By Gideon Rachman

Angela Merkel, the German chancellor, is right that the current refugee crisis is forcing Europe to consider whether it can live up to its own, self-proclaimed values. Unfortunately, the answer is likely to be “No”.

In his 2011 book ‘Vanished Kingdoms: The History of Half-Forgotten Europe’, the historian Norman Davies writes: “That the United Kingdom will collapse is a foregone conclusion. Sooner or later, all states do collapse… Only the ‘how’ and the ‘when’ are mysteries of the future.”

A ‘Yes’ vote in Scotland’s September 18 referendum is a distinct possibility. According to Peter Kellner, one of Britain’s foremost opinion poll experts, the pro-independence forces were, by the start of this month, gaining about four votes for every one lost, whilst the unionists were losing about two supporters for every one they were winning. Read more


By Christian Oliver and Richard Milne

Europe’s leaders are preparing for a trade war with Russia by mapping out the battlefields on which they see the highest risk of casualties.

In data released on Friday, the European Commission identified the agricultural exporters most vulnerable to Moscow’s trade embargo on EU produce. Spanish peaches, Dutch cheeses and Polish apples find themselves squarely on the front line.

Polish fruit exports to Russia were valued at €340m last year and win the dubious honour of being the most exposed crops. The Poles have launched an impassioned public campaign to try to switch to more domestic consumption with their “Eat an apple to spite Putin” slogan.

The Netherlands (with dairy exports to Russia of €257m in 2013) and Finland (€253m) are at most risk on the milk and cheese front. Spain and Greece are vulnerable in relation to citrus, with stoned fruit such as peaches and nectarines also being described by farmers as being at crisis point in terms of storage overload and no market to go to. Read more

  • Edward Luce examines EU-US drift: “Without US leadership, the transatlantic alliance will not spring back to life.”
  • Philip Stephens argues that London’s Heathrow airport has turned its “manifest failings into a potentially golden asset” by convincing travellers that “the only way to improve the dismal lot of passengers is guarantee Heathrow still higher profits”.
  • David Pilling asks: what is the real point of GDP and can it ever be accurately measured?
  • Smart view: the French government hopes that its package of business reforms will encourage investment – the FT’s Michael Stothard sees whether France’s business community is convinced.
  • The conflict between China and Vietnam in 1979 lasted less than a month, but the legacy of ferocious fighting permeates the sour relations between the two countries even now.

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Croatia's economy is not so sunny

The slow, painful healing of the Greek economy after a catastrophic debt crisis raises an interesting question. Which country now holds the title of No.1 Economic Basket Case of the European Union?

The answer is surely Croatia. It is a small country (4.3m people, not even 1 per cent of the 28-nation EU’s 506m inhabitants) that did not join the EU until last July. It is not a eurozone member. It has gorgeous islands and beaches where life seems distinctly pleasant. So Croatia and its economic troubles often slip under everyone’s radar.

But Croatia is now in its sixth successive year of recession. During this time it has lost almost 13 per cent of its gross domestic product. Unemployment is about 17 per cent of the workforce, and among young people the rate is close to 50 per cent. Read more

The focus in last week’s European elections was on the seismic waves of the distinct currents of Euro-populism and reaction that “earthquaked” to the top of the polls in France, Britain (or at least England), Denmark and Greece. But arguably the most intriguing insurgency was Podemos (We Can) in Spain, a phenomenon worth examining outside the swish and swirl of populism.

Much of what I have seen written about Podemos has them “coming out of nowhere” – a cliché employed by politicians and analysts that means “we didn’t see them coming”. Yet a three-month-old party with a budget of barely €100,000 shot into fourth place with one and a quarter million votes and five seats in the European Parliament – similar to Syriza, the Greek left-wing party they plan to hitch up with.

