4 ★ FINANCIAL TIMES Monday5 August 2019market to overseas-based financial
firms. The system means that the EU
can grant access rights to companies
based in another country if regulation
and supervision in those individual
countries are deemed to be as rigorous
as they are within the bloc.
Equivalence is used by more than
30 countries, and the access rules are
set outin over 40 EU laws covering
different parts of the financial services
industry.
After a no-deal Brexit, the UK is
expected to rapidly seek equivalence
for different services offered by the City
of London.
However, since the Brexit referen-
dum, Brussels has made clear that it
intends to ramp up its surveillance of
the system, including monitoring of
whether countries still qualify.
“When we grant equivalence, we
expect that rules in that jurisdiction
stay aligned with EU rules,” Mr Dom-
brovskis said.
The EU’s aim was not to make equiva-
lence harder to obtain, but to strengthen
Brussels’ “surveillance framework” and
ensure “continuous adherence”.to leave the EU in March 2019, and given
the delays to Brexit, some financial
groups have called for an extension.
But Mr Dombrovskis said there was
no reason the sector could not prepare
now, including by ensuring that the nec-
essary clearing services were available
in the EU27.
“I do hope that market participantsare looking at that date,” he said. “My
first message is that it’s now for them to
do the necessary preparations. There is
still time.”
Mr Dombrovskis said that ultimately
it would fall to the next European
Commission, which is set to take
office on November 1, to review the
situation.
The emergency access measures are a
temporary form of the “equivalence”
system that the EU uses to open up itsa situation where the UK is outside
the single market and there is no
transition period”.
Brussels last yeartook legal measures
to prevent the disruption that could be
caused by a no-deal Brexit.
The risks it addressed included
the threat of EU businesses being sud-
denly cut off from UK-based clearing
houses, which serve as intermediaries
between buyers and sellers in the
securities market.
Brussels granted EU institutions tem-
porary access beyond October 31, 2019
to clearing houses such as London’s
LCH, ICE Clear Europe and LME Clear,
which are critical parts of the financial
system. But that access will expire on
March 30, 2020.
EU banks and brokers had warned
that losing access to the platforms
would lead to a hefty rise in trading costs
and leave European companies unable
to hedge their exposures.
The Bank of England estimated last
yearthat about £40tn in swaps posi-
tions held by EU banks were at risk.
The contingency measure was
approved at a time when the UK was setJIM BRUNSDEN— BRUSSELSThe EU’s financial regulation chief has
urged banks and brokers to finish their
preparations for a no-dealBrexit,
warning they should not expect further
help from Brussels to cushion the
impact of the UK leaving the bloc.Valdis Dombrovskissaid the financial
services industry should make the most
ofcontingency measuresthat Brussels
approved last year to avoid an immedi-
ate breakdown in financial trading after
a no-deal outcome.
But the EU commission vice-presi-
dentsaid there was no guarantee that
the measures would be extended
despitetheir being set to lapse several
months after Brexit day, which is due on
October 31.
“We have been very clear in calling on
industry to prepare for different possi-
ble scenarios including a no-deal
Brexit,” hesaid.
Repeated delays to the UK’s depar-
ture were no excuse for financial
institutions to slow downpreparations;
the EU’sprevious actions had already
“given more time to get ready forINTERNATIONAL
VALERIE HOPKINS— BUDAPEST
MICHAEL PEEL— BRUSSELS
EMIKO TERAZONO— LONDON
African swine fever is threatening to
take hold in Europe as a sharp increase
in casesraises concerns among farmers
and animal health experts about its
potential to devastate the continent’s
pork industry.
In Romania, 300 new outbreaks of
the highly contagious viruswere
reportedamong domestic pig herds in
Ju ly,up from nearly 80 in June and 30 in
January. The European Commission
said the fight against swine fever, whichis fatal for pigs but poses no threat to
human health, was an “extreme and
urgent challenge” because of the threat
to the continent’s pig herds.
African swine fever — which was iden-
tified in Kenya in the early 1900s — has
spread rapidly in China and other parts
of Asia over the past year, pushing up
pork prices. More than 4m pigs have
been culled in Asia and, according to
some estimates, China’s pig herd could
halve in size from last year.
