The global economic summit of the G20 countries concluded yesterday. The meeting, intended to address the global financial crisis, concluded with a promise to take “whatever further actions are necessary” to address the crisis, but offered few concrete steps forward. The summit was an opportunity to reconsider the international financial architecture, often referred to as the Bretton Woods system. I’ll have a more detailed assessment of the summit tomorrow. In the meantime, here are five other studies you might have missed:
1. Remember the timeline for withdrawal from Iraq that would have handed a victory to the terrorists? Well, now we have one. The Bush administration concluded a status of forces agreement with the Iraqi government that requires the complete withdrawal of U.S. forces by 2011. The UN Security Council resolution which authorized the U.S. military presence in Iraq is due to expire in December, and without either a new Security Council authorization or an agreement with the Iraqi government, the status of American troops in Iraq would have been uncertain at best (and illegal at worst). The timeline for withdrawal was a sticking point for approval of the Iraqi legislature.
2. The ceasefire between Israel and Gaza militants continued to come under strain last week. An Israeli attack early last week resulted in the death of six Hamas militants. Palestinian militants responded by increasing rocket and mortar attacks against Israeli towns near the Gaza Strip. The Israeli government then closed Gaza’s borders, shutting down the flow of supplies. The European Union on Friday called on Israel to permit the importation of food, fuel, and basic humanitarian supplies, but so far, the Israeli government has declined.
3. The Eurozone has officially entered its first recession ever. Established in 1999 and comprised of all European Union members which have adopted the Euro as their official currency, the 15-member Eurozone has now experienced two consecutive quarters of declining gross domestic product. According to an FT editorial, the recession represents the first real challenge for European economic unity. Already the European Central Bank has taken steps to address the economic downturn, cutting interest rates and increasing liquidity. The effectiveness of these policies—and the difficulty of managing fifteen national economies through a single monetary policy—remains to be seen.
4. Faced with oil prices declining below $55 per barrel and the lowest level of growth in demand for oil since 1985, the Organization of Petroleum Exporting Countries (OPEC) scheduled an emergency meeting for the end of the month. Most forecasters believe OPEC will try to trim global output in an attempt to increase world oil prices.
5. The fighting in eastern portions of the Democratic Republic of the Congo, which has resulted in the displacement of as many as 250,000 people, continued last week despite UN pressure to establish a ceasefire. The United Nations is attempting to address the humanitarian crisis, but has so far been unsuccessful. But according to sources within the UN mission in the Congo, known as MONUC, rebel forces are attempting to force the withdrawal of UN peacekeepers from the region.
And a bonus story for this week:
6. The Mexican Congress passed its annual budget for 2009. In an environment characterized by the global economic downturn and tight finances, the Mexican government will increase spending by 13.1 percent in real terms in 2009. The budget—the first in six years in which the government will run a deficit—increases spending on infrastructure, security, and social development. The new budget represents a return to Keynesian-style counter-cyclical spending which the Mexican government hopes will permit the country to avoid the worst of the global economic crisis.