China tells U.S. and Britain to stop interfering in Hong Kong affairs

By Estelle Shirbon

LONDON (Reuters) – China’s ambassador to London on Monday accused foreign countries including the United States and Britain of interfering in Chinese internal affairs through their reactions to the violent clashes taking place in Hong Kong.

The Asian financial hub, which was handed over to China by former colonial ruler Britain in 1997 but enjoys a degree of autonomy under the “one country, two systems” formula, has been plunged into chaos for almost six months.

In a dramatic escalation, Hong Kong police were laying siege to a university in Hong Kong, firing rubber bullets and tear gas to push back anti-government protesters armed with petrol bombs and other weapons to stop them from fleeing.

In London, Ambassador Liu Xiaoming called a news conference at the Chinese Embassy to comment on events in Hong Kong and criticise Western governments and media for their responses to the crisis.

“Some Western countries have publicly supported extreme violent offenders,” he said.

“The U.S. House of Representatives adopted the so-called Hong Kong Human Rights and Democracy Act to blatantly interfere in Hong Kong affairs, which are China’s internal affairs.

“The British government and the foreign affairs committee of the House of Commons published China-related reports making irresponsible remarks on Hong Kong.”

Liu also said that by criticising violent actions by the authorities as well as by the protesters, Britain was in effect taking sides.

“I think when the British government criticises Hong Kong police, criticises the Hong Kong government in handling the situation, they are interfering into China’s internal affairs,” he said.

“They look like they are balanced but as a matter of fact they are taking sides. That is our position.”

The ambassador also attacked Western media, saying that reporting on Hong Kong was misleading and did not give enough prominence to violence perpetrated by the protesters. He also dismissed Western media reports on the separate issue of what U.N. experts and activists condemn as repression in China’s western Xinjiang region as “pure fabrication”.

As the ambassador’s news conference was unfolding, the British Foreign Office issued the latest in a series of statements about Hong Kong.

“The UK is seriously concerned by the escalation in violence from both the protesters and the authorities around Hong Kong university campuses,” a Foreign Office spokesman said.

“It is vital that those who are injured are able to receive appropriate medical treatment, and that safe passage is made available for all those who wish to leave the area. We need to see an end to the violence, and for all sides to engage in meaningful political dialogue ahead of the District Council elections on Sunday.”

Also during the news conference at the embassy, a spokesman for Prime Minister Boris Johnson called on all sides to show restraint.

The European Commission on Monday also called on law enforcement authorities to keep their action “strictly proportionate”.

(Additional reporting by Andrew MacAskill, Elizabeth Piper and Guy Faulconbridge; Editing by Alison Williams)

Season of discontent: protests flare around the world

Season of discontent: protests flare around the world
(Reuters) – Another day, another protest.

On Monday it was Bolivia – angry people clashed with police after the political opposition said it had been cheated in an election won by incumbent President Evo Morales.

Last week, the streets of the Chilean capital Santiago descended into chaos, as demonstrators enraged by a hike in public transport fares looted stores, set a bus alight and prompted the president to declare a state of emergency.

Earlier this month, Ecuador’s leader did the same after violent unrest triggered by the decision to end fuel subsidies that had been in place for decades.

And that was just South America.

Hong Kong has been in turmoil for months, Lebanon’s capital Beirut was at a standstill, parts of Barcelona resembled a battlefield last week and tens of thousands of Britons marched through London at the weekend over Brexit.

Protests have flared around the world in the last few months. Each has had its own trigger, but many of the underlying frustrations are similar.

Globalization and technological progress have, in general, exacerbated disparities within countries, said Sergei Guriev, former chief economist of the European Bank for Reconstruction and Development, while noting that not all of the current protests were driven by economic concerns.

Digital media has also made people more acutely aware of global inequalities, said Simon French, chief economist at UK bank Panmure Gordon.

“We know that the economics of happiness is largely driven by a relative assessment of your position versus your benchmark,” he said, a benchmark that now stretched way beyond the local community.

ECONOMICS

In at least four countries hit by recent violent protests, the main reason for the uprising is economic.

Governments in Chile and Ecuador have incurred their people’s wrath after trying to raise fares and end fuel subsidies.

As clashes engulfed Quito, Ecuadorean President Lenin Moreno reached out to indigenous leaders who had mobilized people to take to the streets.

