GIS Dossier: The Italian case
Politically and financially, Italy has come to be regarded as a weak link in the European Union. Its shaky banks and enormous public debt almost blew apart the euro area during the debt crisis of 2010-2012, and could still do so. Its government, a marriage of populists on the left and right, claims to be the precursor of a protest wave that will sweep this year’s European Parliament elections. But as usual, it is hard to tell whether Italy is headed for disaster or more of the same.
A year of change for the European Union?
The European Union, which still lacks a post-Brexit vision of itself, will be changing the leadership of almost all its leading institutions over the next few months. Candidates are already jostling for position to take over at the European Commission and the European Central Bank, and surprises could be in store. With non-mainstream parties likely to gain seats in the May European Parliament elections, the EU-27 seems headed for even less harmony and more dissension.
2019 Global Outlook: Economic reform in France
Another year, another missed opportunity for fiscal reform in France. Like his predecessors, President Emmanuel Macron has ended up mostly raising taxes instead of decreasing the size of government and reducing expenditures. The “national dialogue” to come following the Yellow Vest protests could bring better democratic representation – and with it, more economically responsible governance. But entrenched interests will put up stiff opposition.
U.S. interest rates: Where will they take us?
U.S. President Donald Trump worries that the Federal Reserve is raising interest rates too quickly. In fact, the Fed has engaged in only moderate tightening so far. By mid-2019, it is likely to end the cycle and hold rates steady, since the U.S. central bank is probably focusing on restricting the money supply rather than reaching an interest rate target. At that point, Mr. Trump will no longer be able to blame the Fed for any fiscal trouble and will have to implement reforms if he wants to spur growth.
Opinion: Yellow Vests are a symptom of France’s dysfunctional democracy
With the Yellow Vest protests, France has finally fractured between its metropolitan areas and a resentful low-wage periphery. What started as a tax revolt has become a diffuse and unstructured uprising against an unaccountable ruling caste. Many of the movement’s demands would only perpetuate France’s administrative and social centralism, yet its appearance shows that this political model may no longer be sustainable.
Essay: As Russian history repeats itself, Putin becomes Yeltsin
Russia’s pension reform continues to reverberate in domestic politics. For the first time ever, President Vladimir Putin has assumed full personal responsibility for an unpopular decision that directly infringes on the lives of most Russians. The effects are already visible in his slumping popularity and in the startling results of gubernatorial elections in several regions. Mr. Putin could be looking for an electoral out as he follows the downhill path of his predecessor, Boris Yeltsin.
The Italian challenge
Italy’s public finance troubles are making waves again, but the new government’s budget proposal does not spell disaster, nor should debt servicing create a big problem, considering today’s low interest rates. But Italy’s leaders have decided to transform their conflict with the European Union into a casus belli. Will the conflict end in an Italian crisis or a new EU architecture?
The benefits of global tax games
The growth of global trade and rise of more sophisticated financial products from the late 1970s has encouraged in tax arbitrage by multinational firms and tax competition between governments. This phenomenon has become a fixation of global governance do-gooders and bureaucrats. Their seemingly innocuous push for international tax coordination and transparency, however, will have costs that are hard to measure.
Togo faces two years of turmoil
Togo is another instance of “third termism” in sub-Saharan Africa, as a long-time ruler determined to stay in power collides with an increasingly angry populace. President Faure Gnassingbe appears to be losing his grip ahead of the 2020 presidential elections, while his well-organized opponents may be able to count on outside intervention from ECOWAS, West Africa’s regional bloc.
Algeria’s ‘system’ hangs tough
Algeria seems headed down a road already taken by other resource-rich authoritarian countries like Venezuela. Low oil and gas prices have made it harder for a crony oligarchy to buy off the public with subsidies and benefits. Their latest expedient to stave off reforms is to use the central bank to fund a government stimulus program, but that only delays the day of reckoning.