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The European Central Bank’s governing council is meeting against a backdrop of an improving eurozone economy. The ECB kept its benchmark interest rate at a record low 0.05 per cent and its deposit facility at -0.2 per cent on Wednesday and is expected to continue its €60bn a month landmark quantitative easing programme.

But it is not all optimism in the eurozone. The ECB’s bond buying has helped push German 10-year bund yields towards zero raising concerns about the potential for distortions in financial markets, while jitters over the growing possibility that Greece could default on a debt repayment provides a great deal for ECB President Mario Draghi to discuss at his press conference, which starts at 1.30pm UK time. By Ralph Atkins and Lindsay Whipp

 

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Immersed in thoughts about whether Greece will strike a last-minute deal with its foreign creditors to avoid a debt default, I found myself on Tuesday evening outside an Athens souvenir shop selling a T-shirt with this slogan:

To be is to do – Plato
To do is to be – Aristotle
Do be do be do – Sinatra Read more

Listen to the International Monetary Fund and you are liable to think it is giving out two contradictory messages. Last week Christine Lagarde, head of the fund, said the world was at risk of falling into a “new mediocre” and global growth was “not good enough”. Today her chief economist, Olivier Blanchard, is keen to stress medium term growth rates are “not the end of the world” and “there is no reason for doom and gloom”.

Bizarrely, these messages are not the contradiction they seem. How so – and what are the other four things to note in the IMF’s April 2015 World Economic Outlook. Read more

By Gideon Rachman
Last week, the British election went nuclear. Michael Fallon, a Conservative and the UK’s defence secretary, made the emotive claim that a Labour government might “stab the UK in the back” by refusing to fund the renewal of Britain’s Trident nuclear deterrent.

In the lead-up to Hillary Clinton’s long-awaited announcement that she is running for president, potential Republican rivals for the presidency and GOP party leaders have had plenty of time to formulate an opposition strategy that has quickly coalesced around a single meme: “Stop Hillary”.

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Iran and Saudi Arabia wage proxy war in Yemen
Ben Hall is joined by Roula Khalaf and Najmeh Bozorgmehr to discuss the civil war in Yemen, and the growing hostility between Iran and Saudi Arabia, who are backing different sides in the conflict.

This week Greece finally put a figure on its demand for war reparations from Germany – €278.7bn as compensation for the death and destruction visited by the Nazis during the war. Opinion polls suggest that this gambit is widely popular in Greece. But by bringing this issue up now, the Greek government may have made a serious miscalculation that could contribute to the country’s disorderly exit from the euro.

Greece’s reparations demand comes at a time when the government in Athens is running out of money and its creditors are running out of patience. The country is likely to need a new bailout package this summer. By putting the reparations issue on the table, the Greeks may feel they gain extra leverage – as well as the possibility that they will actually get debts written off, rather than simply extended. But they have also significantly raised the risk that the Germans will simply walk away from the table altogether – forcing Greece into a default and a disorderly exit from the euro. Read more

A blizzard of anti-western conspiracy theories has hit Turkey in recent months.

President Recep Tayyip Erdogan last month suggested that the western forces who invaded the Gallipoli peninsula during the first world war still wanted to make the country a second Andalusia — the Spanish region that Christians reconquered from Muslims.

Other recent theories in the pro-government press include the idea that the Islamic State of Iraq and the Levant is a foreign “project” intended to foil the rise of Turkey. So too were the 2013 anti-government protests and a subsequent corruption investigation into Mr Erdogan’s circle.

Some analysts say Mr Erdogan’s rhetoric is an attempt to shore up the nationalist vote ahead of critical elections in Turkey on June 7 — the run-up to which has become increasingly tense. Read more

By Gideon Rachman
Is military and ‘soft power’ enough to make up for relative US economic decline? Read more

By Gideon Rachman

Amid all the talk of a new cold war, it is easy to forget that there are parts of the world where the cold war never ended. A couple of weeks ago I visited one of them. On the south side of the demilitarised zone that divides the Koreas, tourists use telescopes to stare into the North . A giant flag from the Democratic People’s Republic of Korea, as it styles itself, flutters in the breeze. Read more

By Gideon Rachman
Rome fell. Babylon fell. Hindhead’s turn will come.” George Bernard Shaw’s bon mot in Misalliance was a reminder to British theatre audiences in 1910 that all empires eventually decline and fall. The fact that Hindhead is an English village was a light-hearted cloak for a serious point.

