Uniting democracies has been the key international political trend of the last hundred years. Understanding this trend and enabling it to continue is the key to world political development.
New Book by Streit Council Advisory Board Member Kenneth Weisbrode
In Old Diplomacy Revisited: A Study in the Modern History of Diplomatic Transformers, historian Kenneth Weisbrode asserts that Old Diplomacyis not really that old—many of its concepts and methods date to the mid-nineteenth century—while the practices of New Diplomacy emerged only a couple of generations later. Moreover, "Diplomacy 2.0" and other variants of the post-Cold War era do not depart significantly from their twentieth-century predecessor: their forms, particularly in technology, have changed, but their substance has not. In this succinct overview, Weisbrode reminds us that to understand diplomatic transformations and their relevance to international affairs is to see diplomacy as an entrepreneurial art—and that, like most arts, it is adapted and re-adapted with reference to earlier forms. Diplomatic practice is always changing, and always continuous. To read more about this book, click here.
Kenneth Weisbrode, Ph.D., joins the Streit Council's Advisory Board. He is an Assistant Professor of History at Bilkent University, Turkey and has written and edited several books, including Old Diplomacy Revisited: A Study in the Modern History of Diplomatic Transformers; Churchill and the King: The Wartime Alliance of Winston Churchill and George VI; and The Atlantic Century: Four Generations of Extraordinary Diplomats who Forged America's Vital Alliance with Europe. He is also the co-founder of the Toynbee Prize Foundation's Network for the New Diplomatic History, and holds a Ph.D. in History from Harvard University.
New Book by Streit Council Board Member Richard Rosecrance
In The Resurgence of the West: How a Transatlantic Union Can Prevent War and Restore the United States and Europe, Richard Rosecrance calls for the United States to join forces with the European Union and create a transatlantic economic union. A U.S.-Europe community would unblock arteries of trade and investment, rejuvenate the West, and enable Western countries to deal with East Asian challenges from a position of unity and economic strength. Through this great merger the author offers a positive vision of the future in which members of a tightly knit Western alliance regain economic health and attract Eastern nations to join a new and worldwide international order. To read more about this book, click here.
At the Washington D.C. Summit on Cross Continental Cooperation, held by the Institute for Cultural Diplomacy from November 4-7, Streit Council President Richard Conn Henry reviewed the history of the Streit Council, starting with Clarence K. Streit's self-publication of Union Now just prior to World War II, and continuing with the passing of the Atlantic Union Resolution in 1964. Henry also expounded his idea on a possible Amendment to the U.S. Constitution that, if adopted, would lead to a federal union with the European Union. His proposal can be found here.
Brendan Simms, Ph.D., joins the Streit Council's Advisory Board. He is a Professor of the History of European International Relations at the University of Cambridge, and is the founder and Chairman of the Board of the think tank Project on Democratic Union, which supports a full political union of the Eurozone. He also founded and is the President of the Henry Jackson Society, a think tank dedicated to fostering a strong British and European commitment to liberty; constitutional democracy; human rights; governmental and institutional reform; a robust foreign, security, and defense policy; and the transatlantic alliance. His publications include Three Victories and a Defeat: The Rise and Fall of the First British Empire 1714-1783 (2008) and Unfinest Hour: Britain and the Destruction of Bosnia (2001).
Transatlantic Relations and Global Governance News
France launches first air strikes on IS in Iraq
19 September - BBC News
Following 170 U.S. air strikes on the jihadist organization since mid-August, France has become the first of Washington's allies to strike at IS targets. This reflects the surprisingly military activism from French President Hollande, who has committed French forces to operations in Mali, Central Africa, and now Iraq. In contrast to U.S. policy, however, Hollande has announced that French air support operations will be geographically limited to Iraq and not Syria. This past Monday, France hosted an international conference where 26 nations pledged to support the Iraqi government in its fight against IS "by any means necessary, including appropriate military assistance."
