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Can Europe successfully rein in Big Tobacco?

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Photo by Mateo Avila Chinchilla on Unsplash

In what looks set to become the ‘dieselgate’ of the tobacco industry, a French anti-smoking organization has filed a lawsuit against four major tobacco brands for knowingly selling cigarettes with tar and nicotine levels that were between 2 and 10 times higher than what was indicated on the packs. Because the firms had manipulated the testing process, smokers who thought they were smoking a pack a day were in fact lighting up the equivalent of up to 10, significantly raising their risk for lung cancer and other diseases.

According to the National Committee Against Smoking (CNCT), cigarettes sold by the four companies have small holes in the filter that ventilate smoke inhaled under test conditions. But when smoked by a person, the holes compress due to pressure from the lips and fingers, causing the smoker to inhale higher levels of tar and nicotine. According to the lawsuit, the irregularity “tricks smokers because they are unaware of the degree of risk they are taking.”

It was only the most recent example of what appears to be a deeply entrenched propensity for malfeasance in the tobacco industry. And unfortunately, regulatory authorities across Europe still appear unprepared to just say no to big tobacco.

Earlier this month, for instance, Public Health England published a report which shines a positive light on “tobacco heating products” and indicates that electronic cigarettes pose minimal health risks. Unsurprisingly, the UK report has been welcomed by big tobacco, with British American Tobacco praising the clear-sightedness of Public Health England.

Meanwhile, on an EU-wide level, lawmakers are cooperating too closely for comfort with tobacco industry executives in their efforts to craft new cigarette tracking rules for the bloc.

The new rules are part of a campaign to clamp down on tobacco smuggling, a problem that is particularly insidious in Europe and is often attributed to the tobacco industry’s own efforts to stiff the taxman. According to the WHO, the illicit cigarette market makes up between 6-10% of the total market, and Europe ranks first worldwide in terms of the number of seized cigarettes. According to studies, tobacco smuggling is also estimated to cost national and EU budgets more than €10 billion each year in lost public revenue and is a significant source of cash for organized crime. Not surprisingly, cheap availability of illegally traded cigarettes is also a major cause of persistently high smoking rates in the bloc.

To help curtail cigarette smuggling and set best practices in the fight against the tobacco epidemic, the WHO established the Framework Convention on Tobacco Control (FCTC) in 2005. The first protocol to the FCTC, the Protocol to Eliminate Illicit Trade in Tobacco Products, was adopted in 2012 and later ratified by the EU. Among other criteria, the Protocol requires all cigarette packs to be marked with unique identifiers to ensure they can be tracked and traced, thereby making smuggling more difficult.

Unsurprisingly, the tobacco industry has come up with its own candidates to meet track and trace requirements, notably Codentify, a system developed by PMI. From 2005 through 2016, PMI used Codentify as part of an anti-smuggling agreement with the EU. But the agreement was subject to withering criticism from the WHO and other stakeholders for going against the Protocol, which requires the EU and other parties to exclude the tobacco industry from participating in anti-smuggling efforts.

The EU-PMI agreement expired in 2016 and any hopes of reviving it collapsed after the European Parliament, at loggerheads with the Commission, overwhelmingly voted against a new deal and decided to ratify the WHO’s Protocol instead. Codentify has since been sold to the French firm Impala and was rebranded as Inexto – which critics say is nothing but a front company for PMI since its leadership is made out of former PMI executives. Nonetheless, due to lack of stringency in the EU’s draft track and trace proposal, there is still a chance that Inexto may play a role in any new track and trace system, sidelining efforts to set up a system that is completely independent of the tobacco industry.

This could end up by seriously derailing the EU’s efforts to curb tobacco smuggling, given the industry’s history of active involvement in covertly propping up the black market for cigarettes. In 2004, PMI paid $1.25 billion to the EU to settle claims that it was complicit in tobacco smuggling. As part of the settlement, PMI agreed to issue an annual report about tobacco smuggling in the EU, a report that independent researchers found “served the interests of PMI over those of the EU and its member states.”

Given the industry’s sordid history of efforts to prop up the illicit tobacco trade, it’s little surprise that critics are still dissatisfied with the current version of the EU’s track and trace proposal.

Now, the CNCT’s lawsuit against four major tobacco firms gives all the more reason to take a harder line against the industry. After all, if big tobacco can’t even be honest with authorities about the real levels of chemicals in their own products, what makes lawmakers think that they can play a viable role in any effort to quell the illegal cigarette trade – one that directly benefits the industry?

