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Escalation in Syria means EU less likely to soften stance on Russia

Russia's President Vladimir Putin delivers a speech during the 23rd World Energy Congress in Istanbul, Turkey,

By Gabriela Baczynska and John Irish

BRUSSELS/ PARIS (Reuters) – Outraged by Russia’s intensified air strikes on rebels in Syria, the European Union is now less likely to ease sanctions on Moscow over Ukraine, diplomats say, and some in the bloc are raising the prospect of more punitive steps against the Kremlin.

While the EU says conflicts in Syria and Ukraine need to be kept separate, the latest military offensive by Damascus and its ally Moscow on rebel-held eastern Aleppo further clouds the strained ties between Moscow and the bloc.

That weakens the hand of Italy, Hungary and others who have steadily increased pressure for easing sanctions, returning to doing business and reengaging with Moscow after first hitting it with punitive measures for annexing Crimea in March 2014.

“It’s clear that the assault on Aleppo has changed the mindset of some. It will be impossible to back an easing of sanctions on Ukraine in the current context,” said one EU foreign minister.

A French diplomatic source echoed the view, saying: “The prospect of the Russian sanctions over Ukraine being lifted are practically nil after Aleppo.”

France says the Aleppo attacks amount to war crimes and wants Syria and Russia investigated. EU and NATO officials on Monday said the Ukraine sanctions on Russia should be kept in place.

“There is just no appetite for an easing of sanctions now. Ukraine is one thing, but what is going on in Syria creates no atmosphere for any overall improvement in ties with Russia,” said one diplomat in Brussels.

EU leaders will discuss their ties with Moscow on Oct. 20-21 in Brussels. The bloc’s main economic sanctions against Russia over Ukraine are now in place until the end of January.

The sanctions include restrictions on Russia’s access to international financing, curbs on defense and energy cooperation with Moscow, a blacklist of people and entities and limitations on doing business with the Russian-annexed Crimea.

Italian Prime Minister Matteo Renzi has long called for a substantial debate, saying that the crisis in Ukraine, where Russia backs rebels in the country’s east, must not rule out more economic cooperation.

Italy is backed by Greece, Cyprus, Slovakia and Hungary in calling for doing more business with Russia, the EU’s main gas supplier, not least to help economic growth.

“Things are going from bad to worse. No one will dare to ask for an easing. At this stage, the doves will be happy if things stay where they are,” said another diplomat in Brussels.

Russia says it will never return Crimea to Ukraine. Efforts led by Germany and France to implement a broader peace deal in east Ukraine have stalled for many months.

Russian President Vladimir Putin is due to meet some leaders of the EU and Ukraine on Oct. 19 for more talks.

Ukraine’s President Petro Poroshenko is expected in Brussels at the time of the 28 EU leaders’ summit and the bloc will then hold a high-level meeting with Kiev on Nov.24.

A man carries a child that survived from under debris in a site hit by what activists said were airstrikes carried out by the Russian air force in the town of Douma, eastern Ghouta in Damascus, Syria January 10, 2016. REUTERS/Bassam Khabieh

NEW SANCTIONS SEEN A LONG SHOT

Diplomats said France was leading discussions on whether to impose new sanctions on Russia specifically over Syria, where Moscow backs President Bashar al-Assad in the five-year-old war.

Russia last week vetoed a French-drafted U.N. Security Council resolution demanding an immediate end to air strikes and military flights over Aleppo.

On Monday, EU foreign ministers will discuss the bloc’s reaction to the devastating bombings of Aleppo.

But Germany is seen as opposing new sanctions on Moscow and diplomats in Brussels cast doubt on chances for any swift move on that, saying there was no critical mass among EU states.

“But even if its is too early for the whole bloc to arrive at a common position, the sole fact that these discussions are taking place does send a signal to Russia,” one said.

(Additional reporting by Andreas Rinke in Berlin, Writing by Gabriela Baczynska, Editing by Angus MacSwan)

U.S.-based cleric urges Europe act to stop “catastrophe” in Turkey

U.S. based cleric Fethullah Gulen at his home in Saylorsburg, Pennsylvania

ROME, Sept 23 (Reuters) – A U.S.-based Turkish cleric accused by Tayyip Erdogan of treason said the President was using a failed coup to promote himself as a national hero and urged Europe to intervene to prevent catastrophe” as purges from the army to the judiciary proceed.

