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Brussels’ next financial policy chief warns of Brexit frictions

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The EU’s incoming financial regulation chief has warned that post-Brexit links with the City of London will inevitably be “less fluid” than now, advising companies to “urgently” prepare for changed trading conditions. 

Mairead McGuinness, Ireland’s prospective European commissioner, also insisted that critical financial services needed to take place under EU “rules and supervision”, setting the EU on a course to try to extract key market infrastructure from the UK. 

“We need to avoid being overly dependent on a third country for key financial services,” Ms McGuinness said during a confirmation hearing at the European Parliament. “We must be ready to deal with the consequences in the financial sector that flow from the UK becoming a third country.”

Her comments will disappoint some in the UK financial industry who had hoped that Ms McGuinness’s appointment would herald a more liberal attitude towards future ties with the City, not least because of Dublin’s close financial-sector links with London. 

In practice, Ms McGuinness set out an agenda that emphasised continuity with existing European Commission policies. The politician, at present a member of the European Parliament, was tapped by Dublin to become the country’s new member of the EU’s executive arm after the shock resignation of former trade commissioner Phil Hogan, who was engulfed in a coronavirus lockdown scandal. 

Commission president Ursula von der Leyen offered her the EU’s coveted financial services portfolio, which is at present managed by Valdis Dombrovskis, Latvia’s member of the commission. Mr Dombrovskis has been assigned Mr Hogan’s former job.

MEPs are widely expected to vote next week to approve Ms McGuinness’s nomination.

Brussels in recent months has set out a hawkish approach to future market-access arrangements between the EU and the UK in the area of financial services, which EU chief negotiator Michel Barnier has insisted must be addressed outside the scope of the two sides’ trade talks. The latest round of negotiations were due to finish on Friday.

Last month, the bloc granted only temporary access rights for EU companies to UK-based clearing houses, critical institutions that manage risk in the trade system. Brussels argues that the bloc needs to build up independent capacity as part of its drive for strategic autonomy. 

The EU has also ruled out granting coveted market-access rights to UK investment firms in the near-term, and EU market regulators have called for a review of the extent to which EU-domiciled investment funds should be allowed to be managed from London. 

Ms McGuinness said that the EU’s policies were not about “closing ourselves off to the outside world”.

“Instead, I want to make sure that we have a strong European financial system, and that the services that underpin our financial stability are under our rules and supervision,” she said. 

“Under all circumstances — deal or no deal — the trade in financial services between the EU and the UK will be different and less fluid as of 1 January next year,” she said. “All EU financial firms and stakeholders need to prepare for this. Many already have, others need to do so urgently.”

Asset shifting already under way in the industry includes the transfer to the EU of the €182bn of Irish equity and funds securities assets held in London. 

Shifting the business to Euroclear in Belgium, one of the world’s largest settlement houses, is due to take place mid-March, two weeks before the expiry of a licence that allows investors to use UK-based companies.



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Global house prices: Raising the roof

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Global house prices: Raising the roof



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Missing Belarus activist found hanged in Kyiv park

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Belarus updates

A Belarusian opposition activist has been found hanged from a tree in a park near his home in Ukraine, a day after he was reported missing. Local police said his death could have been made to look like suicide.

Vitaly Shishov, who led the Kyiv-based organisation Belarusian House, which helps Belarusians fleeing persecution find their feet in Ukraine, had been reported missing by his partner on Monday after not returning from a run.

Shishov’s death follows weeks of increased pressure in Belarus by authorities against civil society activists and independent media as part of what the country’s authoritarian president Alexander Lukashenko has called a “mopping-up operation” of “bandits and foreign agents”.

Many Belarusians have fled the country since Lukashenko launched a brutal crackdown last summer after nationwide protests erupted following his disputed victory in presidential elections. About 35,000 people have been arrested in Belarus and more than 150,000 are thought to have crossed into neighbouring Ukraine.

Franak Viacorka, an aide to Belarusian opposition leader Sviatlana Tsikhanouskaya who met UK prime minister Boris Johnson on Tuesday in London, said Shishov’s death was “absolutely shocking and unexpected to all of us”.

“He [Shishov] and his friends helped people who were moving to Ukraine,” Viacorka told the Financial Times. “They were very helpful, especially for those who have just arrived and didn’t know what to do.”

Viacorka said many activists living in Ukraine, such as Shishov who fled Belarus in 2020, had “complained about possibly being followed, and receiving threats”.

Kyiv park where Vitaly Shyshov’s body was found
The Kyiv park where Vitaly Shishov’s body was found after he failed to return home following a run © Gleb Garanich/Reuters

Downing Street said that after meeting Tsikhanouskaya, Johnson condemned the Lukashenko regime’s severe human rights violations. “The UK stands in solidarity of the people of Belarus and will continue to take action to support them,” a spokesperson said.

