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Friday 10th of January 2020 |
The Deeper Story Behind The Assassination Of Soleimani Federico Pieraccini via The Strategic Culture Foundation Law & Politics |
Days after the assassination of General Qasem Soleimani, new and important information is coming to light from a speech given by the Iraqi prime minister. The story behind Soleimani’s assassination seems to go much deeper than what has thus far been reported, involving Saudi Arabia and China as well the US dollar’s role as the global reserve currency. The Iraqi prime minister, Adil Abdul-Mahdi, has revealed details of his interactions with Trump in the weeks leading up to Soleimani’s assassination in a speech to the Iraqi parliament. He tried to explain several times on live television how Washington had been browbeating him and other Iraqi members of parliament to toe the American line, even threatening to engage in false-flag sniper shootings of both protesters and security personnel in order to inflame the situation, recalling similar modi operandi seen in Cairo in 2009, Libya in 2011, and Maidan in 2014. The purpose of such cynicism was to throw Iraq into chaos. Here is the reconstruction of the story: [Speaker of the Council of Representatives of Iraq] Halbousi attended the parliamentary session while almost none of the Sunni members did. This was because the Americans had learned that Abdul-Mehdi was planning to reveal sensitive secrets in the session and sent Halbousi to prevent this. Halbousi cut Abdul-Mehdi off at the commencement of his speech and then asked for the live airing of the session to be stopped. After this, Halbousi together with other members, sat next to Abdul-Mehdi, speaking openly with him but without it being recorded. This is what was discussed in that session that was not broadcast: Abdul-Mehdi spoke angrily about how the Americans had ruined the country and now refused to complete infrastructure and electricity grid projects unless they were promised 50% of oil revenues, which Abdul-Mehdi refused. The complete (translated) words of Abdul-Mahdi’s speech to parliament: This is why I visited China and signed an important agreement with them to undertake the construction instead. Upon my return, Trump called me to ask me to reject this agreement. When I refused, he threatened to unleash huge demonstrations against me that would end my premiership. Huge demonstrations against me duly materialized and Trump called again to threaten that if I did not comply with his demands, then he would have Marine snipers on tall buildings target protesters and security personnel alike in order to pressure me. I refused again and handed in my resignation. To this day the Americans insist on us rescinding our deal with the Chinese. After this, when our Minister of Defense publicly stated that a third party was targeting both protestors and security personnel alike (just as Trump had threatened he would do), I received a new call from Trump threatening to kill both me and the Minister of Defense if we kept on talking about this “third party”. Nobody imagined that the threat was to be applied to General Soleimani, but it was difficult for Prime Minister Adil Abdul-Mahdi to reveal the weekslong backstory behind the terrorist attack. I was supposed to meet him [Soleimani] later in the morning when he was killed. He came to deliver a message from Iran in response to the message we had delivered to the Iranians from the Saudis. We can surmise, judging by Saudi Arabia’s reaction, that some kind of negotiation was going on between Tehran and Riyadh: The Kingdom’s statement regarding the events in Iraq stresses the Kingdom’s view of the importance of de-escalation to save the countries of the region and their people from the risks of any escalation. Above all, the Saudi Royal family wanted to let people know immediately that they had not been informed of the US operation: The kingdom of Saudi Arabia was not consulted regarding the US strike. In light of the rapid developments, the Kingdom stresses the importance of exercising restraint to guard against all acts that may lead to escalation, with severe consequences. And to emphasize his reluctance for war, Mohammad bin Salman sent a delegation to the United States. Liz Sly, the Washington Post Beirut bureau chief, tweated: Saudi Arabia is sending a delegation to Washington to urge restraint with Iran on behalf of [Persian] Gulf states. The message will be: ‘Please spare us the pain of going through another war’. What clearly emerges is that the success of the operation against Soleimani had nothing to do with the intelligence gathering of the US or Israel. It was known to all and sundry that Soleimani was heading to Baghdad in a diplomatic capacity that acknowledged Iraq’s efforts to mediate a solution to the regional crisis with Saudi Arabia. It would seem that the Saudis, Iranians and Iraqis were well on the way towards averting a regional conflict involving Syria, Iraq and Yemen. Riyadh’s reaction to the American strike evinced no public joy or celebration. Qatar, while not seeing eye to eye with Riyadh on many issues, also immediately expressed solidarity with Tehran, hosting a meeting at a senior government level with Mohammad Zarif Jarif, the Iranian foreign minister. Even Turkey and Egypt, when commenting on the asassination, employed moderating language. This could reflect a fear of being on the receiving end of Iran’s retaliation. Qatar, the country from which the drone that killed Soleimani