Fethullah Gulen, who denies backing the July putsch, suggested in an interview with Italian daily La Stampa Europe’s leaders had done too little in criticizing Erdogan over the arrest of tens of thousands, from the army and journalism to the judiciary and arts, and the suspension of some 100,000 people.

“Internal pressure from refugees, the proliferation of radical groups, the persecution of tens of thousands of
civilians, Erdogan’s rash self-proclamation as national hero… should compel European leaders to take effective action to stop the…government’s move towards authoritarianism,” he said.

He did not say what form such action might take.

Erdogan has long been by far the most popular politician in Turkey – a popularity critics say he has abused to extend his powers and clamp down on dissent. After the failed coup his popularity rose still further.

Turkey hosts nearly three million refugees from war in Syria. Implementing a deal the EU struck with Turkey to stem the flow of illegal migrants to Europe has been delayed by disputes over Turkey’s anti-terrorism laws and the post-coup crackdown.

“Reinforcing democracy, the rule of law and respect for human rights in Turkey is absolutely necessary to manage the refugee crisis and the fight against (Islamic State) in the long term. If this doesn’t happen, Europe risks finding itself with an even bigger problem, a catastrophe,” Gulen said.

Gulen was once a close ally of Erdogan, but the relationship has become openly hostile in recent years, culminating in Erdogan accusing Gulen of orchestrating the July coup.

More than 240 people were killed in the July 15 coup. Gulen denies any involvement and has condemned it.

Gulen said European leaders should encourage Turkey’s entry into the European Union – another element of the refugee deal – as it could strengthen democracy and respect for human rights.

(Reporting by Isla Binnie; editing by Ralph Boulton)

Brexit not the end of European Union, Juncker says

By Alastair Macdonald and Robin Emmott

STRASBOURG (Reuters) – The president of the European Commission, Jean-Claude Juncker, sought on Wednesday to rally support for the European Union, saying the bloc battered by the UK Brexit referendum was not about to break up despite its existential crisis.

In setting out the Commission’s plans for the first time since the UK voted to exit the EU on June 23, Juncker highlighted the British referendum as a warning that the EU faces a battle for survival against nationalism in Europe.

“The European Union doesn’t have enough union,” Juncker told the European Parliament in Strasbourg, noting his own executive was limited in its response to problems by division among states that was the worst he had seen in three decades in EU politics.

“There are splits out there and often fragmentation exists,” he said. “That is leaving scope for galloping populism.”

But he underlined he believed the world’s biggest trade bloc was still an important force. “The EU as such is not at risk.”

Proof of that, Juncker said, was the success of a new European investment fund that the former Luxembourg premier proposed to double to 630 billion euros ($707 billion) by 2022 to help with a sharp fall in spending since the global financial crisis, helping projects from airports to broadband networks.

The 48-minute speech drew a standing ovation from the main parties in an assembly dominated by supporters of closer European integration, but there was scorn from eurosceptics, including Marine Le Pen, the French National Front leader, and Nigel Farage, the triumphant Brexit campaigner from UKIP.

The pro-Brexit British Conservative leader, Syed Kamall was also dismissive: “Today was billed as a relaunch, but sadly it’s fundamentally the same mantra we’ve heard year after year,” he said, criticizing plans for more EU military cooperation — something long blocked by Britain, whose voice no longer counts.

AFRICA FUND

Juncker also wanted to extend the fund to the private sector in Africa to help curb emigration to Europe, starting with a pot of 44 million euros that could also be doubled later on.

An Africa fund was part of Juncker’s efforts to stress a more positive agenda, particularly over the migration crisis that has deeply divided the European Union. He also had veiled criticism of eastern European countries unwilling to take in refugees from North Africa and the Middle East.

“Solidarity must come from the heart. It cannot be forced,” Juncker said.

But the Juncker address offered few clues to the talks with London that the EU insists cannot start until Prime Minister Theresa May formally sets starts a two-year countdown to British departure. Juncker urged that to be done quickly and reiterated the EU negotiating position that Britain could not retain its full EU market access if it blocks free immigration from the EU.

