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French government felled in no-confidence vote, deepening political crisis

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French lawmakers passed a no-confidence vote against the government on Wednesday, throwing the European Union’s second-biggest economic power deeper into a crisis that threatens its capacity to legislate and tame a massive budget deficit.

Far-right and left-wing lawmakers joined forces to back a no-confidence motion against Prime Minister Michel Barnier, with a majority 331 votes in support of the motion, Reuters reported.

Barnier now has to tender his resignation and that of his government to President Emmanuel Macron, making his minority government’s three-month tenure the shortest lived in France’s Fifth Republic beginning in 1958. He is expected to do so on Thursday morning, French media reported.

The hard left and far right punished Barnier for using special constitutional powers to adopt part of an unpopular budget without a final vote in parliament, where it lacked majority support. The draft budget had sought 60 billion euros ($63.07 billion) in savings in a drive to shrink a gaping deficit.

“This (deficit) reality will not disappear by the magic of a motion of censure,” Barnier told lawmakers ahead of the vote, adding the budget deficit would come back to haunt whichever government comes next.

No French government had lost a confidence vote since Georges Pompidou’s in 1962. Macron ushered in the crisis by calling a snap election in June that delivered a polarised parliament.

With its president diminished, France now risks ending the year without a stable government or a 2025 budget, although the constitution allows special measures that would avert a U.S.-style government shutdown.

France’s political turmoil will further weaken a European Union already reeling from the implosion of Germany’s coalition government, and weeks before U.S. President-elect Donald Trump returns to the White House.

The country’s outgoing defence minister Sebastien Lecornu warned the turmoil could impact French support for Ukraine.

The hard left France Unbowed (LFI) party demanded Macron’s resignation.

Barnier’s demise was cheered by far-right chief Marine Le Pen, who has sought for years to portray her National Rally party as a government in waiting.

“I’m not pushing for Macron’s resignation,” she said. “The pressure on the president will get greater and greater. Only he will make that decision.”

NO EASY EXIT FROM FRENCH POLITICAL CRISIS

France now faces a period of deep political uncertainty that is already unnerving investors in French sovereign bonds and stocks. Earlier this week, France’s borrowing costs briefly exceeded those of Greece, generally considered far more risky.

Macron must now make a choice. The Elysee Palace said the president would address the nation on Thursday evening.

Three sources told Reuters that Macron aimed to install a new prime minister swiftly, with one saying he wanted to name a premier before a ceremony to reopen the Notre-Dame Cathedral on Saturday, which Trump is due to attend.

Any new prime minister would face the same challenges as Barnier in getting bills, including the 2025 budget, adopted by a divided parliament. There can be no new parliamentary election before July.

Macron could alternatively ask Barnier and his ministers to stay on in a caretaker capacity while he takes time to identify a prime minister able to attract sufficient cross-party support to pass legislation.

A caretaker government could either propose emergency legislation to roll the tax-and-spend provisions in the 2024 budget into next year, or invoke special powers to pass the draft 2025 budget by decree – though jurists say this is a legal grey area and the political cost would be huge.

Macron’s opponents also could vote down one prime minister after the next.

ECONOMIC PAIN

The upheaval is not without risk for Le Pen.

Macron allies sought to present her as an agent of chaos after her party joined forces with the left to down Barnier.

“The French will harshly judge the choice you are going to make,” Laurent Wauquiez, a lawmaker from the conservative Les Republicains party who backs Macron, told Le Pen in parliament.

Since Macron called the summer snap election, France’s CAC 40 benchmark stock market index has dropped nearly 10% and is the heaviest loser among top EU economies.

The euro EUR=EBS showed little immediate reaction versus the dollar, trading for around $1.05 per euro, but dipping against other European currencies, such as the Swiss franc and the pound .

“I’m amazed the euro hasn’t moved much,” said Nick Rees, senior foreign exchange market analyst at Monex Europe. “There are two major powers in Europe, France and Germany, both of which right now are emasculated.”

Barnier’s draft budget had sought to cut the fiscal deficit from a projected 6% of national output this year to 5% in 2025. Voting down his government would be catastrophic for state finances, he had said.