Within minutes, chief protest organizer Jaime Vargas had rejected that outreach.

“We’re defending the people,” Vargas said in a live Facebook video from the march in Quito.

His response, visible to millions of people, underlines an added challenge authorities have when trying to quell dissent: social media has made communication between protesters easier than ever.

Tens of thousands of people have flooded Beirut in the biggest show of dissent against the establishment there in decades. People of all ages and religions joined to protest about worsening economic conditions and the perception that those in power were corrupt.

Similar factors were behind deadly civil unrest in Iraq in early October.

More than 100 people died in violent protests across a country where many Iraqis, especially young people, felt they had seen few economic benefits since Islamic State militants were defeated in 2017.

Security forces cracked down, with snipers opening fire from rooftops and the internet being shut to stem the flow of information among protesters.

GIVE US OUR AUTONOMY

Hong Kong has been battered by five months of often violent protests over fears Beijing is tightening its grip on the territory, the worst political crisis since colonial ruler Britain handed it back to China in 1997.

There have been few major rallies in recent weeks, but violence has escalated at those held, with militant activists setting metro stations ablaze and smashing up shops, often targeting Chinese banks and stores with mainland links.

Police have fired thousands of rounds of tear gas, hundreds of rubber bullets and three live rounds at brick- and petrol bomb-throwing activists.

The events in Hong Kong have drawn comparisons to Catalonia in recent days. There, too, people are angry at what they see as attempts to thwart their desire for greater autonomy from the rest of Spain, if not outright independence.

Protesters set cars on fire and threw petrol bombs at police in Barcelona, unrest sparked by the sentencing of Catalan separatist leaders who sought to declare an independent state.

Demonstrators also focused on strategic targets to cause maximum disruption, including the international airport, grounding more than 100 flights.

That came several days after similar action in Hong Kong, suggesting that protest movements are following and even copying each other on social media and the news.

“In Hong Kong they have done it well, but they are crazier,” said Giuseppe Vayreda, a 22-year-old art student at a recent Catalan separatist protest.

On Thursday, Hong Kong protesters plan a rally to show solidarity with those demonstrating in Spain.

LEADER OR NO LEADER

In some cases, individuals rise to the forefront of protest movements, using social media to get their message across.

In Egypt, where demonstrations last month were relatively small yet significant in their rarity, the catalyst of dissent against President Abdel Fattah al-Sisi was an Egyptian posting videos from Spain.

Greta Thunberg, a Swedish teenager, inspired millions of people to march through cities around the world in September to demand that political leaders act to stop climate change.

Tens of thousands gathered in a New York park to listen to her speech.

“If you belong to that small group of people who feel threatened by us, then we have some very bad news for you,” she said. “Because this is only the beginning. Change is coming whether they like it or not.”

(Reporting by Reuters correspondents; Additional reporting by Andrea Shalal and Heather Timmons in Washington; Writing by Mike Collett-White; Editing by Nick Tattersall and Sonya Hepinstall)

Britain joins Boeing suspensions, investigators probe Ethiopia crash

Passengers' personal belongings are seen at the scene of the Ethiopian Airlines Flight ET 302 plane crash, near the town of Bishoftu, near Addis Ababa, Ethiopia March 12, 2019. REUTERS/Baz Ratner

By Duncan Miriri and Tim Hepher

ADDIS ABABA/PARIS (Reuters) – Britain joined a growing wave of suspensions of Boeing 737 MAX aircraft around the world on Tuesday, escalating the global alarm after a crash in Ethiopia that killed 157 people in the second such disaster for the model in the past few months.

The decision by one of the industry’s most established regulators was the most serious setback yet for Boeing in the wake of Sunday’s crash and put pressure on regulators in the rest of Europe and the United States to follow suit.

At the same time as London’s announcement, Norwegian Air said it too would temporarily ground its MAX 8 passenger jets on the advice of European regulators.

Earlier, Singapore, Australia, Malaysia and Oman had also temporarily suspended the aircraft, following China, Indonesia and others the day before.

“The UK, Singapore and Australia are independent professionals,” said Teal Group analyst Richard Aboulafia. “I am sure the (U.S.) Federal Aviation Administration will take their judgment into account.”

Sunday’s disaster – after the fatal crash of a 737 MAX jet in Indonesia in October – has wiped billions of dollars off the market value of the world’s biggest planemaker.