Business “relief” over Scotland’s Rejection of Independence
19 September 2014 – BBC News
The Royal Bank of Scotland said its headquarters would remain in Scotland. Standard Life also said it would not be relocating. However, Lloyds Bank was ambiguous on the matter, wanting to settle regulatory issues first. The bank said it “remains committed to having a significant presence in Scotland.” The UK Government is considering dividing investment and retail banking. RBS said “it is business as usual for all our customers across the UK and RBS.” John Cridland of the Confederation of British Industry said there was a “collective sigh of relief across the business community.” However, not all businesses and industry groups were pleased with the outcome. Business for Scotland was "disappointed” with the result.
Russia demands changes to Ukraine-EU trade deal
18 September 2014 – Reuters
Russian Economics Minister Alexei Ulyukayev demanded changes to the recently ratified trade deal between the EU and Ukraine in a letter to European Trade Commissioner Karel De Gucht. Ukraine had already decided to postpone the implementation of the agreement until 2016 and give autonomy to pro-Russian separatists in the eastern part of the country. De Gucht met with Ulyukayev last Friday. Russia believes the agreement will harm its economy and has asked for trilateral talks to modify the already ratified treaty. Russia fears that goods not meeting EU consumer standards will be excluded from the Ukraine. “We reiterate our intention to adjust, if necessary, the preferential regime between Russia and Ukraine in order to minimize negative problems related to the change in the trading regime between Ukraine and the EU, not excluding other ways to protect the Russian economy,” Ulyukayev said. “If I wanted to, in two days Russian troops could be not only in Kiev, but in Riga, Vilnius, Tallinn, Warsaw or Bucharest,” Russian President Vladimir Putin purportedly said to Ukrainian President Petro Poroshenko in a phone conversation.
Merkel Wins German Labor Backing on EU-U.S. Trade Talks
18 September 2014 – Bloomberg
German Chancellor Angela Merkel’s government has won labor-union backing to help advance a U.S.-European trade agreement that may boost economic growth and create jobs on both sides of the Atlantic. This represents a significant shift in the policy of the DGB labor union umbrella organization, which as recently as May was opposed to the deal. The labor unions view the EU-U.S. talks as a chance to strengthen trade relations and make them “fair and sustainable.” Goals include spreading more wealth “to broad parts of the population, to improve economic, social and environmental standards as well as to create fair competition and working conditions.”
U.S., EU set seventh round of trade talks for Sept. 29 start
18 September 2014 – The Hill
The U.S. Trade Representative’s office said that the seventh round of discussions on the Transatlantic Trade and Investment Partnership (TTIP) will take place from Sept. 29 to Oct. 3 near Washington in Chevy Chase, Md. U.S. Trade Representative Michael Froman explains that the TTIP agreement represents a unique and fleeting opportunity to “shape the rules of the road of these regions and for the global economy in a way that reflects and our values." Froman warns that if the agreement fails to come together, there are others eager to establish trade regimes that might not line up with American and Western interests.
ECB Outlines New Plan That Will Give More Voting Power to Bigger States
18 September 2014 – Business Insider
The European Central Bank has released detailed plans for changing the way Eurozone governors vote from next year, curbing smaller economies' potential influence in favor of big countries, like Germany. The five largest economies with the biggest financial sectors will share four votes. These are Germany, France, Italy, Spain and the Netherlands. Each month one of these countries will relinquish its voting power on a rotating basis. The remaining 14 smaller economies will share 11 votes, but will get to vote less frequently as more countries join the governing council. Despite lacking the ability to vote at certain meetings, all governors will continue to participate in the Governing Council's discussions.
Polish Fears of Russia Run High on War Anniversary
18 September - ABC News
Anxiety is on the rise in Poland as yesterday marked the 75th anniversary of the Soviet invasion of Poland during World War Two. Poland has a unique territorial history of being repeatedly partitioned and put back together, only to be divided again. As the Ukraine crisis has simmered to a boil, Poles have grown increasingly wary of their neighbor to the east. Adding to the worry is the Russian capture of an Estonian border patrol agent, probing of Finnish air space, and decreased gas exports to Poland, Austria, and Romania. While cases of Poles preparing for war by stockpiling food or withdrawing cash reserves are rare, there is sense that the Ukraine crisis is only the calm before the storm.
