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Hardline IMF forced Germany to guarantee Greek bailout

Acting IMF chief threatened to trigger sovereign default if Berlin failed to come to rescue of Greece Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned. Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance and it warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece’s rescue. Senior officials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding – in stark contrast to the more emollient line of Strauss-Kahn – had been defused because of a German climbdown. As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a new government, the stage was being set for a political struggle between Europe’s powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece. Berlin is deeply at odds with France and with the key EU institutions – the European Central Bank (ECB), the European commission, the presidency of the EU and the head of the eurozone, Jean-Claude Juncker, prime minister of Luxembourg – over the terms of a new deal. While conceding the need for the new bailout, Berlin is insisting that the banks and other private creditors holding Greek debt suffer losses as part of the rescue plan, which is expected to amount to €125bn (£110bn), or about €90bn if the Germans succeed in forcing losses on holders of Greek bonds. Although international markets enjoyed a calmer day on Thursday, Juncker believes that imposing losses on investors could trigger a European version of the Lehman Brothers bank collapse – a so-called “credit event”. Juncker said: “It’s a really ugly situation. The [German] idea is dangerous. It could provoke the gravest risk, that all three rating agencies declare a credit event and then there are big contagion risks for other countries.” Nout Wellink, a member of the ECB’s governing council, warned that the EU bailout fund would have to double to €1.5tn if Greece fails to pay its debts and spreads financial turmoil to other countries. The French President Nicolas Sarkozy goes to Berlin on Friday for a summit with German Chancellor Angela Merkel, with the aim of stitching up a compromise. Under Greece’s current €110bn bailout, shared by the EU and the IMF, a fifth tranche of €12bn is to be disbursed next month. Publicly, the IMF had been threatening to withhold its share of the money unless Greece’s funding gap for 2012 is closed. But Olli Rehn, the European commissioner for monetary affairs, said on Thursday that the EU and the IMF had agreed to throw Greece the €12bn lifeline by next month to forestall a default. Privately, sources said that Lipsky challenged the Germans on the fringes of a G8 summit in France almost three weeks ago and demanded that Berlin guarantee Greece’s borrowing requirements and put a figure on the pledge. The IMF ultimatum came a week after Strauss-Kahn, a former French presidential contender, resigned as IMF chief following his arrest in New York on charges of attempted rape and sexual assault of a hotel chambermaid. Berlin blinked, according to participants in the negotiations, and 10 days after the IMF challenge, the Merkel government admitted for the first time that Greece would need a new bailout. But it stoked further controversy by demanding that Greece’s private creditors take losses on their loans. Before a series of crucial EU meetings starting this weekend, Berlin looks increasingly isolated in its demands, spelling trouble for Merkel at home, where the rescue of spendthrift eurozone countries is deeply unpopular. Merkel’s junior coalition partner, the liberal Free Democrats, on Thursday reiterated the need for the banks to take some of the pain in the Greek crisis. The rescue scenario is also hostage to developments in Greece, with European leaders anxiously eyeing the political turmoil in Athens and questioning whether Papandreou would be able to deliver on his side of the bargain: savage spending cuts and tax increases aimed at raising €28bn, combined with a €50bn privatisation programme. “We expect the Greek parliament to endorse the economic reform programme as agreed by the end of June,” said Rehn. “We will not let the euro area face any kind of catastrophe.” But senior officials in Brussels worried that time was running out. Papandreou’s attempt to form a new government, win a vote of confidence and then drive the austerity package through parliament could take longer than scheduled, jeopardising the planning in European capitals. European debt crisis IMF Europe Greece Germany Ian Traynor guardian.co.uk

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Hardline IMF forced Germany to guarantee Greek bailout

