ESADEgeo Daily Digest, 12/06/2019

Washington Post – Raphael Tsavkko Garcia / Brazil’s democracy suffers another blow with ‘Operation Car Wash’ leaks

  • The Intercept has disclosed old private messages between Brazil’s now-Justice Minister Sérgio Moro and the task force of “Operation Car Wash,” the corruption probe started in 2014 that led to the conviction and jailing of former president Luiz Inácio Lula da Silva.
  • Moro, a former crusading anti-corruption judge, exchanged messages with members of the attorney general’s office. The messages show clear collusion between a judge and prosecutors to convict those involved in the operation.
  • Beyond the immediate implications — such as the possible reversal of convictions and the political impact to Moro and to President Jair Bolsonaro’s plans to appoint him to the Supreme Court — there’s more at stake for Brazil. The revelations could be a mortal blow to institutional credibility.
  • It’s important to note that no evidence has emerged exonerating da Silva and others convicted by the operation. It’s possible that the prosecutions were flawed, even marked by illegal practices, but serious crimes were still committed.

Financial Times – Martin Wolf / Jens Weidmann casts a shadow over the ECB

  • Who should succeed Mario Draghi as president of the European Central Bank? That is the most important decision European governments will take this year. The next president of the ECB might determine whether there is a eurozone, perhaps an EU, at the end of the term in 2027.
  • Draghi has transformed the ECB from a descendant of the old Bundesbank into a modern central bank. It is doubtful whether any of the candidates to replace him can fill his shoes. The riskiest by far would be Bundesbank President Jens Weidmann, who has opposed many of Draghi’s innovations.
  • Yet the one thing that could reconcile Germans to how the ECB must behave is recognition of that reality by a German president. A realistic and reasonable German president would be a great boon. Unfortunately, Weidmann has so far validated the sceptical German view about the ECB’s policies.
  • Above all, the decision on the next ECB president must not be the product of horse-trading among governments. The question is whether the next president can and will do the job as Draghi defined it. Everything else is noise.

Euractiv / UK-South Korea deal seeks to calm Brexit anxiety in oil markets

  • On Monday, the UK and South Korea agreed to adopt a free trade deal following the country’s exit from the EU that will replicate an existing EU-South Korea deal exempting the country from a 3% import tariff on oil. It is the UK’s first post-Brexit deal struck with an Asian country.
  • The deal follows four months which saw South Korean imports of UK crude fall to zero. South Korea is normally a large buyer of UK crude, but fears over the future status of the exemption after Brexit was causing buyers to back off.
  • The uncertainty around future trade arrangements comes as oil refining margins have been falling in Northwest Europe. According to Bloomberg, three out of seven refining configurations in Northwest Europe are losing money in the face of weak demand for crude.
  • In March, the International Energy Agency warned that “a disorderly Brexit could lead to a reduction in the rate of growth of international trade and oil demand.”

Al-Monitor – Shlomi Eldar / Despite US pressure, expect regional players to phone in Manama meeting

  • Two weeks prior to the opening of the June 25 Bahrain conference, where the US administration plans to unveil the economic component of its Israeli-Palestinian “deal of the century,” Israel is uncertain the event will take place. The Palestinians announced on May 23 that they would boycott the event.
  • Israel hopes that US presidential envoys Jason Greenblatt and Jared Kushner, faced with an event that seems to be sputtering, will delay the meeting at least until the winter months, when the Israeli political picture becomes clearer.
  •  “It is our assessment that even if the conference is held, the really important states such as Egypt and Jordan and even Saudi Arabia will send minor delegates,” said an Israeli official. And they would not attend out of any sense of responsibility, but “because of their egos.”
  • In a New York Times interview on June 8, US Ambassador to Israel David Friedman said Israel has the right to annex parts of the West Bank. His remarks gave Prime Minister Benjamin Netanyahu a boost, but they may chase away those who are still undecided on whether to fly to Bahrain.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces.

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