Digital single market needs to be better integrated, say MEPs
17 September 2014 – European Parliament News
Members of the European Parliament (MEPs) stressed that more effort is needed to integrate the EU digital single market, so as to unlock its growth and job-creating potential. Measures to bring together the 28 national digital markets should include ending mobile roaming charges, promoting e-commerce, ensuring open access to the Internet for users and neutral treatment of its service providers, and also better data protection, they added. The MEPs further noted the significant gains that are possible for European consumers and businesses if laws are standardized across the EU.
European bank test results to be announced October 26
17 September 2014 – Reuters
The results of Europe's most comprehensive ever review of its banks' health will be announced on Sunday, October 26. The tests, which were designed to finally banish fears about the health of Europe's banks, will reveal whether around 130 of Europe's largest banks need to raise more capital for losses they have already incurred and future crises. The valuation of European banks has largely lagged behind their U.S. peers since the region's debt crisis struck. They will also form part of the European Banking Authority’s EU-wide results, which give less detailed information about the finances and capital needs of 124 banking groups across the EU.
Kosovo Arrests Several Imams in Push to Stem Flow of Islamic Fighters
17 September 2014 – Voice of America
At least nine imams were among 15 people arrested in Kosovo on Wednesday in the second major operation in weeks to try to stem the flow of young ethnic Albanians joining Islamist fighters in Iraq and Syria. The 15 are facing charges including “terrorism, threatening the constitutional order, incitement and religious hate speech.” In the last such operation on August 11, 40 people were arrested on suspicion of fighting in Iraq and Syria or recruiting insurgents. Among the imams arrested was an influential Muslim cleric from the Grand Mosque in the capital Pristina and another was the leader of an Islamic-rooted political party. Fears of a creeping radicalization among their Muslim communities are stirring in other Balkan countries – such as Serbia and Bosnia – with dozens of their citizens also known to have joined Islamist fighters in the Middle East. Intelligence officials in Kosovo believe between 100 and 200 Kosovars are fighting in Iraq and Syria, with least 20 reported to have been killed in the past year.
The EU’s Economic Partnership Agreements sideshow is coming to a close
17 September 2014 – Turkish Weekly
The Cotonou Partnership Agreement set out ambitious core elements around which Economic Partnership Agreements (EPAs) could be built, including differentiation, reciprocity, regionalism and development. One initially ambitious EPA, that between the Caribbean and EU, has thus far proven difficult to implement resulting in uninspiring outcomes, whereas some African partners have, through separate agreements, gained duty-free quota-free access to the EU, roughly amounting to €100 million per year of saved duties. The EU has now finalized new EPAs with the Economic Community of West African States and the Southern African Development Community, although implementation difficulties are feared due to challenges in implementing necessary reforms and regulatory changes.
Deutsche Bank CEO backs Berlin in euro reform debate
16 September 2014 – Reuters UK
The co-head of Deutsche Bank, Anshu Jain, has taken sides in the debate on how to stimulate the European economy by backing the German government in declaring that structural reforms, rather than looser fiscal policy, are what is needed to boost growth. This comes in the wake of calls from the IMF, European Commission and ECB President Mario Draghi for Germany to boost spending to enliven the European economy. Jain, however, has noted that asking Germany to spend more was the "easy way out" and praised nations that have already made significant reform progress.
Most of the world supports globalization in theory, but many question it in practice
16 September 2014 – Pew Research Center
The United States and European Union are currently negotiating a free trade agreement known as the Transatlantic Trade and Investment Partnership (TTIP). Other major free trade agreements are also being brokered. While 81% participants in a survey conducted in 44 countries said increased trade was beneficial and 74% thought foreign companies investing in their countries was beneficial, only 26% thought trade reduced prices for consumers, and 54% thought trade could generate jobs. Skeptics of investment and trade are prevalent in the United States, France, Japan, and Italy. A mere 20% of Americans believe trade generates new employment, and 17% believe increased income can come from trade.
