Tag Archives: structural adjustment

Five Stories You Might Have Missed

The political situation in Iran continued to evolve over the past week. Last week, a standoff between President Mahmoud Ahmadi-Nejad and Iran’s Supreme Leader, Ayatollah Ali Khamenei, culminated in the dismissal of two conservatives from the cabinet and the firing of Vice President (and close ally of Ahmadi-Nejad), Esfandiar Rahim Mashaei. The deteriorating relationship between Ahmadi-Nejad and Khamenei further undermines the political stability of Iran, already weakened by June’s disputed presidential elections and the subsequent protests which have rocked the country. Protests have been a regular feature of the Iranian political scene for the past month, including clashes between police and opposition supporters like those that occurred on Thursday.  Although the Iranian government last week released hundreds of people arrested for participating in the post-election protests, the trial of 100 of the most prominent detainees is moving forward. Critics of the regime have condemned the trial as a spectacle.

Meanwhile, three Americans were arrested on Saturday by Iranian security forces for allegedly entering the country illegally.  The three were camping in Kurdistan (near the Iraqi-Iranian border) when they crossed over into Iran. They have been transferred to the capital, Tehran, where they are currently being held.

In news from outside Iran in the last week:

1. Two statements by the Indian government last week dashed hopes of progress in multilateral negotiations. On Wednesday, India’s commerce secretary, Rahul Khullar, dismissed hopes of rekindling World Trade Organization talks as unrealistic in the current global political and economic climate. The current round of talks, referred to as the Doha agenda, has been under negotiation for nine years. The talks have been suspended numerous times, largely as a result of the inability of WTO member states to agree on binding cuts to agricultural subsidies. According to Khullar, progress is unlikely because, in the context of the global economic crisis, political leaders are focused on job losses and the lack of domestic economic growth, a focus which makes it difficult to move forward on a new global trade deal.

In another development, India’s environment minister, Jairam Ramesh, said on Friday that India would not agree to binding emission cuts for at least ten years, potentially throwing climate talks scheduled to take place in Copenhagen in December into disarray. India and China are both dismissive of western pressure to agree to greenhouse gas reductions, believing that such reductions would undermine future economic growth and development in their countries. But without the participation of China and India in climate change negotiations, progress will be far more difficult, particularly given the historical U.S. negotiating position that it will not be bound by any climate change agreement that does not also include reductions for China and India.

2. Over the weekend, Russia concluded negotiations to expand the Russian troop presence in Kyrgyzstan. The expanded Russian presence is part of Russia’s broader effort to reassert itself in its traditional sphere of influence, an effort which included the development of the Collective Security Treaty Organization, a counterpart to NATO which includes Russia and six other former Soviet Republics, Kyrgyzstan, Kazakhstan, Tajikistan, Uzbekistan, Armenia and Belarus. The United States and Russia have been competing for influence in Kyrgyzstan, which occupies an important geo-strategic position, and Kyrgyzstan’s president, Kurmanbek Bakiyev, has skillfully negotiated between competing Russian and American interests. In February, after receiving $2 billion in aid from the Russian government, Bakiyev ordered the United States to leave Kyrgyzstani bases by June. The bases are part of the U.S. air transit route to supply forces in Afghanistan. After the United States agreed to triple rent payments for use of the base and to offer additional financial assistance to the Kyrgyzstani government, Bakiyev rescinded his request that the U.S. withdraw.

3. Venezuelan President Hugo Chávez has once again sparked widespread criticism, this time among human rights groups. At issue is the latest development in the president’s campaign against “media terrorism”—a new law which would punish journalists and their sources with up to four years in jail for “causing panic,” “disturbing social peace” or compromising national security.

In an unrelated development, the government of Venezuela has “frozen” diplomatic and economic relations with its neighbor, Colombia. Relations between the two countries have been poor since March 2008, when Colombia launched a raid into Ecuador, a close ally of Venezuela. The decision to suspend relations came after Colombia accused Venezuela of supplying rocket launchers to Marxist rebels in Colombia.

