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
Greece president vote inconclusive after first round
17 December 2014 - BBC News
Receiving 160 parliamentary votes, 40 short of the requirement for an outright win, government candidate Stavros Dimas has failed to win the election for Greek presidency. There will be two more rounds of parliamentary voting, on December 23 and 29, which respectively require 200 and 180 votes for victory. If the Greek parliament fails to select a President the parliament will be forced to dissolve and the Prime Minister will have to hold snap general elections. Increasing Greek frustration with public sector job cuts and savings in welfare budgets, results of EU-imposed austerity, are leading causes for failing support for the currently leading two-party coalition, which holds 155 seats.
EU Leaders to Insist on 2015 Deadline for U.S. Trade Agreement
17 December 2014 – Bloomberg
EU national governments want negotiations on the Transatlantic Trade and Investment Partnership (TTIP), a trade agreement with the U.S., to be concluded by the end of 2015, despite remarks from negotiators on both sides and the European Commission that they are unwilling to rush negotiations. EU leaders are anticipated to give a speech in Brussels tomorrow. A draft of the speech states that the “EU and the U.S. should make all efforts to conclude negotiations...by the end of 2015.” EU leaders want to finish the TTIP talks before the U.S. presidential campaign begins. U.S. and EU negotiators have called for a “fresh start” to their negotiations following the recent transfer of power from the Barroso Commission to the Juncker Commission. The next round of negotiations is scheduled for February.
U.S. Places Sanctions on Swiss, Dutch Companies Over Syria
17 December 2014 – Voice of America
On Wednesday, the U.S. Treasury department placed sanctions on Dutch and Swiss oil trading firms over their dealings with the Syrian government, which remains engaged in bloody civil war with opposition forces. Netherlands-based Staroil B.V. as well as Swiss-based firms Rixo International Trading Ltd and Bluemarine SA were put on the list of sanctioned entities, effectively cutting them off from the U.S. financial system. The Treasury also placed sanctions on several officials from the firms, as well as on a company based in Syria and another from the UAE.
Dow Jones Industrial Average Surges 300 Points After Fed Is “Patient” On Hiking Rates
17 December 2014 – International Business Times
U.S. stocks soared Wednesday, with the Dow Jones Industrial Average surging more than 300 points, after the U.S. Federal Reserve replaced the phrase "considerable time" in its policy statement with "patient," signaling the central bank could raise interest rates sometime next year. “Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” the Federal Reserve said in its monetary policy statement Wednesday. Following the Federal Open Market Committee’s statement, Federal Reserve Chair Janet Yellen held a news conference, saying the Fed is unlikely to start the process for raising interest rates for "at least the next couple of meetings." By laying the groundwork for a rate increase in the future, it is believed by some that markets will be able to avoid an unsettling reaction that could come from sudden, unexpected increases.
U.S. Companies Increasingly Borrow In Euros
17 December 2014 – The Financial Times
Several U.S. companies, including Verizon, Apple, Coca-Cola and AT&T, are showing increasing willingness to issue investment grade bonds in euros for a combination of financial and strategic reasons. Big issuers of investment grade bonds are attracted to the euro-denominated market because of its rapid recovery since the financial crisis, almost doubling between 2010 to its present level of annual issuance, running at $341bn — though still below its peak of $387bn in 2009, according to Dealogic. Another reason for Europe’s popularity with issuers is the relative scarcity of new supply of investment grade paper, which has performed strongly for investors during the year. A key consideration driving this trend towards euro-denominated issuance is cost: the yield being paid by euro-denominated investment grade bonds currently averages 1.1 percent, compared with a little more than 3 percent for the U.S., according to Barclays indices.
Cuba’s Half Century of Isolation to End
17 December 2014 – Bloomberg
President Barack Obama said the U.S. will end more than half a century of isolation of Cuba, initiating talks to resume diplomatic relations, opening a U.S. embassy in Havana, and loosening trade and travel restrictions on the nation. “Neither the American nor Cuban people are well served by a rigid policy that’s rooted in events that took place before most of us were born,” Obama said today at the White House in a statement that coincided with remarks by Castro in Havana. The White House plans to move swiftly. The administration expects to issue regulations within weeks and open an embassy as soon as is logistically possible, according to White House officials before Obama spoke. Obama said he will work with Congress to lift the full trade embargo. The president also ordered the State Department to review Cuba’s designation as a state sponsor of terrorism.
