Britain Officially Starts Withdrawal from European Union

The treaty is an international agreement on which the EU is based. Article 50 deals with how a member country can withdraw from the organization.

May’s letter noted the historic nationwide vote on EU membership last year. It said the British people had not voted to “harm the European Union or any of the remaining member states.”

The letter went on to say that Britain wanted the EU to succeed and explained that the election result was an effort to “restore national self-determination.”

By informing the EU of its decision, Britain now starts two years of negotiations between the two sides. Talks on security, business, defense, health, the environment and other issues are expected to be complex.

The process started on June 23, 2016, when Britons decided in a close referendum vote to leave the EU.

Then-prime minister David Cameron had promised to hold the referendum but had campaigned for Britain to stay an EU member. Cameron resigned after the vote.

Some observers say the vote’s outcome resulted partly from feelings that the EU government was taking too much control away from British citizens.

People in London and Scotland voted to stay in the EU, while other areas supported a British exit, commonly called “Brexit.”

Little agreement on how long Brexit will take

Few Britons and political observers agree on what Brexit will mean for Britain and its partners.

Jo Murkens of the London School of Economics says most people do agree the process will be disorderly and take more than two years.

He said, “The effect of European Union law is all pervasive from constitutional-level questions to the regulation of bananas and cucumbers. So, it is a mammoth task that will not be negotiated within two years. It will take a decade or decades to give full effect to EU withdrawal.”

One day before May invoked Article 50, London’s Mayor Sadiq Khan called on European leaders not to punish Britain. He said that London would remain an important city, especially as a financial center, after Brexit.

He said, “The truth is that London will always remain a key partner for Brussels and every European nation long after Brexit is resolved.”

Khan warned against a bad Brexit deal. He said such an agreement would cut off the EU from its only truly international financial center and risk losing financial services companies to New York, Singapore and Hong Kong.

London’s mayor also said the “perfect gesture of goodwill” would be for the government to guarantee that EU citizens would remain in Britain.

Seliq Khan is the first Muslim mayor of a major western city. He has launched a campaign bringing attention to how London continues to welcome foreigners and businesses.

I’m Jonathan Evans.

Will High Cost of Small Loans Hurt Cambodians?

 

The Cambodian government has ordered a limit on interest rates on small loans. The decision comes before local elections are set to take place in June.

The 18 percent limit on the microfinance industry interest rates takes effect on April 1.

Microfinance businesses operate in many developing countries. They accept deposits and provide small loans to people in the developing world.

In Sokai is a 32-year-old Cambodian garment worker. She recently received a microfinance loan of $5,000. She must repay it within four years.

“I borrowed $5000 and I bought chickens, built the house, and my husband bought a boat, fishing nets and other items,” she said.

She will pay interest at a rate of 22 percent a year.

The new legislation will not reduce her loan payments because the law has not yet taken effect.

Her loan is considered large for the Cambodian microfinance industry. Seventy percent of microfinance industry, of MFI, loans are under $500.

Sokai had not heard of the new law. But it has caused a lot of concern among the private microfinance businesses in Cambodia.

Small loans more costly to provide, lenders say

Microfinance loans are usually for less than one year. Their interest rates are very high — 30 percent or more. Microfinance industry supporters say this is necessary because the costs of servicing small, risky loans are higher.

The high cost of the loans has not reduced demand, however.

Cambodia’s microfinance industry is growing quickly. In 2015, there were 1.5 million depositors and more than two million borrowers. MFIs are in every province of the country of 15 million people.

Almost all the loans go to people living outside Phnom Pehn, Cambodia’s capital. Most borrowers are women.

The new law comes before local elections in June. A national vote is to take place in the middle of 2018.

Supporters of the new law say the limit is meant to protect Cambodians from paying high rates. Lawmakers also want to increase access to Cambodia’s financial system.

Borrowers often use their land or home as a security for the loan. They can lose their property if they are unable to pay.

Interest rate limits are not unusual. Many countries have them. But, the World Bank says they are becoming less popular.

Some industry observers, however, say the law limiting interest rates will have a negative effect. Stephen Higgins is with Mekong Strategic Partners. The company gives business advice.

“Ideally we shouldn’t have this cap. The interest rates in Cambodia for these small loans, they’re actually amongst the lowest in the world. And people forget that.”

Higgins says the cost of lending for small loans is high. He says microfinance businesses need to charge a 30 percent interest rate for a $500 nine-month loan to make a small profit.

Opponents of the limits say microfinance businesses may stop offering loans. That, they say, will force rural people to go to moneylenders who charge much higher interest rates.

The Cambodia Microfinance Association (CMA) is a non-profit organization based in Phnom Penh. It supports microfinance businesses. It says its members will need to reduce costs and become more efficient in order to survive.

Mey Kalyan is an economist and adviser to the government. He supports the law. He says it will help protect small farmers from agriculture-related debt. He says that farmers who take out high interest loans of 30 percent or more struggle to make a profit.

CMA chairman Hout Ieng Tong says at least some CMA members will still offer small loans. But it is unclear whether the new interest rate limit will hurt deposits in microfinance businesses or will drive borrowers to higher-cost moneylenders.

I’m Mario Ritter.

And I’m Ashley Thompson.