Russia sanctions risk lasting damage to Europe’s shaky economy
15 September 2014 – The Washington Times
Western sanctions have pushed the Russian economy into recession. However, there is also the fear that EU sanctions as well as Russian countersanctions could put the Eurozone into recession. Germany, one of the Eurozone’s strongest countries, has also been one of the most affected by the sanctions. Eurozone GDP stagnated in the second quarter. Nonetheless, the EU implemented its most recent sanctions on Russian state-owned oil companies last Friday. Russia could possibly cut or reduce energy exports to Europe this winter if the crisis does not progress as it wishes. However, the sales they would lose would make this unlikely. Many are comparing the Eurozone economy today to the stagnant Japanese economy of the 1980s. Heavily indebted Eurozone banks are reluctant to lend.
Farm Bureau Leads Delegation to Reduce Trade Barriers Abroad
16 September 2014 – The Poultry Site
American Farm Bureau Federation President Bob Stallman is leading a delegation of the organization’s leaders to Europe this week to discuss efforts to increase trade through comprehensive agreements that would reduce, if not eliminate, government-imposed barriers to agricultural trade. The American Farm Bureau Trade Advisory Committee will meet in Geneva with representatives of the WTO as well as trade ambassadors from Brazil, Japan, Australia, India, China and Canada. Afterwards the group will travel to Brussels to discuss agriculture trade as part of the TTIP agreement with the aim of securing greater market access for American farmers.
EU “single market for research” now depends on national reforms, study finds
16 September 2014 – Europa
According to a report by the European Commission, the conditions for achieving a European Research Area (ERA), where researchers and scientific knowledge can circulate freely, are in place at the European level. Integrative reforms must now be implemented at the Member State level to make ERA work. The goal of the ERA system is to enable researchers, research institutions and businesses to better move, compete and cooperate across borders. This will strengthen EU Member States' research systems, increase their competitiveness and allow them to work together more effectively to tackle major societal challenges.
The TTIP Prescription: Expanding Trade Can Speed the Flow of New Medicines
16 September 2014 – Forbes
In addition to cutting tariffs, there are three areas where TTIP can be a prescription for reducing friction in the drug development pipeline: regulatory harmonization, intellectual property protection and enforcement, and market access. As rules currently stand, there are duplicate regulatory requirements between the U.S. Food and Drug Administration and the European Medicines Agency - the elimination of which would save companies millions of dollars. Likewise, given that Europe and the U.S. are leaders in the pharmaceutical industry, the harmonization of intellectual property standards can not only facilitate innovation, but also set a standard for other agreements with partners throughout the world. The gains from such reforms hold promise not only for the pharmaceutical industry, but also patients in the EU and U.S. and even throughout the world.
Team Juncker - connecting the EU's digital dots
16 September 2014 – The Parliament Magazine
According to European Commission President Juncker, the creation of a digital single market can generate up to €250bn of additional growth in Europe by 2019. Creating such a market will involve the creation of a business environment that enables firms to take their activities online and across borders, safely and at reasonable cost as well as high-speed mobile connectivity reaching into the most remote rural areas and learning opportunities for those not born into the digital age.
Turkey Mulling Buffer Zone with Iraq, Syria
16 September 2014 – Defense News
President Recep Tayyip Erdogan announced on Tuesday that the Turkish military, threatened by the emergence of a radical self-declared Islamist state at its doorstep, is considering creating a buffer zone along the country’s nearly 900-mile border with Syria and Iran. A diplomat dealing with Syria and Iran said that the plan, if endorsed, would mean a defensive posture toward the Islamic State, not necessarily an offensive one. Islamic State militants captured large swaths of land in northern Syria and Iraq this summer and has become a “de facto neighbor” of Turkey. In June, the IS attacked Turkey’s consulate in Mosul, northern Iraq, and took 49 Turks, including the consul general, hostage. They remain in captivity. Last week, after meetings with U.S. state and defense secretaries John Kerry and Chuck Hagel in Ankara, Turkey ruled out any active participation in a fight against the Islamic State. Nor would the country allow the U.S. to use its air base in southern Turkey for attacks against militants, but would allow for humanitarian operations from its soil.
