The U.S. House of Representatives has passed a bill allowing the Biden administration to confiscate Russian assets held in American banks and transfer them to Ukraine, something the Kremlin has said would be illegal and trigger retaliation.

In response to Russia’s war in Ukraine, the United States and its allies prohibited transactions with Russia’s central bank and finance ministry and blocked about $300 billion of sovereign Russian assets in the West, most of which are in European not American financial institutions.

The Group of Seven (G7) major democracies is also looking at what it may be able to do around the frozen Russian assets.

Medvedev, a close ally of President Vladimir Putin and the deputy chairman of Russia’s Security Council, said on Saturday that Russia would not be able to retaliate in kind against any U.S. seizure of its reserves.

“The reason is clear – we do not have a significant amount of American state property, including money, rights and other US assets. Therefore, the answer can only be asymmetrical. It is not a fact that it will be any less painful,” Medvedev wrote on his official Telegram channel.

“We are talking about the foreclosure, for example by a court decision, on the property of private individuals located in the jurisdiction of Russia (money, real estate and movable property in kind, property rights).”

“Yes, this is a complex story, since these individuals usually acted as investors in the Russian economy,” Medvedev said. “And we guaranteed them the inviolability of their private property rights. But the unexpected happened – their state declared a hybrid war on us. This must be answered.”

He said the law in Russia would need to be changed to allow such asset seizures in favour of the Russian state.

Russian Central Bank governor Elvira Nabiullina said on Friday Moscow would defend its legitimate interests in the event that its assets were confiscated, but did not disclose the strategy and tactics.

Source: Reuters

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Shares surged past $70 in early trade, giving the firm a market value of more than $9bn. They ended the day at about $58, still up more than 16%.

The long-awaited moment will inject more than $200m into Trump Media & Technology Group and hands the former president a stake worth more than $4bn.

Analysts say that is far more than the firm’s performance warrants.

Trump Media’s Truth Social, a Twitter-like service, brought in just $3.3m in revenue in the first nine months of last year and lost nearly $50m.

It says 8.9 million accounts have been created since the platform launched to the general public in 2022 as an alternative to mainstream sites such as Facebook, but it is not clear how many are active.

By comparison, the recently-listed Reddit currently has a market value of about $11bn. It boasts more than 70 million users and brought in $800m in revenue last year.

Kristi Marvin, chief executive of SPACInsider, compared Trump Media – which trades under the ticker DJT for Mr Trump’s initials – to a meme stock, in which prices are untethered from the business prospects.

Interest in Trump Media has also been fuelled by individual investors, as opposed to Wall Street firms, many of them apparently Trump supporters.

“Everybody expected to trade a little bit crazy today, which it has,” she said. “The real question is how does it trade a week from now, two weeks from now and nobody really knows.”

The deal to list Trump Media was first announced in 2021.

The move was accomplished via what is known as a SPAC, a merger with a publicly listed shell company, Digital World Acquisition Corp, which was expressly created to buy a company and take it public.

The deal was delayed by government investigations and other hurdles, but regulators cleared it earlier this year and Digital World shareholders voted in favour last week.

Ahead of the listing on the Nasdaq exchange, Trump Media officials called it a “pivotal moment” for the firm – and the wider media landscape.

“As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors,” said Trump Media chief executive Devin Nunes, a former congressman.

“We will continue to fulfil our commitment to Americans to serve as a safe harbour for free expression and to stand up to the ever-growing army of speech suppressors.”

The debut comes at a critical moment for Mr Trump, who has been scrambling for cash to pay legal penalties and owns more than half of the firm’s shares.

He is currently barred from selling his holdings for about six months, making it difficult for him to tap the windfall immediately.

The company’s board, which is stocked with allies including one of his sons, could potentially change that rule, but analysts have said they think that would be unlikely to happen immediately.

If Mr Trump were to sell a significant chunk of his shares, it could hurt the share price.

Investors face other risks as well, tied to Mr Trump’s political fortunes and his 2024 presidential campaign.

A loss might be expected to hurt the share price, but a win could have the opposite effect, especially if it generated further demand from buyers hoping to curry favour with Mr Trump, said Michael Ohlrogge, a law professor at New York University.

However, Prof Ohlrogge said the current share price is “far, far elevated above what anyone would consider its fundamental value”.

Source: BBC

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This could present a boost for Ukrainian defense production amid ammunition shortages and dwindling supplies from the U.S.