In the EU, Bulgaria hasstepped up
culls after 18 cases were diagnosed in
July, while Slovakia reported its first
case last month.
The virus has not yet spread to
Europe’s leading pork-producing
nations, including Germany, France and
the Netherlands. But Justin Sherrard, ananalyst at Rabobank, said that “as seen
in China and Vietnam, if the disease
were to spread, it will have devastating
consequences [in Europe]”. All 28 EUmember states are obliged to apply pre-
vention and control measures where the
disease is suspected or confirmed.
The outbreak in Romania is“an
unfortunate mixture of politics, disor-
ganisation and inefficiency,” said Ioan
Ladosi, president of the Romanian
Association of Pork Producers. Roma-nia culled more than 200,000 pigs last
year when the country’s largest breeder
was infected. Mr Ladosi blamed the gov-
ernment for the latest outbreak, saying
it had “failed to implement in full” the
recommendations made in EU audits
over the past 12 months “for a simple
reason: politics and votes” as politicians
feared angering small farmers.
Romania’s pig industry includes
about 250 commercial pig producers,
but more than 50 per cent of animals are
raised by “backyard” farmers. Mr
Ladosi accused politicians of favouring
the small-scale businesses in an attempt
to boost their votes, making the swine
fever outbreak a “political disease”.
The virus is mainly carried by wild
boar which mingle withroaming
domestic pigs. It was detected in Geor-gia in 2007, from where it spread to Rus-
sia. By 2014 cases had been seen in
Ukraine and Belarus and then Lithua-
nia, but incidence had until recently
been largely confined to wild boar.
Vytenis Andriukaitis, the EU health
and food safety commissioner, last
month urged member states to be extra
vigilant during the summer months,
when incidents tend to peak.
European countries havestepped up
biosecurity procedures at EU borders
after Northern Ireland authorities inter-
cepted travellers’ luggage that con-
tained illegal meat and dairy products
infected with the swine fever virus.
The UK government has begun a bor-
der campaign warning holidaymakers
of the threat of the disease and risks of
bringing back contaminated pork.ANDREW ENGLAND— LONDON
SIMEON KERR— DUBAIJust over a year ago, Saeed Obad and his
family fled the city of Hodeida along
with hundreds of thousands of other
Yemenis as local forces led by the United
Arab Emirates attacked the port. They
returned in May and are living in the
aftermath of one of the most significant
shifts in the four-year conflict: a deci-
sion last monthby the UAE to scale back
its presence inthe war-torn country.
The question is whether the move by
the UAE, until now a key part of the Sau-
di-led coalition battling Iranian-aligned
Houthi rebels in Yemen, will bolster
efforts to end the conflict or leave a void
that leads to an escalation of the vio-
lence. Mr Obad has little hope it will be
the former.
“We heard about the withdrawal of
Emirati forces as a step towards peace,
but we didn’t feel it. The battles are still
ongoing,” said Mr Obad, a father of
three. “The warring sides try to prove to
the world that they seek peace, but their
hands remain on the trigger.”
His pessimism is not without cause.
Since March 2015, Yemenis have been
trapped in a civil conflict that morphed
into aRiyadh-led proxy waragainst the
Houthi rebels. The UAE-led offensive onHodeida last year — the biggest battle of
the conflict — was launched amid claims
that the Houthis were using the port to
smuggle weapons in from Iran.
The assault was halted after an inter-
national outcry about the humanitarian
impact in a country where 10m people
have been pushed to the brink of fam-
ine. In December, UN-brokered talks in
Stockholm secured a deal under which
the Houthis and pro-government local
forces would redeploy from the city.
Implementation of the peace deal has
been slow, with fighting continuing,
including around Hodeida. But UN dip-
lomats hope the Emirati decision will
boost their efforts to secure a wider
ceasefire. The UAE had been discussing
a drawdown for more than a year, but
the process gained momentum after the
Stockholm agreement was sealed. The
Houthis unilaterally withdrew from
Hodeida in May and the UN is monitor-
ing the flow of goods in and out of the
port. There has also been speculation
that the UAE redeployment was in part
motivated by a desire to bring home
troops and military assets in case the
heightened tensions between the US
and Iran trigger a wider conflict.