Topic: EU Membership in Five Years and without Opt-Outs, Says Spanish Minister
16 September 2014 – The Telegraph
Spanish European Affairs Minister Inigo Mendez de Vigo said Scotland will have to reapply for EU membership post-independence. President-Elect Jean-Claude Juncker implied that this could take up to five years. As a new applicant, Scotland would enjoy none of the UK’s opt-outs, including the budget rebate, Schengen, or the euro. No candidate country has obtained an opt-out during the accession process. The Spanish minister said Scotland would have to agree to the single currency. Scottish First Minister Alex Salmond said Scotland would be able to iron out the terms of its membership of the EU before independence becomes effective in 2016. With secessionist movements in their own countries, Belgium and Spain will not look fondly on an independent Scotland. “There is no way that the EU won’t want to keep oil-rich, fishing-rich, renewable energy-rich Scotland. And we will keep the pound, because joining the euro is entirely voluntary—as the example of Sweden shows. We have no intention of joining the euro, and don’t even qualify for membership even if we did,” a spokesman for the nationalist campaign said.
(Read More 1, 2)
Seven Lessons from the Eurozone on the Dangers for an Independent Scotland
16 September 2014 – Forbes
If Scotland votes for independence on Thursday, the country could possibly negotiate a currency union with the remainder of the UK, informally use the pound sterling, adopt the euro, or create their own currency. On Scotland’s future currency, the country could learn from the fiscal and monetary experiences of Eurozone countries, writes Raoul Ruparel of Forbes. Scotland may not have the Bank of England as its lender of last resort, and Scottish banks may not be able to borrow from the central bank. As a result, banks could leave Scotland. If Scotland does secure a currency union, it would be handing over its fiscal independence to the UK Government. The Bank of England’s interest rates and pound’s exchange rates could be to strong or weak for the Scottish economy. ECB interest rates were too low for Ireland, which suffered from a property bubble as a result, and too high for Portugal, resulting in a stagnant economy. Eurozone reform is unfinished and the economic outlook is weak, so the euro is not an appealing option for the time being.
15 September 2014 – Breaking Views
Jean-Claude Juncker, incoming president of the European Commission, has declared a goal of bringing about “a well-regulated and integrated capital markets union, encompassing all member states, by 2019…” The Union, however, is currently suffering from “clogged up and fragmented markets, which are a fraction of the size of their U.S. equivalents.” To combat this congestion, the aim of the capital markets union should be to develop strong sources of non-bank finance that can fund jobs and economic growth. In creating the union, new regulations will have to be established, while tearing others down, in order to unify and unleash these alternative sources of capital funding.
Scottish “Yes” Vote Could Have Major Impact On UK Defense
15 September 2014 – Aviation Week
On Septepmber 18, the results of the Scottish independence referendum are set to change the defense plans of the British Isles. There are few, if any, drafted defense plans to deal with the possible transition to an independent Scotland. While the 2010 Strategic Defense and Security Review (SDSR) significantly downsized the armed forces’ presence in Scotland—in particular for the Royal Air Force—it remains home to Britain’s Trident armed ballistic missile submarines, the country’s collective nuclear deterrent. While fighter aircraft and soldiers can be moved easily, relocating the nuclear deterrent would be a major headache for defense planners. In the event Scotland forces Britain to remove the submarines quickly, without the necessary infrastructure in place to support them immediately available elsewhere, this may result in the potential unilateral disarmament of the country’s nuclear capability, a move that would not go down well with NATO partners and probably the EU – two organizations that Scotland aspires to join. The Scottish National Party’s (SNP) own rhetoric on the Tridents is clear, calling them an “affront to basic decency with its indiscriminate and inhuman destructive power.” The nationalists also claim that while Scotland currently pays in 10% of the current UK defense budget of £34 billion, only around half comes back.