“There can be no a la carte access to the single market,” he said of British hopes to cut immigration and keep free trade.

A summit of the 27 EU leaders in Bratislava on Friday is also unlikely to shed much light on the Brexit issue. Juncker will travel there to urge national leaders to remember the big picture and stop their “bickering”.

“What are we instilling in terms of values in our children. Is this a union that has forgotten its past, has no vision for the future? Our children deserve better,” Juncker said, speaking of his own father, a war veteran who died last month.

BORDER GUARDS

With Germany and France both facing major elections in the coming year, major changes in the Union are unlikely, but EU officials are concerned that left-right political tensions over fiscal policy in the euro zone or divisions over taking in refugees will jeopardize the cohesion of the bloc.

Juncker also urged states to complete the setting up of a European Border and Coast Guard, a project driven by last year’s chaotic arrival of over a million migrants and refugees, and proposed new cooperation among EU armies, as well as pushing for an acceleration of capital markets union.

Claiming success in fostering investment by the application of seed capital and guarantees from the EU and national governments, the Commission has put the European Fund for Strategic Investment (EFSI) at the heart of its economic policy.

Set up last year to run for three years until 2018 with a target of mobilizing 315 billion euros of investment, the current EFSI target is based on 21 billion euros of EU money being leveraged 15 times by other investors.

However, as the EU’s current, seven-year budget program ends in 2020, the total target will rise to 500 billion euros for five years and the Commission will call on member states to add to their contributions.

Brussels says the fund could also serve to bolster Internet connectivity across the bloc.

“We propose today to equip every European city with wireless internet,” Juncker said, revealing the kind of project he hopes can help build some love for the EU among ordinary voters.

(Additional reporting by Gabriela Baczynska, Alissa de Carbonnel, Jan Strupczewski, Marilyn Haigh, Francesco Guarascio, Foo Yun Chee and Robin Emmott in Brussels; Writing by Robin Emmott; Editing by Alastair Macdonald)

EU ministers seek to ease tensions with Turkey

By Gabriela Baczynska

BRATISLAVA (Reuters) – The European Union must mend ties with Turkey, Slovakia’s Foreign Minister Miroslav Lajcak said on Friday, as the bloc’s 28 ministers met to discuss a fraught relationship that has soured further following a failed coup in Ankara.

Turkey has accused the EU of being slow and half-hearted in its condemnation of the failed coup, while hurrying to criticize President Tayyip Erdogan for a purge of officials from police and army to journalists and academics that followed.

Lajcak, whose country holds the EU’s rotating presidency, is hosting his 27 fellow ministers in Bratislava, where they will also meet Turkish EU minister Omer Celik on Saturday. The bloc is seeking to retain Turkish co-operation in slowing a flow of refugees from war zones including Syria into EU states.

“It’s not normal that after the failed coup when we expressed the strong solidarity with the elected leaders of Turkey, instead of getting closer to each other, there is mutual frustration,” Lajcak told reporters.

“Turkey is an important partner, we need to clarify what it is that what we want from Turkey and with Turkey and then I expect that after tomorrow’s meeting we will help to improve, normalize the atmosphere between the EU and Turkey.”

MIGRANT DEAL

Turkey blamed the U.S.-based Muslim cleric Fethullah Gulen for the attempted coup, in which more than 200 people were killed, and went on to detain or dismiss tens of thousands of people for allegedly sympathizing with him.

Some in the EU were skeptical and believed Ankara was using the failed coup as a pretext to go after Erdogan critics.

The worsening atmosphere in EU-Turkey ties triggered worry that Ankara could walk away from a migration deal, which sharply cut the number of migrants and refugees reaching Europe, giving a much-needed breathing space to EU leaders after the mass influx of 2015.

But there are signals the EU’s tone on Turkey is softening after the summer break. One indication is that a senior lawmaker with the European Parliament — a body often very critical of Turkey’s track-record on human rights and rule of law — said this week that the EU might have “underestimated” the gravity of the failed coup and urged dialogue with Ankara.

In Brussels, a senior EU official said many have grown to believe the situation in Turkey would be way worse had the coup succeeded.

But for all the conciliatory signals coming from the EU side, many ministers arriving in Bratislava still stressed the need to combine cooperation with Turkey with pressuring Ankara to raise democratic standards.