“Ukraine is now an important partner for us, where we see a potential of between 2 and 3 billion euros ($2.18-$3.27 billion) per year,” Rheinmetall CEO Armin Papperger said during a presentation of the company’s 2023 results, the AFP wrote.

Previously, the company signed a contract with the Ukrainian Defense Industry (Ukroboronprom) in October 2023 to repair and produce armored vehicles directly in Ukraine in a joint plant.

During the Munich Security Conference in February, Papperger signed a memorandum of intent with Ukraine’s Strategic Industries Minister Oleksandr Kamyshin to produce artillery shells in another joint plant based in Ukraine.

Source: The Kyiv Independent

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Infighting over the succession and growing frustration in the regions could shatter the stability that the Tajik president has been building for so many years.

Next year will mark thirty years of Emomali Rahmon’s presidency in Tajikistan, now the only country in Central Asia that has not seen a change of leadership since the early 1990s. Unsurprisingly, there have been rumors of an imminent transition of power for a decade.

The name of the successor is no secret: it’s Rahmon’s son, thirty-six-year-old Rustam Emomali. But there is no consensus within the president’s large family over the succession. Some of the president’s other children have their own ambitions to run the country, which could upset plans for the transition.

President Rahmon is seventy-one years old, and has reportedly suffered numerous health issues. Arrangements for the transition have long been in place, but events keep getting in the way of its implementation: first the pandemic and its economic fallout, and then the street protests in neighboring Kazakhstan in January 2022, which frightened the Tajik leader and persuaded him it was not a good time to step down. Even Turkmenistan has seen a power transition in recent years. Now Tajikistan is expected to implement its own in 2024.

Rustam has already headed a number of government agencies. Since 2017, he has been mayor of Dushanbe: a post he has combined since 2020 with that of speaker of the upper house of parliament, to whom power would automatically pass if the current president were to step down early.

His supporters argue that as the capital’s mayor, he has improved the city, supported youth initiatives, and started to form his own team of young technocrats. Some are counting on him to carry out at least limited reforms once he is in power, such as those seen in neighboring Uzbekistan and Kazakhstan.

Not everyone believes Rustam is ready to take over, however. The future president is an unknown quantity for most Tajiks. All of his public appearances are prerecorded and accompanied by information read out by the broadcaster, meaning that people have not even heard him speak. His nickname on social media is “the great mute.”

More worryingly, the heir apparent has reportedly shot and wounded two people: his own uncle in 2008, and—just last year—the head of the State Committee for National Security, Saimumin Yatimov, supposedly for refusing to carry out orders.

There are those within the presidential family who do not want to see Rustam succeed his father because they fear losing prestigious posts in government and business. They are indignant that there are no relatives within the team he is building. The current president cannot possibly keep everyone happy, and this could threaten the transition, as ambitious clan members prepare to battle it out for the top job in order to retain their privileges.

Rahmon has seven daughters and two sons. The most ambitious of them is generally considered to be the second daughter Ozoda, who has headed up the presidential administration since 2016. She is very experienced, works well with her staff, and has the trust of the security services. Unsurprisingly, given the alleged shooting incident, there is no love lost between Rustam and the country’s main security official Yatimov, who has reportedly been paving the way for Ozoda’s candidacy. In addition, her husband Jamoliddin Nuraliev is also considered a very influential figure, having been deputy chair of the country’s central bank for over seven years.

Another contender for the presidency could be Rahmon’s fifth daughter, Ruhshona, a seasoned diplomat who is well versed in Tajikistan’s political affairs. Her husband is the influential oligarch Shamsullo Sohibov, who made his fortune thanks to his family connection to the president. Together with his brothers, he controls entire sectors of the economy, including transport, media, and banking. Change at the top could deprive the Sohibov clan of both influence and money, so Ruhshona and her husband may well throw their hats into the ring.

They might get the backing of Rahmon’s other children, who also control various sectors of the economy, including air travel (the third daughter, Tahmina) and pharmacies (the fourth daughter, Parvina). There are also plenty of Rahmon’s more distant relatives who owe their fortunes to the president and fear losing their positions under his successor.

Rahmon has relied on the loyalty of various relatives to ensure the stable functioning of his regime. But overly vociferous squabbles within the family could destabilize the situation, and for precisely this reason, Rahmon has tried to temper their ambition. Ruhshona, for example, was sent to the UK as Tajik ambassador to stop her from interfering in the plans for the transition. Her oligarch husband went with her.

