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The enormous influence that Cuba has gained in Venezuela is one of the most underreported geopolitical developments of recent times. It is also one of the most improbable. Venezuela is nine times bigger than Cuba, three times more populous, and its economy four times larger. The country boasts the world’s largest oil reserves. Yet critical functions of the Venezuelan state are either overseen or directly controlled by Cuban officials.
The relationship goes beyond subsidies and advantageous business opportunities for Cuban agencies. Cuban officers control Venezuelaﾒs public notaries and civil registries. Cubans oversee the computer systems of the presidency, ministries, social programmes, police and security services as well as the national oil company, according to Cristina Marcano, a journalist who has reported extensively on Cubaﾒs influence in Venezuela.
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It always seemed likely the UK’s elevated inflation rate in recent years would prove to be a temporary phenomenon. With miserably low domestic wage growth and low rates elsewhere, it was only a matter of time before UK inflation began to drop. Wedneday’s fall in consumer price inflation to 1.6 per cent leaves the Bank of England with an unfamiliar problem: what should it do when inflation is too low?
Optimists will argue that the drop in inflation is consistent with the beginnings of a productivity boom, whereby the UK finally rediscovers its supply potential. Continue reading »
The 20th anniversary of the Rwandan genocide is a time for grief, humility and reflection. The scale, speed and viciousness of the brutality – one million dead and two million driven from their homes between April 7 and mid-July – scarred not just Rwanda and its neighbours, but the conscience of a generation of western politicians and aid workers. Bill Clinton described the failure of the west to act as one of the greatest regrets of his presidency.
In Rwanda every year there is a week-long programme of events to remember the genocide and learn lessons. This year four themes seem especially important. Continue reading »
The world’s finance ministers and central bank governors gather in Washington this week for the biannual International Monetary Fund meetings. While there will not be the sense of alarm that dominated the convocations in the years after the financial crisis, the unfortunate reality is that the medium-term prospects for the global economy have not been so problematic for a long time.
The IMF in its current World Economic Outlook essentially endorses the “secular stagnation” hypothesis, noting that the real interest rate necessary to bring about enough demand for full employment is likely to remain depressed for a substantial period. This is made manifest by the fact that inflation is well below target throughout the developed world and is likely to decline further this year. Without robust growth in, and greater demand from, these markets, growth in emerging economies is likely to subside. That is even without considering the political challenges facing countries as diverse as Brazil, China, South Africa, Russia and Turkey. Continue reading »
Twenty years on, the debate about the Rwandan genocide in which up to a million people lost their lives still reverberates. The question of why Rwandans did this to each other and why the world stood by remains bitterly contested.
What is not in doubt is that over a period of 100 days the most widespread horrific massacre of modern times took place as the victims perished, mostly killed by hand with machetes. And even as that history is still fought over, an even angrier, more contemporary dispute rages about the nature of today’s government that first took power in the genocide’s aftermath. Continue reading »
The numbers are in for first quarter performance for global stocks and bonds. Taken at face value, the price signals emitted by public markets contrast quite a bit with what they were predicting last year for the global economy. Yet the economic and policy realignments implied by markets may well fall on deaf ears when it comes to immediate and durable changes in the behaviour of key economic actors.
Judging from their absolute and relative performance, last year’s markets correctly signalled a better growth trajectory for advanced countries, overall and compared to their counterparts in the emerging world – the most notable contrast pitting enthusiasm for a Japanese rebound against Chinese growth pessimism. Continue reading »
After prolonged debate, China’s long anticipated “New-Type Urbanisation Plan 2014-2020” was unveiled in mid-March. There is much to be applauded. It rightly focuses on improving the quality of urbanisation by reining in wasteful investments, meeting the social needs of migrant workers, addressing environmental concerns and developing new financing sources. The ultimate target is that by 2020 China will be 60 per cent urban compared with 54 per cent today.
—But its flaw comes from a seemingly reasonable stipulation that the size of the largest cities should be “strictly controlled” and labour migration should be targeted at the smaller and medium-sized cities. This restriction not only violates a central theme of the leadership’s Third Plenum in Beijing last November — that the market and not the government should play the “decisive role” in allocating resources — but it also will make it more difficult for China to achieve much needed productivity gains. Continue reading »
Last month’s judgment by the German constitutional court on the European Central Bank’s Outright Monetary Transaction indicated that the main problem with the commitment to do “whatever it takes” to save the eurozone lies in its unlimited nature, which could lead the central bank to purchase a large amount of assets of a specific country and thus take on to its balance sheet risks that could have budgetary consequences outside the control of national parliaments. The statement implicitly recognised that there would be no objections if the purchase of assets was limited rather than open-ended; and spread throughout the eurozone rather than concentrated on only one country. Continue reading »
Early next month, just a few days after President Barack Obama visits its Brussels headquarters this week, Nato will turn 65. That is normally a good age for retirement. But Vladimir Putin’s blatant actions in Ukraine have put a halt to any such thoughts. The transatlantic defence alliance is still very much needed. The question now is not whether Nato should retire, but how it should respond to the new challenges to its east.
Over the years, the alliance has evolved through various phases in response to changes in the security environment. During the first phase of its existence – let us call this NATO 1.0 – the alliance’s focus was on defending western Europe against an attack from the large Soviet-led forces arrayed against it. The North Atlantic Treaty, which was signed on April 4 1949, committed each of the 12 signatory states to regard an armed attack against one as an armed attack against all. Collective defence was the essence of Nato’s mission – and remained so until the cold war ended in the late 1980s. Continue reading »
The unsurprising consequence of the indifference of supporters of the centre left and centre right is that more extreme parties, and notably the far-right National Front, have done better than many forecast. The FN may have scored only 7 per cent on a national basis but it did well where it focused its attention. Continue reading »
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