“Part of this tensions are coming from misunderstandings and we have to slow down these,” Italy’s Paolo Gentiloni said.

“Other issues are very serious and so the support to Turkish authorities cannot be separated from our commitment to the human rights and the rule of law. We have to balance the two.”

(Additional reporting by Tatiana Jancarikova in Bratislava and Alastair Macdonald in Brussels; editing by Ralph Boulton)

Turkey warns EU it is making ‘serious mistakes’ over failed coup

Turkish Foreign Minister Mevlut Cavusoglu

By Ece Toksabay and Tuvan Gumrukcu

ANKARA/ISTANBUL (Reuters) – Turkey said on Wednesday the European Union was fueled by anti-Turkish sentiment and hostility to President Tayyip Erdogan and was making grave mistakes in its response to a failed coup which was costing it the trust of ordinary Turks.

Erdogan and many Turks have been incensed by what they see as the undue concern of Europe over a crackdown after the abortive July 15 putsch but indifference to the bloody events themselves, in which more than 240 people were killed.

“Unfortunately the EU is making some serious mistakes. They have failed the test following the coup attempt … Their issue is anti-Turkey and anti-Erdogan sentiment,” Foreign Minister Mevlut Cavusoglu told the state-run Anadolu Agency.

“We have worked very hard toward EU (membership) these past 15 years. We never begged, but we worked very hard … Now two out of three people are saying we should stop talks with the EU.”

More than 60,000 people in the military, judiciary, civil service and education have been detained, suspended or placed under investigation since the coup attempt, in which rogue soldiers commandeered tanks and warplanes to try to take power.

Dismissals continued at Turkey’s Scientific and Technological Research Council (Tubitak), which has now removed 560 staff, private broadcaster NTV said on Wednesday.

Some of Turkey’s European allies are concerned Erdogan, already seen as an authoritarian leader, is using the coup attempt as an excuse to further tighten his grip. Turkish officials dismiss such claims, saying the purges are justified by the gravity of the threat posed by the putsch.

Western allies are also watching Erdogan’s rapprochement with Russian President Vladimir Putin, concerned that both leaders may use their detente and chilled relations with the West to pressure Washington and the European Union.

Austrian Chancellor Christian Kern has said Europe needs to think again about Turkey’s possible EU membership.

“I am interested in a fundamental discussion,” he said on Wednesday in an interview with broadcaster ORF.

“That fundamental discussion is: Can we accept someone within the EU who does not adhere to democratic standards, who has difficulty with human rights, and who ignores humanitarian necessities and necessities regarding the rule of law?”

Turkey began EU accession talks in 2005 but has made scant progress despite an initial burst of reforms. Many EU states are not eager to see such a large, mostly Muslim country as a member, and are concerned that Ankara’s record on basic freedoms has gone into reverse in recent years.

In a return to combative form, Erdogan on Wednesday took aim at Turkey’s banks, saying they should not be charging high interest in the aftermath of the coup plot and promising to take action against lenders who “go the wrong way”.

Erdogan has repeatedly equated high interest rates with treason and called for lower borrowing costs to fuel growth, raising concern about the independence of the central bank.

‘LOSING’ TURKEY

Erdogan on Tuesday took a big step toward normalizing ties with Russia, meeting Putin in a visit to St Petersburg, his first foreign trip since the failed putsch.

Putin said Moscow would phase out sanctions against Ankara, imposed after the Turks shot down a Russian fighter jet near the Syrian border nine months ago, and that bringing ties to their pre-crisis level was the priority.

“We’re not mending relations with Russia to send a message to the West,” Minister Cavusoglu said. “If the West loses Turkey one day, it will not be because of Turkey’s relations with Russia, China, or the Islamic world, but rather because of themselves.”

Erdogan’s spokesman Ibrahim Kalin told reporters in Ankara it was normal for Turkey to seek “other options” on defense cooperation as it had not received the expected support from its western friends and NATO allies following the failed coup.

NATO said on Wednesday that Turkey’s membership was not in question and that Ankara could count on its solidarity and support after the coup bid, which has triggered deep purges in the alliance’s second-largest armed forces.