  • From Brazil to China, Russia and beyond, developing economies that gorged on debt in recent years are suffering their biggest capital outflows since the financial crisis
  • Poland’s perpetually delayed entry into the eurozone is becoming a thorny issue in an increasingly combative presidential election
  • The dark clouds have lifted after Saturday’s fraught elections in Nigeria, but the winner, 72-year-old General Muhammadu Buhari, faces a daunting economic task
  • Just 15 months after it was founded, Podemos now leads the polls in Spain and has changed European politics. Can the grassroots party win power – or is its bubble about to burst?
  • In an example of the gamesmanship that has overtaken the Iran nuclear talks, with just hours to go US president Barack Obama told negotiators to ignore the deadline

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The publication of “The Second Machine Age” by Andrew McAfee and Erik Brynjolfsson last year sparked a debate over the impact of technological change on the workplace. The spread of computers, alongside the high unemployment rates experienced by many rich countries during the Great Recession, have raised fears that advanced economies may be heading for an age of mass joblessness. Capital is set to replace labour on an unprecedented scale – so the argument goes – squeezing wages while entrepreneurs and shareholders enjoy ever fatter profits. Read more

Rush to join China-led bank embarrasses Washington
It seems odd that an international bank for building roads and airports in Asia should become a yardstick for the rise of China as a global power and of the relative decline of the US. But that is what Beijing appears to achieved with its Asia Infrastructure Investment Bank. Some of Washington’s closest allies have signed up even though it had lobbied furiously to dissuade them from doing so. Ben Hall discusses the development with Alan Beattie and Ed Luce.

Manuel Valls, French prime minister, hit the nail on the head when giving his explanation for the resounding defeat suffered by his Socialist party in Sunday’s local elections.

“With their vote, the French have expressed their anger, their fatigue with life that is too difficult – unemployment, taxes and a high cost of living,” said Mr Valls (above). Read more

  • As the US moves closer to a nuclear deal with Tehran that could end decades of estrangement, it simultaneously finds itself scrambling to curb Iran’s influence in the Middle East
  • The contours of Russia’s new national ideology have become clear in the Ukraine crisis; its foundations are nostalgia for a glorious past, resentment of oligarchs, materialism and xenophobia
  • Despite being engulfed in news about corruption, Latin America is showing advances in strengthening institutions and holding the powerful to account
  • Uzbekistan president Islam Karimov has upgraded his country from pawn to rook as central Asia’s chess master uses the rivalry between China, Russia and the US to its advantage (Foreign Policy)
  • The provision of an hallucinogenic drug to inmates in the middle of the rain forest reflects a continuing quest for ways to ease pressure on Brazil’s prison system (New York Times)

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The scramble by European countries to join China’s new Asian Infrastructure Investment Bank is a powerful symbol of the eastward shift of global power

Soldiers of fortune from apartheid-era South Africa that inspired the Hollywood thriller ‘Blood Diamond’ are starring in Nigeria’s attempt to flush out Boko Haram terrorists

Saudi Arabia’s military intervention in Yemen’s civil conflict has turned up the heat on a simmering cold war between regional Sunni Arab states and their Shia rival, Iran

If the cries of ‘Je suis Charlie’ were sincere, the western world would be convulsed with worry and anger about the Wallström affair, argues Nick Cohen (The Spectator)

Chad’s strongman president, Idriss Déby, says Nigeria is absent in the fight against Boko Haram as Chadian troops defend Nigerian territory from the extremists (New York Times)  Read more

 

Militia men loyal to Yemen's President Abd-Rabbu Mansour Hadi loot the barracks of the Special Forces in Aden

As Saudi jets launched bombing raids against Yemeni rebel targets, escalating another war in the Middle East, the Sunni world showed remarkable unity. A coalition of the willing — all Sunni — was assembled, stretching from Egypt to Pakistan. Supporters and critics of the Saudi regime alike agreed that it was time to teach Shia Iran.

And yet, Sunni communities should have little cause for satisfaction. It may be understandable that Riyadh considers Iranian backing for advancing rebels in Yemen as a step too far – Yemen is the Saudi backyard after all. But however large the Saudi-led coalition, and however united in its resolve to confront Iran, the latest intervention in Yemen is unlikely to save the country from sliding into all out civil war.

Indeed, Yemen is turning into another worrying case of Saudi-Iranian proxy war, a heightening power struggle that has engulfed other nations in the region and spread mayhem throughout the Middle East. Read more