September 18th - The BESA Times
Fifty-fourth Edition - Monday, 17th Every week, a complete snapshot of what happened around the world in the past seven days
Last week the tension between current and ex superpowers have become unbearably tense. New allegations from the UK government against Russia directly blaming the GRU (Russian Intelligence) was again met with denial from the Russian side. No one knows where this will lead but the most likely solution would be even more sanctions against Russia, which may lead to problems in trading based economies all around the world. On a much more subdued note, it was reported that two Russian spies (different from those allegedly involved in the Skripal assassination case) have been arrested as they were making their way to the lab in The Hague where the sample of Novichok taken from Salisbury was being tested for evidence against Russia. However, no further details were discussed and it has been reported that the two arrested were sent back to Russia. It is encouraging to see that all bureaucratic precautions are taken (at least by the British government’s side) as a criminal case of this gravity can create catastrophic outcomes if handled poorly.
Of course there were other storms brewing around the globe this week, as two major hurricanes made their way towards the US and to Philippines respectively. Luckily for US the hurricane Florence once feared to be a category four with strong winds the like of which were never seen in the area it was projected to hit, has downgraded to a category one with less destruction power. However, loss of property and even life is still forecasted as the major problem with Florence: the unprecedented levels of rain haven’t didn’t decrease. Hurricane Mangkhut, in Philippines however doesn’t have the same faith as Hurricane Florence, as it continues being classified as a category five hurricane. Five years ago Philippines suffered six thousand deaths as a hurricane with similar strength had hit the country. From the early reports it seems that lessons were learnt by both the government and the people, as the aftermath is still unknown but it is projected to be less catastrophic than the storm five years ago.
What to remember of last week's news?
The Turkish lira has suffered unprecedented dips against the euro and the dollar over the summer and the Turkish government has been trying all the tricks in the book, and those that don’t quite make it to the book, to settle markets down and stabilize the lira. With the warranted but doubted increase in policy rates, this week the currency seems calmer. The macroeconomic idea of “surprises move markets” seems to be the main theory of the Turkish government as each day a new and unexpected decision is announced. The team that was in charge of Turkey’s sovereign debt fund was fired and replaced by Erdoğan, who is known for being extremely against interest rates, calling it a tool for exploitation, just before the central bank was due to review policy. What would’ve been an otherwise expected increase of the policy rate became a pleasant surprise as Erdoğan gaining more power struck doubt in the market about the independence of the CB. With the positive movement of TL and market risk assessments, Euro has also gained some strength as Turkey is one of the greatest trading partners to the eurozone both in goods and in financial markets. The positive news and the expected increase in policy rates shouldn’t take away from the fact that many other policy changes were announced by the government and the CB. It would be wise to look back and re-study those announcements after the dust settles down from all the other breaking news going around the world.
Did you know
That EUCD (European Union Copyright Directive) has become one of the main issues of online content creators and platforms all around the world. This may be one of the few times that internet platforms and creators all around the world agreed that the steps taken by the government was short sighted and hastily produced. The fallout from the bill is unknown however memes attacking the parliament and the PMs are bountiful.
What to expect from the coming week
US primaries are on their way and the US news cycle, like the others abroad, are filled with Trump and the ill-advised advisors. New confessions and settlements are coming in everyday, and the Democrats are hoping for one testimony that will surely unhinge Trump and with it the Republican votes. The Washington Post seems to be a little too fixated on the outcome of the Supreme Court appointee Kavanaugh, which is shocking as the odds of him being denied when election is this near with Republicans controlling every part of the government is close to zero.
Much delayed “200 billion dollar tariff” is set to become reality this coming week with hopes of putting pressure on China, before high-level US-China talks that are set for later this month. Watch out for any and all news surrounding the announcement of US and the answer from China as the financial markets are bound to fluctuate. It should be noted that EU and Russia are still on China’s side in this trade war, of course what actions will actually be taken by the governments is unknown.
The EU is trying hard, to keep afloat the 2015 Nuclear Agreement. In the State of the Union talk Juncker said that an option may be switching the Iran deals from Dollars to Euro. Germany also proposed establishing a new international payment system to maintain the nuclear accord. No action has been taken yet but keeping an eye out for change is good. If everything goes smoothly with the proposed measures, the power moves made by the US may backfire, isolating the erratic Trump government and giving EU a chance to increase its political presence and leverage.
WRITTEN BY ANIL CAN KACAR
PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT
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