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DAILY BRIEFING

Erdogan's pipe dream

Written by Ralitsa Bobcheva, associate 
Edited by Harriet Moll, creative director
10 September 2020

Good morning,

On the 21st of August, national headlines cheered at President Recep Tayyip Erdogan’s announcement that Turkey had “made the biggest discovery of natural gas in its history in the Black Sea”. He vowed to launch production by 2023, the 100th anniversary of the Turkish republic.
 
The discovery of some 320 billion cubic metres of natural gas was particularly welcome news for the country which has long been heavily dependent on foreign gas and oil imports. The diversification of its energy supplies would enable the country to meet close to 7% of its annual demand for natural gas and reduce its reliance on countries such as Russia and Iran.
 
Moreover, a potential reduction in the country’s energy import bill would be a much-needed respite to Turkey’s faltering economy. The lira has lost nearly a fifth of its value since the beginning of 2020. At the peak of the coronavirus between April and June, Turkey’s GDP shrank 11% – the largest decline in a series of declines since 1998. 
 
Still, financial markets have not shared Ergogan’s optimism. Following an initial rally on the news of the gas find, the lira slipped back. Industry experts are also sceptical. The main concern is that the president’s ambition to make the Black sea gas available by 2023 would be challenging given that extracting the hydrocarbons is both a timely and a costly enterprise. Some have noted that to meet Erdogan’s ambition, the country would need to partner with western companies. 
 
In today’s interdependent energy world, however, Turkey is growing more isolated. The gas find comes amid growing tensions between Turkey and a Greece-Cyprus alliance over maritime rights in the Mediterrenian. At the heart of the Athens-Ankara conflict is Turkey’s oil exploration in disputed waters in the eastern Mediterrenian, prompting France to increase its military presence in the region and Germany to intervene in a bid to prompt a peaceful dialogue. 
 
And while the new natural gas reserve may grant Turkey a level of energy independence, critics are wary that the country already benefits from the second cheapest natural gas in Europe which means that Turkey may have to sell its growing gas surplus. In a world of oversupply where energy is becoming more of an international tradable commodity, though, this could result in insufficient demand. 
 
To be a real game-changer for Turkey’s economy, then, the energy card requires more than a zero-sum game and political grandstanding from Erdogan’s side. It requires diplomacy and acknowledgement of the importance of transnational dependence to make investment-intensive projects like this gas discovery successful. 

News

A mass testing programme is Boris Johnson’s only hope for avoiding a second national lockdown before a vaccine, according to leaked official documents, The Guardian reports. If delivered, the “Mass Population Testing Plan” would be unprecedented in scale as it sets out plans to deliver up to 10m tests a day.

A major report by the conservation group WWF indicates a “catastrophic decline” of wildlife populations by more than two-thirds in less than 50 years. According to Dr Andrew Terry, director of conservation at the Zoological Society of London, the decline is evidence of the damage caused by human activity. 

Prime Minister Boris Johnson has come under increasing criticism after pressing ahead with plans to override parts of the Withdrawal Agreement. The European Commission confirmed that plans violated the treaty, stating in an internal analysis paper that they equal a “clear breach” of the agreement. (£)

Business and economy

English businesses that have been affected by local lockdowns will receive grants worth up to £1,500 per property. The funding will be available for businesses based in cities such as Leicester, Bolton and other parts of Greater Manchester which have been affected by local lockdowns. 

Goldman Sachs is seeking to bring 38,000 staff back to the office in shifts, in a rotational approach akin to the one that JP Morgan Chase announced last month. The bank employs more than 6,000 people in London. (£) 

The UK will not finalise its plan for a post-Brexit state aid regime until after a public consultation, including with business, due to be completed in 2021. The move prompted anger among EU officials who are seeking full details of London’s state aid plan as part of talks on the future EU-UK relationship. (£)

Columns of note

In the Financial Times, Valzhyna Mort illustrates the mounting sense of fear and exultation among Belarusians. A month after the mass protests across the country began, anyone standing in opposition to Lukashenko’s oppressive regime could be among the arrested. (£)  

Writing in City AM, Russ Lidstone argues that in the era of blended working, the most significant changes will be in the role of line managers. To ensure employee engagement at all levels in an organisation in the hybrid world of the office, capability training for leaders will become more critical.

Cartoon source: The Economist

Markets

What happened yesterday? 

London stocks were back in rally mode on Wednesday as the UK was set to publish its new internal market bill. 