Acting IMF chief threatened to trigger sovereign default if Berlin failed to come to rescue of Greece Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned. Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance and it warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece’s rescue. Senior officials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding – in stark contrast to the more emollient line of Strauss-Kahn – had been defused because of a German climbdown. As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a new government, the stage was being set for a political struggle between Europe’s powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece. Berlin is deeply at odds with France and with the key EU institutions – the European Central Bank (ECB), the European commission, the presidency of the EU and the head of the eurozone, Jean-Claude Juncker, prime minister of Luxembourg – over the terms of a new deal. While conceding the need for the new bailout, Berlin is insisting that the banks and other private creditors holding Greek debt suffer losses as part of the rescue plan, which is expected to amount to €125bn (£110bn), or about €90bn if the Germans succeed in forcing losses on holders of Greek bonds. Although international markets enjoyed a calmer day on Thursday, Juncker believes that imposing losses on investors could trigger a European version of the Lehman Brothers bank collapse – a so-called “credit event”. Juncker said: “It’s a really ugly situation. The [German] idea is dangerous. It could provoke the gravest risk, that all three rating agencies declare a credit event and then there are big contagion risks for other countries.” Nout Wellink, a member of the ECB’s governing council, warned that the EU bailout fund would have to double to €1.5tn if Greece fails to pay its debts and spreads financial turmoil to other countries. The French President Nicolas Sarkozy goes to Berlin on Friday for a summit with German Chancellor Angela Merkel, with the aim of stitching up a compromise. Under Greece’s current €110bn bailout, shared by the EU and the IMF, a fifth tranche of €12bn is to be disbursed next month. Publicly, the IMF had been threatening to withhold its share of the money unless Greece’s funding gap for 2012 is closed. But Olli Rehn, the European commissioner for monetary affairs, said on Thursday that the EU and the IMF had agreed to throw Greece the €12bn lifeline by next month to forestall a default. Privately, sources said that Lipsky challenged the Germans on the fringes of a G8 summit in France almost three weeks ago and demanded that Berlin guarantee Greece’s borrowing requirements and put a figure on the pledge. The IMF ultimatum came a week after Strauss-Kahn, a former French presidential contender, resigned as IMF chief following his arrest in New York on charges of attempted rape and sexual assault of a hotel chambermaid. Berlin blinked, according to participants in the negotiations, and 10 days after the IMF challenge, the Merkel government admitted for the first time that Greece would need a new bailout. But it stoked further controversy by demanding that Greece’s private creditors take losses on their loans. Before a series of crucial EU meetings starting this weekend, Berlin looks increasingly isolated in its demands, spelling trouble for Merkel at home, where the rescue of spendthrift eurozone countries is deeply unpopular. Merkel’s junior coalition partner, the liberal Free Democrats, on Thursday reiterated the need for the banks to take some of the pain in the Greek crisis. The rescue scenario is also hostage to developments in Greece, with European leaders anxiously eyeing the political turmoil in Athens and questioning whether Papandreou would be able to deliver on his side of the bargain: savage spending cuts and tax increases aimed at raising €28bn, combined with a €50bn privatisation programme. “We expect the Greek parliament to endorse the economic reform programme as agreed by the end of June,” said Rehn. “We will not let the euro area face any kind of catastrophe.” But senior officials in Brussels worried that time was running out. Papandreou’s attempt to form a new government, win a vote of confidence and then drive the austerity package through parliament could take longer than scheduled, jeopardising the planning in European capitals. European debt crisis IMF Europe Greece Germany Ian Traynor guardian.co.uk

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Hardline IMF forced Germany to guarantee Greek bailout

Acting IMF chief threatened to trigger sovereign default if Berlin failed to come to rescue of Greece Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned. Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance and it warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece’s rescue. Senior officials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding – in stark contrast to the more emollient line of Strauss-Kahn – had been defused because of a German climbdown. As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a new government, the stage was being set for a political struggle between Europe’s powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece. Berlin is deeply at odds with France and with the key EU institutions – the European Central Bank (ECB), the European commission, the presidency of the EU and the head of the eurozone, Jean-Claude Juncker, prime minister of Luxembourg – over the terms of a new deal. While conceding the need for the new bailout, Berlin is insisting that the banks and other private creditors holding Greek debt suffer losses as part of the rescue plan, which is expected to amount to €125bn (£110bn), or about €90bn if the Germans succeed in forcing losses on holders of Greek bonds. Although international markets enjoyed a calmer day on Thursday, Juncker believes that imposing losses on investors could trigger a European version of the Lehman Brothers bank collapse – a so-called “credit event”. Juncker said: “It’s a really ugly situation. The [German] idea is dangerous. It could provoke the gravest risk, that all three rating agencies declare a credit event and then there are big contagion risks for other countries.” Nout Wellink, a member of the ECB’s governing council, warned that the EU bailout fund would have to double to €1.5tn if Greece fails to pay its debts and spreads financial turmoil to other countries. The French President Nicolas Sarkozy goes to Berlin on Friday for a summit with German Chancellor Angela Merkel, with the aim of stitching up a compromise. Under Greece’s current €110bn bailout, shared by the EU and the IMF, a fifth tranche of €12bn is to be disbursed next month. Publicly, the IMF had been threatening to withhold its share of the money unless Greece’s funding gap for 2012 is closed. But Olli Rehn, the European commissioner for monetary affairs, said on Thursday that the EU and the IMF had agreed to throw Greece the €12bn lifeline by next month to forestall a default. Privately, sources said that Lipsky challenged the Germans on the fringes of a G8 summit in France almost three weeks ago and demanded that Berlin guarantee Greece’s borrowing requirements and put a figure on the pledge. The IMF ultimatum came a week after Strauss-Kahn, a former French presidential contender, resigned as IMF chief following his arrest in New York on charges of attempted rape and sexual assault of a hotel chambermaid. Berlin blinked, according to participants in the negotiations, and 10 days after the IMF challenge, the Merkel government admitted for the first time that Greece would need a new bailout. But it stoked further controversy by demanding that Greece’s private creditors take losses on their loans. Before a series of crucial EU meetings starting this weekend, Berlin looks increasingly isolated in its demands, spelling trouble for Merkel at home, where the rescue of spendthrift eurozone countries is deeply unpopular. Merkel’s junior coalition partner, the liberal Free Democrats, on Thursday reiterated the need for the banks to take some of the pain in the Greek crisis. The rescue scenario is also hostage to developments in Greece, with European leaders anxiously eyeing the political turmoil in Athens and questioning whether Papandreou would be able to deliver on his side of the bargain: savage spending cuts and tax increases aimed at raising €28bn, combined with a €50bn privatisation programme. “We expect the Greek parliament to endorse the economic reform programme as agreed by the end of June,” said Rehn. “We will not let the euro area face any kind of catastrophe.” But senior officials in Brussels worried that time was running out. Papandreou’s attempt to form a new government, win a vote of confidence and then drive the austerity package through parliament could take longer than scheduled, jeopardising the planning in European capitals. European debt crisis IMF Europe Greece Germany Ian Traynor guardian.co.uk