The eruption of Podemos and its compellingly outspoken leader, Pablo Iglesias, has already triggered the fall of Alfredo Perez Rubalcalba, the Socialist secretary general who has presided over the party’s worst electoral performance since democracy was restored in 1977-78. But while obviously a rising current of a new left, Podemos could be a broader catalyst for political change in Spain and beyond. Read more

The differing responses to the Ukraine crisis
This week, German Chancellor Angela Merkel is in Washington for talks with President Barack Obama, and Ukraine will top the agenda. Washington has led the way on sanctions, imposing asset freezes and travel bans on dozens of senior Russians and scores of companies, in an attempt to show Russia’s President Vladimir Putin that his interference in Ukraine will bring rising economic costs. The EU on the other hand, seems deeply resistant to tougher economic sanctions, given the much more important ties between Europe and Russia. In this week’s podcast, Ben Hall, world news editor, is joined by Geoff Dyer, Washington correspondent, and Stefan Wagstyl, Berlin bureau chief, to discuss how the two leaders should handle the escalating situation

Wednesday night’s debate in Britain between the standard-bearers of the pro- and anti-EU camps came out as a victory for the eurosceptic, Nigel Farage, over the pro-European deputy prime minister, Nick Clegg. That is not my judgement, it is the verdict of the polls. A snap poll showed that 57% of viewers had Farage winning, whereas 36% had Clegg ahead. That verdict is extra-depressing for pro-Europeans since the polling company weighted the audience to make sure that it was as neutral as possible. Read more

There was good news for Europe’s farmers this week after a survey of EU citizens showed strong public support for the much criticised common agricultural policy. French farmers, who rely on EU subsidies for about half their income, will be especially glad to hear that Europeans polled by the latest Euro Barometer survey place an increasing importance on the challenges of developing agriculture while preserving the environment .

The French certainly believe the farmer is crucial to safeguarding the countryside as well as producing their food as the recent Salon de l’Agriculture showed. One of the world’s largest food and farm shows, it is held every year close to heart of Paris and this year drew a record 703,000 visitors.

People come here to revel in the best of the French terroir – the people, the food and the drink that make up rural France. The Salon is a mandatory stop for any politician with ambition, and this year everyone from President Francois Hollande to hopefuls in the race for Paris mayor made an appearance. Read more

Orient Express

I was passing through eastern Croatia the other day and found myself in Vinkovci, a pleasant town not far from the Danube river border with Serbia. As any Agatha Christie enthusiast will tell you, Vinkovci is the place in Murder on the Orient Express whereSamuel Ratchett, a shady American traveller, is bumped off while the famous train is stuck in a snowdrift. Read more

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  • The United Arab Emirates is hoping to deliver public services using drones.
  • Mitochondrial replacement was developed in the UK, but it might be lost to the US because of government procrastination.
  • Wondering what will happen now that the Swiss have backed immigration quotas? Take a look at our Q&A on the topic.
  • Gideon Rachman looks at what it means now that two German institutions have registered objections to the policies underpinning the euro. He has also mulled over whether the EU should take punitive action over the Swiss vote – prompting quite some debate.
  • Australian authorities have published a graphic novel, seemingly aimed at deterring asylum seekers.
  • The New York Times looks at the conflict faced by Palestinians who opt to take jobs in Israeli companies in the occupied West Bank.
  • Some Russians are mourning the pre-Putin, pre-Olympic Sochi of their childhoods.

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Guy Verhofstadt (Nicolas Maeterlinck/AFP/Getty)

The three main candidates to be the next head of the European Commission are now clear: Martin Schulz will be the left’s candidate; Guy Verhofstadt will be the standard-bearer for the liberals; and Jean-Claude Juncker will be the candidate of the centre-right, having apparently secured the all-important backing of Angela Merkel. (The German chancellor’s office has declined to confirm officially that Merkel is backing Juncker – but press reports, including in the FT, seem pretty certain.)

The most striking thing about this list is how very traditional it is. The EU has just been through a wrenching crisis that has raised questions about its very survival. And it is also now a club of 28 countries. But the three main candidates for Commission president are all traditional European federalists – drawn from the six founding member states. Read more

Courtesy of FastFT:

Iranian president Hassan Rouhani is giving a high-profile keynote address at the World Economic Forum in Davos, Switzerland on Thursday. Read more

Protesters in Kiev's Independence Square, Dec 2013 (Getty)

November 22 2004 In Ukraine’s second round election, the Central Electoral Commission declares pro-Russian incumbent Viktor Yanukovich the winner. Viktor Yushchenko, the leader of the opposition decries widespread voter fraud and electoral irregularities.

November 23 2004 An estimated 500,000 protestors assemble in Kiev’s Independence Square. The Orange Revolution is born. Ukraine’s Supreme Court suspends publication of the election results pending an investigation.