One western official said this fear
would lead all parties to de-escalate to
avoid creating a “second front”.
“I think there is an alignment across
the region that peace makes
sense... for Iran; for Saudi, because it
de-escalates its border with Yemen; for
the UAE because of its reputational
damage,” one western official said. “It is
an optimistic view... but it is not out-
side the realm of the possible.” Martin
Griffiths, UN special envoy to Yemen,
said this month that the conflict was
“eminently resolvable”.
Anwar Gargash, UAE minister of state
for foreign affairs, said this month the
military coalition was preparing for “the
next phase” in Yemen, while Prince
Khalid bin Salman, Saudi deputy
defence minister, stressed his support
for a “political solution”. But he also
emphasised the need to “end Iran’s
interference in Yemen”.
Hours later, the Houthis launched a
drone attack on a Saudi airport, the lat-est in an uptick in the rebels’ assaults on
targets in the kingdom.
The extent of Iran’s influence over the
Houthis is contentious. Riyadh, Abu
Dhabi and Washington view the rebels
as Iranian proxies — US president Don-
ald Trump said he wanted to “get them
[Iran] out of Yemen”.
But diplomats and experts say it is
more of an opportunistic alliance and
less ideological than Tehran’s support
for militias in Lebanon, Iraq and Syria.
They add there are tensions among the
Houthis about how closely they should
attach themselves to Tehran.
“It is not an unbreakable tie,” said
Farea al-Muslimi, an analyst with the
Sana’a Centre, a think-tank. “[A cease-
fire] is possible with the right mediator.
It is more feasible to reduce Iran’s influ-
ence in Yemen than Lebanon or Syria.”
Much will depend on whether the
Saudis and Houthis still believe they canachieve a military solution. Some ana-
lysts say the rebels, who control north-
ern Yemen, might attempt to take
advantage of the UAE’s drawdown to
advance south. While Riyadh insists it
wants to end the fighting, there have
been reports it is deploying troops to fill
the gap left by the Emiratis.
“The underlying conditions for an
end to the conflict, and the barriers to
peace, have not changed. The Saudis say
they want the conflict to be over by the
end of 2019, but are they willing to make
the compromises required to make that
happen?” said Peter Salisbury, a Yemen
expert at the Crisis Group think-tank.
“We are in yet another moment when
it could go one of two ways, and the
pathway to renewed, intensified conflict
is much less frictionless than the path-
way for political progress.”
Additional reporting by an FT reporter in
HodeidaBENEDICT MANDER— BUENOS AIRES
NAJMEH BOZORGMEHR— TEHRAN
MICHAEL PEEL— BRUSSELSThe International Atomic Energy
Agency must be unyielding in report-
ing any failure by Iran to comply with a
landmark nuclear agreement that is
gradually unravelling, according to a
leading contender to head the UN’s
nuclear watchdog.Rafael Grossi, an Argentine diplomat
who is in the running to take over the
IAEA after the death of its previous
director-general, Yukiya Amano, in
July, said the agency had to “tell it as it
is” and stick to its mandate of policing
compliance with the 2015 deal.
Theagreement has come close to col-
lapse sinceDonald Trump pulled out of
it last year.
The IAEA had consistently found Iran
to be honouring its pledges under the
accord, but Tehransaid in May it would
gradually decrease its commitments to
limit uranium enrichment activities.
Iran has promised to renew its full com-
pliance if European states do more to
help it withstand US sanctions.
Mr Grossi, 58, told the Financial
Times that Iran’s stepping up of ura-
nium enrichment may not threaten an
imminent crisis, but was “a serious mat-
ter” that must be handled “extremely
prudently” to avoid further escalation.
The nuclear deal, which gave Iran
relief from international sanctions in
return for curbs on its atomic pro-
gramme, aimed to keep the country at
least one year away from amassing
enough fissile material to make a
nuclear weapon.
Mr Grossi indicated that Iran’s posi-
tion had not changed in the recent past,
saying it was still little more than a year
away from reaching a “breakthrough”.