The Streets Are Empty As The Shells Keep Falling In Eastern Ukraine
16 September 2014 – NPR
Since Sunday, over six people have died from shelling in Donetsk. The rebels who still hold control over the vast Donetsk region are mandating that the Kiev government recognize the self-proclaimed Donetsk Republic and vacate Ukrainian military positions. As an extra 500 OSCE monitors recently dispatched to Ukraine survey the streets of Donetsk, the rhetoric of a ceasefire rings hollow as shells keep raining down on the eastern Ukrainian city. A new surplus of Ukrainian police line the embattled streets while the government lead by Poroshenko stresses there is a ceasefire.
An independent Scotland would also mean an exit from EU, NATO
16 September 2014 – Associated Press
Residents in Scotland have a unique opportunity this week to vote for independence from the United Kingdom. Doing so would have significant ramifications, including the loss of the Pound Sterling and membership in the EU, Schengen Area, and NATO. A major decision point in the debate over independence is Scottish opposition to nuclear weapons being based in Scotland. Currently, the UK nuclear deterrent includes the Royal Navy's four Trident missile-carrying submarines based on the Clyde River. Anders Fogh Rasmussen, Secretary General of NATO, declined to comment on the independence campaign. However if Scotland does depart from the UK and NATO, new ways will have to be found to patrol vital shipping routes in the North Atlantic and North Sea, and Scotland will lose a 65-year old security assurance.
Topic: OECD Calls for Greater Stimulus Action from European Central Bank
15 September 2014 – Multiple sources
The European Central Bank must initiate quantitative easing, the Organization for Economic Cooperation and Development said, to boost inflation and consumer demand. The OECD revised its 2014 predicted growth for the Eurozone to 0.8% from 1.2% in May. The OECD also cut its forecast for the U.S. from 2.6% to 2.1% but increased its 2015 estimate to 3.1%. “Given the low-growth outlook and the risk that demand could be further sapped if inflation remains near zero, or even turns negative, the OECD recommends more monetary support for the euro area,” the report stated. “Recent actions by the European Central Bank are welcome, but further measures, including quantitative easing, are warranted.” Quantitative easing would be an unprecedented step for the ECB, which is currently studying the feasibility of this measure. On the other hand, the Bank of England, Bank of Japan, and Federal Reserve have all implemented it in the past. In July, the International Monetary Fund also pressed the ECB to enact quantitative easing, particularly if inflation deteriorates further.
(Read More 1, 2)
European Central Bank (ECB) Publishes Final List of “Significant Supervised Entities” in Preparation for Banking Union
15 September 2014 – JDSupra Business Advisor
A list of credit institutions, financial holding companies and mixed financial holding companies was established for the purposes of the Eurozone’s Single Supervisory Mechanism (SSM), which will come into effect on 4 November 2014. The SSM will implement a substantial shift in banking supervisory powers from EU national regulators (NCAs) to the ECB, even allowing for the fact that the UK, Sweden and the Czech Republic have decided to remain outside. Some of the ECB’s new regulatory responsibilities will include supervising significant credit institutions’ compliance with prudential requirements as well as associated regulatory reporting and public disclosure obligations as well as assessing significant credit institutions’ recovery plans, and trigger early intervention where a credit institution appears unlikely to be able to comply with relevant prudential requirements.
Ukraine Faces Backlash over EU Trade Deal
15 September 2014 - Multiple Sources
Last November, former Ukrainian President Viktor Yanukovych rejected an EU trade deal, leading to his ouster and the institution of a pro-Western government in Kiev. President Poroshenko, faced by threats of Russian retaliation, has temporarily delayed implementing a part of the same trade deal. Russia currently wields massive influence over Kiev's decision-making, including the demonstrated willingness to militarily intervene in Ukraine's east, the unmonitored delivery of "aid convoys" to rebel-controlled territory, and trade restrictions that could cripple 10% of Ukraine's economy. Poroshenko's decision was met by an overwhelmingly negative response from European leaders, resignations from cabinet members such as Deputy Foreign Minister Danylo Lubkivskiy, and rallies from political opponents preparing for the October 26 elections.