December 8 2004 Following the Supreme Court’s annulment of the elections, a December re-run of the disputed presidential election is announced. Protesters scale down their demonstration and government employees return to work. Read more

The tug of war over the future of Ukraine
Ukraine finds itself caught between Russia and the EU ahead of a summit next week in Vilnius, where the country’s president Viktor Yanukovich will have the opportunity to sign a major free trade deal and political association agreement with the EU. Russia has intensified pressure on the country recently not to sign the deal in favour of joining a Russian-led Eurasian Economic Union. In this week’s podcast, Gideon Rachman is joined by Neil Buckley, Eastern Europe editor and Peter Spiegel, Brussels bureau chief to explain how the situation is likely to develop.

By Luisa Frey
♦ Typhoon Haiyan should remind us of something basic: the Philippines remains an extremely poor country, says David Pilling.
♦ Brazilian President Dilma Rousseff’s requirement that online information concerning citizens to be kept within the country sparks furore, writes the FT’s Brazil correspondent Joseph Leahy.
The EU is trying to gather six former Soviet states in its Eastern Partnership programme. Ukraine, the centre of attention, could face Russia’s retaliation if joining.
♦ In an Iran hobbled by sanctions, organization Setad provides an independence source of revenue and patronage for Supreme Leader Ayatollah Ali Khamenei, reports Reuters.
♦ John Kerry’s Saturday-night meeting with his counterpart Laurent Fabius was a late turning point in three days of intense talks about a deal on nuclear Iran, according to The Guardian.
♦ In China, dozens of couples travelled to the birthplace of Mao Zedong to participate in a collective wedding. This comes amid growing divisions over how to define Mao’s legacy ahead of the 120th anniversary of his birth, reports Sinosphere, The New York Times’ China blog.
♦ The mystery surrounding recently discovered masterpieces stolen by the Nazis reveals much about Germany’s attempt to deal with its past, writes Spiegel Online. Read more

By Gideon Rachman

America’s debt-ceiling crisis achieved something quite remarkable. It made the EU look well governed by comparison. Both the EU and the US systems are weighed down with checks and balances that make it hard to get things done. But Europe currently has one thing going for it that America lacks. All the most important decision makers in Brussels are committed to making the system work. There are no Tea Party types who regard compromise as a betrayal.

♦ Zhou Yongkang, a former security chief and member of the Chinese Communist party’s Standing Committee of the politburo, looks set to pay the price for defending Bo Xilai as China cracks down on corruption.
♦ Although Ireland has been lauded for its austerity programme and is about to leave the EU and IMF bailout, concerns persist that its recovery will run out of steam.
♦ Michael Goldfarb at the New York Times thinks the London property market “is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualised rate of return of around 10 percent.
♦ Take a look at these photos: the Mark Twain branch of Detroit public library is another casualty of the city’s bankruptcy.
♦ Yassin Al Haj Saleh, who was jailed for 16 years under the Assad regime and whose family was jailed by Islamist rebels, says a poignant goodbye to Syria. Read more

♦ The FT’s James Politi visits a military base struggling to cope with the effects of sequestration.
♦ One of the FT’s new readers had some questions about her first edition of the pink paper, including: “Why is George Osborne taking legal action against the EU cap on bankers’ bonuses when it says here that these chaps at ICAP were demanding bonuses in return for manipulating the Libor market?
♦ Hassan Rouhani has raised hope among his countrymen of a solution to the crisis over Iran’s nuclear programme.
♦ The ebb in support for Argentina’s president Cristina Fernández has been matched by the rise of Sergio Massa, one of the strongest potential candidates for the 2015 elections.
♦ News reports of the US-intercepting messages between the heads of Al-Qaeda and AQIM, discussing an imminent terrorist attack, have caused more immediate damage to counterterrorism efforts than Edward Snowden’s leaks.
♦ The New York Times profiles Rosario Crocetta, the gay, Catholic leftist taking on corruption in Sicily.
♦ In Damascus, a war-weariness has settled over the city: “there is a sense that the war will continue, perhaps for years, making the country’s rifts progressively harder to heal.”
♦ When Romanian prosecutors announced that Alexandru Visinescu would be put on trial over his role in Communist-era abuses, it raised hopes that Romania may be able to shake off its national amnesia about its brutal past. Read more