Nor is the heir apparent himself outside the fray. There is evidence that Rustam was involved in leaking information to the media about his sister Ozoda’s alleged affair with her driver: something that, in patriarchal Tajikistan, caused serious damage to her reputation. There are also rumors that Ozoda’s main ally Yatimov will be retired from his post as head of the security services and replaced with a close friend of Rustam, Shohruh Saidov.

Right now, international circumstances are conducive to a swift transition. Tajikistan’s relations with its trickiest neighbors, Afghanistan and Kyrgyzstan, are improving. While the Taliban has yet to be recognized as the legitimate Afghan government by Dushanbe, both sides agreed to strengthen economic ties during the first visit to Tajikistan by a delegation from the radical Islamist movement in March this year. Meanwhile, the Tajik government has pledged to resolve the border dispute with Kyrgyzstan—an issue that has led to several armed clashes in the last three years—by spring 2024. Rahmon is clearly trying to hand over a stable country to his son.

The situation at home, however, is more complicated. There is also considerable opposition to Rustam’s candidacy among the regional elites, who have long supported Rahmon in exchange for access to state resources, and are now seeing many of the most lucrative cash flows appropriated by the presidential family. A transition of power could be an opportune moment to express their displeasure.

Events in Gorno-Badakhshan in spring 2022 were a stark warning of the dangers of that displeasure. After the civil war that ravaged the country in the early 1990s, many of its field commanders settled in the region. Over time, they became informal leaders of the local communities, helping to solve problems that the central government was ignoring, sometimes strong-arming local officials into making the required decision. Rahmon ordered several security operations to rid Gorno-Badakhshan of this dual power system, only for it to reemerge further down the line.

Last spring, protests erupted there after a local man was killed by law enforcement officers. The unrest lasted for several months until Rahmon crushed it by force. Many of the activists were killed or imprisoned, while others fled the country, and the region was brought back under Dushanbe’s control. But the anger simmering in the region could boil over again at the first sign of conflict.

For now, the other regions remain loyal to the regime, but that could change after the power transition if the local elites feel they are not getting sufficient state resources.

By directing all the streams of income and control of the country to his own relatives, Rahmon has painted himself into a corner. Infighting over the succession and growing frustration in the regions could shatter the stability that the president has been building for so many years. Power transitions rarely go to plan in Central Asia, and Tajikistan may be no exception.

Source

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In May 2022, tens of ethnic Pamiri protesters were killed by security forces as demonstrations were violently suppressed and an “anti-terrorist operation” was launched in the east of the country. Activists, local leaders, journalists and bloggers were arrested and sentenced in unfair trials. Many reported being tortured. Access to information, including through the media and internet, remained heavily restricted. Domestic violence remained widespread with victims rarely securing justice or support. Afghan refugees continued to be detained and deported.

Tajikistan’s economic and political life continued to be tightly controlled by the president, in the 30th year of his rule, and his family. Over 100 people, including dozens of civilians, were killed and homes, schools and markets destroyed during cross border clashes between Tajikistan and Kyrgyzstan in September. In May, following months of targeted repression by the central government, longstanding tensions in the eastern Gorno-Badakhshan Autonomous Oblast (GBAO) between these authorities and the Pamiris, a small, unrecognized ethnic minority belonging to the Shia Islam Ismaili community, flared into new protests. These were brutally suppressed by the authorities, who launched an “anti-terrorist operation” on 18 May during which tens of Pamiris were killed over several weeks. Over 200 people were arrested.

Pamiri protesters were killed by security forces in May and June 2022, as demonstrations were violently suppressed and an “anti-terrorist operation” was launched in the east of the country. Activists, local leaders, journalists and bloggers were arrested and sentenced in unfair trials. Many reported being tortured.

The official government figure in May for those killed in the “anti-terrorist operation” in the GBAO was originally 21, although unofficial sources reported more than double that number. The circumstances of many deaths, in the absence of independent reporting from Tajikistan, prompted allegations of extrajudicial executions. Prominent activists, informal local leaders, poets, religious leaders and journalists were arbitrarily targeted for arrest. Several prominent members of the Pamiri diaspora in Russia were abducted before resurfacing in custody in Tajikistan. By the end of the year, most of those arrested had been sentenced to long prison terms in unfair trials, typically for purported membership of a criminal organization and seeking to overthrow the constitutional order. The fate and whereabouts of some of those arrested remained unknown, prompting fears that they had been forcibly disappeared.