Mr Grossi said it was an open question
whether Iran’s enrichment move was a
protest at economic hardship caused by
US sanctionsor a “deliberate acceler-
ated effort” that could lead to a “more
problematic situation”.
Yesterday Iran’s Revolutionary
Guards announced it had seized a for-
eign oil tanker for smuggling fuel last
Wednesday, the latest detention of a
vessel amid elevated tensions in the
Gulf. Iran did not disclose the nationali-
ties of the tanker or its crew.
Mr Grossi is currently Argentina’s
ambassador to Austria, and the coun-
try’s representative to international
organisations based in Vienna, which is
the home of the IAEA.
Despite the “gloom and despair” pro-
voked by the situation in Iran, he cast
doubt on whether the world was enter-
ing a new era of nuclear proliferation.
“History is not linear,” said Mr Grossi,
arguing that just two years ago the world
was far more worried about abuild-up
of weapons in North Korea.
“We are not definitely going into an
abyss, or to nirvana,” Mr Grossi said.
“International life is a bit more com-
plex. But we need to make sure that we
have all the elements for diplomacy, in
every case, to avoid a terminal crisis.”
Mr Grossi worked for more than 30
years at Argentina’s foreign ministry,
where he specialised in non-prolifera-
tion and disarmament. He played a role
in defusing a nuclear rivalry between
Argentina and Brazil as democracy
returned to both countries in the 1980s.Meat production
Swine fever threatens Europe’s pork industry
Increasing outbreaks
heighten concern for
continent’s pig farmersIAEA mandate
Would-be head
of nuclear
watchdog calls
for strict Iran
deal policing
Middle East.Proxy war
Hopes raised for
breakthrough in
Yemen conflict
UAE scales back its military
presence in country as efforts
continue to end conflict
Families carry
belongings from
the rubble after
Saudi-led
air strikes on
Hodeida
Stringer/AFP/Getty Images‘The
underlyingconditions
for an endto the
conflict,and the
barriersto peace,
have not
changed’Contingency moves
Brussels urges banks to complete no-deal Brexit preparations
TOM WILSON— LONDONSudan’s military leaders and the coun-
try’s pro-democracy movement have
agreed the terms of a power-sharing
deal that mediators hope will lead to a
return to civilian rule.Leaders from both camps initialled the
document on Sunday and mediators
hope an official signing will take place
later this month.
Mohamed Hassan Lebatt, an African
Union peace broker, announced that the
terms of the so-called constitutional
declaration had been finalised by the
two sides on Saturday.
The agreement fleshes out a political
deal signed last month under which a
new sovereign council will be estab-
lished to run the country for three years
until elections are held. The body will be
headed by a member of the military for
the first 21 months before the leadership
rotates to a civilian. A new legislature
and a technocratic, civilian cabinet will
also be set up.“Glory to the great Sudanese people,”
said Mohamed Nagy Alassam, one the
leaders of the Sudanese Professionals
Association, a workers group that spear-
headed four months of protests against
former president Omar al Bashir before
he was ousted by the military in April.
“The transitional period will not be a
picnic, but successive challenges, hard
work, diligence and success are our
responsibility,” he said in the statement
posted on Twitter.
A transitional military council has
ruled Sudan since Mr Bashir was ousted.
The army’s intervention continued a
pattern of military influence estab-
lished when Mr Bashir seized power in a
coup in 1989.
Peace brokers had been pushing for a
deal since a June raid by members of the
state’s Rapid Support Forces killed more
than 100 people at the opposition’s main
protest site in Khartoum. Pressure on
the generals rose this week after secu-
rity forces opened fire on student pro-
testers in the city of Obeid, killing six.Power sharing
Sudan factions sign agreement
paving way for civilian rule
EU head of financial
regulation Valdis
Dombrovskis says
further cushioning
by the bloc should
not be expectedINDIAN
OCEANGulf of AdenArabian SeaRed
SeaYEMEN
SAUDI ARABIASomaliland
ETHIOPIADJIBOUTISOMALIAERITREA
OMANSana’a km‘If the disease were to
spread, it will have
devastating consequences[in Europe]’
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