Financial Times Europe - 28.08.2019

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2 ★ FINANCIAL TIMES Wednesday28 August 2019

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MONAVAR KHALAJ— TEHRAN
MICHAEL PEEL— BRUSSELS
ANDREW ENGLAND— LONDON
DEMETRI SEVASTOPULO— WASHINGTON

Iranian president Hassan Rouhani has
ruled out meeting Donald Trump until
the US lifts sanctions on the Islamic
republic, saying he would not take part
in a photo opportunity.
Mr Rouhani made the commentsin a
speechyesterday, a day after French
president Emmanuel Macron suggested
at theG7 summitthat he couldbroker a
meetingbetween the Iranian and US
leaders. Mr Trump had said at thegath-
ering that he wouldmeetMr Rouhani “if
the circumstances were correct”.
But Iran, which accuses the Trump
administration of waging an economic
war against the country, played down
the prospects of negotiations. Mr Rou-
hani said there would be no “positive
development” until the US lifted its
sanctions on Tehran.
“Iran is seeking a resolution to the
problems through reasonable means
rather than taking photos,” Mr Rouhani
said. “If [Mr Trump] just wants to take a
photo with Hassan Rouhani that would
not be possible.”
Mohammad Javad Zarif, Iran’s foreign
minister whomet Mr Macronaaat the G7,t the G7,
said he had told French officials that any
meeting between Mr Rouhani and Mr
Trump was “unimaginable”.
Mr Trump hasexpressed interest in
meeting Iran’s leaders, in the same way
that he has met North Korean leader
Kim Jong Un. But Tehran has consist-
ently said it would not negotiate while
sanctions remained. In July, Mr Trump
invited Mr Zarif to meet him in the
White House during a visit to the US, but
Iran turned down the offer.
Washington and Tehran have been
locked in a stand-off since Mr Trump
withdrew the US from the 2015 nuclear
accord Iran signed with world powers
and imposed crippling sanctions. Iran
has responded by increasing its nuclear
activity and exceeding the limits on key
elements of the accord.
France has been working with the UK
and Germanyto try to save the deal and
de-escalate tensions in the Gulf. At the
summit, Mr Macron, who had spoken
by phone with Mr Rouhani, suggested
there could be a meeting between the
Iranian and US leaders within weeks.
An EU spokesperson saidyesterday
the bloc would “support and welcome
any diplomatic efforts to find the way
out of the crisis, de-escalate the situa-
tion in the region and preserve the
[nuclear deal]”.
One senior European diplomat said
the Macron initiative appeared to
reflect a variety of motives, including to
save the accord, defuse the Gulf crisis,
further his growing authority in the EU
and road-test a way of working with Mr
Trump. Butthey said it was not clear
what Iran was being offered to
come to the negotiating table.
“Macron is very keen to get
movement on this for a
number of reasons. But with-
out concrete action I do not
see any reason why it would
provide Iran the incentive to
sign up,” the diplomat said.

The Trump administration has said it
would continue to intensify pressure on
Iran in an attempt to persuade Tehran
to come to the negotiating table. But
Iran has also been adamant it would not
negotiate against the backdrop of eco-
nomic sanctions.
However, Mr Trump hinted at the G
he could be willing to relax his “maxi-
mum pressure” strategy. TheUS has
vowed to drive Iranian oil exports to
zero, but Mr Trump suggestedthat
states could club together to provide
Tehran with an emergency credit line
backed by its crude production.
“They may need some money to get
them over a very rough patch and if they
do need money, and it would be secured
by oil... so we are really talking about a
letter of credit,” hetold the press. “It
would be from numerous countries.”
The White House has not clari-
fied whether Mr Trump has
changed his position on Iran.
Any effort to provide a life-
line to Tehran could hurt
the US president as he
starts to focus more on his
re-election campaign.
Tehran has repeat-
edly insisted it can

“resist”US pressure. But the sanctions
have pushed Iran into a deep recession
and caused its oil exports to plummet
from about 2.8m barrels per day in mid-
2018 to less than 500,000 bpd.
Any talks with Mr Trump would need
approval from Ayatollah Ali Khamenei,
Iran’s supreme leader, who hasthe final
say on all state matters. Mr Khamenei
has ruled out negotiations with the US,
calling any such talks“double poison”.
US pressure on Iran has emboldened
regime hardliners who feel vindicated
in their criticism of the nuclear deal and
a weakened Mr Rouhani, a pragmatist
who sealed the accord in his first term.
Hossein Shariatmadari, editor of Kay-
han, a state-runpaper viewed as the
hardliners’ mouthpiece, wroteyester-
day that a meeting between Mr Trump
and Mr Rouhani would be “madness”.
“The nuclear deal is the most obvious
outcome of your.. .talks with the US,
which no one — I insist no one — has the
least doubt was a disaster,” he said.
Mohammad Ali Abtahi, a reformist
vice-president, said Mr Rouhani should
be wary of being seen to positively react
to the notion of talks with Mr Trump,
saying the Iranian leader could fall into
a “major political trap”.