took off, is only a stone’s throw away from Iran, situated on the other side of the Strait of Hormuz. Riyadh and Tel Aviv, Tehran’s regional enemies, both know that a military conflict with Iran would mean the end of the Saudi royal family. When the words of the Iraqi prime minister are linked back to the geopolitical and energy agreements in the region, then the worrying picture starts to emerge of a desperate US lashing out at a world turning its back on a unipolar world order in favor of the emerging multipolar about which I have long written. The US, now considering itself a net energy exporter as a result of the shale-oil revolution (on which the jury is still out), no longer needs to import oil from the Middle East. However, this does not mean that oil can now be traded in any other currency other than the US dollar. The petrodollar is what ensures that the US dollar retains its status as the global reserve currency, granting the US a monopolistic position from which it derives enormous benefits from playing the role of regional hegemon. This privileged position of holding the global reserve currency also ensures that the US can easily fund its war machine by virtue of the fact that much of the world is obliged to buy its treasury bonds that it is simply able to conjure out of thin air. To threaten this comfortable arrangement is to threaten Washington’s global power. Even so, the geopolitical and economic trend is inexorably towards a multipolar world order, with China increasingly playing a leading role, especially in the Middle East and South America. Venezuela, Russia, Iran, Iraq, Qatar and Saudi Arabia together make up the overwhelming majority of oil and gas reserves in the world. The first three have an elevated relationship with Beijing and are very much in the multipolar camp, something that China and Russia are keen to further consolidate in order to ensure the future growth for the Eurasian supercontinent without war and conflict. Saudi Arabia, on the other hand, is pro-US but could gravitate towards the Sino-Russian camp both militarily and in terms of energy. The same process is going on with Iraq and Qatar thanks to Washington’s numerous strategic errors in the region starting from Iraq in 2003, Libya in 2011 and Syria and Yemen in recent years. The agreement between Iraq and China is a prime example of how Beijing intends to use the Iraq-Iran-Syria troika to revive the Middle East and and link it to the Chinese Belt and Road Initiative. While Doha and Riyadh would be the first to suffer economically from such an agreement, Beijing’s economic power is such that, with its win-win approach, there is room for everyone. Saudi Arabia provides China with most of its oil and Qatar, together with the Russian Federation, supply China with most of its LNG needs, which lines up with Xi Jinping’s 2030 vision that aims to greatly reduce polluting emissions. The US is absent in this picture, with little ability to influence events or offer any appealing economic alternatives. Washington would like to prevent any Eurasian integration by unleashing chaos and destruction in the region, and killing Soleimani served this purpose. The US cannot contemplate the idea of the dollar losing its status as the global reserve currency. Trump is engaging in a desperate gamble that could have disastrous consequences. The region, in a worst-case scenario, could be engulfed in a devastating war involving multiple countries. Oil refineries could be destroyed all across the region, a quarter of the world’s oil transit could be blocked, oil prices would skyrocket ($200-$300 a barrel) and dozens of countries would be plunged into a global financial crisis. The blame would be laid squarely at Trump’s feet, ending his chances for re-election. To try and keep everyone in line, Washington is left to resort to terrorism, lies and unspecified threats of visiting destruction on friends and enemies alike. Trump has evidently been convinced by someone that the US can do without the Middle East, that it can do without allies in the region, and that nobody would ever dare to sell oil in any other currency than the US dollar. Soleimani’s death is the result of a convergence of US and Israeli interests. With no other way of halting Eurasian integration, Washington can only throw the region into chaos by targeting countries like Iran, Iraq and Syria that are central to the Eurasian project. While Israel has never had the ability or audacity to carry out such an assassination itself, the importance of the Israel Lobby to Trump’s electoral success would have influenced his decision, all the more so in an election year . Trump believed his drone attack could solve all his problems by frightening his opponents, winning the support of his voters (by equating Soleimani’s assassination to Osama bin Laden’s), and sending a warning to Arab countries of the dangers of deepening their ties with China. The assassination of Soleimani is the US lashing out at its steady loss of influence in the region. The Iraqi attempt to mediate a lasting peace between Iran and Saudi Arabia has been scuppered by the US and Israel’s determination to prevent peace in the region and instead increase chaos and instability. Washington has not achieved its hegemonic status through a preference for diplomacy and calm dialogue, and Trump has no intention of departing from this approach. Washington’s friends and enemies alike must acknowledge this reality and implement the countermeasures necessary to contain the madness.