The crackdown on prominent Pamiri influencers, local leaders and activists was accompanied by a broader assault on the cultural heritage of Pamiris. Following the May-June unrest, the authorities shut down and confiscated the property of multiple local organizations linked to the Aga Khan Development Network working in the fields of education, economic development and religious instruction.

Freedom of expression remained severely curtailed. The few remaining independent media outlets, human rights defenders and bloggers were heavily targeted in the crackdown that followed the GBAO protests. On 17 May, Mullorajab Yusufi and Anushervon Aripov, journalists working for Radio Free Europe’s Tajik service and regional news outlet Current Time, were severely beaten by unknown assailants in the capital, Dushanbe, shortly after interviewing the well-known Pamiri journalist and human rights activist Ulfatkhonim Mamadshoeva about events in the GBAO. The next day Ulfatkhonim Mamadshoeva was herself arrested and accused of “publicly calling for the overthrow of the constitutional order”. In December, she was sentenced to 21 years’ imprisonment following a closed, unfair trial. Following her arrest, the authorities ordered Asia-Plus, the privately owned news agency for which she reported, to cease covering events in the GBAO. Other outlets reported similar coercion. On 19 May, Pamiri blogger and journalist Khushruz Jumayev (known online as Khush Gulyam) was arrested. He was sentenced to eight years’ imprisonment in December on opaque charges relating to the May events in the GBAO. Other activists who faced unfair trials during the year included around a dozen members of Commission 44, an independent group of lawyers and human rights defenders established to investigate the November 2021 killing of an activist that sparked protests in the GBAO.

Shaftolu Bekdavlatov and Khujamri Pirmamadov were sentenced to 18 years’ imprisonment each on charges of organizing a criminal group and receiving financial assistance from abroad. The head of the Pamiri Lawyers’ Association, Manuchehr Kholiknazarov, was sentenced to 15 years’ imprisonment on 9 December. Journalists and bloggers also faced prosecutions for critical reporting unrelated to the GBAO. On 15 June, two journalists and collaborators who reported widely on economic and social rights violations, Daler Imomali and Avazmad Gurbatov (also known as Abdullo Gurbati), were arrested shortly after reporting on the demolition of homes in Dushanbe. Avazmad Gurbatov was sentenced on 4 October to seven-and-a-half years’ imprisonment in a closed trial on trumped-up charges of assaulting a police officer and membership of the arbitrarily banned political organization Group 24. In a separate trial two weeks later, Daler Imomali was sentenced to 10 years’ imprisonment, on equally far-fetched charges of tax evasion, disseminating false information and purported membership of Group 24. The internet was completely shut down for the first few months of the year in the GBAO and only intermittently and partially restored during the rest of the year. Tight restrictions remained in place throughout the country.

Torture and other ill-treatment remained widespread both as a means of intimidation and extracting confessions. Prisoners continued to report abuse and neglect, including beatings, lack of access to food and water and cold and wet conditions within the cells. While in pretrial detention following his arrest in July, Abdusattor Pirmuhammadzoda, a blogger who had been fired from a state radio broadcaster for criticizing the government in 2020, managed to smuggle out a letter in which he described being subjected to severe beatings, electric shocks and psychological torture, including threats against his family, in order to secure a confession. He was sentenced to seven years’ imprisonment in November. In June, while trying to attend a concert in a public park in Dushanbe, Elobat Oghalykova was arrested for wearing a black dress in mourning for the death of one of her sons – a traditional practice that was banned in 2017. She was beaten at Spitamen District Police station and required hospitalization. When she filed a complaint, she was threatened with 15 days’ detention for disobeying a police officer.

According to multiple indicators published during the year, including the World Economic Forum’s Global Gender Gap Report, Tajikistan’s gender gap was the highest of all Central Asian countries and one of the highest globally. According to a survey published by the EU-UN Spotlight Initiative in June, 77.3% of respondents considered violence against women to be prevalent in Tajikistan and 34% of respondents (across both genders) believed it was justifiable to beat a partner who refused to obey. The accompanying report highlighted many longstanding problems: the weak legal framework; the limited range and inadequate funding of protection services; and stereotypical attitudes among public service providers, including law enforcement agencies. A draft criminal code criminalizing domestic violence, put before parliament in 2021, had not been passed by the end of the year.