China Sees Great Investment Opportunities in Eastern Europe
16 December 2014 – Deutsche Welle
Chinese Premier Li Keqiang met with leaders of eastern and southeastern European countries at the fourth CEE (Central and Eastern Europe)-China summit which took place in Belgrade on December 16. The group seeks to expand economic cooperation and China is set to benefit. The post-Communist area stretching from the Baltic countries to the Black and Adriatic Seas is being hailed as a perfect spot for Chinese investment and exports. While trade between CEE and China remains modest, it has nevertheless increased tenfold in the past decade and there is room to grow. From the perspective of the CEE countries, cooperation with China is not always easy because trade is extremely asymmetrical in favor of the Asian export giant. By bypassing Brussels, some EU politicians feel that the Chinese are trying to play European countries off against one another.
Investors See Greek Upheaval Ring-Fenced From Rest of Eurozone
16 December 2014 – Reuters
Greece's future in the Eurozone may hang in the balance once more, but investors believe the market fallout from any current political turbulence can be insulated, unlike during the region's sovereign debt crisis of 2012. In fact, an HSBC list of the 10 biggest market risks for 2015 does not even mention Greece, even though if the Greek parliament fails to elect a new president by the end of the year, parliamentary elections would be triggered in which anti-bailout party Syriza would be favorites. This relative calm is based on the assumption that if Greece defaulted the impact on private investors would be limited because 83 percent of Greek government debt is held by the public sector. Furthermore, if panic did spread, other debt-laden countries could seek help from the European Central Bank and the European Stability Mechanism's bailout fund.
Obama to Approve New Russian Sanctions
16 December 2014 – Voice of America
President Obama decided on Tuesday to sign legislation authorizing more sanctions on Russia for its role in the Ukraine crisis. The bill passed in the Senate last week and will give the president authority to provide $350 million in lethal and nonlethal military aid to the Ukrainian government, including anti-tank weapons, munitions and surveillance drones. The bill also authorizes the president to impose new sanctions on Russia's defense and energy sectors if Russian firms sell or transfer military equipment to Ukraine, Georgia, Moldova or Syria. However, the legislation does not make the sanctions or military aid mandatory.
ISDS Model is Australia, not Canada
16 December 2014 – EurActiv
Gus Van Harten, an associate law professor at Osgoode Hall Law School, thinks an international arbitration court would be a better alternative to the investor state dispute settlement (ISDS) mechanism. The Transatlantic Trade and Investment Partnership (TTIP), currently under negotiation between the EU and U.S., and the recently negotiated Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada both contain controversial ISDS provisions. ISDS was originally devised to safeguard foreign investors against unreliable court systems in developing countries. Arbitrators in ISDS disputes lack the independence of judges in the U.S. and EU, as they can also simultaneously practice law; their career interests could influence their decisions. While current pacts deal only with 15%-20% investment flows, the TTIP will perhaps deal with 50%-60% of investment flows. Consequently, arbitrators will have wider remit of powers under the TTIP than under past agreements. Australia rejected an ISDS provision in a deal it negotiated with the United States a decade ago and still secured the pact.
Carney Says Sharper Emerging-Market Rout May Harm Core Markets
16 December 2014 – Bloomberg
Bank of England (BOE) Governor Mark Carney said the selloff in emerging markets may worsen, posing the risk of higher borrowing costs and weaker growth in core markets. The global economic outlook has weakened since June, posing an increased threat to the UK’s financial stability, the Bank of England said in its Financial Stability Report, published today in conjunction with its bank stress-test results. Risks could arise “if concerns about persistent low growth lead to a sudden reappraisal of underlying vulnerabilities in highly indebted economies,” according to the central bank. Within Britain itself “high household indebtedness continues to pose risks to financial stability,” so recommendations in June against risky mortgages “continue to act as insurance against a significant deterioration in lending terms,” the BOE said.