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Starbucks is in hot water after a customer witnessed what she calls “one of the most brazen and unapologetic displays of homophobia I have ever witnessed in my entire life” at one of its Long Island locations. Missy Alison wrote an open letter to the company, which her wife posted…

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Investigators in Arizona have questioned two “persons of interest” in the most devastating wildfire to ever blaze through the state, which they believe was caused by a single campfire in the Bear Wallow wilderness, reports the AP. It’s unclear whether those involved will face charges or have to pay restitution,…

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Mitt Romney is now the clear frontrunner in the Republican 2012 race, according to a new Wall Street Journal /NBC News poll. Of those likely to vote, 30% said they support Romney, an increase from last month’s 21%. Sarah Palin, who still hasn’t said if she’s in or out, managed…

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Panini’s football stickers for women’s World Cup prove to be a sellout

First female range an unexpected success in host nation Germany, with demand forcing Italian firm to rush to print more To find out whether women’s football is finally going mainstream, Fifa could commission a focus group. Or it could pay for an opinion poll, phoning 1,000 people to see how many can name a female player. But if officials want a simpler sign of a growing interest in women and the beautiful game, they could just head to a German school playground and see what the children are swapping at breaktime: stickers featuring players taking part in the forthcoming women’s World Cup. According to sales figures from manufacturers Panini, 4.5m packets of stickers featuring the world’s best female players have been snapped up since they went on the market a fortnight ago. The range has proved so (unexpectedly) popular that the Italian firm has had to rush to print a million more, according to a spokeswoman. “The collection was indeed a gamble,” said Christine Frölicher from Panini, in Stuttgart. “But the feedback we have got from the market shows that it paid off.” The stickers and accompanying album are only available in Germany, which will host the tournament from 26 June. This is the first time Panini has covered the women’s World Cup, which has been running since 1991, and the first time it has produced a range for any international women’s sport. The time was optimal, said Frölicher. “If not now, then when? With Germany as the host country and a very strong German team, it seemed the perfect opportunity for a women’s World Cup sticker collection,” she said. It’s a sign of the times, said Jens Kirschneck, managing editor of the German football magazine 11 Freunde – and its female spin-off, 11 Freundinnen. “Not long ago, perhaps eight years ago, it would be unimaginable that Panini could sell so many women’s football stickers.” Niels Barnhofer, media officer for the German national team, current women’s world champions, said the home squad were feverishly collecting the stickers themselves. “Our players are very eager to collect the whole lot,” he said. “They are big collectors and exchanging them has become a big thing among the team. They all want full albums, but it’s difficult to get new cards at the moment because all the shops have sold out.” The €2 scrapbook contains more than 40 pages featuring 17 players from each of the 16 teams. There are already dozens of online swap shops (Tauschbörse) for fans desperately trying to find missing numbers. Particularly popular players include Birgit Prinz, Germany’s star striker, and Marta, the Brazilian forward, who is the five-time winner of the Fifa’s Women’s World Player of the Year award. “Any of the glittery stickers are also popular,” said Frohlicher. The album is currently being offered for more than three times its cover price on Amazon Marketplace in Germany. The book and stickers look pretty much the same as their male-dominated counterparts, with one key difference: the women’s stickers do not list the players’ weight. “It’s simply more charming like that,” said Frölicher. Otherwise, it’s business as usual: birthplace, date of birth, height and home team. Panini admits it had some difficulty researching the album because of the low profile of most players. There are some missing statistics and an editing error meant that one North Korean player was mistakenly included twice. Even if all 5.5m packets are sold, sales will fall far short of the male version for last year’s World Cup in South Africa when 90m packets were snapped up in Germany alone; during the World Cup in 2006, also in Germany, 160m flew off the shelves. “I’m not sure this is the start of a new era,” said Kirschneck. “I don’t think I would take this as an indication that come autumn, there will be twice as many spectators in the stands for women’s Bundesliga games. But I do think it’s a good sign that the event will be a success.” Women have long played football in Germany, but the recent success of the national team – they have won the World Cup twice – has seen more and more taking up the sport. In 2004-05 there were 860,000 female players in the German football federation, now there are 1,020,000. Nothing can match the United States, where more than 7.2 million girls regularly play, only marginally lower than the number of boys. Though ticket sales for this year’s tournament, starting on 26 June, are going well, 25% (230,000) remain unsold. “We’re well on the way to reaching our goal of selling 80% of tickets in advance,” said Steffi Jones, president of the German bid. Women’s World Cup 2011 World cup & the media Germany Europe Helen Pidd guardian.co.uk