Middle East


Iran’s leader rejects meeting


Trump until sanctions lifted


Tehran: a
woman walks
past a painting
of the national
flag yesterday
whilebelow,
Hassan Rouhani
is against a
Trump photo
opportunity
Atta Kenare/AFP/Getty

‘Without
concrete

action I do
not see any

reason why
it would

provide
Iran the

incentive
to sign up’

European
diplomat

VICTOR MALLET— BIARRITZ

Emmanuel Macron’s outing on foot
through the streets of Biarritz on Sun-
day evening at first looked like a typical
French presidential walkabout.
He let residents take selfies with him
and thanked them for tolerating the dis-
ruption of the G7 summit in the middle
of the Atlantic resort’s summer season.
But then he duckedinto the town hall
for a secret meeting with Mohammad
Javad Zarif, the Iranian foreign minister,
after a months-long French drive to
reduce tensions in the Gulf and return
the US and Iran to the negotiating table.
“I want to be prudent,” Mr Macron
saidat his closing news conference. “I
think we have succeeded, at this stage
anyway, in calming things down and
creating the right conditions.”
Iranian presidentHassan Rouhani
yesterday ruled out holding talks with
President Donald Trump until the US
lifted sanctions on the Islamic republic.
But bringing Mr Zarif to Biarritz during
the G7 was a characteristically high-risk
diplomatic initiative from the 41-year-
old French president. He has taken the
lead among western leaders in seeking
to broker solutions to intractable global
crises, from climate change to the war in
Ukraine.
Mr Macron hadprepared Mr Trump
with atwo-hour private lunch before
the start of the summit, and went
straight from his meeting with Mr Zarif
to brief the US president in his suite at
the Hotel du Palais, and also spoke by
telephone to Mr Rouhani.
He has been equally methodical in
deploying his charm to try to solve the
conflict between Russia and Ukraine. If
VolodymyrZelensky, Ukraine’s newly
elected president, and Russia’s Vladimir
Putin meet for a summit as expected in
the coming weeks, together with Mr
Macron and German chancellor Angela
Merkel, it will be because Mr Macron
has relentlessly courted both sides.
Diplomats and analysts say the
French president has risen to promi-
nence in foreign policy not only because
of his evident energy and grasp of detail
but also because of the absence of plau-
sible rivals: Mr Trump isinconsistent;
Ms Merkel is on the way out; and UK
prime minister Boris Johnson is almost
entirely consumed by Brexit.
“Macron is talking a wonderful
game,” said Ronald Tiersky, an author
on French politics. “It’s obvious he’s the
only European leader and he feels
strong.”
Mr Macron’s own speeches about his
diplomatic missions suggest he has two

main motivations: he wants to emulate
his hero, Charles de Gaulle, in present-
ing France as a noble and civilising
power (albeit one of relative weakness
thatmust work with EU partners in a
world dominated by the US and China);
and he wants to win more votesin future
elections.
Hetold the French people in atele-
vised address before the G7 that he was
negotiating at the summit “in your
name” to try to resolve foreign crises
that might seem distant but would
directly affect them.
“If the Middle East goes up in flames,
we will be affected. If we don’t fix the sit-
uation in Libya, we will continue to suf-
fer the scandal of migration across the
Mediterranean and the destabilisation
of a large part of Africa,” he said.
While ultimate success on Iran,
described by one of his advisers as
“probably the most complicated issue in
the world”, is far from assured, the
meeting saw some concrete achieve-
ments for Mr Macron. Finance minister
Bruno Le Maire extracted from Steven
Mnuchin, the US Treasury secretary, an
agreement to accept a new French turn-
over tax on big tech companies, a deal
that marks a climbdown for the US and
vindicates the French position.
Mr Trump had previously been so
outraged by the French tax, which he
said unfairly targeted US groups such as
FacebookandGoogle, that he threat-