But experts say it is too early to speculate on the reason for the crash or whether the two are linked. Most crashes are caused by a unique chain of human and technical factors.

Given problems of identification at the charred disaster site, Ethiopian Airlines said it would take at least five days to start handing remains to families.

The victims came from more than 30 different nations, and included nearly two dozen U.N. staff.

“We are Muslim and have to bury our deceased immediately,” Noordin Mohamed, a 27-year-old Kenyan businessman whose brother and mother died, told Reuters.

“Losing a brother and mother in the same day and not having their bodies to bury is very painful,” he said in the Kenyan capital Nairobi where the plane had been due.

 

Wreckage is seen at the site of the Ethiopian Airlines Flight ET 302 plane crash, near the town of Bishoftu, southeast of Addis Ababa, Ethiopia March 11, 2019. REUTERS/Tiksa Negeri

Wreckage is seen at the site of the Ethiopian Airlines Flight ET 302 plane crash, near the town of Bishoftu, southeast of Addis Ababa, Ethiopia March 11, 2019. REUTERS/Tiksa Negeri

FIREBALL

Flight ET 302 came down in a field soon after takeoff from Addis Ababa on Sunday, creating a fireball in a crater. It may take weeks or months to identify all the victims, who include a prize-winning author, a soccer official and a team of humanitarian workers.

The United States has said it remained safe to fly the planes, and Boeing has said there is no need to issue new guidance to operators based on the information it has so far.

Ethiopian Airlines has grounded its four other 737 MAX 8 jets as a precaution.

Anxiety was also evident among some travelers, who rushed to find out from social media and travel agents whether they were booked to fly on 737 MAX planes – the same model in the Lion Air crash off Indonesia that killed 189 people in October.

If the black box recordings found at the Ethiopian crash site are undamaged, the cause of the crash could be identified quickly, although it typically takes a year for a full probe.

Nearly 40 percent of the in-service fleet of 371 Boeing 737 MAX jets globally is grounded, according to industry publication Flightglobal. That includes 97 jets in biggest market China.

Boeing shares fell another 4.8 percent on Tuesday after having lost 5 percent on Monday.

The U.S. Federal Aviation Administration (FAA) issued a “continued airworthiness notification” for the 737 MAX on Monday to assure operators, and detailed a series of design changes mandated by Boeing after the Indonesia crash.

FILE PHOTO - SilkAir's new aircraft, the Boeing 737 Max 8, sits on the tarmac at Changi Airport in Singapore October 4, 2017. REUTERS/Edgar Su/File Photo

FILE PHOTO – SilkAir’s new aircraft, the Boeing 737 Max 8, sits on the tarmac at Changi Airport in Singapore October 4, 2017. REUTERS/Edgar Su/File Photo

BETTER SOFTWARE

Boeing said it had been working with the FAA following the Lion Air crash to enhance flight control software that would be deployed across the 737 MAX fleet in the coming weeks.

The MAX 8 has new software that automatically pushes the plane’s nose down if a stall is detected. There is no evidence so far whether the system was involved in the Ethiopia crash, though experts said this would be a focus of the investigation.

The new variant of the 737, the world’s best-selling modern passenger aircraft, could become the workhorse for airlines around the globe for decades and another 4,661 are on order.

In Latin America, Gol in Brazil temporarily suspended MAX 8 flights, as did Argentina’s state airline Aerolineas Argentinas and Mexico’s Aeromexico.

In Asia, South Korean budget carrier Eastar Jet said it would temporarily ground its two 737 MAX 8s from Wednesday, while India ordered additional checks.

Vietnam state media reported the aviation regulator would not issue licenses to local airlines to operate the 737 MAX until the cause of the Ethiopian crash was known.

Still, major airlines from North America to the Middle East kept flying the 737 MAX. Southwest Airlines Co, which operates the largest fleet of 737 MAX 8s, said it remained confident in the safety of all its Boeing planes.

Former FAA accident investigator Mike Daniel said the decision by regulators to ground the planes was premature. “To me it’s almost surreal how quickly some of the regulators are just grounding the aircraft without any factual information yet as a result of the investigation,” he told Reuters.

In Nairobi, the U.N. Environment Program set up a small memorial for Victor Tsang, a staff member who lost his life.