Ruble collapse prompts Moscow shopping spree
16 December 2014 - Financial Times
As the Russian ruble’s collapse accelerates, increasing numbers of Russians are going on shopping sprees and converting their savings to more stable currencies. Many do not know what the future holds, and are therefore exchanging their rubles for dollars or euros, against which the exchange rate hit the significant 100:1 mark today. Artem Zotov, head of currency operations at the retail arm of Otkritie Bank, notes that demand for foreign currencies has jumped three or four times in the last day alone. Similarly, shoppers are rushing to purchase large items such as furniture, cars and apartments. Pressure on price inflation is not predicted to subside, despite efforts by the Russian central bank.
EU Approves German-UK Initiative to Revive Bosnia Membership Bid
15 December 2014 – Deutsche Welle
The EU has agreed to back a German-UK initiative meant to revive Bosnia's bid to join the bloc. The plan offers the carrot of EU funds in exchange for Bosnian politicians implementing key reforms. "This could be a turning point in Bosnia and Herzegovina's path towards the European Union," the bloc's foreign policy coordinator, Federica Mogherini, told a news conference. The troubled Balkan state launched its bid to join the EU in 2010, but it continues to be plagued by economic stagnation, official corruption and an unemployment rate of more than 40 percent. In February, in the worst violence since the war, demonstrators torched government buildings across the country in protest against political inertia, unemployment and corruption.
Sweden and Denmark Summon Russian Ambassadors Over Air Incident
15 December 2014 – AFP
Sweden and Denmark summoned Russia’s ambassadors Monday in protest over a near miss between a Russian surveillance plane and a commercial aircraft, a further sign of rising military tensions in the Baltic. Sweden said the Russian plane came dangerously close to the passenger jet at less than six miles, and that it was flying without an electronic transponder, making it invisible to commercial jets. Both Swedish and Danish jet fighters were scrambled in response to the incident which reportedly took place in international airspace covered by Swedish air traffic control. The incident happened amid growing concern in the Baltic region over signs of more assertive Russian behavior, including Russian planes regularly skirting or violating the national air space of neighboring countries.
Topic: Russia Raises Interest Rate to 17%
15 December 2014 – Irish Times, BBC News
In a desperate, overnight decision, the Central Bank of Russia radically increased its key interest rate from 10.5% to 17%. Russia hopes the sharp increase will prevent any further depreciation of the ruble. This is the sixth time the bank has raised interest rates this year. The bank had only just raised interest rates from 9.5% to 10.5% on December 11th. “This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks,” a statement on the bank’s website read. On Monday, the ruble fell 9.7% against the dollar; this was its sharpest decline in 15 years. One dollar is now equivalent to 64.45 rubles.
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EU May Scrap Environmental Proposals amid Focus on Growth
15 December 2014 – Bloomberg
Major pieces of environmental legislation are among scores of draft laws the new European Commission is considering scrapping as part of a pared down agenda for next year. Commission President Jean-Claude Juncker’s agenda at an EU meeting today may include withdrawing a proposal intended to cut air pollution, another that would limit landfill waste across the EU, and other initiatives drafted before Juncker’s team took office. As well as the environmental legislation, the proposals that could be canceled range from laws to regulate the prices of medicinal products to increasing competition in ground-handling services at airports. Dominating Juncker’s list of priorities is a 315 billion-euro investment plan, which the Commission will combine with additional measures to remove barriers to project funding. The Commission also has plans to modernize copyright rules, boost cyber-security and come up with “a new approach to legal migration.”
Bundesbank Backs ECB on Monetary Stimulus
15 December 2014 – Deutsche Welle
Germany has echoed the European Central Bank's line on adopting further stimulus measures to boost the Eurozone. But the German central bank did not go so far as to openly support ECB plans to print more money in order to buy sovereign bonds. The language of the new report represents a U-turn when compared to previous statements from the German central bank. Bundesbank chief, Jens Weidmann, had previously been pressing for more reforms to spur growth in the European economy. Economists are increasingly worried that plunging oil prices may send the Eurozone into a deflationary spiral, which could depress consumption, growth and employment. While the inflation outlook has been hampered by falling oil prices, the lower fuel costs are likely to give a slight boost to the area GDP.