ened to launch yet another trade war
and impose new tariffs on French wine.
In Biarritz, when asked whether his wife
Melania had tried a glass, he confessed
cheerfully: “I can confirm that the first
lady loved your French wine.”
Defending French farmers and con-
fronting over-mighty US tech compa-
nies plays well with those French voters
who criticise Mr Macron as a “president
of the rich” and suspect the former
investment banker of harbouring an un-
French love for ultraliberal capitalism.
Saving the Amazon rainforest is
another popular cause in a country
where greens won the largest share of
the vote among the young in the Euro-
pean election in May.
Instead of fighting what he said would
be a fruitless battle with Mr Trump over
global warming, he launched the G
with an appeal to tackle the Amazon
firesand a threat not to ratify the EU-
Mercosur trade agreement with South
American countries because Brazil
president Jair Bolsonaro had “lied” to
him in making false environmental
promises.
That conveniently coincided with
harsh criticism from French farmers,
and a rebellion from some of Mr
Macron’s own members of parliament,
about the likely consequences for
France of the Mercosur trade deal.
“In France as elsewhere, foreign pol-
icy doesn’t usually earn you votes, it
only loses you votes,” said François
Heisbourg, special adviser at the Fonda-
tion pour la Recherche Stratégique,a
think-tank. “But it is true that the Ama-
zon thing plays to the electorate
extremely well.”
Editorial Commentpage 8

Diplomacy.Flashpoints


Macron uses G7 to


burnish foreign


policy ambitions


With characteristic energy,


president sets pace on issues


from Iran to saving Amazon


‘Macron is talking a


wonderful game. It’s
obvious he’s the only

European leader’


Talks between Rouhani


and US president were
mooted at G7 summit

Walkabout: Emmanuel Macron
takes to the streets in Biarritz

JAMES SHOTTER— WARSAW

Polandhas proposedits first balanced
central government budget in three
decades, as the ruling Law and Justice
party tries to boost its reputation for
economic management ahead ofOcto-
ber’s parliamentary election.

Sincewinning power in 2015, the
socially conservative Law and Justice
has sharply boosted welfare spending,
with handouts to pensioners and fami-
liesproving keyto cementing support
among older and less well-off Poles.
It made furthergenerous promises
this year, including an income tax
exemption for those under 26and an
expansion of its flagship child benefit
programme, prompting rating agencies
towarnthat, despite its booming econ-
omy, Poland could come close to the
EU’s 3 per cent budget deficit limitin
2020.
However, Poland’s prime minister
Mateusz Morawiecki saidyesterdayhe
expected the central government deficit
to fall to zero in 2020 and thusensure

Poland was on “a good economic
course” despite a macroeconomic envi-
ronment clouded by a German slow-
down and fears of aUS-China trade war.
“We have economic growth that is
three times faster than in the eurozone,
and even four or five times faster than
some states in western Europe,” he told
a press conference in Warsaw.
Opposition politicians dismissed the
proposal — which still has to be
approved by parliament — as a pre-elec-
tion gimmick. Although the central gov-
ernment budget is projected to be in bal-
ance, the general government budget —
which includes social security and local
government outlays — is forecast to be
0.3 per cent in deficit.
“There’s supposed to be no budget
deficit in 2020,” Aleksandra Dulkiewicz,
the mayor of Gdansk, wrote on Twitter.
“Did it evaporate? It is being pushed on
to local governments instead: for exam-
ple, there are pay rises for teachers, an
increase in energy prices and lower
income tax receipts. In Gdansk, that is
minus 160m zloty [$40.6m].”

Fiscal target


Polish PM vows a balanced


budget as October poll nears


DAVIDE GHIGLIONE AND
HANNAH ROBERTS— ROME

Talks between Italy’s anti-establish-
ment Five Star Movement and the
opposition Democratic party (PD)
aimed at forming a new government
hit bumpy ground yesterday as negoti-
ationstemporarily broke down, before
being restarted later.