“Travel well my friend, see you on the other side,” said one entry in a condolence book beside a framed photograph, bouquet of flowers and candle. By mid-afternoon, 23 pages of the condolence book had been filled with over 250 names.

(Additional reporting by Jamie Freed and Aradhana Aravindan in Singapore; Katharine Houreld and Hereward Holland in Nairobi; Eric Johnson in Seattle; James Pearson in Hanoi; Alexander Cornwell in Dubai; Heekyong Yang in Seoul; Tracy Rucinski in Chicago; Writing by Andrew Cawthorne; Editing by Georgina Prodhan, Jon Boyle and Keith Weir)

Major European nations recognize Guaido as Venezuela president

FILE PHOTO: Venezuela's opposition leader Juan Guaido speaks during a news conference in Caracas, Venezuela, January 25, 2019. REUTERS/Carlos Garcia Rawlins/File Photo

By Jose Elas Rodriguez and Sudip Kar-Gupta

MADRID/PARIS (Reuters) – Ten European nations joined the United States in recognizing opposition leader Juan Guaido as Venezuela’s interim president on Monday, heightening a global showdown over Nicolas Maduro’s socialist rule.

France, Spain, Germany, Britain, Portugal, Sweden, Denmark, Austria, the Czech Republic and the Netherlands’ coordinated move came after the expiry of an eight-day ultimatum for Maduro to call a new election.

The Venezuelan leader, accused of running the OPEC nation of 30 million people like a dictatorship and wrecking its economy, has defied them and said European rulers are sycophantically following President Donald Trump.

Guaido, who leads the National Assembly, declared himself caretaker leader last month in a move that has divided international powers and brought Venezuelans onto the streets.

Trump immediately recognized him but European Union countries were more hesitant.

Russia and China, which have poured billions of dollars of investment and loans into Venezuela, are supporting Maduro in an extension of their geopolitical tussle with the United States.

“From today, we will spare no effort in helping all Venezuelans achieve freedom, prosperity and harmony,” Spanish Prime Minister Pedro Sanchez said, urging fair elections and humanitarian aid.

In response, Maduro accused “cowardly” Spain of taking a “malign” decision. “If one day there is a coup, if one day there is a gringo military intervention, your hands will be stained with blood, Mr. Pedro Sanchez,” he said in a speech.

Maduro, 56, a former union leader, bus driver and foreign minister, replaced former president Hugo Chavez in 2013 after his death from cancer. But he has presided over an economic collapse and exodus of 3 million Venezuelans.

He accuses Washington of waging an “economic war” on Venezuela and harboring coup pretensions aimed at gaining control over its oil. Venezuela’s oil reserves are the largest in the world but production has plunged under Maduro.

“ILLEGITIMATE, KLEPTOCRATIC REGIME”

Critics say incompetent policies and corruption have impoverished the once-wealthy nation while dissent has been brutally crushed.

A draft EU statement said the 28-member bloc would “acknowledge” Guaido as interim president, but formal recognition was a prerogative of individual states.

“The oppression of the illegitimate, kleptocratic Maduro regime must end,” said British Foreign Secretary Jeremy Hunt as he announced London was recognizing Guaido.

Russia accused Europe of meddling.

“Imposing some kind of decisions or trying to legitimize an attempt to usurp power is both direct and indirect interference,” Kremlin spokesman Dmitry Peskov told reporters.

Caracas pays both Russian and Chinese loans with oil.

Maduro won re-election last year, but critics say the vote was a sham. Two opposition rivals with a good chance of winning were barred, while food handouts and other subsidies to hungry Venezuelans were linked with political support.

Italy’s 5-Star Movement, which makes up half of the ruling coalition, dissents from the European stance, saying it would not recognize self-appointed leaders.

But its governing partner, the League, disagrees.

Guaido told Italian newspaper Corriere Della Sera that he would do everything possible to secure Italian support.

In addition to European pressure, a bloc of Latin American nations plus Canada were to meet on Monday seeking to maintain pressure on Maduro.

“All these shameless people are clinging to power,” said Luis, a 45-year-old Venezuelan outside the consulate in Madrid. “Let them hold elections so they see they won’t get even 10 percent of the votes.”

Italy’s SkyTG24 channel quoted Maduro as appealing to the Pope to help dialogue ahead of what he hoped would be a “peace conference” led by Mexico and others on Feb. 7. Conscious of the collapse of a past Vatican mediation bid, foes say Maduro uses dialogue to play for time and regroup when on the back foot.