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Earth Is Hotter Than at Any Time Since Steam Engine Was Invented @business Law & Politics |
The last five years on Earth have been hotter than at any time since the industrial revolution kicked off almost two centuries ago. That’s the conclusion of Europe’s Copernicus Climate Change Service, which published data on Wednesday showing that global average temperatures since 2015 were some 1.2 degrees Celsius (2.2 degrees Fahrenheit) higher than when steam engines began powering industry. Last year was the second warmest on record after 2016. “These are unquestionably alarming signs,” Jean-Noel Thepaut, the head of climate change monitoring at the European Centre for Medium-Range Weather Forecasts, said in an email. As wildfires continue to ravage Australia and pollution increasingly chokes millions living in cities, the new data highlights the rapid changes that the Earth’s ecosystem is undergoing as a result of man-made carbon emissions. After its invention in the 17th century, the steam engine was developed to power the locomotives and factories that proliferated during the industrial revolution. The Copernicus Climate Change Service operates a network of satellites for the European Union that collects weather, soil, air and water data. 2019 was Europe’s warmest year, marginally higher than temperatures in 2014, 2015 and 2018 Global average temperatures in 2019 were 0.6 degrees Celsius warmer than the 1981 to 2010 average Atmospheric carbon dioxide concentration increased by about 2.3 parts per million in 2019, to the second-highest level on record
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Global Economic Prospects. | Slow Growth, Policy Challenges. #WBGEP2020 @WorldBank International Trade |
Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank says in its January 2020 Global Economic Prospects. Growth among advanced economies as a group is anticipated to slip to 1.4% in 2020 in part due to continued softness in manufacturing. Growth in emerging market and developing economies is expected to accelerate this year to 4.1%. This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment. “With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth.” U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. Euro Area growth is projected to slip to a downwardly revised 1% in 2020 amid weak industrial activity. Downside risks to the global outlook predominate, and their materialization could slow growth substantially. These risks include a re-escalation of trade tensions and trade policy uncertainty, a sharper-than expected downturn in major economies, and financial turmoil in emerging market and developing economies. Even if the recovery in emerging and developing economy growth takes place as expected, per capita growth would remain well below long-term averages and well below levels necessary to achieve poverty alleviation goals. “Low global interest rates provide only a precarious protection against financial crises,” said World Bank Prospects Group Director Ayhan Kose. “The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.” Analytical sections in this edition of Global Economic Prospects address key current topics: The Fourth Wave: Recent Debt Buildup in Emerging and Developing Economies: There have been four waves of debt accumulation in the last 50 years. The latest wave, which started in 2010, has seen the largest, fastest, and most broad-based increase in debt among the four. While current low levels of interest rates mitigate some of the risks associated with high debt, previous waves of broad-based debt accumulation ended with widespread financial crises. East Asia and Pacific: Growth in the region is projected to ease to 5.7% in 2020, reflecting a further moderate slowdown in China to 5.9% this year amid continued domestic and external headwinds, including the lingering impact of trade tensions. Regional growth excluding China is projected to slightly recover to 4.9%, as domestic demand benefits from generally supportive financial conditions amid low inflation and robust capital flows in some countries (Cambodia, the Philippines, Thailand, and Vietnam), and as large public infrastructure projects come onstream (the Philippines and Thailand). Regional growth will also benefit from the reduced global trade policy uncertainty and a moderate, even if still subdued, recovery of global trade. Europe and Central Asia: Regional growth is expected to firm to 2.6% in 2020, assuming stabilization of key commodity prices and Euro Area growth and recovery in Turkey (to 3%) and Russia (to 1.6%). Economies in Central Europe are anticipated to slow to 3.4% as fiscal support wanes and as demographic pressures persist, while countries in Central Asia are projected