Will Italy make it?
Italy’s public finance situation is worrying global markets, just as the newly-elected populist coalition is plotting its economic course. The coalition made dramatic promises to voters that could blow past deficit targets and push Italy toward default, bailout or an exit from the euro. But despite their recklessness, the Five Star Movement and the League are more likely to moderate their economic programs — that is, if they can manage to keep their alliance together.
EU budget plan offers progress and pitfalls
The European Commission is finally taking steps to trim unproductive spending in areas like agriculture in its budget framework for 2021-2027. But while the new emphasis on fighting waste is promising, the fiscal plan also contains troubling proposals. One of the most disturbing is to reduce cohesion payments to countries that violate European "values," based on the arbitrary interpretations of the Commission and a few powerful member states.
Central European states face dual fiscal challenge
By the beginning of the next decade, Central European countries will face two tough fiscal challenges. First is the risk of losing access to generous EU funds, which today support infrastructure investments. Second is the fiscal burden of health-care spending, which will rise rapidly as their populations age. These problems can be solved with gradual reform and careful planning – things that can rarely be counted on in politics.
As sanctions take their toll, Russia turns to import substitution
As the Russian economy’s difficulties deepen, the Kremlin is putting a brave face on things. It maintains that Western sanctions have been beneficial and that its own anti-crisis program is working. Moreover, the government is talking up a new “Strategy 2030” to boost domestic self-sufficiency based on import substitution. The new measures, however, are unlikely to...
Euro crisis: time for a rerun?
After Greece obtained its third bailout last summer, Europe turned its attention to other crises. But it would be naive to conclude that the sovereign debt crisis is over. The Greek drama is still far from a happy ending; in Portugal and Spain, fragile left-wing governments may want to abandon austerity and roll back reforms; France has declared a state of economic...
U.S. is key to managing the Western Pacific military buildup
The most important navies in the Western Pacific are growing in strength. Forces all around the region are improving, but the Chinese People’s Liberation Army Navy accounts for the lion’s share of new capacity, both in the number of vessels and technological sophistication. How the United States chooses to address this challenge will make the difference between war...
Brazil braces for a rough ride, but its strengths remain
The drama of Brazil’s immense political and economic crisis has reached a sort of “ground zero” point, from which it can develop in any direction, leading to a positive or very negative outcome for the country. In early December 2015, Brazil’s Congress unexpectedly and abruptly moved to impeach President Dilma Rousseff. A...
Russian economy's hard choices as country faces recession
President Vladimir Putin’s hopes and ambitions to see Russia return to take its place among the leading industrialised nations are fading fast as the country heads for recession. ‘Hard decisions’ need to be taken to rein in its spending and cut budgets, according to his Prime Minister Dmitry Medvedev. Russia is at a crossroads and it is the global price of oil wh...