Ukrainian police have now launched a criminal case for the suspected murder of Shishov, including the possibility of “murder disguised as suicide”.

Yuriy Shchutsko, an acquaintance and fellow Belarus refugee who found Shishov’s body, ruled out suicide, pointing out that Shishov’s nose was broken.

“I suspect this was the action of the [Belarus] KGB . . . we knew they were hunting for us,” he told Ukrainian television.

Ihor Klymenko, head of the National Police of Ukraine, subsequently said Shishov’s body had what appeared to be “torn tissue” on his nose and other wounds, but stressed it would be up to medical examiners to determine if these were caused by beatings or the result of suicide.

There was no immediate comment from Lukashenko or his administration.

Belarusian House said: “There is no doubt that this is an operation planned by the Chekists [the Belarusian KGB] to eliminate someone truly dangerous for the regime.

“Vitalik was under surveillance,” it added. “We were repeatedly warned by both local sources and our people in the Republic of Belarus about all kinds of provocations up to kidnapping and liquidation.”

Adding to the swirl of attention on Belarus this week, Tokyo Olympics sprinter Krystsina Tsimanouskaya on Monday took refuge in Poland’s embassy after alleging she had been taken to the airport against her will, having criticised her Belarusian coaches.

The athlete has said she feared punishment if she went back to Belarus but has so far declined to link her problems to the country’s divisions.

Shishov’s death comes five years after Pavel Sheremet, a prominent Belarus-born opposition figure and journalist, was killed in an improvised bomb explosion in downtown Kyiv while driving to work at a local radio station. Lukashenko has ruled Belarus since 1994.

Ukrainian authorities at first suggested Belarusian or Russian security services could have been involved in the hit, as Sheremet was close to opposition movements in Russia as well.

Instead, officials charged three Ukrainian volunteers who supported war efforts against Russia-backed separatists in eastern Ukraine — although they steadfastly denied involvement and authorities were unable to provide a motive in what has been widely described as a flimsy case.

Additional reporting by Jasmine Cameron-Chileshe in London



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EU pledges aid to Lithuania to combat illegal migration from Belarus

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EU immigration updates

In the latest sign of deteriorating relations between the EU and Belarus, Brussels has promised extra financial aid and increased diplomatic heft to help Lithuania tackle a migrant crisis that it blames on neighbouring Belarus and its dictator Alexander Lukashenko.

Lithuania detained 287 illegal migrants on Sunday, more than it did in the entirety of 2018, 2019, and 2020 combined, the vast majority of them Iraqis who had flown to Belarus’s capital Minsk before heading north to cross into the EU state. Almost 4,000 migrants have been detained this year, compared with 81 for the whole of 2020. 

“What we are facing is an aggressive act from the Lukashenko regime designed to provoke,” Ylva Johansson, the EU commissioner for home affairs told reporters on Monday after talks with Lithuania’s prime minister Ingrida Simonyte. “The situation is getting worse and deteriorating . . . There is no free access to EU territory.”

The EU imposed sweeping sanctions against Lukashenko’s regime in June, after he fraudulently claimed victory in last year’s presidential election and then led a brutal campaign to violently suppress protesters and jail political opponents. Lukashenko has ruled Belarus since 1994.

The rising concern over the migrant crossings, which EU officials say is a campaign co-ordinated by Lukashenko’s administration, comes as one of the country’s athletes competing in the Tokyo Olympic Games sought refuge in Poland after team management attempted to fly her home against her will after she publicly criticised their actions.

Johansson said the EU would provide €10m-€12m of immediate emergency funding and would send a team of officials to the country to assess the requirements for longer-term financial assistance, including for extra border security and facilities to process those attempting to enter.

Simonyte said that Vilnuis would require “tens of millions of euros” by the end of the year if the number of people attempting to cross the border continued at the current pace.

Lithuania’s foreign minister Gabrielius Landsbergis told the Financial Times in June that Belarus was “weaponising” illegal immigration to put pressure on the Baltic country over its housing of several opposition leaders. Since then, the flow of illegal immigrants from Iraq, Syria, and several African countries has increased sharply.

Iraqi diplomats visited Vilnius at the end of last week after Lithuania’s foreign minister flew to Baghdad in mid-July. Johannson said on Monday that EU diplomats were engaged in “intensive contacts” with Iraqi officials, which she said were “more constructive than we had hoped”.

State carrier Iraqi Airways offers flights from four Iraqi airports to Minsk, according to its website. Former Estonian president Toomas Ilves suggested on Twitter that the EU could cut its aid to Iraq “immediately until they stop these flights”.

Speaking at the border with Belarus on Monday, Johansson added that the tents provided by Lithuania were unsuitable for families. Lithuania’s interior minister Agne Bilotaite said she hoped the number of illegal migrants would subside in the coming months but that Vilnius was planning to build some housing to accommodate them over the upcoming winter.



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