(Reporting by Sudip Kar-Gupta and Marine Pennetier in Paris; Guy Faulconbridge and Mike Holden in London; Jose Elias Rodriguez in Madrid; Andrew Osborn and Thomas Balmforth in Moscow; Andrei Khalip in Lisbon; Steve Scherer in Rome; Alissa de Carbonnel and Gabriela Baczynska in Brussels; Toby Sterling in Amsterdam; Sarah Marsh in Caracas; Writing by Andrew Cawthorne; Editing by Janet Lawrence and Raissa Kasolowsky)

Kremlin says we won’t use detained ex-U.S. marine as a pawn

FILE PHOTO: Paul Whelan, a U.S. citizen detained in Russia for suspected spying, appears in a photo provided by the Whelan family on January 1, 2019. Courtesy Whelan Family/Handout via REUTERS

MOSCOW (Reuters) – The Kremlin on Wednesday rejected a British suggestion it might use a former U.S. Marine detained in Russia on espionage charges as a pawn in a diplomatic game and said it reserved the right to conduct counter-intelligence activities.

Paul Whelan, a former U.S. Marine who also holds a British passport, was detained by Russia’s Federal Security Service on Dec. 28. His family has said he is innocent and that he was in Moscow to attend a wedding.

Commenting on the case earlier this month, British foreign minister Jeremy Hunt said individuals should not be used as pawns of diplomatic leverage.

Asked about Hunt’s remark, Kremlin spokesman Dmitry Peskov told reporters:

“In Russia, we never use people as pawns in diplomatic games. In Russia, we conduct counter-intelligence activity against those suspected of espionage. That is done regularly.”

(Reporting by Andrew Osborn and Tom Balmforth; Editing by Christian Lowe)

Teacher tried to create ‘army of children’ to launch terror attacks in London

A man walks across London Bridge as the sun rises behind Tower Bridge in London, Britain, January 19, 2018. REUTERS/Hannah McKay

By Michael Holden

LONDON (Reuters) – A British supporter of Islamic State was found guilty on Friday of trying to recruit children he was teaching into an “army” of jihadists to help carry out a wave of attacks across London.

Umar Haque, 25, showed the children beheading videos and other violent militant propaganda, forced them to re-enact deadly attacks on the British capital and made them role-play attacking police officers.

“His plan was to create an army of children to assist with multiple terrorist attacks throughout London,” said Dean Haydon, head of the Metropolitan Police’s Counter Terrorism Command. “He tried and he did, we believe, radicalize vulnerable children from the ages of 11 to 14.”

Despite having no qualifications and being employed as an administrator, police say Haque used the guise of teaching Islamic studies to groom 110 children into becoming militants at the Lantern of Knowledge, a small private Islamic school, and at a madrassa connected to the Ripple Road Mosque in east London.

Of those children, 35 are now undergoing long-term safeguarding measures involving social services and other authorities. Six of the group gave evidence at Haque’s trial, detailing how he taught them fighting was good and had given them training such as doing push-ups to build their strength.

His intention was to use them to attack London targets such as the Big Ben tower, soldiers from the Queen’s Guards, a large shopping center, banks, and media stations, prosecutors said.

Believed to have been self-radicalized online, Haque was inspired by an attack in March last year when Khalid Masood plowed a rented car into pedestrians on London’s Westminster Bridge, killing four, before stabbing to death a police officer in the grounds of parliament.

He had discussed with Abuthaher Mamun – a 19-year-old who also taught at the mosque – carrying out a similar attack using guns and a hire car packed with explosives. He had made the children re-enact Masood’s assault and told another co-defendant the public deserved to be annihilated.

ROLE-PLAYING

“He tried to prepare the children for martyrdom by making them role-play terrorist attacks. Part of that role-playing was re-enacting attacking police officers,” Haydon said.

“He had shown them graphic terrorist videos – beheading videos and frightening terrorist activities overseas. He described himself as a loyal follower to IS.”

Haydon said the children had been “paralyzed by fear” into not telling their parents or teachers, with Haque saying he was part of IS and threatening that they would suffer the same fate as those in the militant videos he showed them.

However, Haque’s “ambitious”, long-term plans were in an early stage, he said. No issues had been raised at the school – rated outstanding by government inspectors – prior to Haque’s arrest and when it came to light what was going on, police initially met a wall of silence from the children.

