ISIS-linked news agency releases video of Berlin attacker swearing allegiance to the radical group

Tunisian migrant Anis Amri was shot and killed in Milan early on Dec. 23, after a massive manhunt. The 24-year-old suspect of the Berlin Christmas market attack shot a police officer in Italy before he killed in a shoot-out. (Jenny Starrs/The Washington Post)

By Anthony Faiola, Souad Mekhennet and Stefano Pitrelli December 23 at 10:39 AM

BERLIN — The suspect in the Berlin Christmas market attack was shot dead Friday by an Italian police trainee after an identity check in Milan, ending an international manhunt but raising new fears as an Islamic State video purported to show the attacker calling for more bloodshed in Europe.

The 24-year-old Tunisian, Anis Amri, was killed following a dramatic encounter in the Piazza I Maggio in the Sesto San Giovanni area outside Milan, after a two-man patrol stopped him for questioning around 3:15 a.m. on suspicion of burglary. 

One of the officers requested his identification. Amri responded by pretending to fish in his backpack for documents. Instead, he pulled a gun, shooting one officer in the shoulder.

Amri, who spoke Italian, then ducked behind a car, shouting “poliziotti bastardi” — police bastards. The second patrolmen — trainee Luca Scatà — fired back, killing Amri, according to Italian officials.

“He was the most-wanted man in Europe” said Italian Interior Minister Marco Minniti. “There is absolutely no doubt that the person killed is Anis Amri.”

The suspect in the attack, 24-year-old Anis Amri, was killed in a shootout with police in Milan on Dec. 23.

[Refugees in Germany fear backlash after Berlin truck attack]

In Germany, Federal Attorney General Peter Frank said fingerprints confirmed Amri was the man killed. But German and European authorities grappled with how Amri — who Italian authorities say traveled by train through France — managed to slip out of Berlin and make it all the way to Milan almost three days after he was named as the prime suspect.

Chancellor Angela Merkel on Friday thanked Italian authorities, while adding “the Amri case raises a number of questions . . . We will now press ahead and look into in how far state measures need to be changed.”

Hours after the shootout, the Islamic State-linked news agency, Amaq, released a video the purports to show Amri swearing allegiance to Abu Bakr al-Baghdadi, the self-proclaimed caliph of the Islamic State.

Speaking in black-hooded windbreaker on Berlin bridge, only 1.5 miles from the German chancellery, he called on Muslims in Europe to rise up and strike at “crusaders.”

“God willing, we will slaughter you like pigs,” he said in the video, whose date and location was not given but looked like it was filmed in winter weather.

He added, “to my brothers everywhere, fight for the sake of Allah. Protect our religion. Everyone can do this in their own way. People who can fight should fight, even in Europe.”

[Amid rising German fears, experts warn of ‘underage terrorists’]

The authenticity of the video could not be independently confirmed, but previous material released by Amaq has been credible.

Earlier, a statement carried on Amaq described Amri as inspired by the Islamic State.

In Oueslatia, Amri’s bleak home town in Tunisia, news of his death had reached his mother, five sisters and three brothers, who until the end held hopes that the German authorities were after the wrong guy. 

His 30-year old brother Walid Amri sounded distressed and was struggling to speak over the phone. Women were wailing in the background. 

“This is a very difficult time for the entire family,” he said, before his voice broke. 

While Amri’s death ended the hunt for the suspect who drove a truck into a teeming Christmas market on Monday, killing 12 and wounding dozens, it also raised a whole new set of questions.

Amri appeared to travel right under the noses of European authorities, though a circuitous route.

After leaving Berlin, Amri is believed to have traveled by train through the French city of Chambery and appears to have stopped in Turin, Italy, before arriving in Milan, said Alberto Nobili, coordinator of the anti-terrorism department at the district attorney’s office in Milan. Milan police say they have surveillance video placing Amri at Milan’s train station around 1 a.m. 

German officials said the investigation would accelerate toward possible accomplices and the route Amri took to escape Berlin. “If there are others who are guilty or accomplices, we will hold them accountable,” Merkel said.

[Truck attack may be part of ISIS strategy to sharpen divide between Muslims and others]

Nobili said Italian authorities were sharing ballistic information with the Germans to ascertain whether the gun used to shoot the Italian police officer was the same one used to slay the Polish driver whose truck Amri is believed to have hijacked on Monday before slamming into the Christmas market, killing 12 and wounding dozens.

His death in Italy also raised serious questions about the handling of the case by German authorities. German investigators only uncovered their single biggest clue — his wallet with identification left in the truck’s cabin — the following day after the attack, suggesting the delay may have facilitated his flight from Germany.

“We need to increase international collaboration against terrorism,” Gentiloni said.

Minniti said he had phoned the wounded Italian officer, Cristian Movio, and Scatà, an agent-in-training. Already, Facebook sites and other social media sites were popping up, including ““give Luca Scatà a medal” and “Luca Scatà world HERO.”