Despite disappointing news on the Covid-19 vaccine front, the FTSE 100 closed the session up 1.39% at 6,012.84, while the FTSE 250 lost 0.17% to 17.594.93. Sterling has a mixed day, gaining 0.18% on the dollar to $1.3005, but falling 0.06% against the euro to €1.1015. 

In the US, Wall Street’s main indexes bounced back on Wednesday after from the worst sell-off for US tech since March. The Dow Jones Industrial Average ended the day up 1.6% at 439.78, the S&P 500 was up by 2.02% at 3,399.06, and the Nasdaq Composite rose 2.71% at 11,141.56.

In company news:

BT is set to pass the cost of better broadband onto customers as the firm faces share price collapse and a gaping pension deficit.  

Lloyds Bank has announced restructuring plans which include cutting 865 jobs from November, although the cuts will be partly offset by the plan to create 226 new positions elsewhere. 

Food chain Pizza Hut will launch a company voluntary agreement (CVA) during the Covid-19 pandemic in a bid to cut rents and exit loss-making stores. 

British Airways owner IAG ICAG.L will raise 2.74 billion euros through a fully underwritten, heavily discounted capital increase in a bid to help strengthen its finances.
 

What’s happening today?

Finals
Dunelm
Go-Ahead

Interims
Cairn Homes, Deepmatter, Epwin Grp, International Public Partnerships, Jadestone Energy, Jadeston, Energy, Midatech Pharma, Mirriad Advert., Secure Income Reit, Serica, Team17 Group

AGMs
Atlantis Japan, Beowulf, Br.smaller Cos., Brown Group, Invesco Inc Gth, Montanaro, Nb Priv. Eqty, Reneuron, Speedy Hire, Stanley Gibbons, U And I Group, Victoria

UK economic announcements
(00:10) RICS Housing Market Survey

Int. economic announcements
(12:45) ECB Interest Rate (EU) 
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(13:30) Producer Price Index (US)
(15:00) Wholesales Inventories (US)
(16:00) Crude Oil Inventories (US)

Source: Financial Times

did you know

Many Roman statues were made with detachable heads. If the figure they depicted became unpopular, the statue could simply be re-headed. Source: @qikipedia

Parliamentary highlights

House of Commons

Oral questions
Environment, Food and Rural Affairs (including Topical Questions)

Oral questions
Church Commissioners and House of Commons Commission and Parliamentary Works Sponsor Body and Public Accounts Commission and Speaker’s Committee on the Electoral Commission

Business Statement
Business Questions to the Leader of the House – Mr Jacob Rees-Mogg

Select Committee Statement
Select Committee statement on the Business, Energy and Industrial Strategy Committee’s forthcoming inquiry on findings of the report of Climate Assembly UK

Backbench Business
General Debate on the Aviation Sector – Huw Merriman, Abena Oppong-Asare, Lilian Greenwood, Stuart C McDonald, Rachel Hopkins, Dr Rupa Huq, Ian Byrne
 
Backbench Business
General Debate on support for the Tourism Industry after the Covid-19 Lockdown – Selaine Saxby

Adjournment
Manchester Piccadilly to Rose Hill Marple trains – Mr William Wragg

House of Lords 

Oral questions
Introduction(s)
Lord Vaizey of Didcot and Lord Wharton of Yarm

Oral questions
Continuity of military operations and support during the COVID-19 pandemic – Baroness Anelay of St Johns

Oral questions
Gambling legislation – Lord Foster of Bath

Oral questions
Support of the music industry, particularly the self-employed and sole traders – Baroness Kennedy of Cradley

Oral questions
Encouraging the uptake of electric vehicles – Baroness Hayman

Orders and regulations
Town and Country Planning (Permitted Development and Miscellaneous Amendments) (England) (Coronavirus) Regulations 2020 – Motion to take note – Lord German

Orders and regulations
Town and Country Planning (Permitted Development and Miscellaneous Amendments) (England) (Coronavirus) Regulations 2020 – Motion to regret – Baroness Wilcox of Newport

Orders and regulations
Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (Amendment) (England and Wales) Order 2020; Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (England and Wales) Order 2020 – Lord Keen of Elie

Orders and regulations
Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020 – Lord Callanan

Scottish Parliament 

Parliamentary Bureau Motions

First Minister’s Questions

Parliamentary Bureau Motions

Portfolio Questions
Transport, Infrastructure and Connectivity

Stage 1 Debate (Committee Bill)
Scottish Parliament (Assistance for Political Parties) Bill

Ministerial Statement
Internal Market Update

Business Motions

Parliamentary Bureau Motions

Decision Time

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