to grow at a robust pace on the back of structural reform progress. Growth is projected to firm in the Western Balkans to 3.6% -- although the aftermath of devastating earthquakes could weigh on the outlook -- and decelerate in the South Caucasus to 3.1%. Latin America and the Caribbean: Regional growth is expected to rise to 1.8% in 2020, as growth in the largest economies strengthens and domestic demand picks up at the regional level. In Brazil, more robust investor confidence, together with a gradual easing of lending and labor market conditions, is expected to support an acceleration in growth to 2%. Growth in Mexico is seen rising to 1.2% as less policy uncertainty contributes to a pickup in investment, while Argentina is anticipated to contract by a slower 1.3%. In Colombia, progress on infrastructure projects is forecast to help support a rise in growth to 3.6%. Growth in Central America is projected to firm to 3% thanks to easing credit conditions in Costa Rica and relief from setbacks to construction projects in Panama. Growth in the Caribbean is expected to accelerate to 5.6%, predominantly due to offshore oil production developments in Guyana. Middle East and North Africa: Regional growth is projected to accelerate to a modest 2.4% in 2020, largely on higher investment and stronger business climates. Among oil exporters, growth is expected to pick up to 2%. Infrastructure investment and business climate reforms are seen advancing growth among the Gulf Cooperation Council economies to 2.2%. Iran’s economy is expected to stabilize after a contractionary year as the impact of US sanctions tapers and oil production and exports stabilize, while Algeria’s growth is anticipated to rise to 1.9% as policy uncertainty abates and investment picks up. Growth in oil importers is expected to rise to 4.4%. Higher investment and private consumption are expected to support a rise to 5.8% in FY2020 growth in Egypt. South Asia: Growth in the region is expected to rise to 5.5% in 2020, assuming a modest rebound in domestic demand and as economic activity benefits from policy accommodation in India and Sri Lanka and improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan. In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5% in FY 2019/20, which ends March 31 and recover to 5.8% the following fiscal year. In Pakistan’s growth is expected to rise to 3% in the next fiscal year after bottoming out at 2.4% in FY2019/20, which ends June 30. In Bangladesh, growth is expected to ease to 7.2% in FY2019/2020, which ends June 30, and edge up to 7.3% the following fiscal year. Growth in Sri Lanka is forecast to rise to 3.3%. Sub-Saharan Africa: Regional growth is expected to pick up to 2.9% in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters. The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries. In South Africa, growth is expected to pick up to 0.9%, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers. Growth in Nigeria expected to edge up to 2.1% as the macroeconomic framework is not conducive to confidence. Growth in Angola is anticipated to accelerate to 1.5%, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment. In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4%. In Kenya, growth is seen edging up to 6%.
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THE FOURTH WAVE Rapid Debt Buildup #WBGEP2020 @WorldBank International Trade |
The global economy has experienced four waves of debt accumulation over the past fifty years. The first three ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and more broad- based than in any of the previous three waves. Current low interest rates —which markets expect to be sustained into the medium term—appear to mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood of the current debt wave ending in crises and, if crises were to take place, to alleviate their impact. Total EMDE debt reached almost 170 percent of GDP in 2018 ($55 trillion), an increase of 54 percentage points of GDP since 2010. Although China accounted for the bulk of this increase—in part due to its sheer size—the debt-buildup was broad-based: In about 80 percent of EMDEs total debt was higher in 2018 than in 2010. Following a steep fall during 2000-10, debt has also risen in low-income countries (LICs), reaching 67 percent of GDP (around $270 billion) in 2018, up from 48 percent of GDP (around $140 billion) in 2010. In contrast, in advanced economies, total (public and private) debt has remained steady near the record levels reached in the early aftermath of the global financial crisis, at 264 percent of GDP in 2018 ($130 trillion). While government debt has risen to a high of 104 percent of GDP ($50 trillion), private sector debt has fallen slightly amid deleveraging in some sectors.
