Tag Archives: Madagascar

Five Stories You Might Have Missed

It was a busy week for the U.S. Federal Reserve. Addressing a meeting of bankers on Friday, the Chair of the U.S. Federal Reserve, Ben Bernanke, called on legislators to address the need for regulatory reform of global financial markets. On Wednesday, the Federal Reserve undertook announced new plans intended to improve the position of the U.S. credit markets. With the federal funds rate remaining near zero percent, the Federal Reserve has been forced to turn to a program of qualitative easing, under which it purchases mortgage-related securities, removing them from the market and expanding the amount of cash in circulation. It is coordinating policy with the central banks of England, Japan, and Switzerland. But the dramatic move carries a number of risks, including the introduction of high rates of inflation and a decline in the value of the dollar

In news from outside the United States last week:

1.  A two-day meeting of the European Union last week produced a number of important outcomes, including a commitment to increase the E.U.’s contribution to the International Monetary Fund by €75bn. The European Union also staked out its position on reforming global financial market regulation, the focus of an upcoming G20 meeting in April. Current speculation is that the meeting of the G20 will likely pit Germany and France, which favor stricter regulation, against the United States and China, with the United Kingdom falling somewhere in the middle. However, all sides are currently playing up the likelihood of compromise.

2. On Saturday, the Abhisit Vejjajiva’s government in Thailand survived a no confidence motion in the national legislature. Vejjajiva has been in office for only three months, but has been under fire nearly the entire time, as Thailand has been plagued by political and economic instability compounded by declining exports, part of the impact of the global economic crisis. 

3. On Thursday, the government of China announced it would step up naval operations in the South China Sea, specifically targeting the disputed Spratly Islands. The Spratly Islands are claimed (in whole or in part) by at least six countries, including Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam. The announcement comes after a standoff between U.S. and Chinese naval vessels earlier this month, when the U.S. accused China of harassing a U.S. naval vessel operating in the South China Sea. China maintains the vessel was operating illegally in Chinese waters.

4. Israeli President Shimon Peres last week granted Likud party leader Benjamin Netanyahu two more weeks to form a coalition government. Netanyahu’s right-wing Likud party was named by Peres as formateur party after extremely close restuls in national elections earlier this month.  Netanyahu has the option of forming a coalition with a group of far-right and religious parties, but has been seeking to form a more centrist coalition with either Ehud Barak’s Labour party or Tzipi Livni’s Kadima party. A more centrist coalition, Netanyahu believes, would be better positioned to avoid potential clashes with the United States. But both Labour and Kadima remain hesitant to join a coalition government with Likud.

5. Andry Rajoelina was sworn in as the new president of Madagascar on Saturday. Brought to power under the auspices of a military rebellion, Rajoelina committed the new government to routing out the corruption of the previous regime and to re-establishing democracy within two years. But may observers remain skeptical. On Friday, the African Union suspended Madagascar from the organization, many donors have announced they will freeze aid, and the United States

And a bonus story this week:

6. A standoff between farmers and the government in Argentina last week threatens global food markets. Farmers are angry about the imposition of a 35 percent duty on soya exports and bans on export of some other food commodities. A similar standoff last year resulted in nationwide strikes and export bans. The standoff in Argentina has the potential to influence global food prices, as Argentina is one of the word’s largest food exporters—second only to the United States. China is the largest consumer of Argentinean soya exports.

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Five Stories You Might Have Missed

The G20 (which actually has 22 states attending this year) met this weekend in London. The ongoing economic crisis, of course, dominated discussions. The meeting produced a communiqué in which the states commit themselves to restoring financial growth and strengthening the global financial system. Discussions were dominated by several important divisions between the member states, particularly between the developed and developing countries (largely over reform of the International Monetary Fund) and between the United States and Europe (over the urgency and scope of economic stimulus efforts). In the end, the only real, concrete policy initiative was the agreement to enlarge the membership of the Financial Stability Forum to include all G20 members. Created in the aftermath of the 1997 Asian Financial Crisis, the FSF monitors the global financial system and coordinates policies between the international financial institutions.

In news from outside the G20 meeting:

1. On Friday, Chinese Premier Wen Jiabao expressed concern over the mounting U.S. deficit and the future stability of the U.S. economy. The Chinese government currently holds an estimated 70 percent of its $2 trillion foreign exchange reserve in dollar-denominated assets and is the single-largest buyer of U.S. Treasury Bills. A decline in the value of the U.S. dollar therefore threatens China’s massive reserves. But while the Premier is pressuring the U.S. to ensure the stability of its currency, Luo Ping, the director general of the Chinese Banking Regulatory Commission, reassured the U.S. government (and dollar markets more generally), that the investment in the dollar remains the “only option” for Chinese foreign reserve holdings.

2. Secretary of State Hillary Clinton, fresh off her trip to the Middle East and Europe, will be visiting Mexico later this month to discuss the crisis resulting from the growth of drug cartels in the country. The U.S. and Mexico already have an ongoing anti-drug effort (currently valued at approximately $750 million). However, the effort has not been successful in curbing the growing influence of the cartels, and many observers fear that Mexico may fall to the cartels. The situation in Mexico has become so stark in recent weeks that the U.S. State Department has issued a travel advisory, and the U.S. Joint Forces Command has begun gaming exercises based on the assumption that Mexico could undergo a “rapid and sudden collapse.”

3. The deepening political crisis in Pakistan continues. Over the last week, the government has increased its crackdown on opposition party members, which they accuse of attempting to undermine Pakistan’s fragile parliamentary democracy. A series of nationwide protests led by many of the country’s lawyers has been demanding the “restoration of democracy and the rule of law.” On Sunday, the government placed Nawaz Sharif, leader of the Pakistan Muslim League-Nawaz, under house arrest and attempted to block protests in Islamabad, the country’s capital.

4. On Tuesday, Madagascar’s the army gave the country’s president, Marc Ravalomanana, a 72-hour ultimatum to resolve the ongoing crisis or resign from office. Madagascar has been suffering from an economic malaise due the collapse of the vanilla market, Madagascar’s main export. While the country has begun to attract foreign investment, Madagascar remains incredibly poor, with a GDP per capita of just $330, and inequality between rich and poor remains very high. Ravalomanana remains defiant. On Saturday, he addressed his supporters to say he would not be resigning.

5. In a new statement released on Saturday, Al Qaeda leader Osama bin Laden warned Arab leaders against cooperating with the West and renewed calls for his followers to prepare for jihad. Bin Laden singled out Egypt, Jordan, and Saudi Arabia, as countries headed by leaders that “have plotted with the Zionist-crusader coalition against our (Muslim) people.” Bin Laden also made reference to the recent conflict between Hamas and Israel in Gaza, describing it as a “holocaust.”