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US to host Armenia-Azerbaijan conflict talks

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The Trump administration is seeking to mediate a solution to the deadly conflict in Nagorno-Karabakh as it tries to pull off a foreign policy victory ahead of next month’s US elections.

The news that Mike Pompeo, US secretary of state, will host the foreign ministers of warring Armenia and Azerbaijan in Washington on Friday comes after Democratic presidential candidate Joe Biden criticised the Trump administration’s “passive disengagement” from the crisis.

Fighting for control of Nagorno-Karabakh, an Armenian-run enclave within Azerbaijan, erupted last month in the worst clashes since a war over the territory ended in 1994. Hundreds of troops and civilians have been killed and tens of thousands of people displaced in three and a half weeks of fighting, marked by the use of drones and heavy artillery against populated areas.

Zohrab Mnatsakanyan, the Armenian foreign minister, and Jeyhun Bayramov, his Azeri counterpart, will travel to Washington after talks with Sergei Lavrov, Russian foreign minister, in Moscow on Wednesday.

Attempts by Russia, the traditional power in the Caucasus, to end the fighting have been unsuccessful, amid strong support for Azerbaijan from Turkey. A Moscow-brokered ceasefire fell apart almost immediately and subsequent efforts to pause the conflict have failed.

“The US has a positive role — as a mediator, as a superpower, they can have influence,” Varuzhan Nersesyan, Armenia’s ambassador to the US, told the Financial Times. He said the country expected the US to exert pressure over Turkey, which he described as “a full participant” in the war.

“The United States as a leading member of Nato also can put pressure on Turkey to immediately stop this aggression,” Mr Nersesyan said, adding that he wanted Turkey to withdraw “terrorists” and military equipment from Azerbaijan and stay neutral.

Nagorno-Karabakh map

Turkey has denied sending Syrian mercenaries to support the Azeri military, despite claims to the contrary by middlemen who say they have helped with recruitment.

Turkish president Recep Tayyip Erdogan has offered vociferous support to Azerbaijan’s military campaign while Ankara has supplied Turkish-made armed drones to the Azeri armed forces.

Mr Pompeo last week called on the warring parties to implement a ceasefire and stop targeting civilian areas, but since then has appeared to endorse Armenia, which has a defence treaty with Russia, against Azerbaijan, which the US and Armenia accuse of benefiting from support from Turkey.

“We’re hopeful that the Armenians will be able to defend against what the Azerbaijanis are doing,” Mr Pompeo told WSB Atlanta radio station last week, pointing out that Turkey was increasing the risk by stepping in to “provide resources” to Azerbaijan.

“Third-party countries” should “not be coming in to lend their firepower to what is already a powder keg of a situation”, Mr Pompeo said.

US secretary of state Mike Pompeo will host the foreign ministers of Armenia and Azerbaijan in Washington © Balce Ceneta/Pool/Reuters

Last week Mr Biden accused the Trump administration of “coddling Ankara”. President Donald Trump has regularly praised Mr Erdogan, despite rising tensions between the US and Turkey over a number of issues.

Mr Biden said that since the outbreak of hostilities last month, neither Mr Trump nor Mr Pompeo “has placed a single phone call to the leaders of Armenia and Azerbaijan, even as the region goes up in flames”. He called on Washington to work with Europe to de-escalate the fight than “delegating the diplomacy to Moscow”.

Mr Pompeo is due to meet both foreign ministers separately, although the ambassadors of each country to Washington told the FT they did not preclude the possibility of a three-way meeting.

But Elin Suleymanov, Azerbaijan’s ambassador to the US, said people should be “realistic” about the possibility of a US-brokered breakthrough, and warned that he did not want his country to become a victim of a competition between the co-chairs of the Minsk Group — France, Russia and the US — which has spent decades trying to mediate a solution to the long-running conflict.

“It’s not about the US being more successful than Russia or Russia being more successful than US,” he said.

Mr Suleymanov said he wanted to see other members of the wider Minsk Group — which includes Turkey — become more involved in resolving the crisis.

Mr Erdogan has voiced scepticism about the value of a ceasefire, and cast doubt on the motivation of those seeking to secure one. “The west is not on Azerbaijan’s side,” he said on Sunday as he accused western nations of supplying weapons to Armenia. 

“Russia, the US and France would not give back our Azeri brothers their own land. May god help them [in this effort to reclaim it]. I believe that they will save these lands from the Armenians.”