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African spring, economic winter @Africa_Conf Africa |
Fresh from signal victories in Khartoum and Algiers, youthful mass movements are demanding jobs, opportunities and accountability as financial uncertainty grows Two developments in the past year will be of seismic importance in 2020: the revolutionary movements in Algeria and Sudan and the start of the African Continental Free Trade Agreement (ACFTA). The tension between the aspirations of Africa's overwhelmingly young 1.2 billion people and the continent's sluggish economic progress is palpable throughout the continent's 30 million square kilometres. In several countries, especially in the bigger economies such as Algeria, Nigeria and South Africa where hopes are highest, the political temperature is close to boiling point. It will take quantities of political will not seen so far to respond to such pressures with a credible plan. That explains the attention given to the free trade deal, which all the members of the African Union bar Eritrea have signed, and is due to start operating in July. It is the most ambitious trade zone project in the world. No other region has tried to weld 54 countries into a single market and eventually a full customs union. It also flies in the face of the waves of nationalism, protectionism and populism surging around the world. Africa isn't immune to those pressures, as shown by the xenophobic attacks in South Africa and Nigeria's closure of its land borders. It will take many years to change Africa's economic game, to reach its first target of a single market with a gross domestic product of over US$3 trillion, bigger than India's economy today. But the trade treaty is the essential first step. It is the biggest of several regional initiatives, such as a new regional currency in West Africa, attempts to rationalise the range of overlapping trading blocs, and ending visa requirements for all African visitors as a first step on the road to free movement across the continent. All face political opposition from vested business interests and hard-pressed workers fearful of more competition for local jobs. Outsiders, governments and multinational companies are re-focusing attention on Africa this year – mainly for natural resources, markets, votes at the UN General Assembly and occasionally as a location for high-return investment. Britain starts off with an Africa investment summit in London on 20 January; Turkey says 2020 is its year for Africa and follows with an investment conference in April; France hosts its event in Bordeaux in June and will also launch a six-month festival of Africa in May to be run by Senegalese architect and public intellectual N'Goné Fall. And China's Foreign Minister Wang Yi started this year with his customary African tour, this year to Egypt, Djibouti, Eritrea, Burundi and Zimbabwe. It's significant that the last three countries on Wang's itinerary are all under some Western sanctions. Certainly, the battle for African hearts and minds is heating up. Expect to hear more claims from the United States, which is due to announce its own new initiatives in Africa, about how China's prolific lending based on resource deals threatens a new debt crisis for Africa. The reality is that China is now unassailably Africa's leading trading partner, in spite of infrastructure projects of often doubtful utility and massive expense. Western business feels left out and wants to catch up. Fresh from what is sees as the triumph of its Africa summit in Sochi, Russia will ramp up its trade with the continent, although it's still trailing the major players such as China, India, the European Union and the US. Moscow hopes for more natural resource deals backed by diplomacy and security assistance. Several massive deals are in the pipeline. As a guide to the year ahead, Africa Confidential is dedicating this and the next edition to the coming political, economic and security developments in Africa. Apart from the biggest countries, such as Egypt, Nigeria and South Africa, we will cover the many elections throughout the continent this year, together with regional and national economic and financial trends. We will also focus on the growing security crisis across the Sahel, the Horn of Africa and in the Great Lakes region, as well as the escalating war in Libya which is sucking in more outside powers.