“Thanks to him Italians can have a Merry Christmas,” Minniti said.

By heading to Italy, Amri was, to some extent, retracing his steps. He had first arrived in Europe in April 2011 on the Italian island of Lampedusa, and spent four years in jail in Sicily, where Italian officials believe he was radicalized.

The news of Amri’s death came as German police said they had thwarted yet another terrorist attack planned against a shopping mall and arrested two brothers from Kosovo.

Authorities detained the brothers, aged 28 and 31, after receiving an intelligence tip-off, according to North Rhine Westphalia police. Security at the Centro Mall in the western German city of Oberhausen has been beefed up.

Amri had a criminal record in Europe and his native Tunisia, where he was accused of hijacking a van with a gang of thieves. Italian authorities jailed him in 2011 for arson and violent assault at his migrant reception center for minors on the isle of Sicily.

There, his family noted, the boy who once drank alcohol — and never went to mosque — suddenly got religion.

He began to pray, asking his family to send him religious books. The Italian Bureau of Prisons submitted a report to a government ­anti-terrorism commission on Amri’s rapid radicalization, warning that he was embracing dangerous ideas of Islamist ­extremism and had threatened Christian inmates, according to an Italian government official with knowledge of the situation. The dossier was first reported by ANSA, the state-run Italian news service.

The Italians tried to deport Amri but could not. They sent his fingerprints and photo to the Tunisian consulate, but the authorities there refused to recognize Amri as a citizen. The Italians, officials there say, could not even establish his true identity. Italy’s solution: After four years in jail, they released him anyway — giving him seven days to leave the country.

He had previously known links to Islamist extremists, and German efforts to deport him also failed because Tunisia had initially refused to take him back.

In Germany, the case was already having serious repercussions — with talk of pushing through stricter legislation on the deportation of migrants, particularly those with criminal records. The Germans are especially seeking to deport North Africans who have claimed asylum, and whose countries of origin have refused to take them back.

Merkel said Wednesday she had earlier spoken on the phone with Tunisian president Beji Caid Essebsi.

“I told the president that we have to significantly speed up the return process and continue to increase the number of returnees.” she said. “We can be relieved at the end of this week that an acute danger has ended. The general threat of terrorism, however, continues to exist, as it has for many years.”

Pitrelli reported from Rome. Stephanie Kirchner in Berlin contributed to this report.

Chinese media warns of U.S. showdown after Trump names trade adviser

U.S. President-elect Donald Trump speaks at election night rally in Manhattan, New York, U.S., November 9, 2016. Pic: Reuters

23rd December 2016

CHINESE state media on Friday expressed alarm and warned of a “showdown with the U.S.” after President-elect Donald Trump named Peter Navarro, an economist who has urged a hard line against China, to head a new White House National Trade Council.

Navarro is an academic and one-time investment adviser who has authored books such as “Death by China: How America Lost its Manufacturing Base”. The book was made into a documentary film about Beijing’s desire to become the dominant economic and military power in Asia.

“That individuals such as Navarro who have a bias against China are being picked to work in leading positions in the next administration, is no laughing matter,” the official English-language China Daily said in an editorial.

“The new administration should bear in mind that with economic and trade ties between the world’s two largest economies now the closest they have ever been, any move to damage the win-win relationship will only result in a loss for both sides.”

SEE ALSO: China: Prominent feminist warns Trump he is being monitored

The previous day, China’s foreign ministry said in reaction it was playing close attention to Trump’s transition team and possible policy direction, that cooperation between the two countries was the only correct choice.

The Global Times, an influential tabloid published by the ruling Communist Party’s official People’s Daily, said Trump’s decision over Navarro was “by no means a positive signal”.

“China needs to face up to the reality that the Trump team maintains a hard-line attitude toward China. It must discard any illusions and make full preparations for any offensive move by the Trump government,” the Global Times said in an editorial.

“China is powerful enough to withstand pressures from the Trump government. Beijing will get used to the tensions between the two countries. If Washington dares to provoke China over its core interests, Beijing won’t fear setting up a showdown with the U.S., pressuring the latter to pay respect to China.”

SEE ALSO: US firms warn of Chinese backlash over Trump’s tough trade talk

Trump, a Republican, made trade a centrepiece of his presidential campaign and railed against what he said were bad deals the United States had made with other countries. He has threatened to hit Mexico and China with high tariffs once he takes office on Jan. 20.

Navarro, 67, a professor at University of California, Irvine, advised Trump during the campaign.

As well as describing what he sees as America’s losing economic war with China, Navarro has highlighted concerns over environmental issues related to Chinese imports and the theft of U.S. intellectual property. – Reuters

Why Trump’s plan is a terrible idea for Israel, Palestine, and the wider Middle East.

