple, and Alphabet (Google’s parent company) over potential violations of the Digital Markets Act (DMA) introduced in 2022. If found guilty, these companies could face fines of up to 10% of their annual turnover.

EU antitrust chief Margrethe Vestager and industry head Thierry Breton announced the investigations, focusing on allegations of anti-competitive practices by these tech giants. The DMA, which targets companies considered to be digital gatekeepers, aims to foster fair competition in the digital market.

The investigations are particularly focused on whether these companies are impeding fair competition, such as by limiting app communication with users, restricting user choice, or favoring their own services in search results. For instance, Apple faces scrutiny for its App Store policies, while Meta is being investigated for its advertising practices.

These investigations come shortly after Apple was fined €1.8 billion for competition law violations related to music streaming, and amid a landmark lawsuit in the United States accusing Apple of monopolizing the smartphone market.

Both Apple and Meta have responded, expressing willingness to engage with the investigation and asserting their compliance with the DMA. However, Alphabet has yet to comment on the matter.

The EU aims to complete the investigations within approximately 12 months, with a focus on ensuring open and contestable digital markets in Europe. The timing of these actions, just ahead of European Parliament elections, underscores the EU’s commitment to consumer protection and fair competition in the digital sphere.

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Czech Republic MPs vote to tighten gun laws

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The Czech Republic has passed an amendment to its gun legislation, following the recent mass shooting at Charles University. The amendment, proposed prior to the incident, still needs approval from the senate and the president and won’t be effective until 2026. Despite being considered insufficiently transformative, the amendment aims to address loopholes that allowed the shooter, a licensed gun user, to amass eight legally-owned weapons, including an AR-10 semi-automatic assault rifle.

The shooter, a 24-year-old graduate student with a history of depression, killed 14 people on campus. The legal changes propose an updated online register of guns and owners accessible to doctors, including psychiatrists. Gun shops will be obligated to report suspicious purchases, and the system will flag individuals acquiring numerous weapons. Police will gain the authority to seize weapons preventatively, especially if the owners make threats on social media, a power currently unavailable to them.

However, mandatory psychological tests for gun licenses, common in other countries, will not be enforced. Czech doctors can request such tests but are not obligated to do so before signing license applications. The legislation may undergo further amendments in parliament, but the fundamental right to bear arms for self-defense, added to the constitution in 2021 amid EU attempts to restrict weapon possession, is unlikely to be altered. With over 300,000 licensed gun owners and a million guns in the country, the Czech Republic, known for hunting and biathlon, has a majority of licenses granted for personal protection rather than sports or hunting purposes. The necessity of such personal protection in cities like Prague and Brno remains unclear in one of Europe’s safest countries.

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Grzegorz Braun: Polish MP who doused Hanukkah candles loses immunity

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Members of Parliament in Poland have voted to remove the parliamentary immunity of far-right politician Grzegorz Braun after he extinguished candles lit for the Jewish festival of Hanukkah in a highly controversial act. The global condemnation of Braun’s actions resulted in a fine in December, but the recent decision to revoke his parliamentary immunity now exposes him to potential criminal charges. Braun, affiliated with the ultra-nationalist Confederation party, used a fire extinguisher to put out the Hanukkah candles and referred to the celebration as “satanic.”

Prosecutors are planning to bring several charges against Braun, including destruction of property, insulting an object of religious worship, and violation of bodily integrity. The unanimous support for revoking his immunity came from all political parties, except the Confederation party, highlighting the widespread agreement that Braun’s behavior was unacceptable. Lawmakers emphasized the need to hold him accountable for his actions.

Grzegorz Braun has a history of provocative stunts, further contributing to his controversial reputation. In addition to the Hanukkah incident, he gained notoriety for dumping a Christmas tree decorated in the colors of the EU and Ukraine into a bin and damaging a microphone during a talk by a Holocaust historian. Prosecutors also intend to charge him for separate incidents that occurred in 2022 and 2023.

The removal of Braun’s parliamentary immunity signifies a significant step in potential legal consequences for his actions, with prosecutors aiming to address various charges related to his behavior. The broader context of his controversial actions and statements adds to the ongoing debate about the boundaries of free speech and the consequences for those who engage in offensive or harmful behavior.

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