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The Obama administration has notified 1,000 businesses in all 50 states that it’ll be scouring their hiring records for signs of illegal immigrant employees, in a surge of so-called “silent raids,” the Wall Street Journal reports. ICE wouldn’t identify the targets, but did say that businesses of all sizes…

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Ayman al-Zawahiri: from doctor to Osama bin Laden’s successor

Egyptian surgeon turned militant mastermind takes over as world’s most wanted man as al-Qaida tries to reassert authority Al-Qaida has moved to reassert its battered authority, appointing as its leader Ayman al-Zawahiri, the Egyptian militant mastermind who has vowed to avenge the death of Osama bin Laden with a September 11-style mass attack. Zawahiri’s succession was announced by al-Qaida’s ruling council via the internet, six weeks after US special forces killed Bin Laden in a raid on a house in northern Pakistan. It confirms the former surgeon, who has masterminded bombings, including in Nairobi and New York over the past 13 years, as the world’s most wanted man, with a $25m US bounty on his head. The next most wanted figure is the Taliban leader Mullah Omar, with a $10m reward in the US for his capture. Zawahiri will seek to leverage the notoriety to reinvigorate the militant franchise that has been marginalised by this year’s Arab spring revolutions in the Middle East and weakened by the loss of Bin Laden, suspected, by intelligence sources, of having been in greater control of day-to-day operations than previously thought. In a videotape, available from 8 June, Zawahiri is seen wearing a white tunic and sitting beside a rifle. He warns America that it faces a “jihadist renaissance” and speaks of a revenge attack along the lines of “black Tuesday” – al Qaida’s term for the 11 September attacks of 2001. But large questions remain about whether Zawahiri, considered more argumentative and less charismatic than his Saudi predecessor, can unite al-Qaida’s factions across south Asia and the Middle East while evading his American pursuers. Al-Qaida’s goal of creating an Islamic caliphate spanning the Muslim world is limited to a pocket of lawless bolt holes controlled by separate factions. Yemen is now considered al-Qaida’s most powerful division, followed perhaps by Somali, but the group remains based along the mountainous Afghanistan-Pakistan border. Even before his appointment Zawahiri had taken on the mantle of a leader, adopting an inclusive tone intended to unite the various groups. “It was a complete change of language,” said Baker Atyani, a Palestinian journalist and militancy expert, speaking of this latest video. “He’s no longer giving instructions or going into detail but talking in general terms, like a leader, as Bin Laden used to.” From a family of wealthy doctors and religious scholars in Cairo – his grandfather was the grand imam of the Al Azhar university, the seat of Sunni learning – Zawahiri was a cheery if studious child, relatives said. He turned to radical Islam as a teenager, joining Egyptian Jihad in its struggle against the US-backed dictator Gamal Abdel Nasser. He served three years in jail in the 1980s before going to Pakistan to fight the jihad against the Soviet occupation of Afghanistan. There, he joined forces with Bin Laden, and together they founded al-Qaida, in Peshawar, in 1988. Zawahiri emerged as the “brains” of the militant group, playing a key role in several big attacks. The US has only indicted him for one: the August 1998 bombing of US embassies in Tanzania and Kenya, which killed 224 people and wounded several thousand. Since 2001 he has become the voice of al-Qaida, sending dozens of propaganda messages by video, audiotape and written text, spouting fiery rhetoric against his enemies. “Pursuing the Americans and Jews is not an impossible task,” he wrote in 2001. “Killing them is not impossible, whether by a bullet, a knife stab, a bomb or a strike with an iron bar.” Atyani, who met both men near Kandahar in June 2001, said: “Bin Laden was very quiet, he would count his words. Zawahiri likes to talk, to argue, to discuss.” Zawahiri’s anger against the US is partly personal: his wife and two of his children were killed in the US invasion of Afghanistan following the 11 September attacks. Thought to have been hiding in Pakistan’s tribal belt, he escaped death during a drone strike in 2006 on a house in Bajaur, which killed 18 people. Other reliable reports over the past decade have placed him in the Waziristans. But since the discovery, on 2 May this year, of Bin Laden – found in Abbottabad, a garrison town 35 miles north of Islamabad– experts believe Zawahiri could also be sheltering outside the tribal belt. “The border is too dangerous for anyone right now,” said Ahmed Rashid, author of several books on militancy. Zawahiri’s other challenge is from inside al-Qaida. He lacks the popularity of Bin Laden, and is seen as a controlling micro-manager who lacks a popular touch. “Osama was much better at placating the various wings of al-Qaida – the Yemenis, Somalis, north Africans. I’m not sure Zawahiri can do that,” said Rashid. Efforts to capture Zawahiri may be hampered by growing distrust between Pakistan and the US. It has emerged that Pakistani intelligence had arrested five people accused of spying for the CIA in the operation to catch Bin Laden. Pakistan’s generals want to stop the CIA drone campaign in the tribal belt. Pakistan has reportedly stopped supplies entering the remote base where the drones are stationed, and the US has moved some across the border to Afghanistan. And four of six intelligence “fusion centres”, where the CIA and Pakistan’s Inter-Services Intelligence share information, have been closed, according to the Washington Post. Any further deterioration in relations between the spy agencies could seriously damage efforts against al-Qaida. In Egypt there was dismay at Zawahiri’s role. “[He] seems even more of a madman than Osama was, and he’ll want to prove himself by going on the attack soon,” Karim Sabet, a businessman, commented to Reuters. Ayman al-Zawahiri al-Qaida Global terrorism Osama bin Laden Egypt Middle East Declan Walsh guardian.co.uk