BY HUSSEIN IBISH-DECEMBER 22, 2016

Among the many alarming ways in which President-elect Donald Trump might upend traditional American foreign policy, one of the most immediate and troubling concerns his pledge to move the U.S. Embassy in Israel to Jerusalem. Other successful presidential candidates, most notably Bill Clinton and George W. Bush, made the same promise, only, once inaugurated, to emulate all of their predecessors by invoking the executive waiver to the 1995 congressional mandate to relocate the embassy.

Trump, however, appears less inclined than either of them to back away from the idea. What awaits is a potentially colossal blunder — not just for Palestinians, but for America’s diplomatic reputation and standing, and also for Israel’s national security.

Trump’s persistence in giving the impression that he really does intend to move the embassy once in office seems to be part of a broader shift his administration is preparing to make toward Israel’s extreme right. His ambassador nominee, attorney David Friedman, who has counseled Trump in past bankruptcy proceedings, has a long history of extreme statements on the conflict and views wholly out of sync with both international law and long-standing U.S. policy toward Israel and Palestine. Friedman strongly supports aggressive settlement activity and categorically opposes a two-state solution, although, like most such advocates, he carefully avoids outlining what sort of political arrangement, precisely, he would like to see replace it. This is presumably because this vision constitutes something unspeakable in polite diplomacy — a permanent apartheid system complete with “self-ruling” Palestinian Bantustans in a de facto greater Israel that controls most of the land of the occupied territories without taking responsibility for most of its population. All of Friedman’s public statements express a position of maximal Jewish nationalism (he always uses the word “we” to describe Jewish Israelis), with virtually no concessions to Palestinian human or national rights or international laws or norms of conduct.

This appointment is troubling enough, assuming the Senate confirms Friedman (which it shouldn’t but may well do). Trump may be rewarding a loyal subordinate with a cherished appointment in a manner that plays fast and loose with policy and political realities but that could still be manageable because ambassadors don’t make policy. It’s going to be extremely difficult for Friedman, as U.S. ambassador to Israel, to have a reasonable relationship with anyone other than the Jewish Israeli ultra-right, but as long as he is merely the American representative, the actual policy damage could and should be limited and reversible.

The same cannot be said for the idea of moving the embassy to Jerusalem. Ever since Congress mandated the move in 1995, every president, including those who vowed to relocate the embassy, has invoked an executive waiver holding that it is not in the American national interest at the moment. Since 1947, the international community has, virtually unanimously, regarded Jerusalem as a corpus separatum whose future and precise political status must be determined through negotiations between Israel and the Arabs, particularly the Palestinians.

Because of the unanimous international consensus regarding the status of Jerusalem, no international embassies to Israel are currently located in the city, and almost all are in Tel Aviv. This has always been true of the United States and other major powers, although 24 countries did once have embassies in or near West Jerusalem. However, after Israel’s purported annexation of this occupied territory, in violation, as the U.N. Security Council has repeatedly pointed out, of “the inadmissibility of the acquisition of territory by war,” these missions were eventually all relocated. Should the United States move its embassy from Tel Aviv to Jerusalem, therefore, it would be taking the lead in abrogating an international consensus that has held for almost 70 years.

Not only would Washington be abandoning, and effectively trashing, the international consensus it played a leading role in building and maintaining over decades — as well as effectively discarding the idea that territory can’t be acquired militarily as stipulated by the U.N. charter — the United States would also be abandoning any hope of serving as an honest broker or effective negotiator between Israel and the Palestinians in the foreseeable future. Combined with the appointment of Friedman, it would send a very strong message to the Palestinians that Washington is no longer interested in securing a realistic or viable two-state solution, which has been the bedrock of American policy for decades.

The Palestinian response on the ground is hard to predict. But the potential for an explosion of outrage, and possibly violence, is obviously very great. Jerusalem is the most sensitive issue between Israelis and Palestinians, as the outbreak of the Second Intifada and other repeated instances in which it has served as a uniquely potent flash point have illustrated. Jerusalem brings together religious, nationalistic, symbolic, and ethnic sensibilities in a singularly powerful and dangerous mix. If Palestinians conclude that their future in what they consider to be their capital is being effectively foreclosed by American policy, an outraged, and even violent, response in the form of a spontaneous, or possibly even organized, uprising is extremely plausible — perhaps even inevitable, if not immediately.

For Israel, the benefits of a Jerusalem-based U.S. Embassy would be entirely symbolic, while the costs could be significant and substantial. Not only could the Israelis end up dealing with a new eruption of violence and unrest directly linked to the move; it could severely damage Israel’s regional posture and diplomatic gains with key Arab states. The embassy move would certainly violate the spirit, if not the letter, of Israel’s Washington-brokered peace treaties with Egypt and Jordan, and the reaction of these countries is hard to predict but unlikely to be insignificant. If nothing else, domestic political pressure would virtually guarantee that Cairo and Amman find some way of expressing their extreme discomfort, and broader cooperation with Israel will become far more difficult for both of them.