Following thecollapseof the govern-
ment last week, President Sergio Matta-
rella had asked the parties for guaran-
tees bytoday that a new coalition would
produce a stable administration. Other-
wise he is expected to dissolve parlia-
ment and call snap elections.
But according to PD officials, talks
between Nicola Zingaretti, PD chief,
Luigi Di Maio, Five Star leader, and
Giuseppe Conte, whoresigned as prime
ministerlast week, ran aground over
who would be the new prime minister.
Mr Zingaretti said any new govern-
ment must break with the past, while
Five Star insisted Mr Conte, who enjoys
high approval ratings, should take the

post. Other disagreements centred on
the government programme and key
ministerial positions.
Five Star cancelled talks scheduled
for yesterday morning but lateragreed
to restart negotiationsin the evening. A
PD adviser confirmed Mr Zingaretti and
Mr Conte had been in contact “through-
out the day to discuss the situation”.
Italy’s fractious 14-month coalition
between Five Star and the anti-immi-
gration League party collapsed follow-
ing Mr Conte’s resignation after he
accused Matteo Salvini, interior minis-
ter and leader of the League, of weaken-
ing the country by calling for an elec-
tion. Mr Salvini hoped to trigger a vote
to capitalise on his party’s poll lead.
Mr Mattarella is under pressure to get
a government in place before a difficult
autumn budget, in which Italy needs to
make €23bn in spending cuts.
Tensions rose earlier yesterday after
the PD said Mr Di Maio had demanded
to be deputy prime minister and inte-
rior ministerand for Five Star to choose
the country’s EU commissioner.

Government collapse


Italy coalition talks stutter in


dispute over role of premier


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153, Monza, 20900, Milan. Tel. +39 039 28288201
Owner, The Financial Times Limited; Rappresentante e
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Owner, The Financial Times Limited; Rappresentante e
Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -"What's
Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy.Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy."What's

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emirören Media, Hurriyet AS-Branch

News"

emirören Media, Hurriyet AS-Branch
Germany, An der Brucke 20-22, 64546 Morfelden-

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Germany, An der Brucke 20-22, 64546 Morfelden-
Walldorf, +49 6105 327100.
News"

Walldorf, +49 6105 327100.
Barber. Responsible for advertising content, Jon Slade.Barber. Responsible for advertising content, Jon Slade.News"
a Stampa S.r.l., Via Michelangelo Buonarroti,a Stampa S.r.l., Via Michelangelo Buonarroti,News"

vk.com/wsnws

153, Monza, 20900, Milan. Tel. +39 039 28288201

vk.com/wsnws

153, Monza, 20900, Milan. Tel. +39 039 28288201
Owner, The Financial Times Limited; Rappresentante e

vk.com/wsnws

Owner, The Financial Times Limited; Rappresentante e
Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -

vk.com/wsnws

Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -
Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy.

vk.com/wsnws

Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy.
Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in

vk.com/wsnws

Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in
Abb.Post.DL. 353/2003 (conv. L. 27/02/2004-n.46) art. 1
vk.com/wsnws

Abb.Post.DL. 353/2003 (conv. L. 27/02/2004-n.46) art. 1
.comma 1, DCB Milano.
vk.com/wsnws

.comma 1, DCB Milano.
Spain:Spain:vk.com/wsnws vk.com/wsnws BB

TELEGRAM:

.comma 1, DCB Milano.

TELEGRAM:

.comma 1, DCB Milano.
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TELEGRAM:

Bermont Impresion, Avenida de Alemania 12, CTC,

TELEGRAM:

ermont Impresion, Avenida de Alemania 12, CTC,
28821, Coslada, Madrid.

TELEGRAM:

28821, Coslada, Madrid.

t.me/whatsnws

Barber. Responsible for advertising content, Jon Slade.

t.me/whatsnws

Barber. Responsible for advertising content, Jon Slade.
a Stampa S.r.l., Via Michelangelo Buonarroti,

t.me/whatsnws

a Stampa S.r.l., Via Michelangelo Buonarroti,
153, Monza, 20900, Milan. Tel. +39 039 28288201

t.me/whatsnws

153, Monza, 20900, Milan. Tel. +39 039 28288201
Owner, The Financial Times Limited; Rappresentante e

t.me/whatsnws

Owner, The Financial Times Limited; Rappresentante e
Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -

t.me/whatsnws

Direttore Responsabile in Italia: I.M.D.Srl-Marco Provasi -
Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy.

t.me/whatsnws

Via G. Puecher, 2 20037 Paderno Dugnano (MI), Italy.
Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in
t.me/whatsnws

Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in
Abb.Post.DL. 353/2003 (conv. L. 27/02/2004-n.46) art. 1Abb.Post.DL. 353/2003 (conv. L. 27/02/2004-n.46) art. 1t.me/whatsnws
.comma 1, DCB Milano..comma 1, DCB Milano.t.me/whatsnws
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