By Imants Liegis, Latvia’s ambassador to Hungary
This Saturday marks the 25th anniversary of the world’s biggest and longest, peaceful, mass demonstration.
On August 23, 1989, some 2m Latvians, Estonians and Lithuanians held hands to form a human chain, 600km long, linking all three capital cities, from Tallinn, Estonia, in the north, via Riga in Latvia to Vilnius in the south-west – at a time when all three nations were still forcibly incorporated into the Soviet Union.
Dubbed the Baltic Way, this long thin line of humanity finally linked up at 7.00 that evening. Read more
By Dalibor Rohac of the Cato Institute
In the weeks leading to the Annual Meetings of the International Monetary Fund (IMF) and the World Bank last weekend, Christine Lagarde, the managing director of the Fund, has been making a lot of headlines. She announced that the IMF would push for more gender equality in labour markets around the world, suggested that the IMF could help protect the planet from environmental damage by promoting reforms of energy subsidies, and urged European countries to move towards a fiscal union in order to help eurozone limit the severity of future financial crises.
That is a lot of ground to cover. While each of these proposals should be discussed on its own merit, jointly they are symptomatic of the spectacular mission creep that characterises the past 40 years of the organisation’s existence. Read more
Brazil has been putting its weight about again, this time throwing a spanner into the IMF’s efforts to secure an €11bn bailout for Greece from the eurozone countries. Even if Brazil’s economic weight is not what it used to be, it seems it can still rile the old world when it feels like it.
So for the benefit of beyondbrics readers, here is a timeline of Brazilian bolshiness: Read more
As Poland’s sluggish economy shows signs of being on the road to recovery is it time for investors to re-discover an interest in the country’s equity market? Read more
Time for collective action on bad debt in some of the more vulnerable economies of central and eastern Europe? The experts at Raiffeisen International Bank certainly think so, at least for Ukraine, Hungary, Slovenia and the Balkans. Nearly five years after the 2008 crisis, it’s time for “joint efforts” to tackle non-performing loans, they say in a report.
As CEE’s second-biggest lender, Raiffeisen is hardly a neutral observer. But given that rates of non-performing loans run to 20 per cent or more in some southeast European states, it’s difficult to see solutions without greater coordination and cooperation. Read more
By Otilia Simkova of Eurasia Group
In the midst of the mayhem over Cyprus, some observers of Europe’s banking crisis noticed another small country – Latvia.
The Baltic country made headlines when it applied to join the eurozone by January 2014, pushing ahead despite doubts about the benefits of accession. Now it risks making news again for another reason: non-resident deposits. Foreign money, especially from Russia, has been trickling in. Read more
By Dalibor Rohac of the Cato Institute
Slovenia, once celebrated as the poster boy of central and eastern Europe, is now widely perceived as yet another sick man of the eurozone. With bond yields close to those of Portugal and a Moody’s downgrade for one of the country’s largest banks, rumors of an imminent bailout abound — though vehemently denied by Alenka Bratušek, Slovenia’s prime minister.
To solve their problems, Slovenians should look north, as their woes resemble the afflictions facing the Baltic states only four years ago. Read more
Emerging market equites rose sharply on Monday lifted by the general relief at the 11th-hour Cyprus rescue deal.
Even though key details still need to be decided, such as when the Cyprus banks actually re-open, investors judge that the settlement will be enough to reassure market participants – except, of course, for those wretched depositors who stand to lose a chunk of their savings. Read more
By Sergey Karaganov
When the eurogroup of finance ministers first issued its ultimatum to Cyprus demanding a levy on deposits – requiring their de facto partial confiscation – many Russians were indignant. Even Russia’s leaders called the Eurogroup demand absurd, non-professional, unfair and dangerous.
The latest rescue plan agreed on Sunday by the eurogroup, which also involves the partial confiscation of deposits, changes nothing. Russians are angry – and have every right to be. Read more
By Jochen Wermuth of Wermuth Asset Management
In the eyes of a simple German sitting with friends around a table with a good beer, pretzel and Weisswurst sausage, operating on pure speculation and gross exaggeration and unfounded prejudices, much of the cash sitting in Cypriot bank accounts is presumed to belong to people who paid ridiculously low taxes on this income, might not have paid any taxes on this income, or earned the money from ill-gotten gains received from bribes or other criminal activities.