This applies even more to the Gulf Arab states, such as Saudi Arabia, the United Arab Emirates, and Qatar, which have entered into a cautious, politically sensitive, and positive re-evaluation of their relations with Israel in light of the shared perception of Iran as an overarching regional threat. While Israeli Prime Minister Benjamin Netanyahu and his allies have been exultant about the quiet progress that has been made with these Arab countries because of shared anxiety about Tehran’s agenda, the relocation of the U.S. Embassy to Jerusalem would likely prove a massive complication, if not a complete end, to these developments.

Along with other members of the Organization of Islamic Cooperation, the leading Gulf Arab states would almost certainly feel it necessary to practically demonstrate their objections to the relocation of the U.S. Embassy by finding some means of reasserting Palestinian, and even broader Christian and Muslim, claims on Jerusalem — and the most likely fallout would be a curtailment of security cooperation with Israel on matters concerning Iran’s nefarious activities in the Middle East. Adding such an additional layer of tension between Israel and the Arab states would be an enormous gift to Tehran and its regional alliance.

Moreover, for Palestinian diplomacy, the lesson will be all too clear: Israel preaches the pointlessness of purely symbolic gestures regarding national morale on the Palestinian side but wholeheartedly embraces them when it comes to issues such as Jerusalem. It will be impossible for Israel and America, if the U.S. Embassy is moved to Jerusalem, to successfully lecture the Palestine Liberation Organization about how pointless or quixotic purely symbolic moves at the United Nations and other international organizations and forums might be on the grounds that nominal gains with practical costs are foolish. Both the United States and Israel will have demonstrated that they don’t believe that at all and instead embrace symbolic moves that come at high costs when it suits them. There’s almost no question the Palestinians will take it as a virtual mandate to charge forward in international forms, ratcheting up as many symbolic victories as possible with a similar disregard for the practical consequences.

Israel’s national security establishment almost certainly understands these dangers, and it’s clear that much of it has and will be quietly counseling against any dramatic move to relocate the U.S. Embassy. Some half measures are possible: Building could be initiated on a site intended for a future U.S. Embassy but without much urgency and without actually relocating diplomats. Other gestures, short of a calamitous actual relocation, are also possible, as is the most likely and advisable course: the repetition of what other presidents have done in the past, which is abandon the campaign promise because it is bad for American policy, very dangerous for Israel’s national security, devastating to prospects for peace, and a gift to Iran and other nefarious actors.

Trump may have committed to moving the U.S. Embassy in Israel, but given how flexible he has proved to be on a huge variety of issues throughout his campaign and pre-inaugural interregnum, reversing course shouldn’t be particularly difficult. But it requires that someone first carefully inform him of the real costs at stake. And, sadly, his nominee for ambassador to Israel means there’s one less person inclined, or able, to do just that.

Photo Credit: SAUL LOEB/AFP/Getty Images

Malta hijack ends peacefully as Gaddafi loyalists surrender

Malta hijack drama ends without bloodshed

By Chris Scicluna | VALLETTA-Sat Dec 24, 2016

Hijackers armed with what were probably replica weapons forced an airliner to land in Malta on Friday before freeing all their hostages unharmed and surrendering, having declared loyalty to Libya's late leader Muammar Gaddafi.

Television pictures showed two men being led from the aircraft in handcuffs. The prime minister of the tiny Mediterranean island, Joseph Muscat, tweeted: "Hijackers surrendered, searched and taken in custody".

The Airbus A320 had been on an internal flight in Libya on Friday morning when it was diverted to Malta, 500 km (300 miles) north of the Libyan coast, after a man told the crew he had a hand grenade.

Muscat said the grenade and two pistols the hijackers were also carrying appeared to be replicas, according to an initial forensic examination.

A Libyan television channel reported it had spoken by phone with a hijacker who described himself as head of a pro-Gaddafi party. Gaddafi was killed in an uprising in 2011, and Libya has been racked by factional violence since.

With troops positioned a few hundred metres (yards) away, buses were driven onto the tarmac at Malta International Airport to carry away 109 passengers, as well as some of the crew. Television footage showed no signs of struggle or alarm.

After the passengers had left the plane, a man briefly appeared at the top of the steps with a plain green flag resembling that of Gaddafi's now-defunct state.

People disembark from a hijacked Libyan Afriqiyah Airways Airbus A320 on the runway at Malta Airport, December 23, 2016. REUTERS/Darrin Zammit-Lupi-People disembark from a hijacked Libyan Afriqiyah Airways Airbus A320 on the runway at Malta Airport, December 23, 2016. REUTERS/Darrin Zammit-Lupi

People disembark from a hijacked Libyan Afriqiyah Airways Airbus A320 on the runway at Malta Airport, December 23, 2016. REUTERS/Darrin Zammit-Lupi-A hijacked Libyan Afriqiyah Airways Airbus A320 stands on the runway at Malta Airport, December 23, 2016. REUTERS/Darrin Zammit-Lupi

Libya's Channel TV station said one hijacker, who gave his name as Moussa Shaha, had said by phone he was the head of Al-Fateh Al-Jadid, or The New Al-Fateh. Al-Fateh is the name that Gaddafi gave to September, the month he staged a coup in 1969, and the word came to signify his coming to power.