Putin said on Tuesday Moscow would gradually phase out sanctions against Ankara, imposed after the Turks shot down a Russian fighter jet near the Syrian border nine months ago, and that bringing ties to their pre-crisis level was the priority.

Cavusoglu also indicated that Turkey could find common ground with Russia on Syria, where they have been on opposing sides of the conflict. Moscow backs Syrian President Bashar al-Assad, while Turkey says he is a dictator who must be removed.

“We think similarly regarding the ceasefire, humanitarian aid and (the need for) political resolution in Syria,” Cavusoglu said, although he added the two may think differently on how to implement the ceasefire.

He said Turkey was building a “strong mechanism” with Russia to find a solution in Syria, and a delegation including the foreign ministry, military and intelligence officials would go to Russia on Wednesday for talks.

(Additional reporting by Francois Murphy in Vienna; Writing by Nick Tattersall and David Dolan; editing by Patrick Markey and Richard Balmforth)

UK police say almost 6,200 hate crimes in month after Brexit vote

LONDON (Reuters) – British police said on Friday there had been almost 6,200 hate crimes reported in the last month following the vote to leave the European Union in a referendum where immigration had been a key issue.

In the four weeks from June 16, police forces across the country said 6,193 offences had been reported, with the most common crimes being harassment, assault and other violence such as verbal abuse or spitting.

Britons voted on June 23 to exit the EU following bitter and deeply divisive campaigning in which the control of immigration was one of the main arguments of those who supported leaving the bloc. Since the result was declared, Muslims and Eastern Europeans say they have been particularly targeted.

The latest figures showed there were 3001 offences in the first two weeks of July, down 6 percent compared to the previous fortnight but still 20 percent higher than the same period last year.

“Following increases in hate crime seen after the EU referendum, police forces have been taking a robust approach to these crimes and we are pleased to see the numbers of incidents have begun to fall,” Mark Hamilton, the National Police Chiefs’ Council spokesman on hate crimes.

“Clearly any hate crime is unacceptable and these numbers are still far too high.”

Critics of the “Leave” campaign say its focus on immigration helped stoke xenophobia and racism, an accusation its leaders reject. A week before the vote, opposition Labour lawmaker Jo Cox, a strong supporter of remaining in the EU, was shot and stabbed to death in her constituency in northern England.

(Reporting by Michael Holden; editing by Giles Elgood)

Turkey rebuffs EU on death penalty, as Erdogan calls for ‘new blood’ in army

By Ece Toksabay, Samia Nakhoul and Nick Tattersall

ANKARA (Reuters) – Turkey rebuffed the European Union on Friday over the death penalty, while President Tayyip Erdogan vowed to restructure the military and give it “fresh blood”, signaling the scope of a shake-up yet to come under a state of emergency.

There is growing worry in the West about Turkey’s widening crackdown against thousands of members of the security forces, judiciary, civil service and academia after last week’s failed military coup. On Wednesday Erdogan announced a state of emergency, a move he said would allow the government to take swift action against coup plotters.

The possibility of Turkey bringing back capital punishment for the plotters of the attempted coup that killed more than 246 people and wounded more than 2,100 has put further strain on Ankara’s relationship with the EU, which it seeks to join.

Turkey outlawed capital punishment in 2004 as part of its bid to join the bloc and European officials have said backtracking on the death penalty would effectively put an end to the EU accession process. Erdogan says the death penalty may need to be brought back, citing the calls for it from crowds of supporters at rallies.

“People demand the death penalty and that demand will surely be assessed. We have to assess that demand from the standpoint on law, and not according to what the EU says,” Justice Minister Bekir Bozdag told broadcaster CNN Turk.

His comments are likely to spark further unease in the West, where there is growing worry about instability and human rights in the country of 80 million, which plays an important part in the U.S.-led fight against Islamic State and in the European Union’s efforts to stem the flow of refugees from Syria.

Erdogan accuses Fethullah Gulen, a charismatic U.S.-based cleric, of masterminding the plot against him, which crumbled early on Saturday. In a crackdown on Gulen’s suspected followers, more than 60,000 soldiers, police, judges, civil servants and teachers have been suspended, detained or placed under investigation.

Bozdag said that armed Gulen supporters had infiltrated the judiciary, universities and the media, as well as the armed forces.