Thomas de Waal, an expert in the region at Carnegie Europe, said the US has been “too disengaged on this issue to exert any serious influence”.

“The momentum is now all behind Azerbaijan’s military operation on the ground,” he said, adding that even Russian diplomacy was struggling to respond. “So I doubt very much the USA can offer anything, all the more so in the dying days of an administration. But if, as looks likely, the conflict worsens and the Armenians of Karabakh continue to suffer, there will definitely be a huge outcry from the large Armenian-American community.”

US state department, which has yet to confirm the meetings, did not reply to a request for comment.



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‘After a year we’re back to square one’: Milan locked in Covid’s grasp

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This time last year, chef Andrea Berton thought customers “might be overreacting” when they began cancelling tables at his Michelin-starred Milan restaurant amid a rise in cases of the concerning new coronavirus.

“It was a strange atmosphere,” he recalled this week. “The restaurant was suddenly empty at lunchtime and international customers kept calling to cancel bookings and events around the Salone del Mobile,” he added, referring to Milan’s annual furniture fair.

Neither he nor anyone else could have foreseen what would happen next. Days later, on March 8, Italy’s government ordered the immediate lockdown of the wealthy Lombardy region that includes Milan in an effort to stem the spread of Covid-19. The unheard-of restrictions were extended across the whole country the following day, confining 60m people to their homes.

It was the moment that Europe finally woke up to the threat from a virus that had emerged in China around the turn of the year. Within weeks, the entire continent — and soon the whole world — had been brought to heel by the pandemic.

“We were confronted with a virus we knew nothing about,” said Francesco Passerini, mayor of the small town of Codogno, an hour from Milan, where one of Italy’s earliest confirmed Covid-19 cases had been discovered in late February. “We didn’t know how to protect our community and we had people who were very ill. It felt like an impossible fight.”

Doctor Annalisa Malara with a patient in the coronavirus intensive care unit at a hospital in Lodi, near Milan, last month
Inside a coronavirus intensive care unit at a hospital in the city of Lodi, near Milan © Emanuele Cremaschi/Getty Images

A year on, an end to Europe’s coronavirus crisis still seems some way off despite the hope offered by vaccines. Most of the continent’s 750m citizens continue to endure curbs on their daily lives and the economic and social toll has been enormous.

In Italy — as in some other EU countries such as nearby Greece and the Czech Republic — the number of new infections is rising as concerns intensify over the threat from new variants. Lombardy, still Italy’s worst-affected region, is grappling with thousands of new cases daily and hundreds of deaths each week.

On Friday, a new two-week partial lockdown came into force across the region, with offices closed and employees told to work from home. Schools and playgrounds are shut and hospitality and travel are banned, although shops remain open — for now.

Yet as cases tick higher, experts fear it is only a matter of time before the curbs are extended.

“It won’t be long before the whole country goes back into the ‘red zone’,” said Guido Bertolaso, Lombardy’s vaccine adviser, this week, referring to the most stringent level in Italy’s coloured tier system.

Chart showing that cases and ICU admissions are rising again in Lombardy, with the number of ICU patients climbing 30 per cent in the last week

“Unfortunately it’s not over,” said Passerini, the Codogno mayor. “But it’s not comparable with last year because we’ve learned to live with the virus and now we have a vaccine. So we have something to look forward to.”

Looking back evokes painful memories. The most vivid was the day he and other volunteers had to empty a church to make room for dozens of coffins. “I remember watching the dead bodies being brought in and the church, a place of hope, suddenly turn into a morgue. I couldn’t believe it was happening,” he said.

In the weeks and months that followed, Carla Sozzani, founder of 10 Corso Como, a cultural, shopping and dining destination in Milan’s nightlife district, could not get used to the silence in a city known as a teeming hub for industry, banking and fashion.

“The only noises you could hear, day and night, were the ambulances and the drones they used to check nobody was leaving their homes,” she said. “It was unsettling.”

Mired in a series of lockdowns, Milan has welcomed only a fraction of the 10m tourists who came in 2019, a shortfall that has put immense strain on its economy.

There is hope that the new government of Mario Draghi, an experienced crisis manager who formerly ran the European Central Bank, can bring improvements by speeding up the vaccine rollout and leading an economic recovery.

Sozzani, a self-confessed optimist by nature, was certain that Milan would regain its vigour in time for the rescheduled Salone del Mobile in September, once more people had been inoculated. “The fair is a symbol of Milan and it will represent its rebirth,” she said.