In a tweet, the TV station later quoted the hijacker as saying: "We took this measure to declare and promote our new party."

STANDOFF ON TARMAC

Lawmaker Hadi al-Saghir told Reuters that Abdusalem Mrabit, a fellow member of Libya's House of Representatives on the plane, had told him the two hijackers were in their mid-20s and were from the Tebu ethnic group in southern Libya.

After the standoff ended peacefully, Muscat told a news conference there had been talks between Maltese authorities and the Libyan hijackers.

The men had asked for two Maltese negotiators to board the aircraft, but this was rejected.

"We were not willing to negotiate until there was a surrender," he said, adding that the hijackers had not requested asylum.

A senior Libyan security official told Reuters the first news of the hijack came in a call from the pilot to the control tower at Tripoli's Mitiga airport.

"Then they lost communication with him," the official said, speaking on condition of anonymity. "The pilot tried very hard to have them land at the correct destination but they refused."

The aircraft, operated by state-owned Afriqiyah Airways, had been flying from Sebha in southwest Libya to Tripoli, a trip that would usually take a little over two hours.

The last major hijacking on Malta was in 1985, when Palestinians took over an Egyptair plane. Egyptian commandos stormed the aircraft and dozens of people were killed.

(Additional reporting by Ahmed Elumami in Tripoli, Ayman al-Warfalli in Benghazi, Aidan Lewis in Tunis and Robin Pomeroy and Alison Williams in London; writing by Andrew Roche and John Stonestreet; Editing by Mark Trevelyan)

Migrant death toll passes 5,000 after two boats capsize off Italy

At least 100 people missing, feared dead, as UN refugee agency says number of deaths in 2016 has passed 5,000

 A woman and her daughter after being rescued from a wooden vessel off Italy last month. Photograph: Dan Kitwood/Getty Images

Ben Quinn-@BenQuinn75-Friday 23 December 2016 

About 100 people are missing and feared dead after two boats capsized off Italy, increasing the estimated death toll among migrants in the Mediterranean this year to at least 5,000, a record, UN agencies have said.

Deaths linked to Mediterranean crossings by migrants trying to reach Europe have spiked in 2016. Last year, 3,771 deaths were recorded as more than a million people made the journey, mostly from Turkey to Greece. This year, about 360,000 people have crossed, most between Libya and Italy, with far more deadly results.

“The latest information we have is that yesterday [Thursday], in two incidents, as many as 100 people lost their lives,” said William Spindler, a spokesman for the UN refugee agency, UNHCR.

“The number of people who have lost their lives on the Mediterranean this year has now passed 5,000,” he said. “That means that on average, 14 people have died every single day this year in the Mediterranean trying to find safety or a better life in Europe.”

Citing survivors’ accounts, Joel Millman, a spokesman for the International Organisation for Migration, said that at least 57 people were feared dead after a rubber dinghy carrying between 120 and 140 people capsized on Thursday. A number of women and children were believed to have been among those on board.

He said eight bodies had been recovered. A further 40 people were feared dead from another dinghy also carrying about 120 people. Millman said he did not immediately have more details.

UNHCR said the Italian coastguard had carried out four rescue operations in the central Mediterranean on Thursday, including the rescue of about 175 people from another dinghy and a wooden boat. The rescued survivors were taken to the western Sicilian town of Trapani, from where they are expected to be transported to reception centres.

A further 417 people who have been rescued in other operations since Thursday were expected to be landed at the port of Augusta in eastern Sicily, according to a UNHCR spokesperson, who said emergency activities at sea were “non-stop”.

Among possible causes for the increase in deaths in the Mediterranean this year, the agency cited a worsening quality of vessels and smugglers’ tactics to avoid detection by authorities, such as sending many boats out at the same time, which makes the work of rescuers harder.

More asylum seekers have reached Italy by boat in 2016 than in any previous year on record. Statistics compiled by UNHCR and the Italian government and released last month revealed that the total had surpassed the previous record of 170,000 set in 2014.

The spike comes after migration flows in the eastern Mediterranean between Turkey and Greece were drastically reduced following actions by both states, and the closure of a humanitarian corridor between Greece and Germany.

Médecins Sans Frontières broadcast footage of rescue operations in the Mediterranean on Thursday night on Twitter. It said more than 112 men, women and children had been taken on board the Aquarius, a search-and-rescue ship the charity runs in partnership with SOS Méditerranée.