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Growth in Sub-Saharan Africa moderated to a slower-than-expected 2.4 percent in 2019. #WBGEP2020 @WorldBank Africa |
Growth is projected to firm to 2.9 percent in 2020 and strengthen to 3.2 percent in 2021-22—notably weaker than previous projections. Downside risks to the outlook include a sharper- than-expected deceleration in major trading partners; increased investor risk aversion and capital outflows triggered by elevated debt burdens; and growing insecurity. The feeble economic recovery in Sub-Saharan Africa has lost momentum, with growth in 2019 estimated to have edged down to 2.4 percent, from 2.6 percent in 2018. In Angola, Nigeria, and South Africa—the three largest economies in the region—growth was subdued in 2019, remaining well below historical averages and contracting for a fifth consecutive year on a per capita basis. Activity in Nigeria was lackluster, as both macroeconomic policy and the business environment remain unconducive to strong domestic demand. Growth in 2019 is estimated to have remained broadly unchanged at 2 percent In South Africa, growth remained anemic in 2019 as it fell to an estimated 0.4 percent. Weak growth momentum has reflected an array of overlapping constraints. These include persistent policy uncertainty, constrained fiscal space, subdued business confidence, infrastructure bottlenecks— especially in electricity supply—and weakening external demand, particularly from the Euro Area and China. In addition, financial stresses at the public energy utility have worsened the government budget balance and raised debt sustainability concerns, weighing further on sentiment Activity in Angola is estimated to have contracted by 0.7 percent in 2019, as oil output declined for the fourth consecutive year due to lower yields from aging fields and postponed investment in new capacity. In Sudan, the fourth largest economy in the region, political instability, alongside an ongoing currency crisis, has caused activity to contract sharply. However, the formation of a three-year interim government to oversee the country’s transition to democracy helped improve stability in the second half of last year. Beyond the large economies, growth deteriorated in several industrial commodity exporters in 2019 as weaker prices and softer demand dampened activity in extractives sectors (Democratic Republic of Congo, Liberia, Namibia; Figure 2.6.1.C). In contrast, growth accelerated in some countries as investments in new oil and mining capacity boosted activity (Ghana, Guinea, Mauritania). Among exporters of agricultural commodities, growth rates have been more robust, notwithstanding some mild slowdowns. Estimates for 2019 indicate that growth averaged in excess of 5 percent, as sustained public investment in infrastructure continued to support activity (Togo, Uganda). Yet, growth softened in some other countries as decelerating external demand and lower commodity prices constrained export revenues (Madagascar, Rwanda). In others, agricultural production suffered from severe drought (Senegal, Zimbabwe), or late rains (Kenya). Zimbabwe also suffered a sharp rise in inflation that continued to squeeze real incomes, resulting in a large contraction in economic activity, estimated at 7.5 percent. Activity has been further constrained by persistent shortages of food, fuel, electricity, and foreign exchange. However, per capita incomes contract among some of the largest economies that account for one-third of the region’s poor (Angola, Nigeria, Sudan). Projected per capita growth for the region is insufficient to yield significant progress in poverty alleviation. In South Africa, growth is expected to firm to 0.9 percent in 2020, before strengthening to an average of 1.4 percent in 2021-22. Growth in Angola is projected to rise to 1.5 percent in 2020 and to average 2.7 percent in 2021-22. In the West African Economic and Monetary Union (WAEMU), growth is expected to average 6.7 percent. In Kenya, growth is expected to remain solid, but soften somewhat as accommodative monetary policy does not fully offset the impact of a fiscal tightening. Activity in Ghana—the region’s fifth largest economy—is expected to soften from the 7 percent growth of 2019 partly due to slowing oil production as much-needed maintenance on various oil fields is carried out to ensure their long-term viability. The balance of risks for Sub-Saharan Africa is firmly to the downside. China, in particular, accounts for one-half of global metals demand and one-quarter of global oil demand (World Bank 2018o). A faster-than- expected slowdown in China would cause a sharp fall in commodity prices and, given Sub-Saharan Africa’s heavy reliance on extractive sectors for export and fiscal revenues, weigh heavily on regional activity. Government debt in the region is expected to reach 62 percent of GDP, on average, in 2020, up from its trough of 39 percent of