(Read More 1, 2, 3, 4)
Indo-Russian Jet Program Moving Forward
15 September 2014 – DefenseNews
A Russian diplomat in India confirmed that India and Russia have managed to sort out an agreement on the Fifth Generational Fighter Aircraft (FGFA) program, which is expected to build 200 jets at a cost of $30 billion. Prime Minister Narendra Modi and President Vladimir Putin discussed the matter during a summit in Brazil in July and agreed that the FGFA deal should move forward. Both countries have invested $295 million so far. India has wanted to boost its workshare from 18 percent to more than 25 percent. The Russian diplomat said India’s share will steadily increase to 40 percent as the Indian industry matures, especially with respect to incorporating sophisticated technology into the aircraft. In 2010, officials signed a preliminary agreement between India’s state-owned Hindustan Aeronautics Ltd. (HAL) and Russia’s Sukhoi Design Bureau to jointly produce the FGFA for use by both countries, but a final accord to begin production has been pending over designs and labor divisions. A Ministry of External Affairs source said that India and Russia will sign a final agreement on the program by year’s end.
OECD sees global economy held back by slow Eurozone
15 September 2014 – BBC News
A slowdown in the Eurozone’s recovery has slowed global economic growth. The Organization for Economic Cooperation and Development (OECD) revised its Eurozone and U.S. forecasts from 1.2% in May to 0.9% and 2.6% to 2.1% respectively. British and Japanese GDP were also not anticipated to grow at as fast a rate as was previously thought for the year. The OECD’s prediction for China remained unchanged, while the only economy to have its GDP growth revised upward was India. Following a change in leadership, the Indian economy is anticipated to grow at 5.7%.
EU brainstorm ways of bringing billions of euro into its ailing economy
14 September 2014 – Malta Today
EU authorities are struggling to find ways to stimulate the economy without sending debt levels to even higher levels. Two proposed options include the creation of a pan-European capital market as well as a joint EU fund worth €700 billion. The EU’s economy is still struggling to recover from the financial crisis and grew only 0.1% last year while around 25 million EU citizens remain unemployed, almost twice the number in the United States. EU finance ministers have asked the European Commission, the EU executive, and the European Investment Bank (EIB) to come up with a range of projects that would create growth. One major aim is to allow European companies access to credit lines to facilitate expansion, however these have been harder to attain since the crisis.
As Fed, ECB Act, Other Central Banks Drift
14 September 2014 – The Wall Street Journal
The European Central Bank cut its main interest rate and announced private sector asset purchases last week. The Federal Reserve is anticipated to raise interest rates in the near future. The ECB’s stimulus ensures liquidity will remain in the unlikely case the Federal Reserve raises rates on Wednesday. Other central banks are concerned the ECB’s actions could increase their currencies’ values and make their countries’ less competitive. The Swiss National Bank has sought to keep its currency at 0.83 Swiss franc or less to the euro to maintain competitive exports, while the Danish central bank reduced rates to keep the krone pegged to the euro. Interest rates have remained the same in Canada and Japan since the fall of 2010. Eastern European and Scandinavian countries will likely postpone expected interest rate hikes in light of ECB’s actions.
Trade talks “must include healthcare”
13 September 2014 – BBC News
One major protest against the Transatlantic Trade and Investment Partnership (TTIP) agreement coming out of Britain is the fear that it will undermine the National Health Service (NHS) system. Due to this fear, many have advocated the removal of healthcare related topics from the treaty. A UK Health Minister, however, disagrees, saying that exempting health would not be in the interest of British pharmaceutical and medical technology firms, which currently face trade barriers in the U.S. Targeting specifically claims that the agreement would undermine NHS contracts, EU Trade Commissioner Karel de Gucht noted that "[p]ublic services are always exempted - there is no problem about exemption…”
Single market means “more jobs for British workers”
12 September 2014 – The Parliament Magazine
European Commissioner László Andor explains how the EU has adopted a program called the “youth guarantee,” which will ensure that, within four months of leaving school or losing a job, young people can either find a job suited to their education, skills and experience or acquire the education, skills and experience required to find a job in the future. The commissioner also noted how the EU laws have created greater equality in the workplace throughout the Union and implemented worker protections that have benefitted European workers and protected countries with stronger worker rights from competition with countries with less stringent protections. Countries such as Britain have also benefitted from the free movement of labor, which has, due to differential tax policies, resulted in a lower tax bill for British citizens.