Later this month, the European Parliament will have a new chance to show they’re ready to get tough on tobacco, when they vote on the pending proposal for an EU-wide track and trace system. French MEP Younous Omarjee has already filed a motion against the system due to its incompatibility with the letter of the WHO. Perhaps a ‘dieselgate’ for the tobacco industry might be just the catalyst they need to finally say no to PMI and its co-conspirators.

Europe

U.S. President Trump to meet Bulgaria’s Prime Minister at the White House: What to expect?

Iveta Cherneva

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Next Monday, 25 November, President Trump will welcome Bulgarian Prime Minister Borissov at the White House for a bilateral meeting.

This is not the first White House visit for Bulgaria’s Prime Minister Boyko Borissov who previously met President Obama at the White House in 2012.

The White House press secretary has announced that Trump and Borissov plan to discuss security in the Black Sea region, energy and countering malign influence – all Russia-related topics, as one would expect.

The real reason for the White House treat, however, is Bulgaria’s substantial purchase of US aircraft this year.

In August, Bulgaria bought eight F-16 airplanes from the US for the hefty price of USD 1.2bln. White House meetings with foreign leaders represent special thanks for something a foreign country has done for the United States and the F-16 airplanes purchase seems to be what we are looking at here. The US is a happy seller and Bulgaria is a happy customer.

In the area of energy, Bulgaria is looking towards the US while trying to reach energy diversification and gain independence from Russian natural gas. On this, there is a clear intersection with US interests. Bulgaria agreed in May to purchase natural gas from the US for the first time. Bulgarian Prime Minister Borissov met last week with the US Ambassador to Greece to explore the possibility of purchases of American liquid gas down the line.

What is not mentioned by the official White House position is that visa restrictions will be a topic of the meeting, too. The Bulgarian Prime Minister will likely request that President Trump dropped the visa requirements for Bulgarians – an issue the Bulgarian government has been chasing for a while now and something which Bulgarian President Radev had raised with President Trump also on the sidelines of the UN General Assembly in September. Visa restrictions were removed for Polish citizens last month. The Bulgarian Prime Minister will seek the same outcome. On this point, it is unlikely that President Trump would give the green light though.

What we won’t hear about publicly is the issue of the return of ISIS fighters to Europe. No one in Bulgaria really talks about this but one can imagine this is an issue for the US government. Bulgaria doesn’t have a problem with ISIS fighters itself but, as an EU external border country, it is Turkey’s neighbor and the closest to the Middle East EU ground entry point. Last week, Turkey began returning ISIS fighters back to Europe and President Trump has been adamant that European nations with ISIS fighters need to take responsibility for them. Western European EU countries do not want their ISIS fighters back to try them in court or to reintegrate them, which is understandable but also irritating because Europeans have had the unfounded expectation that the US would somehow take care of this. How Bulgaria as an EU country at the crossroads between Turkey, the EU and the US handles that is key. No one in Bulgaria really talks about it, and the various EU, US and Turkish pressures on Bulgaria are not really known, but one can imagine the situation is that of being between a rock and a hard place. So, the return of ISIS fighters is another issue to look out for, although it will not come through in public.

In the past, NATO ally Bulgaria has aided the US with criminal and law enforcement investigations in the areas of terrorism, drug trafficking and human trafficking. This is another area to look out for.

President Trump’s impeachment is not really a topic in Bulgaria, as no one here seems to be concerned with that. It will be interesting whether Prime Minister Borissov would mention this at all to issue words of support to President Trump. This is something that President Trump would appreciate, although protocol says Prime Minister Borissov would be smart to steer away from impeachment comments.

Direct, to the point and simple words can be expected from President Trump. Prime Minister Borissov, on the other hand, is learning English so the meeting will necessarily have a Bulgarian interpreter. Expect one or two jokes by President Trump about simultaneous Bulgarian interpretation. The meeting will not pass without that.

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EU chief prosecutor Laura Kovesi needs media freedom to do her job

Iveta Cherneva

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Last month, Laura Codruta Kovesi, the former chief prosecutor of Romania’s National Anti-corruption Directorate, was officially confirmed as the first ever EU chief prosecutor to head the newly created European Public Prosecutor’s Office. Her team will start work in the end of 2020. 