Erdogan told Reuters late on Thursday he would restructure the military and give it “fresh blood”, citing the threat of the Gulen movement, which he likened to a cancer.

Gulen, who has lived in self-imposed exile in the United States for years, has denied any role in the attempted putsch, and accused Erdogan of orchestrating the coup himself. Turkey wants the U.S. to extradite the cleric. Washington says Turkey must give clear evidence first.

SUPREME COUNCIL

Erdogan said the government’s Supreme Military Council, which is chaired by the prime minister, and includes the defense minister and the chief of staff, would oversee the restructuring of the armed forces.

“They are all working together as to what might be done, and … within a very short amount of time a new structure will be emerging. With this new structure, I believe the armed forces will get fresh blood,” Erdogan said.

Speaking at his palace in Ankara, which was targeted during the coup attempt, he said a new putsch was possible but would not be easy because authorities were now more vigilant.

“It is very clear that there were significant gaps and deficiencies in our intelligence, there is no point trying to hide it or deny it,” Erdogan told Reuters.

Erdogan also said there was no obstacle to extending the state of emergency beyond the initial three months – a comment likely to spark concern among critics already fearful about the pace of his crackdown. Emergency powers allow the government to take swift measures against supporters of the coup, in which more than 246 people were killed and over 2,000 wounded.

Emergency rule will also permit the president and cabinet to bypass parliament in enacting new laws and to limit or suspend rights and freedoms as they deem necessary.

Germany called for the measure to end as quickly as possible. An international lawyers’ group warned Turkey against using it to subvert the rule of law and human rights, pointing to allegations of torture and ill-treatment of people held in the mass roundup.

EU foreign policy chief Federica Mogherini said the reaction to the coup must not undermine fundamental rights.

“What we’re seeing especially in the fields of universities, media, the judiciary, is unacceptable,” she said of detentions and dismissals of judges, academics and journalists.

For some Turks, the state of emergency raised fears of a return to the days of martial law after a 1980 military coup, or the height of a Kurdish insurgency in the 1990s when much of the largely Kurdish southeast was under a state of emergency.

Opposition parties which stood with the authorities against the coup expressed concern that the state of emergency could concentrate too much power in the hands of Erdogan, whose rivals have long accused him of suppressing free speech.

Erdogan, an Islamist, has led Turkey as prime minister or president since 2003.

“We will continue the fight … wherever they might be. These people have infiltrated the state organization in this country and they rebelled against the state,” he said, calling the actions of Friday night “inhuman” and “immoral”.

Around a third of Turkey’s roughly 360 serving generals have been detained since the coup attempt, a senior official said, with 99 charged pending trial and 14 more being held.

The Defence Ministry is investigating all military judges and prosecutors, and has suspended 262 of them, broadcaster NTV reported, while 900 police officers in the capital, Ankara, were also suspended on Wednesday. The purge also extended to civil servants in the environment and sports ministries.

The state of emergency went into effect after parliament formally approved the measure on Thursday.

(Additional reporting by Orhan Coskun, Humeyra Pamuk, Seda Sezer and Gareth Jones; Writing by David Dolan)

EU-U.S. commercial data transfer pact enters into force

By Julia Fioretti

BRUSSELS (Reuters) – A new commercial data pact between the European Union and the United States entered into force on Tuesday, ending months of uncertainty over cross-border data flows, and companies such as Google <GOOGL.O>, Facebook <FB.O> and Microsoft <MSFT.O> can sign up from Aug. 1.

The EU-U.S. Privacy Shield will give businesses moving personal data across the Atlantic – from human resources information to people’s browsing histories to hotel bookings – an easy way to do so without falling foul of tough EU data transferral rules.

The previous such framework, Safe Harbour, was struck down by the EU’s top court in October on the grounds that it allowed U.S. agents too much access to Europeans’ data.

Revelations three years ago from former U.S. intelligence contractor Edward Snowden of mass U.S. surveillance practices caused political outrage in Europe and stoked mistrust of big U.S. tech companies.

In the months that followed the EU ruling companies have had to rely on other more cumbersome mechanisms for legally transferring data to the United States.

The Privacy Shield will underpin over $250 billion dollars of transatlantic trade in digital services annually.

Google and Microsoft said they would sign up to the Privacy Shield and would work with European data protection authorities in case of inquiries.