Le Pen shrugged off the warning. She said her party would support any eventual emergency law that rolls over the 2024 budget’s tax-and-spend provisions into next year to ensure there is stopgap financing.

($1 = 0.9513 euro)

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Hong Kong tycoon Jimmy Lai sentenced to 20 years in jail in national security trial

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Hong Kong’s most prominent media tycoon Jimmy Lai was sentenced on Monday to a total of 20 years in jail on national security charges comprising two counts of conspiracy to collude with foreign forces and one of publishing seditious materials.

The sentence ends a legal saga spanning almost five years, and Hong Kong’s most high-profile national security hearing. Lai, founder of the now-shuttered Apple Daily newspaper, was first arrested in August 2020 and convicted last year, Reuters reported.

Lai’s sentence of 20 years was within the most severe penalty “band” of 10 years to life imprisonment for offences of a “grave nature”.

The Hong Kong court said Lai’s sentence was enhanced by the fact that he was “mastermind” and driving force behind foreign collusion conspiracies.

The 78-year-old, a British citizen, has denied all the charges against him, saying in court he is a “political prisoner” facing persecution from Beijing.

Lai’s plight has been criticised by global leaders, opens new tab including U.S. President Donald Trump and British Prime Minister Keir Starmer, spotlighting a years-long national security crackdown in the China-ruled Asian financial hub, following mass pro-democracy protests in 2019.

“The rule of law has been completely shattered in Hong Kong. Today’s egregious decision is the final nail in the coffin for freedom of the press in Hong Kong,” said Jodie Ginsberg, CEO of the Committee to Protect Journalism.

“The international community must step up its pressure to free Jimmy Lai if we want press freedom to be respected anywhere in the world.”

Lai arrived to court in a white jacket, with hands held together in a praying gesture as he smiled and waved at supporters.

The case has drawn calls for the long-standing critic of the Chinese Communist Party, who friends and supporters say is in frail health, to be freed.

“The harsh 20-year sentence against 78-year-old Jimmy Lai is effectively a death sentence,” said Elaine Pearson, Asia Director of Human Rghts Watch. “A sentence of this magnitude is both cruel and profoundly unjust.”

Dozens of Lai’s supporters queued for several days to secure a spot in the courtroom, with scores of police officers, sniffer dogs and police vehicles including an armoured truck and a bomb disposal van deployed around the area.

“I feel that Mr. Lai is the conscience of Hong Kong,” said a man named Sum, 64, who was in the queue.

“He speaks up for Hong Kong people, and even for many wrongful cases in mainland China and for the development of democracy. So I feel that spending a few days of my own freedom sleeping out here is better than seeing him locked up inside.”

Starmer raised the case of Lai, who holds British citizenship, in detail during a tête-à-tête with Chinese leader Xi Jinping last month in Beijing’s Great Hall of the People, according to people briefed on the discussions. Britain’s national security adviser, Jonathan Powell, and China’s foreign minister, Wang Yi, were also present.

“I raised the case of Jimmy Lai and called for his release,” Starmer told the UK parliament after his trip.

Trump too, raised Lai’s case with Xi during a meeting last October. Several Western diplomats told Reuters that negotiations to free Lai would likely begin in earnest after he is sentenced, and depending on whether Lai will appeal.

LIFE IN PRISON?

Lai’s family, lawyer, supporters and former colleagues have warned that he could die in prison as he suffers from health conditions including heart palpitations and high blood pressure.

Besides Lai, six former senior Apple Daily staffers, an activist and a paralegal will also be sentenced.

“Jimmy Lai’s trial has been nothing but a charade from the start and shows total contempt for Hong Kong laws that are supposed to protect press freedom,” said the Committee to Protect Journalists’ Asia-Pacific Director Beh Lih Yi.

Beijing, however, says Lai has received a fair trial and all are treated equally under the national security law that has restored order to the city.

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Trump signs order threatening tariffs on nations doing business with Iran

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U.S. President Donald Trump signed an executive order on Friday that may impose a 25% tariff on countries that do business with Iran.

The order comes as tensions between Iran and U.S. continue to simmer even as the two countries engaged in talks this week.