Kovesi will shake things up. She has a lot of hurdles to overcome. Among the main ones is the silencing and stifling of journalists across Europe, including in Bulgaria. The lack of media freedom will make it exceptionally difficult for Kovesi to do her job and uncover crimes involving EU funding.

As soon as the news hit that Kovesi was to become EU’s top prosecutor, anti-corruption activists across Europe applauded loudly. One could hear the applause also in Bulgaria where we face issues with EU funds misappropriation and theft but also complaints regarding the freedom of the press – a place where Kovesi’s work is much needed.

Defined institutionally, Kovesi’s mandate is “to investigate, prosecute and bring to judgment crimes against the EU budget, such as fraud, corruption or serious cross-border VAT fraud”. The EU’s top prosecutor is tasked with the tough job of going after crimes involving EU money. 

It might sound as a disappointment to many, but Kovesi will not have the institutional competence to address everything that is wrong with a country or a sector. Corruption and fraud are covered by the EU prosecutor’s mandate only as long as they are related to EU funds.

So if Kovesi won’t be a see-it-all, do-it-all messiah, where does this leave media freedom then and why am I talking about it in the context of her job?

Well, bringing to justice crimes related to EU funds is almost impossible without the leads on the ground – work often done by a functioning free media and hard-hitting  investigative journalism that uncovers fishy deals and contracts. It is journalists that sometimes lead the way. Often media investigations chart a course for criminal investigations. The media is a key ally in uncovering crimes involving EU funds. This is particularly true of a service such as the EU’s prosecutor office that will operate from EU headquarters and will rely on leads and allies on the ground.

We can’t expect that an EU service will get all the intricate, hidden local information on its own or through cooperation with the state authorities in question. This is where media and journalists come in. 

Bulgaria – as sad I am to say this – gives a clear illustration of why Kovesi’s job could prove to be especially tough. The country ranks 111th in the world in terms of media freedom, according to Reporters without Borders. 

To illustrate the situation, one should look no further than the current scandal involving the nomination of Bulgaria’s own chief prosecutor and the simultaneous firing of a seasoned journalist who has been critical of the only candidate for Bulgaria’s top prosecutor post.

As reported by Reuters, the national radio journalist Silvia Velikova was fired for allegedly being critical of the work of the deputy chief prosecutor Ivan Geshev, who has already been selected to become Bulgaria’s next chief prosecutor. Bulgaria’s President Rumen Radev vetoed the appointment last week, so now the country is facing judicial uncertainty and protests such as the ones from today. 

Among the reasons why the chief prosecutor’s appointment has been controversial – to say the least – is the sacking of the Bulgarian Radio journalist Silvia Velikova. Her ousting caused protests by Bulgarian journalists which I have been attending, while the capital Sofia saw thousands of protesters marching in the streets against Geshev’s nomination in September, October and now, after the presidential veto.

Where the story gets interesting or horrific – or both – is that as many as four unnamed individuals made phone calls in September to the Director of the National Radio, allegedly asking for the journalist critical of the prosecutor candidate to be fired, or at least to be silenced until Geshev’s selection as chief prosecutor. The journalist Velikova was subsequently fired. She was reinstated to her post after Prime Minister Boyko Borisov spoke in her defence. And the Director of the National Radio was himself fired for stepping over by a media oversight organ.  

In Bulgaria, a persistent complaint is that journalists who ask the inconvenient questions can be removed in a heartbeat, after so much as a phone call. The suspicion remains that shady dealings – not merit – continue to play a significant role in the firings and hirings of Bulgarian journalists.

One should look no further than the stories of investigative journalists Miroluba Benatova and Genka Shikerova. They are both known as hard-hitting investigative journalists that ask the tough questions and uncover corruption and mismanagement. They are both out of job after being pressured to quit a mainstream media. 

Genka Shikerova faced severe intimidation over the years, as her car was set on fire not once but twice, in 2013 and 2014, in relation to her work on Bulgaria’s significant anti-government protests during these years.

Miroluba Benatova, on the other hand, caused massive waves with her recent revelation that she has become a taxi driver – only to surprise foreign tourists about how politically astute and knowledgeable Bulgarian taxi drivers are. “The service in Bulgaria has improved greatly”, told her a German tourist assuming he was being driven by just a regular taxi driver.

So, how is this related to Kovesi?

It is unlikely that by driving a taxi Benatova will be coming across many leads about EU funds theft, to assist Kovesi. Such a waste of talent, and also funds.