GDP in 2011. This broad-based rise in government debt has led to sharp increases in interest burdens, crowding out non-interest expenditure and raising concerns about debt sustainability. Countries with elevated debt burdens are susceptible to sudden increases in investor risk aversion (Angola, Ghana, Mozambique, Namibia, South Africa, Zambia; Figure 2.6.2.D). This can lead to sizable currency depreciations, capital outflows, and increases in borrowing costs as risk premia rise sharply. Where debt is largely denominated in foreign currency, sharp currency depreciations would make servicing debt more challenging. Insecurity, conflicts, and insurgencies— particularly in the Sahel—would weigh on economic activity and food security in several economies (Burkina Faso, Chad, Ethiopia, Mali, Niger, Nigeria), if they were to intensify further or spread geographically (Figure 2.6.2.E; FAO 2019; UNHCR 2019). Moreover, the large populations that are forcibly displaced by these conflicts cluster in areas that often become a source of further instability, with poverty rates being worse than in their places of origin (Beegle and Christiaensen 2019). Extreme weather events are becoming more frequent as the climate changes, posing a significant downside risk to activity due to the disproportionate role played by agriculture in many economies in the region (Figure 2.6.2.F). The devastation caused by the tropical cyclones that hit low-income countries in East and Southern Africa in 2019 bear testimony to this, as do persistent drought conditions, particularly in the Sahel and Southern Africa. As droughts continue to suppress agricultural output, they increase food insecurity, raise food price inflation, exacerbate poverty levels, and often contribute to forced displacement of populations (IPCC 2019).
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Contextualizing Ethiopia's Recent Economic Performance Keynote Address by Abebe Aemro Selassie Director, Africa Department, IMF Africa |
Since 1990, per capita income in the world has increased by about 50 percent. For the median SSA country, this increase was 45 percent. In the case of Ethiopia, it was over 200 percent! Of course, there are countries that have done better still—China (960 percent increase) and India (280 percent increase). In terms of the industrial sector’s value added in GDP, this has increased sharply in recent years in Ethiopia getting closer to the other comparator groups. But this has been driven predominantly by the construction sector. Similar to other observers, my conclusion is that it is too soon to say if the recent industrialization push will have an enduring effect. Much of the “hardware” necessary for rapid industrialization—industrial parks, road and electricity infrastructure, etc.—have been put in place. But the economic transformation risks being stifled because the “software” that is as important for effective industrialization is missing—things like access to credit and sufficient foreign exchange for the private sector. Growth in Ethiopia, on average, has been 8.1 percent in 2000-10 and 9.5 percent in 2010-18, this compares with 5.6 and 5.9 percent respectively in other fast-growing countries in sub- Saharan Africa. For one, the level of public debt has increased from some 40 percent of GDP in 2008 to 60 percent of GDP last year. Note that we are normalizing by GDP which has been increasing furiously over this period. The fact that the debt to GDP ratio has increased markedly in this context shows just how pro-cyclical fiscal policy has been. The rate of increase in public debt relative to GDP is comparable to the other country groupings. But the scale of borrowing in Ethiopia has been an order of magnitude different. This has pushed up debt vulnerability ratios, placing Ethiopia at high risk of debt distress according to the IMF/World Bank debt sustainability analysis. Over the last two decades the share of credit to the public sector has been about 60 percent of total credit to the economy, while in sub-Saharan African comparator countries is has been just 30 percent of total credit. The effect of this has been to engender the very high levels of public investment that we have seen—indeed, higher than even some of the fastest growing countries globally at the time of their take-off. That financial conditions have been looser is evident from the higher level of inflation in Ethiopia. But one consequence of this has been weak export performance. Most other sustained growth cases saw exports as a share of GDP increase substantially during the transition, but this has not been the case in Ethiopia. Exports as a share of GDP remains well below that of comparators, even as imports have risen sharply. Exports as a share of GDP has actually declined in recent years, which is highly unusual. there is a strong need to boost export growth by creating room for higher levels of domestic and foreign private investment.