Chef Andrea Berton has been forced to close his Michelin-starred Milan restaurant once again

In a sign of his frustration at the slow rollout, Draghi has moved to block the export of 250,000 Oxford/AstraZeneca doses destined for Australia so they could be used in Italy. As of this week, however, under 6 per cent of Italians had received a first vaccine dose.

One Milan-based anaesthesiologist, who did not wish to be named, also warned that intensive care units in hospitals across the region were rapidly filling up again.

“It reminds me of last spring,” she said. “The vaccine makes us hope for the best but we need to plan for the worst, because the rollout is too slow and people are dying.”

Berton was this week forced to close his restaurant again, a “stop-go approach” that he said would be the death of his and other businesses in the city.

“I would never have imagined it would last this long,” he added. “After a year we’re back to square one.”

 



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EU and US agree to suspend tariffs in Airbus-Boeing dispute

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The EU and US have agreed to suspend punitive tariffs related to their longstanding feud over aircraft subsidies, in the first breakthrough in trade relations since President Joe Biden took office. 

The two sides reached a deal after intensive talks, according to people familiar with the discussions, in a sign that the 16-year-old transatlantic trade battle over state aid to Airbus and Boeing could be coming to an end. 

The accord, announced by Ursula von der Leyen, European Commission president, means both sides will suspend tariffs linked to the dispute for four months. The duties have hit products ranging far beyond aircraft, encompassing an eclectic array of goods such as US self-propelled shovel loaders, French wine and even US ornamental fish.

In a statement issued after a call with Biden, von der Leyen said: “President Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of four months.

“We both committed to focus on resolving our aircraft disputes, based on the work of our respective trade representatives,” she said.

The goodwill gesture is intended to prepare the ground for negotiations on a permanent solution to the dispute by setting joint rules on permissible aircraft subsidies.

The US trade representative’s office said that a settlement was needed to address challenges posed by new entrants to the aircraft sector from China. Beijing has made it a priority to break the global duopoly that has dominated for decades.

It added that limits on future subsidies and monitoring and enforcement mechanisms would be part of a deal between the EU and US.

A European official said the announcement came “earlier than expected”, given that Biden’s nominated trade representative Katherine Tai has yet to be confirmed. Countering China and setting transatlantic standards for the aircraft industry were keys goal, the official said.

One European diplomat said that four months would be “enough time to focus minds while still being very do-able”.

The deal came a day after the UK and US came to their own arrangement whereby Washington also agreed to suspend punitive tariffs linked to the dispute for four months.

The UK had already unilaterally stopped imposing its own tariffs at the start of this year. EU officials and other trade experts have questioned whether the UK would have had the right to continue to impose them anyway, given its exit from the bloc’s customs union.

Brussels imposed extra tariffs on $4bn of US goods in November, covering a wide range of products including sugarcane molasses, casino tables and fitness machines. 

By then the US had already imposed extra duties on $7.5bn of European exports — the result of Washington’s own World Trade Organization victory against aid to Airbus. 

Brussels sees today’s step as a breakthrough that can pave the way for broader co-operation on trade after the tensions of the Trump era — tensions that at times threatened to boil over into a full-scale trade war.

The US-EU aircraft subsidies dispute is one of the longest-running cases in WTO history. Both sides have been found over the years to have failed to properly implement WTO panel rulings on illegal subsides. 

The battle dates back to 2004, the year after Airbus overtook its US rival in terms of deliveries for the first time. Having earlier brokered an agreement with the EU on state aid in 1992, the US launched a case against subsidies for the European group that dated back to the 1970s. Initially the US claimed that $22bn in illegal funding had been given to Airbus.

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The EU followed up a few months later with a challenge of its own, originally claiming $23bn in illegal aid was offered to Boeing.

The two sides have long remained far apart on the terms of any agreement on how to fund new aircraft development. But with both Airbus and Boeing focused on recovering after the coronavirus pandemic and a hiatus in new commercial aircraft development, industry experts said the timing was right.

The deal will come as a relief to aircraft manufacturers and other businesses on both sides of the Atlantic. French wine producers and Italian cheesemakers have been among those in the vanguard of calls for an end to the dispute. The spirits industry has also been among the US sectors strongly urging a solution. 

Airbus welcomed the decision to suspend tariffs. The company said it supports “all necessary actions to create a level-playing field and continues to support a negotiated settlement of this longstanding dispute to avoid lose-lose tariffs”.

