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Posts Tagged ‘Turkey’
Friday, February 6th, 2009
From www.reuters.com:
Fitch sees more E.Europe downgrades
Ratings agency Fitch expects more downgrades in emerging Europe after cutting Russia`s rating this week, it said on Thursday, warning political risk was a mounting threat to creditworthiness in the region, Reuters reported.
Head of emerging European sovereigns Edward Parker said that with nine countries in the region on negative outlook and the financial crisis deepening, creditworthiness in a string of countries was deteriorating.
“I would expect that we would see more negative ratings actions,” he told Reuters in a telephone interview.
Parker said deepening economic pain and rising unemployment across the region heightened the risk of political instability and governments failing to take austerity measures out of fear of rising unrest.
“Clearly, there is going to be a rise in political risk,” he said. “Obviously, political shocks by their nature are often unpredictable but as well as that we would be particularly concerned over the risk of governments failing to pursue prudent and responsible policies.”
He would not say which country would likely be next to follow Russia, which on Wednesday suffered its first rating cut from Fitch in a decade on slumping reserves, corporate and banking problems and economic contraction.
But he said Fitch was watching the upcoming review of Ukraine`s International Monetary Fund deal particularly carefully.
Fitch has said previously that any failure of that deal would lead to a further negative move on Ukraine, which has suffered a currency slump and deep recession as its steel industry and banking sector suffered from the global financial crisis.
In contrast, he said that Turkey might be able to survive without an IMF deal with its current rating intact. Turkey has held back from concluding an IMF deal ahead of local elections.
“We would see an IMF deal as a positive development for Turkey,” he said. “But if one was not agreed they might be able to find other financing and it would not alone be enough for negative ratings action.”
Parker said Fitch was continuing to watch Russia closely in the aftermath of its downgrade, with ongoing low oil prices, any further loss of reserves, worsening of corporate balance sheets or difficulty refinancing debt or rising political risk potentially prompting further action.
Both Russia and Kazakhstan have allowed their currencies to depreciate after spending considerable reserves defending them. Parker said those devaluations had been necessary to take into account the drastic fall in oil prices.
With the Baltic states also entering deep recessions, some analysts believe their currencies — either pegged or trading in narrow bands — might also be forced to devalue.
Parker said this would potentially be negative for their ratings.
“It would make it more difficult for companies and others to repay foreign currency debt and it would undermine balance sheets,” he said.
Currency falls in Central and Eastern Europe were already having a similar effect, he said, with the high proportion of foreign currency loans in Hungary making it more vulnerable than other regional economies such as Poland and the Czech Republic.Technorati
Tags: www.reuters.com, Anton Olff, MBS Ltd., Fitch, Europe, Russia, credit rating, unemployment, austerity, oil reserves, International Monetary Fund, steel industry, Ukraine, Turkey, Kazakhstan, Baltic States, Eastern Europe, Czech Republic
Tags: Anton Olff, austerity, Baltic States, credit rating, Czech Republic, Eastern Europe, Europe, Fitch, International Monetary Fund, Kazakhstan, MBS Ltd., oil reserves, Russia, steel industry, Turkey, ukraine, unemployment, www.reuters.com Posted in Uncategorized | No Comments »
Saturday, December 6th, 2008
This article is from one of our favorite bloggers: Mike Hewitt provides the “big picture” of individual nations relative to the global economy. The picture is not pretty for many.
http://www.financialsense.com/fsu/editorials/dollardaze/2008/1205.html
The extreme level of public debt in developed nations in particular…and these charts don’t measure corporate and private debt…portend an almost certain re-alignment of economic power. China for example, can be compared to the United States at the beginning of the 20th century. The United States is now like post World War II Britain. It may never fully recover.
The result of the changes is the full emergence of transition economies. Unburdened by massive debt, with growth oriented economies that have incorporated free market mechanisms, emerging market economies could take the lead a lot faster than previously reckoned. Indeed, that may be the “silver lining” in the current economic cloud.
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Wednesday, December 3rd, 2008
The unwritten rule regarding the blog here at MBS, Ltd., was that we would focus on macro & micro economic and business issues ONLY. We would not stray into the murky and dangerous waters of politics.
Having stated such, we decided to dive into the political pool (or cesspool?) with this entry. The motivation for this diversion is the topicality and relationship of the subject matter to BUSINESS in emerging markets like Eastern Europe, Russia, Georgia and Ukraine. The subject is NATO.
Nick Witney’s article in the Moscow Times (www.moscowtimes.ru) captures, dissects and congeals the truth like few others have recently. The fact is, NATO in its current form is an obsolete, expensive and largely political club, where military and security matters are of primary importance mainly to its newest members and aspirants.
The subject of NATO is a divisive issue here in Ukraine, as well as further east. The inclusion or exclusion of Ukraine and Georgia into the current NATO organization, will affect the economic direction of these nations.
Some argue very coherently, that a byproduct of NATO inclusion is the acceleration of political-or what we could call “philosophic integration” between new members and “the West,” as well as increased trade. The hope among the practitioners of “realpolitik” in the West, is that an expanded NATO will act as a check on Russian, as well as Asian influence and ambitions in Europe.
