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Italy: Silvio's good week |
The prime minister rides high as the opposition leader resigns
IT COULD so easily have been a disastrous week for Silvio Berlusconi. Judges in Milan were winding up yet another trial that raised grave doubts about the prime minister’s probity. And with Italy feeling the full brunt of the global economic downturn—the country’s GDP dropped 2.6% in the last quarter of 2008—he faced a stiff test in regional elections in Sardinia.
But the prime minister is still grinning. On February 17th Walter Veltroni, the leader of the biggest opposition group, the Democratic Party (PD), stepped down after his party suffered a humiliating defeat in Sardinia. Even better for Mr Berlusconi, the resignation distracted attention from the judges in Milan, who sentenced his former adviser on offshore finance, David Mills—a lawyer and the estranged husband of a British minister, Tessa Jowell—to four and a half years in jail on bribery charges linked to Mr Berlusconi.
Source: www.economist.com |
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Charlemagne: Unruly neighbours |
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Europe wants more non-Europeans at the top table. But who should make way? LORD, make us selfless, but not yet. That prayer, with apologies to St Augustine, fits many European leaders all too well, as they debate big changes to global economic governance. The pieties have been flying thick and fast, as Europe’s bosses talk of the need to take more heed of emerging economies. Europe, goes the argument, is sympathetic and open to the idea of reforming an order that has been dominated for too long by Western countries. That is why Europe is now so keen on the G20, a hitherto rather obscure group of developed and emerging countries. This has become the new darling of officials in London, Paris and other EU capitals. Leader after leader has stressed the importance of the G20 summit in London on April 2nd, claiming to see a special “European” tinge to its agenda to reform the financial system and pay more respect to rising economic powers like China, India and Brazil. Gordon Brown, the summit’s host, says he wants fellow leaders to agree to overhaul bodies such as the IMF and the World Bank so that poorer countries do not simply “reject” these institutions as mouthpieces for the richest states. Other EU leaders have warmed to this self-righteous theme. It was Europe that “demanded” a G20 format for the summit in London, President Nicolas Sarkozy of France boasted in December; Europe has spoken with “one voice”. He says Europeans want a return to a “moral” capitalism that serves entrepreneurs, not speculators, and new financial rules that create “a different place” for emerging nations. ...
Source: www.economist.com |
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Spain's opposition: Scandals as bitter as a traitor's kiss |
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Sleaze and disunity trip up the once-confident People’s Party THE Spanish prime minister, Jose Luis Rodriguez Zapatero, may be presiding over an economy in sharp recession. Yet the opposition People’s Party (PP) can scarcely make its criticism heard over the din of its own scandals. Polls predict that, despite unemployment running at 14%, Mr Zapatero’s Socialists will gain votes in two elections on March 1st for regional governments in Galicia and the Basque country. In Galicia, the Socialists may once again form the government; in the Basque country they may lead it for the first time in 25 years. ...
Source: www.economist.com |
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Ukraine's economic slump: Default options |
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Leaders bicker as the economy sinks THE D-word is stalking Ukraine. As its political leaders bicker, investors are having nightmares about its defaulting on its sovereign debt. Yulia Tymoshenko, the prime minister, has sought to calm rising investor panic, suggesting that nothing in the government’s finances warrants “pronouncing the word default”. For now, most experts agree. Even though the markets are charging exorbitant annual rates (32%) for Ukrainian dollar debt (see chart), the coffers seem sturdy enough. Sovereign debt accounts for only about one-fifth of total external borrowing of around $105 billion. The government can handle that, at least this year. But an inevitable series of corporate and banking defaults are likely to hasten the economy’s decline. By now Ukraine should have received the second tranche of a loan from the IMF worth $1.8 billion. But the IMF says Ukraine is not sticking to the conditions of the loan—worth a chunky $16.4 billion in total—and wants greater fiscal discipline. Uncertainty about whether the rest of the loan will be disbursed is causing jitters. But as tension mounts, the president and prime minister are at one another’s throats. President Viktor Yushchenko recently, for the umpteenth time, accused Ms Tymoshenko of “betraying national interests”, by talking to the Kremlin about a $5 billion loan. Playing the anti-Russian card is one of his favourite ways of wooing public opinion in western Ukraine, where there is little love of Russia or its language. ...
Source: www.economist.com |
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Russia: Stalled factories and fireside chats |
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The Kremlin belatedly recognises the full scale of the economic crisis RUSSIA’S president, Dmitry Medvedev, has taken to giving televised fireside chats about the financial crisis. Not before time. As unemployment spirals, industrial production slumps, inflation gallops, the rouble slides and the budget creaks, ordinary Russians are wondering what is going on. Polls show that many—over half the population—have little idea of what the government is doing to help them. When Russia’s oil-fuelled economy began to slump last autumn, later than many other countries’, the Kremlin stifled public debate, dismissively blaming America for “infecting” the world. The infection proved catching, though, and soon world oil prices slid and hundreds of thousands of Russians lost their jobs. Peremptory silence no longer works. “It is very important to tell the truth,” Mr Medvedev now tells Russians on state television. The Kremlin has become more candid about the severity of their economic condition. Having spent weeks predicting that the economy would show zero growth or perhaps a small contraction this year, the economy ministry now admits it will “probably” shrink by 2.2%. That, it says, is because investment in 2009 will fall by 14%. ...
Source: www.economist.com |
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Tax havens: Not-so-safe havens |
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The financial crisis is rattling European tax shelters JUDGED by appearances, Europe’s tax havens seem to promise safety from economic tempests. Some are built around sun-drenched harbours, fringed by palm trees. Others nestle in mountain valleys, or quaint towns guarded by the castles of hereditary rulers. Yet even these pretty shelters are now being lashed by the global financial storm. The European Union is mounting a renewed campaign against tax havens deemed to be unco-operative ahead of a meeting of G20 countries in April. On February 10th ministers demanded the reopening of negotiations with Liechtenstein on fighting fraud. A few days earlier, the European Commission proposed abolishing banking secrecy within EU states in cases of suspected tax evasion. ...
Source: www.economist.com |
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