In August, UNHCR, the UN refugee agency, raised grave concerns about the continued detention and deportation of Afghan refugees. The agency documented dozens of cases in August and September alone. Members of the nearly 14,000-strong Afghan refugee community reported that the forced expulsions were taking place without any procedure or obvious justification.

Source: Amnesty International

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Teachers in Europe are expected to continue striking for better pay and working conditions in 2024 after many of their salaries fell in real terms.

Teachers across Europe have gone on strike in recent years for better pay and working conditions, while many European education systems are suffering from shortages. 

They plan to continue striking and taking to the streets to be heard in 2024 as living costs increase and real wages are down in many countries.

Several indicators suggest that the problem is serious. Annual starting salaries of teachers, which are adjusted for inflation, fell in many countries across Europe in the last six years. 

More than half of teachers in the EU are not satisfied with their salaries. Only one-fifth of them think that the teaching profession is valued in society, and one in 10 regrets becoming a teacher.

Both 2022 and 2023 saw a series of teacher strikes take place across Europe including the UK, France, Germany, Italy, Hungary, Spain, Portugal, Czechia, and Romania. 

The calls of unions show that strikes will continue in 2024. 

Teachers in Northern Ireland have already confirmed that they will join industrial action after Christmas.

So, how do teacher salaries compare across Europe? Which countries pay teachers the most and the least? How much have teacher salaries changed in real terms in recent years?

Average gross teachers salaries

Teacher salaries vary widely across Europe according to the European Commission EACEA/Eurydice’s ‘Teachers’ and school heads’ salaries and allowances in Europe in 2021/2022’ report.

The average annual gross actual salaries of low secondary teachers (ISCED 2) in public schools ranged from around €8,160 in Bosnia and Herzegovina to €71,184 in Germany. 

Data for some countries, including Luxembourg, which ranked at the top in the previous year, is not available for 2022.

The average actual salary refers to the weighted average gross annual salary, including the statutory salary and other additional payments such as bonuses and allowances. 

It excludes the employers’ social security and pension contributions but includes those paid by the employees.

While we look at low secondary teachers in analysis, the graph below also shows the salaries of other education levels such as pre-primary (ISCED 02), primary (ISCED 1) and upper secondary (ISCED 34) teachers.

https://flo.uri.sh/visualisation/15976660/embed?auto=1

The annual actual salary was over €50,000 in eight countries including the Netherlands (€67,638), Denmark (€66,673), Ireland (€63,278), Austria (€60,686), Norway (€59,276) and Finland (€52,076).

Teachers in France earned €30,000 less than their colleagues in Germany

The annual actual salary in Italy was less than half the German figure. Teachers in France also earned almost €30,000 less than what their colleagues in Germany received in 2021/2022.

The salary of teachers was below €20,000 in five EU members such as Greece (€18,765), Poland (€16,725) and Romania (€12,987).

Teachers in Nordic countries are comparatively paid well, whereas the actual salaries of teachers are the lowest in EU member candidates in the Balkans.

According to the UK government’s website, classroom teachers were paid an average of €45,734 (£38,982) in the 2021/2022 school year in England, €45,765 (£39,009) in Wales and €46,959 (£40,026) in Scotland. 

However, it should be noted that UK figures are not directly comparable with Eurydice’s European figures.

Wide disparities in salaries in purchasing power standard

Salaries in purchasing power standard (PPS) can provide a fairer comparison across all countries. 

PPS is “an artificial currency unit” defined by Eurostat, where one PPS unit can theoretically buy the same amount of goods and services in each country.

https://flo.uri.sh/visualisation/15976515/embed?auto=1

Looking at teacher salaries in PPS, there are still wide disparities across Europe.

Germany (56,621 PPS) recorded the highest annual gross statutory starting salaries of lower secondary teachers in PPS. 

This figure was more than four times that in several countries including Albania (12,531 PPS), which was the lowest amount in 2021/2022, and Hungary (12,852 PPS).

At the top, Germany was followed by Luxembourg (52,963 PPS) and Switzerland (46,722 PPS).

Teacher salaries were below 20,000 PPS in thirteen countries, among which eight were EU members: Estonia, Romania, Bulgaria, Greece, Poland, Slovakia, Latvia, and Hungary, respectively.

