AFTER years in economic neverland Argentina has begun waking up to reality. As we report in this week’s issue, having all but emptied its foreign reserves, the government of Cristina Fernández was forced to let the official exchange rate fall closer to the black-market “blue” rate. The peso tumbled by 20% against the dollar in the space of a few days. Will Argentina’s woes spill over into its bigger neighbour, Brazil?
Trade is likely to take the most direct knock. Argentina is Brazil’s third-biggest export market (after the United States and China), accounting for 8% of Brazilian exports. In 2013 Argentines imported $19.6 billion worth of Brazilian wares, mainly cars, equivalent to 0.9% of Brazil’s GDP.
If that does not sound a lot, Itaú, a Brazilian bank, reckons that each 10% decline in exports to Argentina could reduce Brazilian GDP growth by as much as 0.2 percentage points in 2014, with manufacturing bearing the brunt. This would matter less if Brazil’s economy...Continue reading
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JUSTIN TRUDEAU, leader of the third-party Liberals, caught everyone—including his own senators—off-guard when he declared on January 29th that the 32 Liberals in the Senate would henceforth sit as independents. Stripping senators of their official party status is the first step in his plan to end partisanship and patronage in the 105-seat, unelected second chamber of Canada’s parliament, he said. He encouraged the ruling Conservatives to follow suit. The second step will come only if the Liberals win the 2015 election, after which Mr Trudeau promises to set up an independent, non-partisan body to vet and recommend people for the prime minister to appoint to the Senate.
Ending a 147-year-old tradition of party representation in the Senate was a bold move, and a difficult one. Among the senators Mr Trudeau informed of their new status 30 minutes before his public announcement were party stalwarts named by his late father Pierre Trudeau when he was Liberal prime minister in the late 1970s and early 1980s. Yet his move has the potential to offer a way out of a bitter political debate.
What to do about the Senate has been...Continue reading
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“MUCH talk cannot be free of lies, much wealth cannot be free of illicit gain.” This old Turkish adage was tweeted by a former culture minister, Ertugrul Gunay, just as the prime minister, Recep Tayyip Erdogan, was addressing members of his Justice and Development (AK) party in the parliament on January 28th. The message is starting to reflect the public view of the embattled government. More than a month after a three-pronged corruption investigation implicating ministers, close business allies of the prime minister and, even more damningly, his family, the scandal shows no sign of abating.Mr Erdogan is trying hard to paint it all as a plot devised by Israel, America, their financiers and the foreign media. He says their plans to destroy his government and Turkey are being carried out by disciples of his former ally and “bogus prophet”, Fethullah Gulen, a Pennsylvania-based Sunni Muslim cleric, who are embedded in the judiciary and the police. But to many Turks this story is beginning to sound hollow.The reshuffling of thousands of supposedly Gulen-affiliated police, judges and prosecutors because they are part of an attempted “coup” has merely reinforced suspicions of a cover-up. Kemal Kilicdaroglu, the leader of the main opposition, the secular Republican People’s Party (CHP), is having a field day. “Was $99,999,990 transferred into Turgev’s account?” he asked in...
Last week’s story on the Spanish economy ("On the mend") said Milagros Morago, a laundress, had seen her income fall by 40% after a subcontractor took over a hospital laundry. In fact she said it had fallen by 20%. Sorry
FOR weeks, Peruvians and Chileans have talked of little else. On January 27th the International Court of Justice (ICJ) in the Hague gave its ruling on a claim by Peru to fix a new maritime boundary that would give it a large swathe of fisheries-rich ocean at the expense of Chile. Many Peruvians saw in the case a chance to set aside lasting rancour at defeat in the War of the Pacific of 1879-83, aggravated by the failure of victorious Chile to implement the terms of a peace treaty. In the event the court gave Peru something—but less than it hoped and much less than Chile feared. Even so, the ruling offers a potential opportunity for the two countries to deepen growing economic and political co-operation.
The status quo in the Pacific was favourable to Chile: although the coast swings abruptly north-westwards at the border, forming an elbow, the de facto maritime boundary ran due west close to the 18th parallel. This was the result of a 1952 treaty involving the two countries and Ecuador. From the 1980s Peru began to argue that the treaty was merely a fishing agreement and did not fix the maritime boundary. In 2008 it asked the ICJ to rule on a...Continue reading
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