Azerbaijani gas gains more trust in European energy security
15 December 2014 - Azer News
In a move designed to demonstrate the EU’s decisiveness against Russia's cancellation of the South Stream project, the EU has decided to increase the capacity of the Trans-Anatolian Pipeline. Azerbaijani President Ilham Aliyev, Turkish Energy Minister Taner Yildiz, and EU Energy Commissioner Maroš Šefčovič agreed to double the annual flow from 10 billion cubic meters of natural gas to 20. Russia's cancellation of the South Stream project has placed EU member states on the defensive, but instead of forcing them to the negotiation table it has led them to look elsewhere for their increasing energy needs. The EU is also increasing efforts to agree on the Trans-Caspian gas pipeline, which would transport gas from Turkmenistan to Europe and further decrease European reliance on Russia.
Divisions Weaken the ECB’s Hand on Quantitative Easing
14 December 2014 – The Financial Times
Fresh splits between the Eurozone’s monetary policy makers have brought to the fore the constraints facing Mario Draghi, the European Central Bank’s president, in his battle to rid the region of the threat of economic stagnation. While the tougher language from last meeting’s speech boosted hopes that the ECB will embark on full-blown quantitative easing in the months ahead, the dissent risks undermining the size and scope of what the ECB is able to buy. Angela Merkel, German chancellor, and the more hawkish members of the ECB’s governing council fear full-blown quantitative easing could remove the impetus on governments to make the necessary structural reforms. All members, however, we able to agree that if lower oil prices began to threaten the outlook for inflation, or the ECB’s existing measures disappoint, then more radical easing is warranted.
Fed Considers Time to End Free Money Pledge
14 December 2014 – Reuters
The U.S. Federal Reserve will give the clearest signal next week that its easy money stance is ending if, as some expect, it drops its two-year long pledge to keep interest rates close to zero for a "considerable time." The market has understood the term to mean at least six months, with current expectations for a first rate hike in mid-2015. Rob Carnell, chief international economist at ING, believes U.S. headline inflation may well fall below 1 percent in the March-May period, when seasonal adjustments would give a greater weighting for a weak oil price than at present. This would make it difficult for the Fed to raise rates around the anticipated mid-year time frame. Likewise this week, the spotlight in Europe will be on the EU summit, where the focus is likely to be on the weak economy, as well as on Greece, where Wednesday will mark the first round of the parliament’s presidential voting.
Krugman Fighting Consensus Says 2015 Fed Rate Increase Unlikely
14 December 2014 - Bloomberg BusinessWeek
Paul Krugman, challenging the consensus of economists and the Federal Reserve’s forecasts, said policy makers are unlikely to raise interest rates in 2015 as they struggle to spur inflation amid sluggish global economic growth. Yields on 10-year U.S. Treasuries are at the lowest level since mid-2013, and inflation expectations have dropped with the slump in oil prices. “There is a very strong case that the United States is still a very depressed economy,” Krugman said during a presentation on the state of the world economy at the Arab Strategy Forum in Dubai. The outlook for global economic growth may deteriorate in 2015 with risks of crises in China and the euro area, Krugman said, as the European Central Bank fails to dodge deflation and the world’s second-biggest economy struggles to bolster domestic demand.
The Case Against Eurozone QE
14 December 2014 – Forbes
The European Central Bank faces increasing pressure to implement quantitative easing (QE) soon, as the risk of deflation grows. In the past few years, the U.S. Federal Reserve, Bank of Japan, and Bank of England have all decided to implement QE in response to low demand. The ECB has thus far refrained from taking this unconventional step. Instead, the ECB has funded banks and made credit more readily available in the hope that banks will loan to the private sector. However, the private sector is unwilling to borrow money from banks because of the weak economy. The problem is not the supply of loans, but instead demand for them. Frances Coppola asserts that it is not known if QE will be effective and that it could in fact worsen the situation. Germany rejects QE, and some question the legality of QE in the Eurozone. German corporate loans have significantly lower interest rates than Spanish ones. Rate fragmentation across the Eurozone means the euro has different values in each of the member states. QE would not fix rate fragmentation.