“He shouldn’t have been teaching, so that’s a concern,” Haydon said. “We have had challenges with both the local community and some of these institutions.”

Haque was found guilty at London’s Old Bailey Court of a number of offences including preparing terrorist acts, having previously pleaded guilty to four charges.

Mamun, who police said was involved in fundraising and attack planning, and Muhammad Abid, 27, were also convicted of helping him. They will all be sentenced at a later date.

(Editing by Stephen Addison)

British police sift through rubble at scene of fatal blast

Members of the emergency services move debris at the site of an explosion which destroyed a convenience store and a home in Leicester, Britain, February 25, 2018. REUTERS/Darren Staples

By Darren Staples

LEICESTER, England (Reuters) – British police searched for survivors on Monday in the rubble of a shop and apartment destroyed by an explosion that killed at least five people and injured five others in the city of Leicester on Sunday evening.

CCTV footage posted on the local newspaper’s website showed the entire front of the building shooting into the road as a car passed. The scene was then engulfed in fire.

The Leicester Mercury said the shop was a Polish convenience store called Zabka Leicester and above it was a two-story apartment.

Police and the fire service said it would take time to establish what caused the explosion but that there was no immediate indication it was linked to terrorism.

“There are still pockets of fire in the basement area of the building,” said Matt Crane of Leicestershire Fire Service.

“We have a significant number of specialist search and rescue teams who are supported by two search dogs.”

Five people were taken to hospital, one of whom remains in a critical condition, police said.

Salvage crews work at the scene of a convenience store and home that were destroyed by an explosion in Leicester, Britain, February 26, 2018. REUTERS/Darren Staples

Salvage crews work at the scene of a convenience store and home that were destroyed by an explosion in Leicester, Britain, February 26, 2018. REUTERS/Darren Staples

Local resident Harrish Patni told Sky News: “We heard this massive explosion, the shop window six doors away vibrated and we thought it can’t be a car accident, it didn’t sound like a crash.

“We came outside and there was a big cloud of smoke, bricks all across the road.”

Leicester, in the center of England, has long been one of Britain’s most culturally diverse cities, with a large population of people from the Asian subcontinent and many other ethnicities.

(Additional reporting by Andrew MacAskill and Kanishka Singh; Editing by Guy Faulconbridge and Catherine Evans)

U.S. says ready to talk Mideast peace; Abbas calls for conference

White House senior adviser Jared Kushner seen with United States Ambassador to the United Nations (UN), Nikki Haley, and lawyer Jason Greenblatt (R) before a meeting of the UN Security Council at UN headquarters in New York, U.S., February 20, 2018. REUTERS/Lucas Jackson

By Michelle Nichols

UNITED NATIONS (Reuters) – The United States is “ready to talk” Middle East peace with the Palestinians, U.S. Ambassador to the United Nations Nikki Haley said on Tuesday in remarks directed at Palestinian President Mahmoud Abbas during a meeting of the U.N. Security Council.

U.S. President Donald Trump’s son-in-law and senior adviser, Jared Kushner, and U.S. Middle East envoy Jason Greenblatt, who are working on a new peace plan, sat behind Haley. Speaking after Abbas made a rare address to the 15-member council, Haley gave no details of the U.S. plan.

“Our negotiators are sitting right behind me, ready to talk. But we will not chase after you. The choice, Mr. President, is yours,” Haley said. Abbas did not stay in the council chamber to listen to her.

White House spokesman Josh Raffel said Washington would present a peace plan “when it is done and the time is right.”

The Palestinians no longer view the United States as a neutral negotiator, and Abbas on Tuesday called for an international Middle East peace conference to be convened later this year.

The Palestinians are furious over the Trump administration’s recognition of Jerusalem as Israel’s capital in December and its decision to cut U.S. funding for the U.N. agency that helps Palestinian refugees (UNRWA).

“It has become impossible today for one country or state alone to solve a regional or international conflict,” Abbas said. “It is essential to establish a multilateral international mechanism emanating from an international conference.”

Abbas, who shunned a visit by U.S. Vice President Mike Pence to the region last month, said the conference should include the Palestinians, Israel, the five permanent U.N. Security Council members – the United States, Russia, China, Britain and France – the European Union and the United Nations.