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E coli in France: seven children in hospital as beefburgers blamed

French health agency says all but two of sick children ate ground-beef burgers sold by Lidl Health authorities in France have ordered a recall of beefburgers sold by the supermarket chain Lidl after seven children became infected with E coli bacteria, though officials ruled out a link between those infections and the deadly outbreak centred on Germany that has killed 39 people. Daniel Lenoir, head of the health agency in France’s Nord-Pas-de-Calais region, said: “We are certain it’s not the same bacterial strain that was identified on sprouts in Germany.” . Lenoir said the seven children were in hospital with infections stemming from E coli, which causes vomiting and severe, often bloody, diarrhoea. He added that five of the children had eaten frozen ground beef patties that were made in a French factory and sold by the German supermarket chain Lidl. The beef for the burgers came from farms in France, Germany and the Netherlands, according to SEB, the French manufacturer that supplied the meat. The recall affected about 10 tonnes of meat, said Guy Lamorlette, chief executive of SEB, who added that the burgers had been analysed before being delivered to supermarket distributors. The family of one of the children in hospital took a box of the burgers to health authorities for analysis, according to Jerome Gresland, co-director of Lidl France. All the meat supplied by SEB had been removed from the supermarket chain’s shelves. Frédéric Vincent, spokesman for the European commission, said the outbreak in France was not as serious as the one in Germany. He said the strain found in France was “discovered regularly”. There were 3,500 cases of E coli in the EU last year, he said, 93 of which were in France. Vincent said the commission was waiting for more information, keen to avoid a repeat of the situation when Spanish cucumbers were wrongly blamed for the German E coli outbreak, costing Spanish farmers significant income. The E coli outbreak in Germany was traced last week to sprouts from a farm in the north of the country. There have been more than 3,000 infections reported so far but German health officials said the number of new infections was tailing off. They advised consumers not to eat any vegetable sprouts, as they still needed to determine how the bacteria reached the farm. E coli France Europe Germany The meat industry Food Farming guardian.co.uk

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