Vulture funds could hold crisis-hit EU nations to ransom
12 September 2014 – EurActiv
Some EU nations voted against a recent UN resolution that creates a legal framework for restructuring the sovereign debt of countries in a financial crisis. This new framework intends to prevent “vulture funds” from upending the traditional debt restructuring process in which creditors collaborate with the debtor nation to write off a share of their claims in order to get a debtor back on its feet. “Vultures” separately sue the debtor nation in court for full repayment on their claims, and typically receive a judgment approaching (if not matching) the total value of their investment.
Finland's Economic Fate Hinges on Russia as Relations Worsen
12 September 2014 – Bloomberg
As Western sanctions on Russia intensify, European leaders are increasingly forced to decide how much they are willing to hurt their own economies in order to achieve political goals. For Finland, which has the EU's longest border with Russia, this worry has become reality. About 14% of Finland's trade is with Russia. Due to Western sanctions on Russian banks and dual-use machinery or electronics, and Russian retaliatory sanctions on EU farm goods, Finland's total imports and exports are about 20% below normal levels. For an economy that has contracted in two of the last three quarters and significantly relies on Russian trade, this sanctions spiral could be disastrous. In spite of this threat, Prime Minister Alexander Stubb has declared this critical moment to be a "matter of war and peace" and has decided that these sanctions, however self-harming in the short term, are politically crucial in the long term.
Shop bosses plan new “Yes” vote warning
12 September 2014 – BBC News
British retail businesses are to warn Scottish consumers of higher retail prices in the event of Scottish independence. Marks and Spencer, John Lewis, and Asda are among the businesses anticipated to endorse a letter written by the Kingfisher group, a British home improvement retail company, warning the Scottish public of higher prices. However, Business for Scotland CEO Gordon Macintyre Kemp sees no justification for higher retail prices. Timpson Chairman John Timpson, who has signed the letter, said: “The biggest problem is uncertainty. We don’t know what will happen for instance on tax and business rates. My concern is the likelihood that these would go up. If our costs do increase, we certainly wouldn’t put prices up. But we would make less money and we’d have to think very hard over whether we would open any more stores north of the border.” However, other businesses have said higher costs would be passed on to the consumer. Chancellor of the Exchequer George Osborne and Bank of England Governor Mark Carney will be absent from the upcoming G20 meeting in anticipation of the referendum results. Asset management company Aegon UK and a number of other financial institutions said they would re-register their businesses south of the border in the event of independence.
Prague pledges to do “everything” to join euro in four years
11 September 2014 – EurActiv
Bohuslav Sobotka’s government hopes the Czech Republic can join the single currency in the near future despite declining enthusiasm from voters. “This country will do everything it can to be ready in four years,” Czech First Deputy Foreign Affairs Minister Petr Drulák said. The Czech government has called for single European energy market. Only 18.2% of Czech voters bothered to vote in the European elections in May, demonstrating widespread disillusionment with the European Union. However, the government has said its attitude and relations with the European Union have changed.
Draghi Urges Eurozone Governments to Increase Investment Efforts
11 September 2014 – The Wall Street Journal
European Central Bank President Mario Draghi wants governments provide greater lending and investment. “If we don’t manage to get investment going again, we will weaken the economy in the short run and undermine its prospects in the long run,” the ECB President said. Eurozone inflation fell to an annual rate of 0.03% in August, forcing the ECB to cut its main interest rate to 0.05% and announce the beginning of asset purchases in October. However, this monetary stimulus will not be enough on its own, and Draghi said: “Only if structural, fiscal and monetary policies go hand in hand will the euro area see investment return.” Given its balanced budget and low borrowing rates, Germany could increase its investment without breaking the EU’s strict fiscal rules. With private sector asset purchases soon to be implemented and interest rates as low as feasible, the ECB’s next move if the economy does not improve will likely be government bond purchases or quantitative easing, some observers think. However, there is still a lot of opposition, particularly from Germany, to quantitative easing.
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