French U.N. Ambassador Francois Delattre told the council: “We are open to studying the development of the ways of international accompaniment for the peace process.” Deputy British U.N. Ambassador Jonathan Allen described U.S. leadership on the issue as “indispensable.”

Israel’s U.N. Ambassador Danny Danon told the Security Council that Abbas was part of the problem, not the solution, and that the “only way to move forward is direct negotiations” between Israel and the Palestinians.

Russian U.N. Ambassador Vassily Nebenzia said the so-called Quartet – made up of the United Nations, the United States, Russia and the EU – and the League of Arab States could play a role in kick-starting the stalled peace process.

(Additional reporting by Steve Holland in Washington; Editing by Paul Simao)

Britain escorts Russian ship near national waters amid strained relations

Images from an infrared camera on a helicopter show Royal Navy frigate HMS St Albans escorting Russian warship Admiral Gorshkov as it passes close to UK territorial waters through the North Sea in an image from an infrared camera on a helicopter handed out by Britain's Royal Navy December 25, 2017.

A British ship escorted a Russian vessel as it passed near UK territorial waters over Christmas, Britain’s defense ministry said on Tuesday, adding that Russian naval activity near Britain had increased in the holiday period.

The frigate HMS St Albans departed on Dec. 23 to track the new Russian warship Admiral Gorshkov as it moved through the North Sea. The Royal Navy vessel monitored the Russian ship over Christmas and will return to dock in Portsmouth later on Tuesday.

UK defense minister Gavin Williamson said in a statement after the incident that he would “not hesitate in defending our waters or tolerate any form of aggression”.

Relations between Britain and Russia are strained, and UK foreign minister Boris Johnson said there was “abundant evidence” of Moscow meddling in foreign elections during a trip to Russia last week. His counterpart Sergei Lavrov said there was no proof for Johnson’s claim.

While Johnson said he wants to normalize relations with Russia, Moscow blames London for the poor state of relations between the countries.

Britain’s defense ministry said another ship, HMS Tyne, was called to escort a Russian intelligence-gathering ship through the North Sea and the English Channel on Christmas Eve. A helicopter was subsequently dispatched to monitor two other Russian vessels.

(Reporting by Alistair Smout, editing by Ed Osmond)

Rookies and robots brace for first UK rate rise since 2007

Office lights are on at dusk in the Canary Wharf financial district, London, Britain,

By Fanny Potkin and Polina Ivanova

LONDON (Reuters) – Financial markets braced this week for what could be the Bank of England’s first rate rise in a decade – a step into the unknown for a generation of young traders who started work after 2007 but also for the state-of-the-art technology they use.

After a decade that included a global financial crash, numerous investigations into market collusion and relentless automation, trading floors at banks in London have been transformed in ways not obvious at first glance.

The newest kid on the block is not necessarily the rookie trader with a PhD in physics but the latest computer model or algorithm. How these models will perform under the almost novel circumstances of tightening monetary policy is as much a question as how the human neophytes will react.

Using past market data, assessments of demand, valuation models and even measures of how upbeat news headlines are, computers crunch the numbers, game the scenarios and buy or sell in the blink of an eye.

But shocks such as Brexit have shown that computer-driven trading can end in stampedes, or so-called flash crashes.

“You’ve got to weigh up the strength of the traders and the strength of the algorithms that have been developed and whether they can manage this kind of a process when the rate hike does come in,” said Benjamin Quinlan, CEO of financial services strategy consultancy Quinlan & Associates.

At Citibank’s expansive trading floor in London, the dealing room doesn’t look much different from a decade ago with traders hunched in front of banks of screens, the odd national flag perched on top, and television screens on mute.

But beneath the outward appearance, foreign exchange trading has undergone a seismic shift: more than 90 percent of cash transactions and a growing proportion of derivatives trades in the global $5 trillion a day FX market are done electronically.

So-called smart algos, or fully automated algorithmic trading programs that react to market movements with no human involvement, were virtually non-existent in 2007. Now, almost a third of foreign exchange trades are driven solely by algorithms, according to research firm Aite Group.

“Most of these algorithms haven’t really been tested in a rising interest rate scenario so the next few months will be crucial,” said a portfolio manager at a hedge fund in London.