A person familiar with social network Facebook’s thinking said the company had not yet decided whether to sign up.

“It’s too early to say as we haven’t seen the full text yet but like other companies we will be evaluating the text in the coming weeks,” the person said.

The Privacy Shield seeks to strengthen the protection of Europeans whose data is moved to U.S. servers by giving EU citizens greater means to seek redress in case of disputes, including through a new privacy ombudsman within the State Department who will deal with complaints from EU citizens about U.S. spying.

However the framework also faces criticism from privacy advocates for not going far enough in protecting Europeans’ data and is widely expected to be challenged in court.

Max Schrems, the Austrian law student who successfully challenged Safe Harbour, said the Privacy Shield was “little more than a little upgrade to Safe Harbour”. However he added that he did not have plans to challenge it himself for the time being.

“We are confident the framework will withstand further scrutiny,” Penny Pritzker, U.S. Secretary of Commerce, told a news conference.

EU data protection authorities, who had demanded improvements to the Privacy Shield in April, said they were analyzing the framework and would finalize a position by July 25.

(Editing by Alexandra Hudson and Louise Heavens)

Don’t give UK a generous Brexit deal, EU voters say: poll

LONDON (Reuters) – Voters in Germany, France, Sweden and Finland think Britain should not be given a generous deal when it tries to renegotiate its ties with the European Union, an opinion poll published on Friday showed.

Germans and the French were most opposed to helping Britain out: 53 percent of respondents in both countries said it should not expect any favors compared with 27 percent who said the EU should offer Britain a generous deal, polling firm YouGov said.

Furthermore, nearly half of voters in the two EU heavyweight countries said they would support a free trade deal with Britain only if Britain agreed to continue to allow EU citizens to live and work in the country.

Opposition to the EU’s free movement of workers principle was one of the main campaign messages of those who wanted Britain to leave the bloc, a decision British voters backed in a referendum on June 23.

Britain has yet to notify the EU formally of its plan to leave, a step which would kick off a period of up to two years for its exit to be completed.

The front-runner to become Britain’s next prime minister, interior minister Theresa May, has said she wants to hold informal talks with the EU about the outlines of a deal before launching the two-year exit period.

Of five continental EU countries covered by YouGov’s poll, only voters in Denmark favored offering Britain a generous deal, the polling firm said.

YouGov interviewed 2,045 people in Germany, 1,008 people in France and around 1,000 people in each of Sweden, Finland and Denmark between June 30 and July 5.

(Writing by William Schomberg; Editing by Richard Balmforth)

From drinks to drugs to cars: Global business hit by EU vote

By Ben Hirschler and Martinne Geller

LONDON (Reuters) – Chief executives from Tokyo to Denver prepared for long-term disruption, job cuts and lower profits on Friday after Britain’s vote to leave the European Union raised widespread fears over economic growth and sent share prices spinning.

In Britain itself, businesses including aerospace, housebuilders and drugmakers fear a range of difficulties from slumping demand to new regulatory hurdles as the pound plunged to its lowest level since 1985.

British Airways owner IAG <ICAG.L> warned that it would no longer meet its annual profit target and car manufacturers including Ford <F.N>, which employs around 14,000 people in the United Kingdom, indicated that it could ultimately lead to job cuts.

“Ford will take whatever action is needed to ensure that our European business remains competitive,” the company said, adding that it had not changed its investment plans yet.

World stocks headed for one the biggest slumps on record as investors predicted the impact of the narrow 52 vs 48 percent vote for Britain to leave the European Union would damage economic confidence across the globe.

The president of Japan’s Nippon Steel & Sumitomo Metal <5401.T>, the world’s second-largest steelmaker, said the vote was extremely disappointing.

“We are greatly concerned for the negative impact this will have, not only on Britain and the EU but also on the global economy,” said Kosei Shindo.

Those who campaigned for Britain to leave had said a weaker pound could help UK exports, but it will also reduce the value of foreign companies’ UK earnings and raise questions about access to the EU market.

“This decision will create tremendous uncertainty, which will slow economic activity and decision making,” said Martin Sorrell, the boss of the world’s biggest advertising group WPP <WPP.L>.