4. Clashes between security forces and an Islamist sect in three states in Nigeria continued last week despite the death of Islamist leader Mohammed Yusuf in police custody. More than 150 people have died in five days of fighting in Nigeria, where a sharp economic and political divide between the largely Muslim north and the predominately Christian south has been exacerbated by the country’s declining economic situation. The fighting in the northern part of the country complicates efforts to address the longstanding crisis in the southern, oil producing region of the country, where conflicts between militant separatist groups and the government have continued off-and-on for the better part of a decade. Taken together, these conflicts represent the most significant challenge to the Nigerian government since independence.

5. The International Monetary Fund on Friday issued a statement intended to play down the standoff between the Fund and the government of Iceland. At issue are the conditionalities imposed on the government of Iceland as a requirement for the dispersal of $2.1 billion in IMF loans. The government of Iceland has been under immense political pressure regarding the status of foreign savings deposits in Icelandic banks, which collapsed last year as part of the global economic crisis. The IMF is requiring that the government guarantee all foreign savings deposits, but the government of Iceland has so far refused, bowing to domestic political pressure not to compensate account holders.

Advertisements

Five Stories You Might Have Missed

It was a busy week in international diplomacy. President Barack Obama removed some restrictions on travel to Cuba. But the U.S. continues to demand political reform in Cuba as a precondition for further opening of relations between the two countries. Much has also been made of the encounter between Obama and Venezuelan President Hugo Chávez. Chávez gave Obama a gift and signaled his willingness to improve relations with the United States. The United States, however, opted not to attend a United Nations conference on racism due to the conference’s inclusion of Zionism on its agenda.

1. A draft of the final communiqué of the G8 meeting (the final communiqué will be released on Monday) concedes that the world is unlikely to meet the Millennium Development Goals agreed to in 2000. The MDGs include measurable targets to improve the plight of the world’s poor by 2015, including halving the number of hungry, having the number of people who live on less than $1 per day, eliminating gender disparities in all levels of education, and cutting child mortality rates. While the G8 statement will stress the need to achieve a consensus on agricultural reform, it does not include any specific financial pledges. For most observers, this makes the meeting—the organization’s first to deal specifically with agriculture—a failure.

2. Journalist Roxana Saberi was sentenced to eight years in prison after being found guilty of espionage by an Iranian Revolutionary Court. Saberi holds dual U.S.-Iranian citizenship and has been employed as a freelance journalist by many leading Western news agencies, including NPR and the BBC. Saberi’s sentence was longer than most observers had expected, and the trial and sentencing were condemned by the U.S. government. Iranian President Mahmoud Ahmadi-Nejad is urged the judiciary on Sunday to permit Saberi to defend herself in court.

3. Elections scheduled for Wednesday in South Africa appear to be on track, and the ANC appears well-placed to secure another two-thirds majority in the national legislature. Barring an extraordinary development, Jacob Zuma, the leader of the African National Congress, will be the next president of South Africa.

4. A suicide car bomb killed 25 soldiers and police as well as two civilians in Pakistan on Saturday. The Taliban claimed responsibility for the attack, which injured more than 60 people, and said that the attack was a response to U.S. drone strikes in Pakistan.

5. The International Monetary Fund agreed to unlock a $16.4 billion standby loan for the government of Ukraine. While the move is seen as a reflection of the growing confidence the international community has in the Ukrainian government, it also signals the continuing challenges posed by the global economic crisis. As part of the package, the Ukrainian government unilaterally adopted a series of tough concessions, bypassing parliament and undermining popular support.

Five Stories You Might Have Missed

Perhaps the most shocking news from the previous week came in a series of stories and rumors that the U.S. government may move to nationalize some banks in an attempt to address the ongoing global economic crisis.  In an interview on Tuesday, former Federal Reserve Chairman (and ardent free marketeer) commented that, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” In the same story, Republican Senator Lindsey Graham concurred, noting, “If nationalization is what works, then we should do it.” Speculation that Citibank and Bank of America may be the first banks to be nationalized drove their stock values down and led to both dramatic selloffs on Wall Street and a sharp increase in the price of gold, normally used to hedge against uncertainty. The events forced the Obama administration to attempt to reassure global markets, as White House Press Secretary Robert Ribbs said, “This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government. That’s been our belief for quite some time, and we continue to believe that.” Remember when the Democrats were the ones who wanted greater government control over the economy, and Republicans opposed such intervention? Seems the global financial crisis makes the conventional wisdom less and less relevant.

