Monthly Archives: June 2005

Bulgarian Elections

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Tomorrow Bulgaria will have elections:

Nearly six decades after Simeon II, Bulgaria’s 9-year-old child-king, was removed by the Communists, their heirs are again poised to oust him from power. The opposition Socialist Party is leading opinion polls ahead of the June 25 general election and is likely to defeat Prime Minister Simeon Saxcoburggotski.

Actually I know a little bit about Bulgaria as I did some research into Bulgarian immigrants in Spain a couple of years back. My impression is that the Simeon regime is extraordinarily corrupt. Many Bulgarians have had to leave simply to send money home to their parents who can only survive with difficulty on the state pensions. Of course, one extract in the article did catch my eye:

Bulgaria’s demographic decline is also likely to favor the Socialists, who count heavily on the country’s 1.8 million pensioners for support. An estimated 700,000 mostly young people have left the country since the fall of communism in 1989 in hopes of a better life in the West

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German Unemplyment Drops (slightly)

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According to preliminary figures released today the number of people looking for work in Germany dropped in June for the third month in a row, but the slight change revealed little evidence of a real labour market turnaround.

Bild quoted preliminary figures from the Federal Labor Agency — the body responsible for compiling monthly unemployment statistics — in its front-page story.

The paper quoted agency sources as saying that the wave of layoffs in the country appeared to be ebbing.

The …..newspaper said that about 60,000 fewer people were jobless this month versus in May, leaving the national total at 4.75 million unemployed.

FDI in France and Germany

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John Snow obviously had had sight of the document ( and here pdf ) when he went round lecturing us that Europe may become a non-favoured environment for US FDI:

“Foreign investment in France and Germany fell sharply in 2004, reinforcing concerns that inflexible labour practices and weak domestic demand are driving investors elsewhere.

In France, inward investment almost halved from $43bn (?35.44bn) to $24bn, according to figures released yesterday by the Organisation for Economic Cooperation and Development, the group representing the world?s most industrialised countries“.

But as much as the facts, the reasons behind the facts are interesting.

“Mark Zandi, chief strategist at Economy.com, the consultants group, said the data showed US companies the main source of direct investment funds in 2004 were spending their cash piles mainly on Asian investments.

?US companies are attracted to Asia partly because the currencies remain competitive, but also as low cost bases for production destination and as growing markets in their own right,? he said.”

Actually there is little realistic way that the EU or the US can reasonably expect to compete with China for FDI on China’s own terms, we both have to find another way.

Have We Got It Wrong On China?

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Politically incorrect as ever, Samuel Brittan asks an interesting question in today’s FT: have we got it wrong on China. Have Western leaders so obsessed themselves with the need to lecture China on what they should be doing with the Renminbi that we are missing a historic opportunity to put pressure on them about human rights and democracy issues?

“Western statesmen have every duty to remind Chinese leaders of their still appalling human rights record ? from the Tiananmen Square massacre to the occupation of Tibet and the continued veneration of Chairman Mao, who has been exposed as a killer on the level of Hitler and Stalin.

Unfortunately, they have gone quiet on these issues and have instead lectured the Chinese on the need to revalue the renminbi. It is not as if China were making a mess of its economy. On the contrary, it has a higher growth rate than any country in the Organisation for Economic Co-operation and Development. And, far from appealing for handouts from the west, it is one of the main sources of the financial inflows sustaining the US economy“.

#afistfulofeuros

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I’ve set up an afoe IRC channel on the nightstar channel, if your into that kinda thing. The nice thing with nightstar is that you don’t have to use a client if you don’t want to, they have a web based interface.

If you’ve no idea what I’m talking about, just go here, enter #afistfulofeuros as channel, hit connect, and then you can chat with your fellow afoe readers (and us bloggers).

In Lira, or in Euros?

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Even if it is a debatable question whether or not the Iraq war is bogged down in a quagmire, Italy’s economy evidently is. And no-one has even gotten round to offering a plan ‘b’, not even Tony Blair himself. So the silence is deafening, and this simply leads to increased speculation. Berlusconi only pronounced publicy on the issue last Tuesday, nearly three weeks after Maroni’s referendum call. Latest on the list of those taking a long hard look is Bloomberg’s Mark Gilbert, who has dug out an old paper by legal expert on international financial systems Hal Scott.

The key points:

“Countries have kept their own payment systems, government debt instruments, central banks, and the lion’s share of their foreign-exchange reserves,” wrote Hal Scott, professor of international financial systems at Harvard Law School, in a 1998 paper. “It is almost as if the EMU countries have hedged their bets on EMU by retaining the key institutions needed to re- establish their own currency and monetary policies if need be.”

Scott’s paper, titled “When the Euro Falls Apart,” went on to ask “would foreign law, if applicable, such as the law of the U.S. or Germany, enforce the re-denomination or provide instead that the contracts must be honored in euros or are breached if not honored in euros? This is far from clear given the lack of precedents.”
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Blair uses the F word

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My gut tells me there’s a bit of inevitability about reforming the EU’s ridiculous farm subsidies, so it surprises me that Mikulas Dzurinda, Slovakia’s PM, is only the first of the 24 one of the first of the many EU leaders lined up against Britain to break ranks. ?I am for reforms,? Dzurinda declared.

Meanwhile Blair is still talking tough, telling the European Parliament yesterday today that the EU risks “failure on a grand strategic scale.” (See also The Guardian‘s coverage on the speech.)
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Iraq’s Legacy

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This issue has, I think, been obvious for some time now.

“A new classified assessment by the Central Intelligence Agency says Iraq may prove to be an even more effective training ground for Islamic extremists than Afghanistan was in Al Qaeda’s early days, because it is serving as a real-world laboratory for urban combat.

The assessment, completed last month and circulated among government agencies, was described in recent days by several Congressional and intelligence officials. The officials said it made clear that the war was likely to produce a dangerous legacy by dispersing to other countries Iraqi and foreign combatants more adept and better organized than they were before the conflict.”

Which makes the problems raised in this post all the more preoccupying.

Budget Airlines Go East

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AP writes from Bratislava about how budget airlines are allowing middle-aged villagers from Central and Eastern Europe to get on an airplane for the first time. Presumably they will also allow British stag parties to enjoy piss-up weekends someplace other than Prague (or Ljubljana or Tallinn) for a change.

“British tourists can now discover Poland and decide for themselves what Gdansk, Bydgoszcz, Szczecin and Rzeszow have to offer…”

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More Bad News From Italy

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Italy’s crisis rumbles on, and I don’t expect it to get much better any time soon. This week we learn that Italian retail sales fell sharply in April,

After adjustment for seasonal factors, retail sales in April were down 0.8 percent on the previous month ? the steepest month-on-month fall since May 2004. Compared with a year earlier, sales were 3.9 percent lower – the sharpest decline in the series? history.

and that consumer confidence in Italy fell in June to its lowest since last September:

The ISAE institute reported that its consumer sentiment index fell to 102.9 in June, from 104.3 in May. The index has now fallen in six of the past eight months.

ISAE noted that the index measuring expectations about the general economic situation declined to its lowest level for ten years, largely due to concerns about job security.

Also Italy posted a trade deficit with non-EU countries of 487 mln eur in May compared with a 109 mln surplus a year earlier:

Exports rose 10.3 pct year-on-year in May to 10.647 bln eur, while imports rose 16.6 pct to 11.134 bln.

In the five months to May, the trade deficit widened to 5.225 bln eur from 1.732 bln, as exports rose 7.6 pct and imports increased 15 pct.