Jaguar Land Rover, Britain’s biggest carmaker, has estimated its annual profit could shrink by 1 billion pounds ($1.4 billion) by 2020 if Britain returns to World Trade Organization rules for trade with Europe.

Shares in the company’s owner, India’s Tata Motors <TAMO.NS>, fell 8 percent.

IMMEDIATE STEPS

Some businesses signaled an intention to push for a settlement between the UK and the EU that would minimize damage to their business, while others took immediate steps.

“This is a lose-lose ‎result for both Britain and Europe,” said Airbus <AIR.PA> CEO Thomas Enders. “We will review our UK investment strategy, like everybody else will.”

Volkmar Denner, CEO of Bosch, said its investment plans would not change, for now, but it was preparing for a weaker British currency: “We have significantly raised our hedging ratios in order to counteract a possible depreciation of the British pound.”

The German appliances maker plans to invest 25 million euros in Britain this year.

Randstad <RAND.AS>, the world’s second-largest employment services company, said it might need to restructure, as in did during the financial crisis in 2009, to cope with disruption to the jobs market.

Prime Minister David Cameron, who campaigned for Britain to remain in, said he would resign and leaders in Scotland, which voted strongly to stay in Europe, said they would consider holding a referendum to leave the United Kingdom.

Makers of Scotch whisky, who export more than 90 percent of what they produce, fear market access could be jeopardized.

“There are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single (European) market and the wider world,” said David Frost, chief executive of the Scotch Whisky Association.

Some investors warned of a coming British or even global recession as sterling collapsed to lowest since 1985.

Housebuilders Taylor Wimpey <TW.L>, Barratt Developments <BDEV.L> and Persimmon <PSN.L> saw their market values slump by more than a fifth on fears of a sharp economic downturn.

Bank shares such as Barclays <BARC.L> and Credit Suisse <CSGN.S> also tumbled, as well as domestic retailers like Sports Direct <SPD.L> and Marks & Spencers <MKS.L>. Meanwhile safer-haven sectors, like gold miners and tobacco, outperformed.

STERLING HEADACHE

Big swings in sterling will be a headache for some international companies, with a fall in the currency hitting profits earned in Britain.

International companies with sizeable sterling exposure include Denver-based Molson Coors <TAP.N>, owner of Carling beer, which is heavily reliant on the UK.

But for multinationals reporting in sterling, there will be a short-term boost to profits, when expressed in pounds.

Aside from market access, streamlining of regulations within the EU has made life simpler.

Pharmaceutical companies, for example, enjoy a one-stop shop in the form of the London-based European Medicines Agency, which approves new drugs for all EU countries, while the EU’s open airspace deals have fostered a surge in air travel and common policies on agriculture and food safety have allowed for smoother supply chains.

Companies in those sectors have fretted that Britain outside the bloc would disrupt the regulatory landscape.

Ahead of the vote, some British-based multinationals such as Diageo <DGE.L>, Unilever <ULVR.L> and Rolls-Royce <RR.L> had expressed their support for “Remain” directly to employees, although most stopped short of this.

Rolls-Royce said on Friday the medium and long-term impact would depend on the relationships struck by Britain with the EU and the rest of the world.

Government figures show 12.6 percent of Britain’s economic output is linked to exports to the EU’s 27 other members, for whom only 3.1 percent of output is linked to exports to Britain. And 80 percent of British businesses trading overseas do so with the EU.

The Confederation of British Industry has estimated there could be between 550,000 and 950,000 fewer jobs by 2020 in the event of Brexit.

For banks, a huge concern has been the threat that financial institutions based in London could lose their EU “passports”, or the automatic right to sell services across the bloc under single low-cost system. That has made bank shares particularly volatile in the run-up to the referendum.

Brexit uncertainty has also helped push British merger and acquisition activity this year at its lowest as a proportion of global activity since records began in 1980.

It could also impact large deals already in process, such as Anheuser-Busch InBev’s <ABI.BR> $100 billion-plus takeover of SABMiller <SAB.L> and the $30 billion merger of London Stock Exchange Group <LSE.L> and Deutsche Boerse <DB1Gn.DE>.

(Additional reporting by Kate Holton, Ritsuko Ando, Yuka Obayashi and Laurence Frost; editing by Keith Weir and Philippa Fletcher)

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