EU mulls sanctions on some in Lebanon for blocking formation of a government
The move shows the EU’s frustration with the country that is facing financial collapse
John Irish and Robin EmmottA demonstrator carries a national flag along a blocked road during a protest against the fall in Lebanese pound currency and mounting economic hardships in Beirut, Lebanon, March 2021. Picture: REUTERS/MOHAMED AZAKIRParis/Brussels — The EU is drawing up sanctions on politicians in Lebanon seen as blocking the formation of a government, readying the bloc’s first penalties on its Middle Eastern ally in frustration at the ruling elite’s mismanagement, diplomats said.
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12 May 2021 - 13:13 John Irish and Robin Emmott A demonstrator carries a national flag along a blocked road during a protest against the fall in Lebanese pound currency and mounting economic hardships in Beirut, Lebanon, March 2021.12 May 2021 - 12:41 Ania Nussbaum and Silla Brush Fishermen unload their catches at La Collette Marina, in St Helier, Jersey, on May 9 2021.12 May 2021 - 12:54 Stephanie Bodoni Picture: REUTERS/REGIS DUVIGNAU Brussels — Amazon won its bid to topple a €250m tax bill in another blow to European Commissioner Margrethe Vestager’s crackdown on preferential fiscal deals.Palestinians fired uninterrupted barrages of rockets into Israel, while the Israeli military pounded Gaza with air strikes through the early hours of Tuesday, in a dramatic escalation of clashes in Jerusalem.
Picture: REUTERS/MOHAMED AZAKIR Paris/Brussels — The EU is drawing up sanctions on politicians in Lebanon seen as blocking the formation of a government, readying the bloc’s first penalties on its Middle Eastern ally in frustration at the ruling elite’s mismanagement, diplomats said. Led by former colonial power France, the bloc is seeking to ramp up pressure on Lebanon’s squabbling politicians, after 10 months of crisis that has left Lebanon facing financial collapse, hyperinflation, electricity blackouts, and fuel and food shortages. French officials are looking to stall a regulatory co-operation agreement on finance as part of a broader effort to bring pressure to bear on the UK, the people said, asking not to be named discussing private conversations. No names have been discussed and Hungary has publicly denounced EU efforts to pressure Lebanese politicians, but six diplomats and officials said that technical work has now begun on preparing sanctions — “designation criteria” — after EU foreign ministers agreed on Monday to take action. The tech giants were both targeted as part of Vestager’s eight-year crusade against allegedly unfair treatment doled out by EU nations such as Luxembourg, Ireland and the Netherlands to attract some of the world’s leading firms. As many senior Lebanese politicians have homes, bank accounts and investments in the EU, and send their children to universities there, a withdrawal of that access could be a lever to focus minds. The French reluctance to let even that come into force shows how British hopes for access to EU financial markets are fraught with politics. Paris says it has already taken measures to restrict entry for some Lebanese officials, for blocking efforts to tackle the unprecedented crisis, which is rooted in decades of state corruption and debt. Reuters.
“The level of impatience with the ruling class is growing. Before the MOU can be implemented, all 27 EU members must sign off and that formal procedure hasn’t yet started. They also said the commission “cannot be accused of having exceeded its powers”, by probing tax issues. They don’t seem to have their peoples’ interest at heart. Expect to see a decision in the next three to four weeks,” said a senior EU diplomat. Tensions between the UK and France reached a new level last week when ships from both navies were dispatched to the British island of Jersey, just a few miles off the French coast, where dozens of French boats had staged a protest. The EU first needs to set up a sanctions regime that could then see individuals hit by travel bans and asset freezes. Since last year’s Apple case, EU enforcement against tax rulings handed out by nations to selected businesses has slowed. There are divisions among the 27 EU states over the wisdom of EU sanctions, but the bloc’s two main powers, France and Germany are in favour, which is likely to prove pivotal. France’s junior minister for EU affairs Cl é ment Beaune has publicly threatened to limit access for UK financial services companies into the EU if fishing boats aren’t treated fairly.
A larger group of nations has yet to specify their approach. However, officials say it is usual at the technical, preparatory stage that countries remain circumspect and that once a political agreement among EU governments is in place, they will rally around France. The European Commission and an official in Beaune’s office declined to comment on France’s position.” How big companies reduce their tax bills has become a political focus with EU regulators planning a new tax on technology firms if global tax reforms can’t be agreed. “It’s just a question of time. We have what we wanted,” said a senior French diplomat after Monday’s meeting. The deal largely sidelined the finance industry and the EU has since said that it’s in no rush to grant the equivalence rulings that would restore trading rights for British firms. Given Hungary’s opposition, the working hypothesis is now to go for the approach of each of the remaining 26 EU countries to individually place sanctions, as well as offering aid. Amazon said the court’s decision “is in line with our long-standing position that we followed all applicable laws” and that the company “received no special treatment”, according to a statement.
Carrots and sticks “The people are suffering but the political leaders are not taking responsibility while the country is literally falling apart,” EU foreign policy chief Josep Borrell told reporters. While granting equivalences that would allow UK financial firms to do business in Europe remains a separate and unilateral process, the MOU would help speed up the process. “We are working on an approach that combines carrots and sticks.”  An EU options paper lays out how Lebanon could benefit financially from a variety of aid, but diplomats said there is nothing to suggest these carrots would entice Lebanese politicians and that it was now all about the “sticks”. Bloomberg News.” The commission didn’t immediately respond to a request for comment. France has not made public what steps it has taken alone, or against whom, and the potential impact is unclear as some Lebanese politicians hold dual nationality. French officials say a list of names is in place but it has not been divulged so as to “shake-up” and keep Lebanese politicians guessing.
Diplomats have also said the EU would have to decide whether and how to target the political arm of Hezbollah, the Iranian-backed armed movement that wields enormous power in Lebanon and is also held responsible for part of the political status quo. Amazon is one of several tech giants under fire for tax structures that may allow it to pay less than rivals. The group is less likely to have interests in the EU. In a possible signal to the EU, the US, on Tuesday and for the first time under President Joe Biden, sanctioned seven Lebanese nationals it said are connected to Hezbollah’s financial arm and called on governments worldwide to take action against them.  Reuters . The structure was in place from May 2006 to June 2014, the EU said.