News of the week
Western countries about to bomb ISIS targets in Syria
Three western countries are planning air strikes in Syria. The UK, France and Australia have already been carrying out air strikes against the Islamic State (ISIS) in Iraq and now want to extend their missions to Syria. France began flying reconnaissance missions over the country this week. Prime Minister Manuel Valls said in an interview with CNN that he will address Parliament next Tuesday to announce “the objectives of France and that there will be strikes”. He said without destroying the terrorist group there will be no end to the war in Syria.
The government of the UK is expected to draw up proposals within the next few weeks for missile attacks in Syria. Parliament could give a mandate for the military operation in October, according to media reports. Australia’s Prime Minister Tony Abbott announced after a cabinet meeting on Tuesday that Australian war planes will carry out air strikes inside Syria. The decision was in response to a formal request from Washington, he said.
Sources: CNN, Telegraph, BBC, Huffington Post, The Star
World Bank message to US Federal Reserve
Kaushik Basu, the chief economist of the World Bank, argues that the US Federal Reserve may trigger “panic and turmoil” in emerging markets, should it raise interest rates soon. Basu told the Financial Times: “The world economy is looking so troubled that, if the US goes for a very quick move, I feel it is going to affect countries quite badly.” China’s economic troubles have had an impact on the world economy, and other emerging markets are facing a downturn as well.
However, central-bank leaders from Indonesia, Mexico and Peru said they preferred the Fed to raise rates soon. In their eyes, investors are nervous about how the Fed will decide and will regain confidence once the Fed’s policy becomes clear.
In the mean time, the rating agency Standard and Poor has downgraded its assessment of Brazil’s sovereign debt, and the financial-sector giant JPMorgan has removed Nigeria from its emerging-market bond index. Policy makers from both countries issued statements, trying to reassure international investors.
Least developed countries are affected by the downturn too. Zambia’s currency, the kwacha, has depreciated dramatically in view of reduced copper exports to China. Against the dollar, it has lost about 30 % of its value since the beginning of the year. Major mining companies have announced that they are suspending production. Copper exports account for about 70 % of Zambia’s export earnings and more than a quarter of the country’s government revenues.
That the world economy is not growing as fast as expected was acknowledged by the finance ministers from the G20 countries when they met in Ankara. They warned that policy makers must not overly rely on low interest rates and suggested that more investments in infrastructure would be better in terms of fostering growth. The ministers pledged not to manipulate their currencies’ exchange rates with the goal of gaining competitive advantages. The annual meeting of the G20’s top leaders will be held in Turkey in November.
Sources: FT, Deutsche Welle
Thai military leaders reject constitution, pushing back elections
Thailand’s military-appointed “National Reform Council” has rejected the draft for a new constitution, so general elections cannot be held before the middle of 2017. After several delays, they had been envisaged for September 2016. The draft for the new constitution was written after last year’s military coup by a committee the generals had appointed. However, strong disagreement surfaced in recent weeks.
Critics, especially from within the military, opposed a clause to establish a “crisis panel”. This panel would have comprised 23 individuals and would have been empowered to intervene in the event of any political impasse that might result in violence. The panel would have been able to exercise power over the executive and legislative branches.
As a result of Sunday’s decision, the ruling junta will stay in power for at least 22 more months. According to the government’s new roadmap, a new committee will be appointed and start drafting a new charter in November. The process will take six months, followed by four months to prepare a referendum. Drafting laws to implement the constitution will take another six months, followed by another four months needed to prepare the general election.
Sources: Bangkok Post, Reuters, BBC
Comedian best placed to become Guatemalan president
In the first round of Guatemala’s presidential elections, Jimmy Morales, a TV comedian, won about a quarter of the votes, more than any other candidate. Since no candidate won more than 50 %, there will be a run-off election in October.
Morales has no political experience. In his campaign he emphasised that he is not corrupt and has not held any public office. However, he enjoys the support of former military leaders and right-leaning business groups. The same constituencies previously supported Oscar Pérez Molina who resigned as president shortly before the vote was held. Molina is accused of corruption and will be put on trial.
It is not clear yet who will be Morales’ competitor in the run-off elections. Manuel Baldizón and Sandra Torres both received close to 20 % of the votes in the first round. Baldizón is a business leader and a former supporter of Molina. Torres is a left-leaning former first lady. She was involved in several social programmes that were launched when her husband, Álvaro Colon was president from 2008 to 2012.
Sources: New York Times, BBC, taz
These items were compiled by Hans Dembowski and Katja Dombrowski on the basis of international media coverage.