EU Investment Plan May Be A Day Late and a Euro Short
14 December 2014 – Reuters
The EU’s vaunted investment plan, due to be formally approved at a summit this week, may be a day late and several euros short to revitalize a stagnant economy. Because of Europe's mountain of public debt, the initiative outlined by European Commission President Jean-Claude Juncker contains no new public money and relies on financial engineering to turn 21 billion euros in existing EU and European Investment Bank funds into 315 billion euros in project funding. Investment in the 28-nation EU in 2013 was on average 15 percent below pre-crisis levels, according to an EU task force report, with a plunge of more than 60 percent in the worst affected southern countries. The Juncker plan, due to be up and running in mid-2015 and last three years, will focus on "viable investments of European significance" mostly in transport, energy and digital networks, as well as research and development. "Although highly welcome, the plan is unlikely to be large enough or fast enough to have the needed impact all on its own," Monti and French European lawmaker Sylvie Goulard wrote in a joint paper. "Action is required at the national level too."
India-EU Free Trade Agreement May be Finalized by Next Year
14 December 2014 – First Biz
The Free Trade Agreement between India and the EU is expected to materialize next year once the country finalizes its new foreign trade policy, EU Ambassador Joao Cravinho has said. "The Indian government has been a little slow; slower than we wanted, in producing the new trade policy," he added. The EU is open for an asymmetrical agreement, he said, adding, however, that both sides must be agreeable for a little bit of give and take. Addressing the nearly 100 percent tariff India places on car imports from the EU, Carvinho also said that high tax rates such as this must come down as part of an agreement. Improving India’s investment climate for European and global businesses was also discussed during the meeting of the Council of EU Chambers of Commerce.
Fitch Downgrades France Ratings to “AA”
12 December 2014 – Reuters
Fitch Ratings cut its ratings on France to AA from AA+ on Friday, saying the country’s revised deficit-reduction target was not enough to avoid a downgrade. The agency had said in October “it would likely downgrade the ratings by one notch in the absence of a material improvement in the trajectory of public debt dynamics following the European Commission’s opinion on France’s 2015 budget.” Going forward, Fitch pointed out that France’s economic outlook is weak, with the economy expected to grow less than the Eurozone average this year “for the first time in four years.”
ECB Gives Initial Backing to Bank Capital Plans
12 December 2014 – Reuters
The European Central Bank gave initial approval to the plans of 13 banks to plug capital holes discovered in health checks, it said on Friday, bringing a landmark examination of the sector almost to a close. The plans will now go to the central bank's governing council for final sign off. Banks will be given six to nine months to cover shortfalls and implement their plans. Italy faces the biggest challenge, with nine of its banks falling short and two still needing to raise funds. The exercise provided the clearest picture yet of the health of the Eurozone banks more than seven years after the eruption of a financial crisis that almost bankrupted a handful of countries and threatened to fracture the currency bloc.
Poland Calls Out Russia For “Unprecedented” Bomber Activity Above Baltic Sea
12 December 2014 - International Business Times
Tomasz Siemoniak, Poland's Defense Minister, called our Russia for its "unprecedented" naval and air force presence in the Baltic area this past week. Russia claimed it was only testing out NATO's defenses, but most of its activity was in international space. NATO spokeswoman Oana Lungescu told Agence-Presse that NATO's interception of increased fight and bomber overflights represented a "destabilizing and potentially dangerous" threat. Siemoniak ultimately suggested that Polish citizens remain on guard instead of panicking, but mentioned that he would bring up the issue in a meeting with defense ministers in Estonia, Latvia, and Lithuania.
Draghi and the Dissenters
12 December 2014 – The Economist
At a press briefing on December 4th Mario Draghi, the ECB’s president, had little new to convey other than a semantic change to the ECB’s plan to increase the size of its balance-sheet by €1 trillion ($1.2 trillion), which is now “intended” rather than “expected.” Draghi has now also admitted to divisions within the governing board. He earlier tried to convey the single-mindedness of the group in the goal of raising the dangerously low inflation rate, whereas now he is saying that consensus is not required to launch QE. Quite different from his predecessor, Jean-Claude Trichet, Draghi is more willing to strike out on his own, putting pressure on the rest of the council to follow. Some speculate that Draghi may be in a hurry to get on with quantitative easing because he would like to move on to a new job next year, as president of Italy, when Giorgio Napolitano is expected to retire.