Here are five stories from the previous week you might have missed if you’ve been trying to keep the players in the nationalization debate straight:

1. On Friday, the government of Mexico confirmed the country was following the general trend in much of the rest of the world, heading into recession. In the final quarter of 2008, the Mexican economy contracted by 1.6 percent. In an attempt to stimulate the economy, the government cut interest rates. But close ties to the ailing U.S. economy have acted as a drag on the Mexican economy, undermining the ability of the Mexican government to develop an effective stimulus program.

2. The United Nations-backed naval taskforce in the Gulf of Aden appears to have been generally successful in addressing the problem of piracy in the region. A number of U.S. and E.U. naval vessels, as well as ships from several other navies, have been operating off the coast of Somalia in an attempt to curtail the piracy which had become endemic to the region. The government of Somalia remains unable to assert control over its territorial waters, and piracy was one of the few ways in which Somalis were able to earn a living.

3. The government of Pakistan and Taliban fighters in the northwestern part of the country agreed to a “permanent ceasefire” on Saturday.  In exchange for agreeing to the ceasefire, the Pakistani government has offered to reinstate Islamic sharia law in the region. Many observers are concerned that the ceasefire may create a safe haven in Pakistan for Taliban and al Qaeda fighters could regroup.

4. Latvia’s Prime Minister, Ivars Godmanis, became the second victim of the global financial crisis on Friday, as he was forced to resign from office amid widespread popular protest. Like the government of Iceland before it, the Latvian government had been forced by the global economic downturn to launch a series of austerity measures imposed by the International Monetary Fund. A number of other countries in Central and Eastern Europe, including Hungary and Ukraine, have already implemented structural adjustment programs. Several others, including Serbia, Romania, Lithuania, and Estonia, are also seen as vulnerable.

5. The conflict in Sri Lanka continues. After the government had made significant advances into rebel territory over the past several weeks, Tamil Tiger rebels responded on Friday night with a surprise air raid on the Sri Lankan capital, Colombo. Initial reports indicated that at least 42 people were injured in the attack. An estimated 70,000 people have been killed since the civil war began in 1983.

Five Stories You Might Have Missed

The U.S. Presidential elections are in their final days, and the candidates are busy touring swing states in last minute pitches to undecided voters.  Early voting is already underway, and some 20 million people have already voted.  Most analysts are projecting a win for Obama, but McCain is still in position to pull off the upset.  Tuesday is the big day, so all Americans should be sure to exercise their right to vote!

In other news from around the world:

1.  The conflict in the Democratic Republic of the Congo, which reignited in late summer after the rebel leader Laurent Nkunda announced his intention to cancel the ceasefire under which the country had effectively been operating since 2002.  The latest round of fighting, centered in the eastern part of the country known as North Kivu, has sparked a humanitarian crisis of epic proportions, as an estimated one million refugees have fled their homes.  On Wednesday, a new ceasefire was announced after four days of intense fighting, and now the European Union is considering sending troops and aid to the Congo.

2. Ukraine became the latest victim of the global financial crisis on Friday, as its parliament was forced to adopt a package of legislation imposed by the International Monetary Fund as a condition for receiving an emergency $16.5 billion loan from the international organization.  Ukraine’s turn to the IMF for a rescue package follows on the heels of similar moves in Iceland and Hungary, signaling the wide scope of the crisis.  More generally, the Eurozone seems to be facing falling inflation and rising unemployment—with some national variation—as the economic crisis expands.