So the simple German wonders: “Why should I be bailing these guys out?” Read more
By Timothy Ash of Standard Bank
Greek Cypriots must be thinking that with friends like these (the EU and Russia, both seeking to extract their pound of flesh for any bail-out), who needs enemies?
Well, what if Cyprus begins to think outside the box, and what if it goes to its erstwhile enemy, Turkey, for assistance? Read more
Mikhail Prokhorov, the billionaire Russian businessman and politician, reckons the Kremlin should help rescue Cyprus from financial collapse. But Vladimir Putin does not appear to be listening. Here’s why. Read more
Like Russian ones, many Ukrainian companies do business through offshore special purpose vehicles or holding companies registered in Cyprus. By some estimates, billions of dollars with Ukrainian roots flow through Cyprus into offshore tax havens each year. And large portions of this – some $17bn since independence in 1991 – have made their way back into Ukraine through the Cyprus conduit, which is, in fact, the largest contributor of foreign direct investment in the Ukrainian economy.
But this does not mean that most Ukrainian companies exploiting the Cyprus tax loophole actually stash their cash there. And if they don’t, exposure will be limited, analysts say. Read more
The Cyprus crisis has angered the island’s bank depositors, rattled markets and prompted furious arguments about the sacrifices involved in the planned EU/IMF-led rescue.
Trouble all around, not least among the banks’ many Russian clients. But there is a silver lining: Russia’s president Vladimir Putin now has a golden opportunity to impress the world with his generosity and far-sightedness. He should volunteer to cover Russian depositors’ losses – but only on condition they identify themselves and their sources of funds. Moscow would get kudos for contributing to a high-profile international rescue, supporting its citizens, and promoting financial transparency. What could be better than that? Read more
It’s easy to see why Russell Indices, the US index and fund management company, is relegating Greece from its developed economies’ league. About time too. But why is Russell moving Greece into its emerging markets’ list. Emerging? Submerging, more like.
Emerging markets are the fast-growing economies of the world. So much so that many economists have stopped talking about EMs and refer instead to fast-growth economies. Jim O’Neill, the Goldman Sachs executive who invented the Brics, calls these countries “The Growth Map”. Read more
Any hope that the recent global rally, in which emerging market have participated so enthusiastically, might prove resistent to further shocks from the eurozone has been rudely dispelled.
It’s a long way from Madrid to the South China Sea but the impact of the financial scandal that’s embroiled prime minister Mariano Rajoy but the affair is making waves. The Hang Seng index was down by more than 2 per cent in late trading and the $-denominated MSCI Asia ex-Japan index was nearly 1 per cent down. Read more
At last, a breath of optimism on central and eastern Europe from one of the more cautious economic forecasters.
The European Bank for Reconstruction and Development on Monday predicted that growth in the region would increase slightly from 2.6 per cent in 2012 to 3.1 per cent this year. More significantly, given the EBRD’s past warnings, the bank is saying that risks of the eurozone triggering another CEE financial crisis are declining. If the bank’s right, that’s good news. Read more
Last year’s debate between Paul Krugman, the renowned Nobel-prize-winning American economist, and little Estonia produced plenty of drama.
Now, it’s going to be an opera. Read more
Economic growth of 3 per cent in the eurozone? It sounds like a statistical error at a time when the common currency area is braced for a 0.4 per cent drop. But Estonia is set to record a 3 per cent expansion in 2012, nearly double the government’s forecast at the start of the year. And officials expect another 3 per cent in 2013.
Much of this is a rebound from the extra-severe shock that passed through Estonia and the other two Baltic states of Latvia and Lithuania in 2009 when Estonian GDP dropped by a cumulative 18 per cent. Read more
The OECD Economic Outlook, published on Tuesday, has rung a few alarm bells for developed economies, as the FT reports.
But what about emerging economies? What’s the impact on them from the eurozone “negative feedback loop”, as the organisation puts it? Read more