Russia raises interest rates to 10.5%
11 December 2014 – BBC News
Russia’s central bank increased its interest rates on Thursday from 9.5% to 10.5% following a collapse in the value of the roble. The bank had only six weeks earlier increased the rate from 8%. Annual inflation was 9.4% as of Monday, and the bank said it would carry on raising interest rates “in case of further aggravation of inflation risks.” Inflation has remained high because of the weak currency and Russia’s ban on Western agricultural products. Raising interest rates may lower inflation, but it will also weaken consumer demand and slow the economy, which is already on the verge of recession. Following the hike in rates, the ruble declined further against the dollar and euro, trading at 55.45 and 68.98 respectively. The bank has spent over $70 billion this year to prop up the currency. Of this, $4.53 billion was spent last week alone. Many Russians, fearful of the effect Western sanctions are having on the economy, have moved their money out of the country. The ruble has depreciated rapidly as a result. Rosneft, Russia’s state-owned oil company, completed an initial deal to supply oil to Essar Group.
Cheap Loans from the ECB Get a Tepid Response among Eurozone Banks
11 December 2014 – The New York Times
Banks showed only moderate interest on Thursday in a second round of cheap loans that the European Central Bank is offering in hopes of restoring commercial bank lending and combating low inflation. Interest by banks in the cheap cash was “perhaps not as bad as some had feared, but probably much lower than the ECB had hoped,” noted Martin van Vliet, an economist at ING Bank. The response is likely to reinforce expectations that the central bank will soon have no choice but to begin large-scale asset purchases to pump money into the flagging Eurozone economy. Banks took €130 billion, or about $161 billion, in loans from the central bank, which offered a fixed interest rate of 0.15 percent for four years. Banks that take advantage of the central bank’s loans must show that they are using the money to increase lending to households and businesses.
Two Italian Parties Calls for Exit from Eurozone
11 December 2014 – AFP
A pair of Euroskeptic parties announced Wednesday they have plans to get Italy out of the Eurozone, echoing popular anger against the 28-nation bloc. Northern League head Matteo Salvini – the rising star of an Italian right in disarray – told reporters: "We want to exit the euro." At the same time, the populist Five Star Movement announced plans to launch a petition Saturday calling for a referendum on whether Italy should drop the euro. Omnipresent in the Italian media, Salvini seeks to transform his regional party into a national force by first expanding his appeal in the south and also with an anti-immigrant and anti-EU stance, similar Marine Le Pen's National Front in France. Further, the Northern League's leader said if his party came to power he would "review all the founding European Union treaties."
Russia India: Putin agrees to build 10 nuclear reactors
11 December 2014 - BBC News
In light of plummeting relations with the West, and the recent cancellation of the South Stream project, Russia has turned to India to alleviate its needs for an energy importing partner. In a deal announced in Delhi, Russia will provide India with 10 million tons of oil per year and assistance to build 10 nuclear reactors over 20 years. Moreover, India is gaining a production license to one of Russia's most advanced attack helicopters and the two nations have signed a deal to increase bilateral diamond trade. As Russia is the world's top exporter for diamonds, and India is the world's center of diamond cutting and refining, this will cut out the middleman hubs of Antwerp and Dubai.
UK Urges EU to Open Up Professions, Construction Jobs
10 December 2014 – Bloomberg
The U.K. is pressing the EU to make it easier for architects, engineers, accountants and builders to find cross-border work, according to a new policy paper on the need for a single market in services. The European Commission, the EU executive in Brussels, should begin efforts by mid-2015 to reduce service-industry barriers, the UK said in the document. Changing the EU environment for services jobs would bolster an industry that already provides nine out of ten new positions and 70 percent of gross domestic product, according to the UK paper. It further declared that countries should be required to recognize professional standards set out by other EU nations, unless they have a documented reason to pursue a different course. If a country wanted to retain a barrier in any of these fields, they would have to notify the Commission as part of a “comply and explain” strategy.