The main problem with this thesis is that it ignores the weakness of NATO and the shifting alliances that have resulted.
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The Death of NATO
02 December 2008
By Nick Witney
NATO, whose foreign ministers will meet Tuesday and Wednesday, is dying. Death, of course, comes to all living things. And, as NATO approaches its 60th birthday next spring, there seems no immediate urgency about writing its obituary; 60-year-olds may reasonably look forward to another decade — perhaps two or even three — of active and productive life. But perhaps it is now time for some discrete reflection on the fact that “the old man” will not always be with us.
Human institutions, like human beings, can collapse with surprising speed once they have outlived their usefulness. The dramatic dissolution of the Soviet Union stands as a reminder of what can happen to organizations when doubts take hold as to whether they still serve any real interests other than those of their own apparatchiks — and how suddenly such doubts can grow when they attempt to convert themselves into something they are not.
NATO has, of course, shown remarkable tenacity. It should have disappeared when the Soviet Union collapsed and the Warsaw Pact evaporated because its job was done. But then came the Balkan crises of the 1990s, culminating in the realization that only U.S. military power could put a stop to Serbian President Slobodan Milosevic’s ethnic cleansing of Kosovo. And then came the terrorist attacks of Sept. 11, 2001, and this kept NATO in business, spreading its activities to Afghanistan.
But NATO’s repeated demonstrations of resilience should not blind us to the fact that it no longer provides a healthy basis for the transatlantic security relationship. As long as NATO’s raison d’etre was to keep the Russians out and the United States in, NATO’s internal dynamic of U.S. leadership and European obeisance was both inevitable and appropriate.
This unbalanced relationship still has advantages for both parties. Americans may find their European allies less pliable than before, but they can at least count on the absence of any serious alternatives for what NATO should become or what it should do. Europeans can continue to avoid responsibility for their own security and to invoke the catechism of “NATO — the cornerstone of our security” as a substitute for serious strategic thought.
But each now resents the behavior of the other. Americans find their patience tried by Europeans who are free with their advice and criticism, yet reluctant to shoulder risks. Moreover, the United States learned from the Kosovo experience of “war by committee” to distrust NATO as a place to run operations, and now Afghanistan highlights the organization’s limitations as a mechanism for generating force contributions.
As for Europeans, they are unhappy about pressure to participate in a U.S.-led “global war on terror” that they regard as dangerous and misconceived. They are also averse to policies seemingly designed to antagonize their more difficult neighbors like Russia and the Islamic world.
So what is to be done? None of the ideas for another dose of NATO rejuvenation looks like the answer. All the talk of an improved NATO-European Union partnership is mainly wasted breath. “Intensified strategic dialogue in Brussels,” in practice, boils down to the chilling specter of interminable joint committee meetings at which one nation’s ambassador to NATO explains his government’s position to a compatriot diplomat who is accredited to the EU and vice-versa.
The problem is not institutional relationships between the two organizations — except in the important but narrow case of Turkey and Cyprus, which remain bent on pursuing their bilateral feud without regard to the real risks to the personnel of their allies and partners deployed in Afghanistan and Kosovo. The real problem is relations between the United States and European countries, 21 of which belong to both organizations.
Nor does the answer lie in developing an EU “caucus” within NATO. The 1990s concept of a “European Defense Identity” within NATO proved to be unviable. Since then, expansion of the alliance and proliferation of NATO “partners” has made the idea of a special collective role for EU members all the more improbable. A double layer of decision-making would only cause an already ponderous organization to seize up.
There is nothing more dramatic to be done than to focus on upgrading the EU-U.S. strategic dialogue. The annual summits need to be made more substantial, and their focus needs to shift from transatlantic, bilateral issues to aligning EU and U.S. global policies and actions. President-elect Barack Obama should keep an eye on the calendar of the European Council, which brings the EU presidents and prime ministers together four times a year, and solicit an occasional invitation. The U.S. mission to the EU should be scaled up, and the EU representation in Washington needs to become a proper embassy. The more seriously the Americans show that they are willing to take the EU collectively, the more seriously the Europeans will take themselves.
Winston Churchill once remarked that you could always count on the Americans to do the right thing — after having tried all the alternatives. In the same way, the Europeans will eventually find themselves having to speak with one voice and act as one body in the wider world, if only because a globalized world will not allow them the luxury of doing anything else. As Charles de Gaulle forecasted: “It is not any European statesman who will unite Europe. Europe will be united by the Chinese.” Only collectively can Europeans be effective contributors to global security or achieve a robust transatlantic security partnership.
As NATO enters its twilight years, the United States should encourage the EU to grow into its global responsibilities. Despite all their differences and mutual dissatisfactions, Europe and the United States know that their relationship is as close to being best friends as they are likely to see for the foreseeable future.
Nick Witney, former chief executive of the European Defense Agency, is a senior policy fellow with the European Council on Foreign Relations. © Project Syndicate |
Anton Olff
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