Global economy

  • Borzou Daragahi reports on how the violence in Syria, Iraq and Lebanon is merging into a single sectarian war whose Shia and Sunni protagonists are receiving support from regional powers “amid a dizzying and ever-changing cast of militia leaders, jihadi adventurers, sectarian politicians and rogue gangs dressed up as political groups”.
  • As for the conflict in Ukraine, Courtney Weaver discovers that dozens of Chechen fighters have joined pro-Russian separatists in the east of the country, claiming to have been ordered there by Chechen leader Ramzan Kadyrov. “They’ve killed one of our guys and we will not forget this,” said Magomed, a 30 year-old Chechen fighter with a wolf tattooed across his chest. “We will take one hundred of their lives for the life our brother.”
  • On the European front, “the outcome of the European elections (at home and elsewhere) paves the way for Italy to play an active role in Europe,” says the Bruegel think-tank as it chews over the success of Matteo Renzi and the Democratic party. But now that Renzi has a mandate, “Italy should play a role and put itself forward as a decided leader in the project of more European integration.”
  • One for a quiet moment and a cup of coffee: The Guardian has gone deep into “enemy territory” and produced an outsider’s guide to the City of London. “I am trying to understand the culture of the City; to find out whether those who work there have learned the lessons of the crash of 2007-08, and if the City can ever be made ‘disaster proof’,” writes Stephen Moss.
  • On that note, Martin Wolf ponders the crisis-prone nature of capitalism and asks what governments must do to minimise the damage without having to resort to the comprehensive measures needed after the last crash.

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At a recent show at the British Library in London showcasing pre-Columbian gold, a Colombian diplomat noted that his countrymen were “very concerned about their image and public relations.”

Until a decade ago, Colombia was mostly associated with guerrillas and drug kingpins such as Pablo Escobar. All of that has changed.

But the country still suffers from a public relations failure at the local level. As Colombia’s image abroad continues to improve, thanks in large part to the main players in the current election campaign, the view Colombians have of their own nation is growing ever more negative, partly because of those same men. Read more

Containers sit stacked on a cargo ship berthed at Qingdao Port in Lianyungang, China

According to the latest estimates from the International Comparison Program, hosted by the World Bank, China is poised to overtake the US as the world’s largest economy later this year, toppling it from a perch it has held since 1872.

That is several years ahead of all previous estimates and reflects just how much more important the Chinese economy is now to the rest of the world. Read more

Gideon Rachman

The news that Greece is returning to the markets as an issuer of sovereign-debt is symbolic of the resurgence of interest in Europe among international – and particularly US – investors. As ever there is a circular logic in play here.

Because most investors no longer fear a collapse of the euro, Greece can come back to the markets. And the sight of Greece returning to the markets will confirm the prejudices of those who argue that the crisis in the eurozone is over.

But just as international investors were, in retrospect, too panic-stricken about Europe in 2012 – I suspect they are probably too relaxed now.

Greece’s return to the markets is one striking sign of this. Another is the fact that 5-year Spanish bonds now have a lower yield than their US equivalent – despite the fact that Spain is barely growing, that its budget-deficit continues to bust EU rules, while unemployment is more than 25 per cent. Read more

Could the UK go it alone in the cut-throat world of global trade?

Iain Mansfield, the 30-year-old British diplomat awarded a €100,000 prize by the eurosceptic Institute of Economic Affairs for his plan for a British exit from the EU, certainly thinks so. At the centre of his plan is the case for the UK to go it alone in negotiating trade agreements with big players like China and the US. Read more

Imagine you are the boss of a multinational company with a long-planned meeting with an authoritarian leader of a vital trading partner. Then just before the scheduled get-together, he decides to invade one of his neighbours. What do you do?

That, roughly, was the position of Joe Kaeser, chief executive of Germany’s Siemens, as he decided to go through with a meeting with Vladimir Putin this week at the Russian president’s nineteenth century country residence on the outskirts of Moscow. Read more

Here is an addendum to our post on Friday on what might come next for trade sanctions on Russia. I spent part of the weekend playing with the data on MIT’s brilliant Observatory of Economic Complexity. It is a fabulous place for visualisations of trade data. The underlying data are a few years out of date. But the overall trend still holds true and so these interactive charts on Russia seem worth sharing given the current debate. Read more

By Gideon Rachman
In 1996 a friend of mine called Jim Rohwer published a book called Asia Rising. A few months later, Asia crashed. The financial crisis of 1997 made my colleague’s book look foolish. I thought of Jim Rohwer (who died prematurely in 2001) last week as a I listened to another Jim – Jim O’Neill, formerly of Goldman Sachs – defending his bullish views on emerging markets in a radio interview.

David Pilling

AFP

I had the privilege this week of listening to a lecture by Hans Rosling, professor of global health at Sweden’s Karolinska Institute. Many will have seen his engaging performances on Youtube or in Ted talks . He’s the one with the endearing Swedish accent – he says “yust” for “just” – and the animated charts that show nations as variously sized, coloured bubbles moving dramatically over time. He also uses a pointer with a little hand attached to the end.

His message is basically an optimistic one: that poor countries are rapidly converging on richer ones as their birth rates fall to sustainable levels and as their victory over preventable disease and premature death allows them to advance economically. Most of the world is now between what he calls “light bulb” and “washing machine” – in other words advancing up the lower rungs of the “middle classs”. Read more

By Gideon Rachman
Faced with a dangerous political threat, governments the world over tend to place their faith in the same magic medicine – economic growth. When world leaders try to address the roots of terrorism, for example, they instinctively assume that prosperity and jobs must be the long-term answer. And when a regional conflict threatens to get out of control – in east Asia or the Middle East – the standard political response is to call for greater economic integration. From Europe to China, governments place their faith in economic growth as the key to political and social stability.