To be sure, the U.S. Federal Reserve’s first rate rise in a decade in 2015 provided a dry run for this week’s UK decision – but the two economies are in very different positions and the knock-on effects on the wider financial markets of a Bank of England move are hard to predict.

 

ROOKIES AND ROBOTS

Much has changed since the Bank of England raised rates by 0.25 percent on July 5, 2007 to 5.75 percent. The first iPhone had yet to reach British shores, the country’s TVs ran on analogue signals and Northern Rock bank was alive and well.

Where once lightning decision-making and a calm head in a crisis were at a premium, the bulk of trading today is done by machines and the job of a foreign exchange sales trader is often little more than minding software and fielding client queries.

Itay Tuchman, head of global FX trading at Citi and a 20-year market veteran, said while the bank employs roughly the same number of people in currency trading as over the last few years, fewer are dedicated to business over the phone.

“We have an extensive electronic trading business, powered by our algorithmic market making platform, which is staffed by many people that have maths and science PhDs from various backgrounds,” said Tuchman, who heads trading for Citi’s global developed and emerging currency businesses.

London is the epicenter of those changes with the average daily turnover of foreign exchange trades executed directly over the phone down by a fifth to $566 billion in just three years to 2016, according to the Bank of England.

At Dutch bank ING’s London trading room, Obbe Kok, head of UK financial markets, said the floor now has about 165 people but the bank wants to make it 210 by the end of the year – searching mainly for traders attuned to technological innovations and keen on artificial intelligence.

The proportion of people employed in trading with degrees in mathematics and statistics has increased by a 58 percent over the last 10 years, Emolument, a salary benchmarking site, said.

“What banks have started to do is trade experience for technological skill and with electronic platforms growing, the average age on the floor is a bit younger,” said Adrian Ezra, CEO of financial services recruitment agency Execuzen.

 

TAPER TANTRUM

The increasing use of technology means traders can gauge the depth of market liquidity at the click of a button or quickly price an option based on volatility – a major change from a few years ago when they had to scour the market discreetly for fear of disclosing their interest to rivals.

Ala’A Saeed, global head of institutional electronic sales and one of the brains behind Citi’s trading platform FX Velocity, said its electronic programs process thousands of trades per minute.

Most of the currency trading models used by banks incorporate variables such as trading ranges, valuation metrics including trade-weighted indexes and trends in demand based on internal client orders to get a sense of which way markets are moving – and the potential impact of a new trade.

Nowadays, the models also incorporate sentiment analysis around news headlines and economic data surprises.

These electronic trading platforms also have years of financial data plugged into them with various kinds of scenario analyses, but one thing they have sometimes appeared unprepared for is a sudden change in policy direction.

Witness the market mayhem exacerbated by trend-following algorithms when Switzerland’s central bank scrapped its currency peg in 2015, or the taper tantrum in 2013 when the U.S. Federal Reserve said it would stop buying bonds.

Or Britain’s vote last year to leave the European Union.

Indeed, the biggest risk for financial markets cited by money managers in a Bank of America Merrill Lynch poll in October was a policy misstep from a major central bank.

 

EASY CREDIT, LOW VOLATILITY

One concern is that the rise in automation has coincided with a prolonged decline in market volatility as central banks from the United States to Japan have kept interest rates close to zero and spent trillions of dollars dragging long-term borrowing costs lower to try to reboot depressed economies.

While central banks have been careful to get their messages across as they end the years of stimulus, there are concerns about whether quantitative trading models can capture all the qualitative policy shifts.

For example, a growing number of investors expect the Bank of England to raise its benchmark interest rate to 0.5 percent on Nov. 2, and then leave it at that for the foreseeable future.

But futures markets are expecting another rate rise within six to nine months, injecting a new level of risk around interest rate moves and potentially boosting volatility.

Neale Jackson, a portfolio manager at 36 South Capital Advisors, a $750 million volatility hedge fund in London, said young traders have never seen an environment other than central banks supporting markets, and that has fueled risk-taking underpinned by the belief that “big brother has got our backs”.

“The problem these days is that there’s a whole generation of traders who have never seen interest rates, let alone interest rates hikes,” said Kevin Rodgers, a veteran FX trader and the author of “Why Aren’t They Shouting?”, a book about the computer revolution within financial markets.

 

(Additional reporting by Maiya Keidan and Simon Jessop; writing by Saikat Chatterjee; editing by Mike Dolan and David Clarke)