EU, Brazilian Companies Push For a Bilateral Trade Deal
10 December 2014 – EurActiv
With new executives in Brussels and Brasilia, there is a window opportunity for re-launching negotiations between the EU and Brazil to reach a bilateral trade and investment agreement, business leaders said in a survey. CEOs of 27 leading companies involved in trade between the two partners said that the elimination of tariffs is still important, but no longer a priority, as regulations are the main barriers to the development of business and trade between the two entities. Among the main burdens highlighted by companies, the top of the list is the complicated process for approval of environmental licenses. On a regional level, the EU and Mercosur have been sporadically working towards a free trade agreement since 1999. Despite the long delays it is anticipated that once the parties exchange their proposals for the agreement, negotiations will “move fast” and the deal should be closed sometime in 2015.
ECB’s Arsenal Draws Danish Pledge on Limitless Currency Defenses
10 December 2014 – Bloomberg
The unprecedented stimulus push by the European Central Bank president promises to test the euro peg in Denmark, where the benchmark interest rate is already below zero. Should ECB measures weaken the euro, Governor Lars Rohde says experiments with negative rates to date do not mark any limit on how far Denmark is willing to go. The country’s experience in 2012 showed that extreme measures will frighten off speculators and underscore credibility in the bank’s policies, said Per Callesen, a deputy governor at the bank. Addressing the potential of Danish QE, Hugo Frey, another deputy governor at the central bank, noted: “We can buy bonds as long as it serves monetary policy purposes, while we’re not allowed to do it to support the government balance.”
Britain Calls on NATO Help in Submarine Hunt
10 December 2014 – Voice of America
NATO allies, including France, the U.S. and Canada, sent patrol planes to help Britain scour the waters off its western Scottish coast after a submarine's periscope was spotted. Additional reports indicate that similar searches took place in late November and early December. The periscope was spotted in waters where Royal Navy submarines normally surface as they head in or out of a base at Faslane, home to Britain's nuclear deterrent. Britain has not had its own specialist maritime patrol aircraft since scrapping its Nimrod program as part of a defense review in 2010. The operation has reawakened memories of the final years of the Cold War of hunting Soviet submarines.
Armenia Wins Backing to Join Trade Bloc Championed by Putin
10 December 2014 – New York Times
Russia's lower house of parliament voted unanimously to approve a treaty allowing Armenia to join the Eurasian Economic Union, a trade bloc of former Soviet states promoted by Russian President Putin as an alternative to the EU. Other members include Belarus, Kazakhstan, and Russia, with Kyrgyzstan on the path to membership. Armenia was previously on the path to membership in the EU, similar to Ukraine, but then-President Serzh Sargsyan decided to abandon talks and align with Russia, causing widespread protests. Prior to the vote in the Duma, one Russian parliamentarian compared Armenia's fruitful decisions to those of Ukraine, whose decision to align with Europe "[ignored] economic interests, [and] national interests of the state."
UK population boom could make it EU’s top economy
9 December 2014 – The Telegraph
According to forecasts made by the European Commission, the United Kingdom could be the largest economy in Europe by 2060, followed by France and then Germany. However, this is only likely to happen if the UK retains freedom of movement and does not restrict immigration. High birth and net immigration rates could increase the population by nine million by 2060, and this would consequently increase overall GDP. Greater investment in public services such as schools, hospitals, and housing would be required to accommodate for these additional people. With its larger population and GDP, Germany commands a dominant position in the EU. However, if the UK once again became the largest economy in Europe, it would have a greater say on how the EU operates. This will not occur if the current government does not accept freedom of movement and seeks to limit immigration. Of course, loads of things could happen that could render the Commission’s projections invalid. Germany’s population could grow more significantly than anticipated, or the Eurozone could become so highly integrated by then that it would lessen the influence of the UK, which does not use the euro. Fiscal integration may be required to lift the single currency area out of its current economic doldrums.
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