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Back to the one-party state @Africa_Conf Africa |
Civil and political rights will remain constrained as Magufuli seeks a landslide in the general election to endorse his statist vision The prospect of the October general election will dominate 2020. Last year, pre-poll government interference in the local elections saw up to 90% of opposition candidates being disqualified, a subsequent opposition boycott, and over 99% of seats going to the ruling party, Chama Cha Mapinduzi. The CCM aims to repeat the exercise in October, when landslide victories for the CCM can be expected at presidential, parliamentary, and council levels. The challenge this year will be carry it off and still maintain some legitimacy. Landslide victories for the CCM can be expected at presidential, parliamentary, and council levels. The challenge this year will be carry it off and still maintain some legitimacy. @Africa_Conf
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S. Africa Business Confidence Fell to Three-Decade Low in 2019 @economics Africa |
South African business confidence slumped to the lowest in 34 years in 2019 as the country faced power cuts, delays in policy implementation, deteriorating public finances and the risk of losing its only remaining investment-grade credit rating. A sentiment index compiled by the South African Chamber of Commerce and Industry showed business confidence declined to an average of 92.6 from a two-year high of 95.5 in 2018, according to an emailed statement Thursday. That’s the lowest annual number since 1985. Sentiment surged in 2018 after Cyril Ramaphosa won the leadership of the ruling African National Congress and took over as president of the country, but has since slumped as reforms stalled. Business confidence remains fragile and “could tilt either way” in the coming months depending on the fiscal and economic outlooks presented by Ramaphosa and Finance Minister Tito Mboweni in their state-of-the-nation and budget speeches in February, the chamber said. Assessments by credit-ratings companies, which are expected after the budget, will also affect sentiment, it said. The economy unexpectedly contracted in the third quarter and is stuck in the longest downward cycle since 1945. While the government expects gross domestic product growth of 1.2% this year, the World Bank this week became the first key institution to lower its forecast below 1% due to power-supply constraints vexing the country. Eskom Holdings SOC Ltd., which generates about 95% of the South Africa’s electricity, resumed rolling blackouts over the weekend to prevent a total collapse of the national grid. “The economy’s potential is wavering and requires positive corrective steps to direct the economy in an appropriate direction,” Sacci said. Weak economic growth could lead to a further deterioration in public finances and heighten the risk of South Africa losing its last investment-grade credit rating with Moody’s Investors Service. The company cut the outlook of the nation’s Baa3 assessment to negative in November, effectively giving lawmakers just over three months to preserve the assessment and avert a forced selloff of billions of rands of its debt.
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Al-Shabab, anyway, is doing well enough, It killed more people in 2019 than in any year since 2010 @TheEconomist Africa |
Tourists visiting Kenya’s lovely Lamu archipelago are normally stirred from their slumber by pleasant sounds, such as gently lapping waves or the call to prayer drifting across the water. But on January 5th some were woken by the less melodious rattle and crump of distant battle. Across Manda Bay, on the mainland, fighters from al-Shabab, a Somali jihadist group, were engaged in an unusually daring assault on American forces stationed at a Kenyan airbase. The attack, which lasted several hours, was startlingly effective. The lightly armed jihadists—probably no more than 15 of them—managed to kill three Americans (one soldier and two security contractors) and wreck six aircraft, some used by America’s armed forces for snooping missions across the Somali border. Never before had al-Shabab targeted a facility housing American troops outside Somalia.
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KENYA Jockeying for position @Africa_Conf Africa |
Kenya began 2020 with erratic and intractable factional politics as the top two candidates for the next presidential election – William Ruto and Raila Odinga – counter each other's attempts to cobble together alliances from their bases in their respective ethnic homelands. As money changes hands on an epic scale, parliamentarians and county leaders are switching parties and alignments at a bewildering pace.
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Revelation 6:12-13: When he opened the sixth seal, I looked, and behold, there was a great earth- quake, and the sun became black as sackcloth, the full moon became like blood, and the stars of the sky fell to the earth as the fig tree sheds its winter fr Africa |
Revelation 6:12-13: When he opened the sixth seal, I looked, and behold, there was a great earth- quake, and the sun became black as sackcloth, the full moon became like blood, and the stars of the sky fell to the earth as the fig tree sheds its winter fruit when shaken by a gale.
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