The media across Europe has a key role to play in supporting the work of the new EU prosecutor. As long as journalists in countries like Bulgaria lack the freedom to do their jobs, crimes involving EU funding will go uncovered. If Laura Kovesi wants to succeed in her new job, she will have to take context into account and recognize that in many EU states, including Bulgaria, journalists are often not allowed to do their jobs and ask the hard questions. And that’s a shame because Kovesi will not be able to do it alone. 

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Why German car giant Volkswagen should drop Turkey

Iveta Cherneva

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War and aggression are not only questions of ethics and humanitarian disaster. They are bad news for business.

The German car giant Volkwagen whose business model is built on consumer appeal had to stop and pause when Turkey attacked the Kurds in Syria. A USD 1.4bln Volkswagen investment in a new plant in Turkey is being put on hold by the management, and rightly so.

Unlike business areas more or less immune from consumer pressure – like some financial sectors, for example – car buying is a people thing. It is done by regular people who follow the news and don’t want to stimulate and associate themselves with crimes against humanity and war crimes through their purchases. Investing in a militarily aggressive country simply is bad for an international brand.

As soon as the news hit that Turkey would be starting their military invasion against the Kurds, questions about plans for genocide appeared in the public discourse space. Investing over a billion in such a political climate does not make sense.

By investing into a new plant next to Turkish city Izmir, Volkswagen is not risking security so much. Izmir itself is far removed from Turkey’s southern border — although terrorist attacks in the current environment are generally not out of the question.

The risk question rather lies elsewhere. Business likes stability and predictability. Aggressive economic sanctions which are likely to be imposed on Turkey by the EU and the US would affect many economic and business aspects which the company has to factor in. Two weeks ago the US House of Representatives already voted to impose sanctions on Turkey, which now leaves the Senate to vote on an identical resolution.

Economic sanctions affect negatively the purchasing power of the population. And Volkswagen’s new business would rely greatly on the Turkish client in a market of over 80mln people.

Sanctions also have a psychological “buckle-up” effect on customers in economies “under siege”, whereby clients are less likely to want to splurge on a new car in strenuous times.

Volkswagen is a German but also a European company. Its decision will signal clearly if it lives by the EU values of support for human rights, or it decides to look the other way and put business first.

But is not only about reputational damage, which Volkswagen seems to be concerned with. There are real business counter-arguments which coincide with anti-war concerns.

Dogus Otomotiv, the Turkish distributor of VW vehicles, fell as much as 6.5% in Istanbul trading after the news for the Turkish offensive.

Apart from their effects on the Turkish consumer, economic sanctions will also likely keep Turkey away from international capital markets.

There is also the question of an EU company investing outside the EU, which has raised eyebrows. It is up to the European Commission now to decide whether the Volkswagen deal in Turkey can go forward after a complaint was filed. Turkey offered the German conglomerate a generous 400mln euro subsidy which is a problem when it comes to the EU rules and regulations on competition.

The Chairman of the EPP Group in the European Parliament, Manfred Weber filed a complaint with the EU competition Commissioner about the deal, on the basis of non-compliance with EU competition rules. Turkey’s plans to subsidize Volkswagen clearly run counter EU rules and the EU Commission can stop the 1bln deal, if it so decides.

In a context where Turkey takes care of 4mln refugees — subject to an agreement with the EU — and often threatens the EU that it would “open the gates”, it is not clear if the Commission would muster the guts to say no, however. In that sense, the German company’s own decision to pull from the deal would be welcome because the Commission itself wouldn’t have to pronounce on the issue and risk angering Turkey.

While some commentators do not believe that Volkswagen would scrap altogether the investment and is only delaying the decision, it is worth remembering that the Syria conflict is a complex, multi-player conflict which has gone on for more than 8 years. Turkey’s entry in Syria is unlikely to end in a month. Erdogan has communicated his intention to stay in Syria until the Kurds back down.

In October it was reported that the Turkish forces are already using chemical weapons on the Kurdish population which potentially makes Turkish President Erdogan a war criminal. For a corporate giant like Volkswagen, giving an economic boost for such a state would mean indirectly supporting war crimes.

As Kurdish forces struck a deal for protection with the Syrian Assad forces, this seems to be anything but a slow-down. Turkey has just thrown a whole lot of wood into the fire.

Volkswagen will find itself “monitoring” the situation for a long time. There is a case for making the sustainable business decision to drop the risky deal altogether, soon.

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