The meeting of the Group of Seven, or G7, took place in Rome on Saturday. And while anti-poverty campaigners appealed for the group to address the problem of increasing global inequality and rising poverty, the primary focus of the annual meeting was the global economic crisis. Following the dispute over the inclusion (and subsequent removal) of buy-American provisions in the U.S. economic stimulus package, the G7 felt the need to include a commitment to use “the full range of policy tools” to address the global downturn while simultaneously renewing commitments to avoid protectionist measures. This amid news that the Eurozone has now entered its worst slump in fifty years, with the Eurozone GDP falling 1.5 percent in the fourth quarter of 2008, and the German GDP falling by 2.1 percent of the same period. Amid the poor economic news, the European Central Bank is expected to cut its prime interest rate to 1.5 percent, its lowest rate ever. The U.S. Federal Reserve’s federal funds rate has already been effectively reduced to 0 percent.
In other news from the previous week:
1. A U.S. missile strike in the South Waziristan region of Pakistan (along the Afghan border) on Saturday killed at least 25 al Qaeda-linked militants. The drone-launched missile was the third such strike since President Obama took office. The Pakistani government has been undercut the influence of militants in the region, believed to be a bastion for al Qaeda. But the continued strikes by the U.S. also threaten to undermine the legitimacy of the Pakistani government.
2. Israel announced it would not agree to a ceasefire with Hamas unless an Israeli soldier held since he was kidnapped in a cross-border raid in 2006. The Israeli position appears to complicate efforts to reach a permanent ceasefire. A series of rocket attacks and retaliatory strikes (or strikes and retaliatory rocket attacks, depending on whose press you read), has made establishing a lasting ceasefire between the combatants more difficult. Further complicating the situation were Israeli elections held last week. The elections handed Tzipi Livni’s centrist Kadmina party a narrow one-seat victory over the rival center-right Likud party under Benjamin Netanyahu. The close victory has left both parties scrambling to line up potential coalition partners, leaving the final outcome of the election uncertain.
3. The outlook for the ongoing crisis in Zimbabwe appeared to brighten a bit last week, as a unity government took office. Under the terms of the agreement, Robert Mugabe will remain President of Zimbabwe. His political rival, Morgan Tsvangirai, will become the country’s prime minister. The government of national unity appears to have—at least temporarily—brought to a close the country’s ongoing political crisis. But how long this remains the case is unclear. By Friday, the arrest of Roy Bennett, Tsvangarai’s nominee for deputy agriculture minister, on charges of treason raised questions about the degree to which the new government represents a real break with the past. Further, the heavy lifting of addressing a national cholera outbreak and brining the country’s economy back from total collapse remains on the to-do list.
4. The situation in Afghanistan appears to be deteriorating. A series of bombings and well-coordinated attacks by gunmen over the last several days has left dozens of people dead. While such attacks had become increasingly common in the Taliban-dominated areas along the Pakistani border, the most recent attacks occurred in what had historically been viewed as the safest region of the country—its capital, Kabul. Analysts view the attacks as an indication of the increasing support and sophistication of Taliban-backed forces. The attacks come amidst indications that the Obama administration is considering a request to increase by 30,000 the number of troops deployed to Afghanistan.
5. Disputes between European Union member states over the structure and nature of efforts to address the global economic crisis have led to tension within the Union. On Tuesday, the Czech Republic’s prime minister (and current president of the European Union) accused the member state governments of engaging in policies that threaten to “deform” the Eurozone. On Wednesday, in an indication of how serious the dispute is, the European Union scheduled two emergency summits to address the crisis, suppress protectionism, sustain employment, and prevent the bloc’s political fragmentation into old and new member states.