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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)

World

Two Israeli embassy staffers killed in Washington shooting, suspect held

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Two Israeli embassy staff were killed in a shooting outside an event at the Capital Jewish Museum in Washington, DC, on Wednesday night, and a suspect is in custody, officials said.

A man and a woman were shot and killed in the area of 3rd and F streets in Northwest which is near the museum, an FBI field office and the U.S. attorney’s office. They were a young couple about to be engaged to be married, the Israeli ambassador said, Reuters reported.

Washington Metropolitan Police Chief Pamela Smith said a single suspect who was seen pacing outside the museum before the event was in custody. The suspect, tentatively identified as 30-year-old Elias Rodriguez, chanted “Free Palestine, Free Palestine,” in custody, she said.

The suspect had no previous contact with police, she added.

President Donald Trump condemned the shooting. “These horrible D.C. killings, based obviously on antisemitism, must end, NOW!” he said in a message on Truth Social. “Hatred and Radicalism have no place in the USA.”

Israeli President Isaac Herzog and U.S. Secretary of State Marco Rubio also condemned the incident.

Tal Naim Cohen, a spokesperson for the Israeli embassy in Washington, said two of its staff members were shot “at close range” while attending a Jewish event at the museum.

Homeland Security Secretary Kristi Noem said in a post on X:

“We will bring this depraved perpetrator to justice.”

FBI Director Kash Patel said he and his team had been briefed on the shooting.

“While we’re working with (Metropolitan Police Department) to respond and learn more, in the immediate, please pray for the victims and their families,” he wrote on X.

Danny Danon, Israel’s ambassador to the United Nations, called the shooting “a depraved act of anti-Semitic terrorism.”

“Harming diplomats and the Jewish community is crossing a red line,” Danon said in a post on X. “We are confident that the US authorities will take strong action against those responsible for this criminal act.”

Attorney General Pam Bondi and U.S. Attorney for the District of Columbia Jeanine Pirro were at the scene of the shooting.

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World

Trump calls his own foreign aid cuts at USAID ‘devastating’

Washington was funding 17% of the country’s HIV budget before the cuts. In the months since, testing and monitoring of HIV patients across South Africa has decreased, Reuters has reported.

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President Donald Trump said on Wednesday that his administration’s cuts to the U.S. Agency for International Development and its aid programs worldwide have been “devastating.”, Reuters reported.

Speaking beside South African President Cyril Ramaphosa during a White House visit, Trump was asked about his cutting most foreign aid by a reporter who said the decision had significant impacts in Africa.

“It’s devastating, and hopefully a lot of people are going to start spending a lot of money,” Trump said in the Oval Office.

“I’ve talked to other nations. We want them to chip in and spend money too, and we’ve spent a lot. And it’s a big – it’s a tremendous problem going on in many countries. A lot of problems going on. The United States always gets the request for money. Nobody else helps.”

The State Department, which manages USAID, did not immediately respond to a request for comment. The administration has repeatedly defended the cuts, saying they were focused on wasted funds. The gutting of the agency, largely overseen by South Africa-born businessman Elon Musk, is the subject of several federal lawsuits, read the report.

The United States is the world’s largest humanitarian aid donor, amounting to at least 38% of all contributions recorded by the United Nations. It disbursed $61 billion in foreign assistance last year, just over half of it via USAID, according to government data.

The U.S. spent half a billion dollars on South African aid in 2023, mostly on healthcare, the most recent data shows. Most of that funding has been withdrawn, though it is unclear exactly how much.

The cuts have had an effect on the country’s response to the HIV epidemic. South Africa has the world’s highest burden of HIV, with about 8 million people – one in five adults – living with the virus, Reuters reported.

Washington was funding 17% of the country’s HIV budget before the cuts. In the months since, testing and monitoring of HIV patients across South Africa has decreased, Reuters has reported.

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Trump selects $175 billion Golden Dome defense shield design, appoints leader

This month, the Congressional Budget Office estimated that Golden Dome could cost as much as $831 billion over two decades.

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President Donald Trump said on Tuesday he had selected a design for the $175-billion Golden Dome missile defense shield and named a Space Force general to head the ambitious program aimed at blocking threats from China and Russia, Reuters reported.

The program, first ordered by Trump in January, aims to create a network of satellites, perhaps numbering in the hundreds, to detect, track and potentially intercept incoming missiles.

Trump told a White House press conference that U.S. Space Force General Michael Guetlein would be the lead program manager for an effort widely viewed as the keystone to Trump’s military planning.

Golden Dome will “protect our homeland,” Trump said, adding that Canada had said it wanted to be part of it.

In a statement, the office of Canadian Prime Minister Mark Carney said he and his ministers were discussing a new security and economic relationship with their American counterparts.

“These discussions naturally include strengthening NORAD and related initiatives such as the Golden Dome,” it added.

Trump said the defense shield, which would cost some $175 billion, should be operational by the end of his term in January 2029, but industry experts were less certain of that timeframe and the cost.

“Ronald Reagan wanted it many years ago, but they didn’t have the technology,” Trump said, referring to the space-based missile defense system, popularly called “Star Wars”, that Reagan proposed.

The Golden Dome program faces both political scrutiny and funding uncertainty.

“The new datapoint is the $175 billion, but the question remains, over what period of time. It’s probably 10 years,” said Tom Karako of the Center for Strategic and International Studies.

Silicon Valley and U.S. software expertise can be leveraged to bring advances, while also using existing missile defense systems, he added.

This month, the Congressional Budget Office estimated that Golden Dome could cost as much as $831 billion over two decades, read the report.

Democratic lawmakers have voiced concern about the procurement process and involvement of Trump ally Elon Musk’s SpaceX, which has emerged as a frontrunner alongside Palantir (PLTR.O), and Anduril to build key components of the system.

“The new autonomous space-age defense ecosystem is more about Silicon Valley than it is about ‘big metal,’” Senator Kevin Cramer of North Dakota said at the White House event.

“So what’s exciting about this is it makes it available to everybody to participate, to compete.”

“Big metal” refers to legacy defense contractors.

The Golden Dome idea was inspired by Israel’s land-based Iron Dome defense shield that protects it from missiles and rockets.

Trump’s Golden Dome is much more extensive, including a massive array of surveillance satellites and a separate fleet of attacking satellites that would shoot down offensive missiles soon after lift-off, Reuters reported.

Tuesday’s announcement kicks off the Pentagon’s effort to test and ultimately buy the missiles, systems, sensors and satellites that will constitute Golden Dome.

Trump said Alaska would be a big part of the program, while Florida, Georgia and Indiana would also benefit.

Many of the early systems are expected to come from existing production lines. Attendees at the press conference named L3Harris Technologies (LHX.N), Lockheed Martin (LMT.N), and RTX Corp (RTX.N), as potential contractors for the massive project.

L3 has invested $150 million in building out its new facility in Fort Wayne, Indiana, where it makes the Hypersonic and Ballistic Tracking Space Sensor satellites that are part of a Pentagon effort to better detect and track hypersonic weapons with space-based sensors and could be adapted for Golden Dome.

Golden Dome’s funding remains uncertain. Republican lawmakers have proposed a $25-billion initial investment for Golden Dome as part of a broader $150-billion defense package, but this funding is tied to a contentious reconciliation bill that faces significant hurdles in Congress.

“Unless reconciliation passes, the funds for Golden Dome may not materialize,” said an industry executive following the program, who spoke on condition of anonymity. “This puts the entire project timeline in jeopardy.”

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