112 men, women and children are now onboard #Aquarius. Tonight they will sleep safe and full of hope for the first time in months. pic.twitter.com/KU4zWpfTPk

— MSF Sea (@MSF_Sea) December 22, 2016

 Follow

MSF Sea 

✔@MSF_Sea

112 men, women and children are now onboard #Aquarius. Tonight they will sleep safe and full of hope for the first time in months.

5:35 PM - 22 Dec 2016

Images showed dozens of people being taken on board in heavy rain and later being provided with food and assistance. Spanish naval vessels were reported to have been involved in rescuing people from at least two other boats.

UNHCR said the latest incidents highlighted what it described as an urgent need for states to increase pathways for the admission of refugees, such as resettlement and family reunification programmes, so they did not have to resort to dangerous journeys and the use of smugglers.

“The causes for the alarming increase in deaths this year are multiple but appear to be related to the declining quality of the vessels used by people-smugglers, the vagaries of the weather and the tactics used by smugglers to avoid detection by the authorities. These include sending large numbers of embarkations simultaneously, which makes the work of rescuers more difficult,” the agency said in a statement.
The IOM said it believed many more deaths at sea may have gone unreported this year, particularly on journeys from North Africa to Spain, where data collection had been sporadic. Many smaller vessels were believed to have been lost without detection.

A spokesperson for the organiation in Rome, Flavio Di Giacomo, said the number of shipwrecks reflected the poor state of the boats used by the refugees and the current harsh weather conditions at sea. “We are seeing more migrants crossing this winter. This trend confirms the fact that conditions in Libya are becoming increasingly dangerous for migrants, who are often trying to flee the country in order to save their lives,” he said.

“Many people have told us that they didn’t want to come to Europe when they left their country of origin. For many of them the destination country was Libya. But what they found there was abuse and violence. As a consequence, they decided to try the sea crossing, putting their lives in the hands of unscrupulous smugglers, who forced them to embark on vessels unfit to sail. These shipwrecks cannot be therefore considered mere ‘incidents’. They are the consequence of criminal behaviour by smugglers.”

India’s object lesson in how not to demonetize

In the first installment of a two-part series, Chan Akya writes that the reasons for demonetization are sound, but that its execution has been bungled

Protestors in Kolkata make their views about India's demonetization known last month. Photo: AFP / Dibyangshu SARKAR

By CHAN AKYA- DECEMBER 23, 2016

It is something of an article of faith amongst investors in Emerging Markets that economic crises in those markets are at once inevitable and unpredictable: they frequently occur in places where you wouldn’t normally bother to look too closely.

Imagine for a moment that you are the CEO of a company making chocolates. It’s the best in the sector, growing fast and well-leveraged. You have a working capital gap, but it is manageable when compared to your banking lines. Then, one fine day, you decide to change how your workers are paid: from cash in their accounts to packets of chocolates that they have to hawk in the nearby malls. You argue that this makes your employees more invested in the company’s success, whilst also broadening potential sales channels, thereby improving revenues over the long term. Furthermore the theoretical value of the packets of chocolates is the same as the money previously paid to employees; so, really, where’s the harm?

To your surprise and disenchantment, however, you suddenly notice a sharp decline in productivity, workplace attendance and product quality. Pretty soon, you have to shut your factory and are left ruing your decision.

This is not dissimilar to what has just happened in India, where at the beginning of November the government decided to “demonetize” (i.e. declare invalid) the country’s two highest denomination notes (Rs.500 and Rs.1000) in circulation. To fully understand the implications, however, it’s essential to grasp the motivations and the mechanics.

A difficult task at hand

The move essentially targeted some 85% of the banknotes in circulation, or roughly US$225bn of actual physical currency, representing just over 10% of the underlying US$2 Trillion Indian economy. It is estimated, however, that cash was being used for 95% of transactions made in the country.

That in turn implies that the velocity of cash – the speed at which it moves move around the system – was around 8-10x depending on denomination. In contrast, economists have estimated that ‘broad money’ i.e. non-currency-based money transfers, had a lower velocity at closer to 6x – in other words, people transferred money between accounts and companies roughly once every two months.

This is very important. As an underdeveloped economy, India simply did not have the systems in place to deal with counterparty risk. In cash transactions, you don’t have to take anything from the person sitting opposite you except their cash; in more developed systems, you have to take ID cards, bank statements and proof of address along with the mode of payment (cheque or credit card). In cash transactions, the currency acts as your ID card, bank statement, proof of address, etc.

Trouble is, that’s not how developed economies work. When most transactions occur through cash, authorities can lose out in the following ways:

• Lack of information about what’s actually going on around the economy
• Tax leakage, as people can (and do) under-report transactions
• Lack of wealth information (as you don’t know what the value of assets is)
• Income inequality (you don’t even know who is making money)
• Inefficient disbursements of welfare payments by government (including leakage to rentiers)
• Fake currency
• Money fueling terrorism, drug smuggling and prostitution rackets
• Money being used for legitimate economic activity but with tax avoidance as the primary motivation (primarily in the real estate and jewelry sectors)

The government certainly had cause for complaint – the total number of taxpayers within the revenue net (i.e. those paying federal income taxes) in India is estimated at under 30 million, in a country of 1.25 billion. That’s less than 2.5% of all people, worse than the numbers posted by various other countries facing economic crises, including Greece (where under-reporting of income was more common than not reporting at all) and Argentina.