Boeing said it hopes the deal would allow for talks to “bring a level playing field to this industry”.

 



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US suspends tariffs on UK exports in Airbus-Boeing trade dispute

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The US will temporarily lift punitive tariffs on £550m worth of UK exports such as Scotch whisky and Stilton cheese, imposed as part of a row with the EU over subsidies to Boeing and Airbus, in an attempt to de-escalate one of the longest trade disputes in modern history.

The move follows the UK’s unilateral decision to suspend tariffs against the US from January 1, which took both Brussels and Airbus by surprise. Brussels has disputed that the UK had the right to act unilaterally in a trade dispute between the EU and the US when it has left the bloc.

Liz Truss, UK international trade secretary, said she was delighted that US president Joe Biden had agreed to suspend tariffs on UK goods for four months. The move would help to improve transatlantic relations, she said.

The US trade representative’s office confirmed that it would temporarily suspend the tariffs, to allow time to negotiate on settling the aircraft dispute.

The Johnson government has come under heavy fire over the tariffs in particular from the Scotch whisky industry, whose exports to the US plunged 30 per cent last year.

“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenmorangie, the more money those producers will have to invest in their businesses, their staff and futures,” Truss said. “Trade equals jobs.”

The US-EU aircraft subsidies dispute is one of the longest-running cases in the World Trade Organization’s history, reflecting the importance of the industry to each side and the intense competition between Boeing and Airbus.

The battle dates back to 2004, the year after Airbus first overtook its US rival in terms of deliveries. Both sides have been found guilty of providing billions in illegal subsidies to their aircraft makers.

Brussels was last year given the green light by the WTO to impose tariffs of up to 25 per cent on $4bn worth of US products, after Washington announced duties on $7.5bn worth of European imports. 

Both Boeing and Airbus welcomed any move that could help to bring the two sides together. “We welcome USTR’s (US Trade Representative) decision to suspend tariffs for allowing negotiations to take place,” Airbus said in a statement. “Airbus supports all necessary actions to create a level-playing field and continues to support a negotiated settlement of this longstanding dispute to avoid lose-lose tariffs.”

Boeing said: “We commend this action by the US and UK governments creating an opportunity for serious negotiations to resolve the WTO aircraft dispute. A negotiated settlement will allow the industry to move forward with a genuinely global level playing field for aviation.”

However, Britain’s departure from the EU has raised questions about how effective any UK-US suspension can be. With no precedent to follow, trade lawyers have said it is unclear whether the UK still had a right to impose or suspend tariffs that were granted to the EU. 

Whitehall officials insisted the UK had the right to revoke retaliatory tariffs. One individual close to the process said: “This whole issue shows the benefit of being an independent trading nation . . . if we can get this done, it paves the way to a deeper trading relationship with the US and will help free trade deal negotiations.”

Despite this, there appear to be very few signs of progress in the trade talks between the US and UK. In January, White House press secretary Jen Psaki indicated that securing a deal would not be a priority for the Biden administration.

Last month, Biden’s nominated top trade adviser Katherine Tai told senators that she would “review the progress” of the talks that had taken place between the two sides over the previous two and a half years.

Both the EU and the US have long argued for a resolution to the dispute, but have remained far apart on the terms of any agreement on how to fund new aircraft development. 

After Biden’s election as US president, there was a feeling in Europe that a deal could be within reach. There has been growing speculation that talks were progressing.

However, in late December, the US further raised tariffs on European goods, specifically targeting French and German products.

The EU has said it is in intensive talks with the US in a bid to quickly secure a deal to remove punitive tariffs. 

“We have proposed that both sides agree to suspend tariffs for six months,” a European Commission spokesperson said. “This will help restore confidence and trust, and thus give us the space to come to a comprehensive and durable negotiated solution.”

A US administration official said that while he could not indicate whether there were plans to imminently remove the EU tariffs, the Biden team was continuing to review the dispute. “The goal is to resolve the dispute and create a level playing field,” the official said. 

Both Brussels and Washington are keenly aware that the rules need to be set before China becomes a significant competitor to Boeing and Airbus.

China is expected to be the fastest-growing market for commercial aircraft over the coming decades and Beijing has made it a strategic priority to break the global duopoly in an attempt to claim some of that market for Chinese industry. Later this year, China’s Comac is expected to have fully certified its first major commercial aircraft, the C919 single aisle.



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