3.  The global economic crisis is also being felt in China, where projections for annual GDP growth have been cut from 12 percent to 9-9 percent.  Chinese companies are slashing production output, as worldwide demand slides.  Some larger Chinese companies are cutting production by as much as 50 percent, while smaller companies are going out of business altogether.  In an effort to rekindle the economy, the Chinese government announced it would cut the benchmark one-year deposit rate

4.  A U.S. raid into Syria last week has provoked a sharp response from within Syria, as protestors demonstrated against the action.  Syria’s foreign minister condemned the move as an act of “criminal and terrorist aggression.”  The U.S. claimed that Syria had been home to foreign fighters moving into Iraq, saying hat the raid had successfully targeted Abu Ghadiya, who U.S. officials described as “one of the most prominent foreign fighter facilitators in the region.”  As a result of the attack, U.S.-Syrian relations have soured and anti-U.S. demonstrations forced the temporary closure of the American Embassy in Damascus

5.  In another development highlighting the continuing efforts of the Russian government to reassert itself on the global stage after the Cold War, Russia is negotiating the construction of a new naval base in Libya.  Russia envisions the base as a necessary counterbalance to American interests in the region.  In recent weeks, Libya has increasingly opened its economy to foreign investment and has dramatically improved relations with the West.

Five Stories You Might Have Missed

The American presidential race is finally entering its final stretch.  With a little more than a week left in the campaign, both candidates are sharpening their attacks against one another, and the news coverage has largely devolved into a horse race in Pennsylvania, Colorado, and a handful of other tossup states.  From a global perspective, perhaps the most interesting story from the campaign trail this week was Joe Biden’s warning that the next American president would be tested early in his new administration.  The McCain campaign seized on the comments, quickly producing an apocalyptic commercial warning of the dangers facing the United States and hinting that McCain was the only candidate who could successfully navigate those dangers.  Despite the gaffe, Obama seems well-poised to win the presidential election next Tuesday.

But enough on the American election.  Here’s five stories you might have missed with all the attention on the race for the presidency: 

1.  Responding to sharp declines in global oil prices over the past few weeks, the Organization of Petroleum Exporting Countries (OPEC) announced it would cut its output by 4.5 percent from November.  On Friday, oil fell to $62.25 per barrel, its lowest level since June 2007 and a sharp decline from the nearly $150 per barrel over the summer.  Oil prices have fallen dramatically as a result of the global financial crisis, which has resulted in sharp declines in demand for oil.

2.  A 43-nation meeting of Asian and European leaders on Friday met to consider a range of issues, including a new system of global financial regulation.  As home to the world’s largest foreign currency reserves, China has come under increasing pressure to help address the global financial crisis.  So far, China has avoided making any public commitments regarding the crisis.  But according to Charles Grant, director of the London-based Centre for European Reform, “All countries with current account surpluses have people knocking on their doors at the moment and China with the biggest surplus will be the most courted.”  A global summit scheduled fro next month will address global financial regulation in greater detail, and China looks to be a key player there.

3.  Israel appears to be headed towards early elections as Tzipi Livni, who replaced Ehud Olmert as leader of the governing Kadima party, was unable win the support of the ultra-orthodox Shas party.  The differences between the two parties center largely on the status of Jerusalem in negotiations with the Palestinians.  Shas demands that Jerusalem be the undisputed capital of Israel and maintains that the status of Jerusalem is off limits in negotiations.  But by refusing to even consider the status of Jerusalem as part of a broader settlement of the Israeli-Palestinian dispute, Shas’ position undermines the likelihood of a negotiated settlement.

4.  Iceland became the first western country since the United Kingdom in 1976 to seek a rescue package from the International Monetary Fund.  Facing an economic contraction as large as 10 percent next year and a decline in currency value of 70 percent during the crisis, the government of Iceland requested a $2 billion loan from the IMF as part of a larger $6 billion rescue package provided by other Nordic countries.   As part of the IMF package, the government of Iceland will have to impose severe financial restrictions, including curtailing government spending with a goal of balancing the structural budget in the medium term.

5.  The government of Mexico has pushed through changes in the country’s oil sector intended to make the country energy independent and halt declining production.  The changes would grant greater flexibility to Pemex, the national oil company of Mexico but imposes strict limits on the ability of private or foreign oil companies from tapping Mexican oil resources.