Given this context, it certainly made sense to think that, at some point, the system would need a massive overhaul. Granted, few thought India’s ruling BJP would enact such reforms because the primary beneficiaries of the cash economy – small traders, businessmen and self-employed – have tended to form the base of the party’s support. In the event that didn’t stop prime minister Narendra Modi – but his government has taken an overly complicated approach.

• All higher denomination notes were immediately -canceled
• New Rs.2000 notes were introduced but not widely made available as they were smaller than the outgoing Rs.500 and Rs.1000 notes and therefore couldn’t fit into ATMs without retrofitting
• To avoid banks running out of cash, daily withdrawals were essentially rationed
• Deposits of up to Rs.250,000 were not questioned – but anything over that had to be automatically reported to the tax authorities. This meant banks had to fill forms immediately on receipt
• Banks had to report daily cash movements from every branch and ATM location to the central bank, flagging up accountholders who appeared to exhibit suspicious behavior
• While there were multiple exceptions to the rules around the use of old currency notes, the Reserve Bank of India (RBI) continued to modify its rules on a daily basis in an effort to plug holes. This meant processes and limits were updated frequently, leading to further confusion

Since the policy began, some 80-85% of old currency notes have come back into the monetary system. New notes are being added daily but the printing presses really cannot keep up with the demand – queues are still in evidence across the country (but more pronounced in the north). Therefore, only some 35% of the value of the old notes has so far been returned to circulation.

Why it’s all gone wrong

Even the best ideas can be let down by poor execution, and this has certainly happened in India. The problems have fallen into three categories:

• The lack of an institutional framework
• Mathematical problems
• Logistical and infrastructural difficulties

On the institutional side of things, India has seen a steady erosion of many of its institutions over the past 30 years as economic reforms have pitted the country’s burgeoning private sector against the generally staid and slow-moving government sector. Public sector banks, for example, have far fewer automated teller machines and have invested less in workplace automation compared to private sector banks. This has inevitably led to long queues as banks have taken inordinate periods of time to deal with relatively simple requests.

Perhaps more pertinently from an institutional perspective, India’s lack of any robust national identity card system (the government introduced a new card a few years ago that is widely accepted but not considered foolproof) means that counterparty risk on payments cannot be easily dealt with when pure cash isn’t an option, as explained above. The ancillary problem this creates is that small traders and the self-employed use cash primarily as working capital – therefore, cash was neither being hoarded nor saved, it was simply being deployed as working capital.

For the RBI to miss these important aspects of the economy would be perfectly understandable – readers know well that I hold little respect for the economic credentials of central bankers around the world. But what is less clear is why the BJP-led government would make a mistake of this magnitude that affects its core constituency.

Next is the mathematical problem at the heart of this mess. With new Rs.500 notes being largely unavailable to date, consumers are left holding denominations of Rs.100 and Rs.2000 as old Rs. 500 and Rs.1000 notes can no longer be used for transactions. This is a problem – the multiple of 20 between the two widely used denominations (Rs.100 and Rs.2000) means that getting “change” is virtually impossible – there are simply not enough Rs.100 notes in circulation relative to the number of Rs.2000 notes in circulation to allow this. In other words, for every Rs.2000 note issued, the RBI should also have made available at least 10 new Rs.100 notes. Instead, it seems to have focused all printing activity on the Rs.2000 notes to compensate by value the Rs.500 and Rs.1000 notes taken out of circulation – even though value isn’t the core problem; rather, utility is, given the issue of counterparty risk raised above.
Chalk that up as one more case of clueless central bankers damaging the real economy.

The third aspect of the problem – logistics and infrastructure – is perhaps the easiest to understand and indeed, sympathize with, given India’s size and underdeveloped financial systems. Still, that basic infrastructure simply failed to deliver enough new notes.

Processed meat 'could be bad for asthma'

21 December 2016

Eating processed meat might make asthma symptoms worse, say researchers.

Consuming more than four portions a week is a risk, suggests the study of nearly 1,000 French people, published in the journal Thorax.

The researchers believe it could be a preservative called nitrite used in meats such as sausages, salami and ham that aggravates the airways.

But experts say the link has not been proved and more investigations are needed.

Rather than worry about one type of food, people should be eating a healthy and varied diet, they advise.

Processed meat has already been linked with cancer.

The study looked at ham, sausages and salami

What is processed meat?

How much of a cancer risk is processed meat?

Experts say people should eat no more than 70g a day of red and processed meat for good health.

That's about one sausage plus a rasher of bacon a day.

Meat wheeze

The people in the study had been taking part in a French survey about food and health, spanning a decade from 2003 to 2013.

