8 non-Euro EU members fear marginalisation after Brexit - Financial Times

8 fear consequences of Brexit vote
Tony Barber in London



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Britain’s departure from the EU will deprive the eight other countries in the bloc that are not in the euro zone of a powerful ally, forcing them into difficult policy choices, according to officials and analysts in the nations concerned.
“The UK’s exit from the EU will change the relationship between eurozone countries and those without the common currency, to the detriment of the latter,” said Sebastian Plociennik, head of the EU programme at the Polish Institute of International Affairs, a think-tank.

“They will be faced with a choice between fast-track adoption of the euro or political and economic marginalisation.”
While not everyone in non-euro countries would see the future in such stark terms, the non-euro nations are worried that, without the UK, the EU balance of power will swing strongly in favour of eurozone governments. That could make it more difficult for the interests of those outside the single currency to gain a proper hearing.
To the extent that France, Germany, Italy and others pursue initiatives aimed at closer economic, financial and fiscal integration of the eurozone, the impression could arise that the non-euro countries are stuck in a sort of EU second tier or outer circle.
Lubomir Zaoralek, Czech foreign minister, was among the first to warn of the risks, saying in the wake of the Brexit vote: “The debate on the EU’s future must take place on the platform of 27 states . . . The wrong response would be hasty integration.”
Apart from the UK, the non-euro states in the EU are Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania and Sweden.
Disagreements run deep among eurozone governments over a more integrated currency union, including on common deposit insurance and fiscal transfers.
But countries doubtful about adopting the euro, such as Poland and Sweden, found the UK a reassuring presence in Brussels, demonstrating with its economic weight and financial sector’s strength that the EU was beyond any doubt a multicurrency union.
With the UK inside the EU, the combined gross domestic product of the non-euro member states amounts to about 40 per cent of that of the 19 eurozone nations. With the UK out, the GDP of the non-euro states will shrink to about 16 per cent of the eurozone.
Including the UK, the non-euro countries have a combined population of 170m, half that of the eurozone. Without Britain, this figure shrinks to 105m, or just over 30 per cent of the eurozone total.

June 2016: The UK vote to leave throws into doubt the EU’s survival as support for expansion evaporates
One early casualty of Brexit was a deal that David Cameron, former prime minister, negotiated in February to loosen the terms of British membership — an agreement that had important implications for non-euro countries.
It stated that “measures, the purpose of which is to further deepen economic and monetary union, will be voluntary for member states whose currency is not the euro”. This meant, for instance, that non-euro countries were free not to assist in the financial rescues of eurozone states.
Thanks to the UK’s No vote, that deal is no longer valid. The EU reverts to the status quo ante, in which Denmark alone has a legally enshrined right not to adopt the euro — although Sweden rejected joining the currency union in a 2003 referendum, and other governments have not pressed Stockholm hard on the issue since then.
All the central and eastern European states that joined the EU between 2004 and 2013 are, under EU law, obliged to adopt the euro if they meet the membership criteria.
This worries Poland, the largest economy in central and eastern Europe and the sixth-largest in the EU. Speaking a few days after the UK referendum, Witold Waszczykowski, Poland’s foreign minister, said: “Joining the euro today and taking on a common economic policy with its taxes, fiscal solutions, minimum wage based on the level used in western Europe — this would be a disaster for the Polish economy.”
At the same time, Mr Waszczykowski also sees the disadvantages of being on the outside. “If we’re not in the eurozone, then we will not be able to take part in the political structures which the eurozone wants to create,” he said.

Turkey high level security meeting after coup - Bloomberg

Turkey’s President Recep Tayyip Erdogan met with top security officials for the first time since Friday night’s thwarted coup amid a widening purge of state institutions, and has vowed to make an “important” announcement afterward.
Following a National Security Council meeting in Ankara that began at about 1 p.m., Erdogan will also gather with ruling AK Party government ministers as well as the full cabinet in a series of meetings that could last several hours.

Deputy Prime Minister Nurettin Canikli told BloombergHT television in an interview Tuesday that measures to be announced will include a “new framework in line with the constitution” for the prosecution of the coup plotters. Erdogan’s chief adviser Cemil Ertem told Anadolu news agency there’s no plan to impose capital controls, and Deputy Prime Minister Mehmet Simsek said on Twitter that policy steps taken will be “market friendly.”

The government’s crackdown in reprisal for the coup attempt has been swift and severe. Turkey has detained, suspended, fired or stripped the professional accreditation of around 60,000 people, according to Bloomberg calculations. Erdogan has blamed the foiled military intervention on supporters of U.S.-based religious leader Fethullah Gulen. As that purge extended to the country’s academic institutions on Tuesday evening, the lira weakened to within 1 percent of a record low.
Academics including university presidents were barred on Wednesday from traveling abroad until further notice, state-run Anadolu news agency reported, citing the Council of Higher Education. They have been told to “assess” academics and staff linked to Gulen. NTV said that presidents of four universities were removed from office. And 245 staff were fired at the Youth and Sports Ministry, it said.
Obama Call
The purges have unsettled Turkey’s allies and investors by raising concerns that Erdogan’s response may be an overreach that further destabilizes Turkish society and weakens its institutions. Erdogan has been seeking to consolidate power in the presidency since he was elevated to that office two years ago, and has indicated he believes the attempted coup vindicates his policies. Late on Tuesday, U.S. President Barack Obama, in a phone call, urged his ally to act in a way that was “consistent with the democratic” values of the Turkish constitution.
“We are witnessing a crackdown of exceptional proportions in Turkey at the moment,” Andrew Gardner, Amnesty International’s Turkey researcher, said in a statement. “While it is understandable, and legitimate, that the government wishes to investigate and punish those responsible for this bloody coup attempt, they must abide by the rule of law and respect freedom of expression.”

Moody’s Investor Services said Monday that it’s put Turkish debt on review for a possible downgrade from its Baa3 credit rating, already the lowest investment grade, because of the attempted coup and its potential impact on growth. JPMorgan analysts wrote in a note Wednesday that Turkish sovereign bonds worth $7.2 billion are at risk of forced selling if Turkey’s ratings are cut to junk.
The lira was trading at 3.04 to the dollar, compared with about 2.90 in the days before the attempted coup. Yields on Turkey’s 10-year bonds rose for the fourth day in a row to 10.12 percent.
Death Penalty
As the post-coup backlash gathers pace, European leaders have warned Turkey about re-instituting the death penalty, with French President Francois Hollande on Tuesday saying such a move would end Turkey’s European Union membership talks. The last executions in Turkey were in the mid-1980s and capital punishment was formally abolished in 2004.

The U.S.-Turkish relationship has been tested by recent events, with officials trading barbs in the last few days about Turkey’s request that the U.S. extradite Gulen, who has denied any involvement in the failed putsch. On Tuesday, the defense ministers of the two NATO countries spoke by phone and re-affirmed their commitment to fight Islamic State, the U.S. Defense Department said in a statement.

The coup attempt came with Turkey engaged in an escalating fight with Kurdish PKK rebels and unsettled by a series of major bombings claimed by Islamic State. Seeking to end speculation that Kurdish militant leader Abdullah Ocalan had been harmed during the military uprising, Turkey’s Justice Ministry told NTV that he was “in good condition.”