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Trump rejects Putin offer of one-year extension of New START deployment limits

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U.S. President Donald Trump on Thursday rejected an offer from his Russian counterpart to voluntarily extend the caps on strategic nuclear weapons deployments after the treaty that held them in check for more than two decades expired.

“Rather than extend “New START … we should have our Nuclear Experts work on a new, improved and modernized Treaty that can last long into the future,” Trump wrote in a post on his Truth Social platform, Reuters reported.

Arms control advocates warn that the expiration of the treaty will fuel an accelerated nuclear arms race, while U.S. opponents say the pact constrained the U.S. ability to deploy enough weapons to deter nuclear threats posed by both Russia and China.

Trump’s post was in response to a proposal by Russian President Vladimir Putin for the sides to adhere for a year to the 2010 accord’s limit of 1,550 warheads on 700 delivery systems — missiles, aircraft and submarines.

New START was the last in a series of arms control treaties between the world’s two largest nuclear weapons powers dating back more than half a century to the Cold War. It allowed for only a single extension, which Putin and former U.S. President Joe Biden agreed to for five years in 2021.

In his post, Trump called New START “a badly negotiated deal” that he said “is being grossly violated,” an apparent reference to Putin’s 2023 decision to halt on-site inspections and other measures designed to reassure each side that the other was complying with the treaty.

Putin cited U.S. support for Ukraine’s battle against Russia’s 2022 full-scale invasion as the reason for his decision.

White House spokeswoman Karoline Leavitt told reporters that the U.S. would continue talks with Russia.

BOTH SIDES SIGNAL OPENNESS TO TALKS

Earlier, Kremlin spokesman Dmitry Peskov said Russia was still ready to engage in dialogue with the U.S. if Washington responded constructively to Putin’s proposal.

“Listen, if there are any constructive replies, of course we will conduct a dialogue,” Peskov told reporters.

The UN has urged both sides to restore the treaty.

Besides setting numerical limits on weapons, New START included inspection regimes experts say served to build a level of trust and confidence between the nuclear adversaries, helping make the world safer.

If nothing replaces the treaty, security analysts see a more dangerous environment with a higher risk of miscalculation. Forced to rely on worst-case assumptions about the other’s intentions, the U.S. and Russia would see an incentive to increase their arsenals, especially as China plays catch-up with its own rapid nuclear build-up.

Trump has said he wants to replace New START with a better deal, bringing in China. But Beijing has declined negotiations with Moscow and Washington. It has a fraction of their warhead numbers – an estimated 600, compared to around 4,000 each for Russia and the U.S.

Repeating that position on Thursday, China said the expiration of the treaty was regrettable, and urged the U.S. to resume dialogue with Russia on “strategic stability.”

UNCERTAINTY OVER TREATY EXPIRY DATE

There was confusion over the exact timing of the expiry, but Peskov said it would be at the end of Thursday.

Russia’s Foreign Ministry said Moscow’s assumption was that the treaty no longer applied and both sides were free to choose their next steps.

It said Russia was prepared to take “decisive military-technical countermeasures to mitigate potential additional threats to national security” but was also open to diplomacy.

That warning was in apparent response to the possibility that Trump could expand U.S. nuclear deployments by reversing steps taken to comply with New START, including reloading warheads on intercontinental ballistic missiles and submarine-launched missiles from which they were removed.

A bipartisan congressionally appointed commission in 2023 recommended that the U.S. develop plans to reload some or all of its reserve warheads, saying the country should prepare to fight simultaneous wars with Russia and China.

Ukraine, which has been at war with Russia since Moscow’s 2022 invasion, said the treaty’s expiry was a consequence of Russian efforts to achieve the “fragmentation of the global security architecture” and called it “another tool for nuclear blackmail to undermine international support for Ukraine.”

Strategic nuclear weapons are the long-range systems that each side would use to strike the other’s capital, military and industrial centres in the event of a nuclear war. They differ from so-called tactical nuclear weapons that have a lower yield and are designed for limited strikes or battlefield use.

If left unconstrained by any agreement, Russia and the U.S. could each, within a couple of years, deploy hundreds more warheads, experts say.

“Transparency and predictability are among the more intangible benefits of arms control and underpin deterrence and strategic stability,” said Karim Haggag, director of the Stockholm International Peace Research Institute.

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