Around half of them were asthma patients. The rest - the control subjects - had no history of the condition.

The survey looked specifically at asthma symptoms - breathlessness, wheeze, chest tightness - and intake of cured meat: a single portion was two slices of ham, one sausage or two slices of salami.

Among the people with asthma, higher meat consumption was linked with a worsening of their lung symptoms.

People who said they consumed more than four portions a week - eight slices of ham or four sausages, for example - had the biggest deterioration of their asthma by the end of the study.

The experts stress that their work cannot prove diet is definitely to blame. There are lots of factors in a person's life that can make their asthma worse.

The researchers tried to eliminate the most obvious ones, controlling for things like obesity, and the link between processed meat and worsening asthma remained.

Dr Erika Kennington, Head of Research at Asthma UK says: "Although certain foods can be triggers for allergies in some people, there is no specific dietary advice to manage asthma symptoms generally. For most people with asthma, healthy eating advice is exactly the same as it is for everyone else: follow a balanced diet that includes plenty of fresh and unprocessed food and is low in sugar, salt and saturated fat."

Catherine Collins of the British Dietetic Association recommended "a varied and Mediterranean-style diet", containing plenty of fresh produce, "whether you have asthma or not."

Sharing of resources vital for human solidarity

2016-12-21

With Sri Lanka’s two major political parties working together in a National Government for the first time since independence and with intensified moves for inter-religious and inter-racial dialogue and unity in diversity, International Solidarity Day yesterday was of deep significance for our country.  

  According to a United Nations website, in the 2030 Sustainable Development Goals, Solidarity is identified as one of the fundamental values of international relations in the 21st century. Those who either suffer or benefit least deserve help from those who benefit most. Consequently, in the context of globalization and the challenge of growing inequality, strengthening of international solidarity is indispensable. Therefore, the UN General Assembly convinced, that the promotion of the culture of solidarity and the spirit of sharing are important for combating poverty, proclaimed December 20 as International Human Solidarity Day. Through initiatives such as the establishment of the World Solidarity Fund to eradicate poverty and the proclamation of International Human Solidarity Day, the concept of solidarity is promoted as crucial in the fight against poverty and in the involvement of all relevant stakeholders, the UN says. 

  The UN’s outgoing Secretary General Ban Ki-moon, in a message strikes a positive note but also underlines realities. He says the world has achieved significant progress in human development over the past two decades. The global poverty rate fell by more than half. People are living longer and healthier lives and are better educated.

   According to Mr. Ban, discrimination and prejudice remain major barriers to building inclusive societies. Many vulnerable social groups find their situation worsening. The impacts of climate change will fall most heavily on those who did least to cause the problem. 

  Solidarity is essential to address these gaps in sustainable development. Leaving no one behind, promoting prosperity and ensuring inclusiveness and equality are core principles of the 2030 Agenda for Sustainable Development, adopted by world leaders in September 2015 and of the Paris Agreement on Climate Change adopted in December of that same year. 

  The UN Chief says that as nations strive to uphold their promises and to meet the 17 Sustainable Development Goals, mutual support will be crucial. Global problems require collective solutions. “On International Human Solidarity Day, let us emphasize the role of human solidarity in building lives of dignity for all on a healthy planet. We must work together to achieve the Sustainable Development Goals and secure the future we want,” he says in his appeal.  

  In Sri Lanka, the National Government has repeatedly pledged its commitment to the vision of sustainable, eco-friendly and all inclusive development whereby the gap between the rich and the poor could be significantly reduced. Next year has been declared as the poverty alleviation year and we all hope that practical and effective steps will be taken not only to dole out charity but to bring about social justice.  

  The millions of people trapped in oppression and enslaved poverty, suffer from a lack of food, shelter and clothing, lack of healthcare, education and job opportunities. But what hurts them even more than all of these are the humiliation they suffer and their exclusion from mainstream society and decision making processes. Thus we need to go beyond charity or just doling out money to the higher vision of social justice whereby we will see the restoration of the human dignity of these oppressed and enslaved people. For that to happen we need to see major structural changes that will bring about a more equitable distribution of wealth and resources. 

   Political, religious and other leaders also need to set an example. Their lifestyle needs to be humble and simple in line with the hallowed principle of ‘alpechchathawaya’, which has been part of Sri Lanka’s culture and civilization for thousands of years. Wasteful expenditure, luxuries and extravagance cannot be indulged in. 

 For instance on Monday, a public interest litigation activist filed a petition in the Supreme Court calling for a probe on the abuse of the tax-free vehicle permits given to government and opposition parliamentarians during the previous and present administrations. He says this abuse of funds has caused the country thousands of billions of rupees. We were told that the frauds, corruption and the abuse of public funds had ended with the previous regime but the petitioner alleges it is still continuing. This will not bring about good governance or human solidarity which will come only when the leaders practise what they preach.