Turkey was ranked the fourth in PPS among 35 countries, which came in at eleventh place in 2020/2021.

Besides Turkey, EU candidate countries Montenegro, North Macedonia, and Serbia had higher figures in PPS than several EU countries.

Actual salaries higher than the GDP per capita in 11 EU countries

Annual gross actual salaries of lower secondary teachers were higher than the gross domestic product (GDP) per capita in 11 EU countries whereas it was lower in 10 EU member states in 2021/2022. 

This suggests that teachers who start working in state schools can earn significantly less than the average GDP per capita in most European countries.

https://flo.uri.sh/visualisation/16004591/embed?auto=1

The ratio of annual gross actual salaries of teachers to GDP per capita ranged from 0.59 in Norway to 1.62 in Cyprus. 

While Germany is one of the countries with the highest GDP per capita in Europe, the ratio is 1.54, meaning that junior teachers still earn more than the average GDP per capita. 

This ratio was just 1.22 in France.

Salaries down in real terms in several countries

Teacher salaries have fallen in real terms, meaning inflation is taken into consideration, in several countries in the last six years. In nine countries, the annual starting salaries of teachers (adjusted for inflation) decreased for all education levels between 2014/2015 and 2021/2022.

Lower secondary teacher salaries fell in ten countries: Norway (–15.4 per cent), Greece (–10.1 per cent), Portugal (–9.2 per cent), Cyprus (–8.1 per cent), Italy (–8 per cent), Belgium (–7.7 per cent), Finland (–5.1 per cent), Turkey (–3.5 per cent), the Netherlands (–2.7 per cent) and Spain (–2.3 per cent).

https://flo.uri.sh/visualisation/15976554/embed?auto=1

The salaries significantly increased in Bulgaria (116.1 per cent) in this period. The increase was also above 40 per cent in Latvia, Serbia, and Lithuania.

In Germany and France, salaries rose less than 3 per cent.

According to the Institute for Fiscal Studies, teachers’ salaries in England decreased by an average of 11 per cent between 2010 and 2022.

Are teachers satisfied with their salaries?

No, they are definitely not. 

According to the OECD’s Teaching and Learning International Survey (TALIS) in 2018, half of teachers (52 per cent) who were under 30 years old were satisfied in the EU (average of 23 countries), while this rate was just 34 per cent for teachers above 50.

https://flo.uri.sh/visualisation/15976871/embed?auto=1

The satisfaction rate in the older age group was evidently low in most of countries. For example, it was below 27 per cent in 12 of 21 countries, including Sweden and France.

Some regrets about deciding to become a teacher

The survey also demonstrates that teachers are not happy with the perceptions of society. In the EU-23, only 18 per cent think that the teaching profession is valued in society. This rate is below 20 per cent in 16 of 22 countries such France (7 per cent), Sweden (11 per cent) and Denmark (18 per cent).

Almost one in ten in the EU-23 also regret that they decided to become a teacher. This rate is above the EU average in Sweden (12 per cent), and Portugal (22 per cent).

https://flo.uri.sh/visualisation/15976929/embed?auto=1

Shortage of teachers and other concerns for the future

While many European countries have been suffering from a lack of qualified teachers for decades, new teaching eco-systems introduced by COVID-19, and the integration of Ukrainian children into EU schools due to Russia’s invasion of Ukraine, are likely to have contributed to exacerbating this problem, according to the European Commission’s ‘Indicators for monitoring teacher shortage in the European Union: possibilities and constraints’ report.

The lack of attractiveness of the teacher profession is often identified as a main factor driving teacher shortage. 

“Low pay, job insecurity, and high workload make it difficult to attract and retain qualified teachers,” the report found.

According to Eurydice’s ‘Teachers in Europe Careers, Development and Well-being’ report, 35 countries across Europe face teacher shortages. 

There are only three countries where oversupply is the main challenge, namely Cyprus, the United Kingdom (Northern Ireland), and Turkey.

Source: Euronews

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As recently as the early 1980s, central bankers around the world could be heard moaning and groaning about having to hold physical gold reserves to back up their currencies. The trouble, expense and potential loss of picturesque cast metal in a world of infinite fiat money and digital bytes reflecting off satellites. It’s a trend: citizens would be amazed to learn that only around 8% of the money working as the lifeblood of economies around the world is in the form of coins and banknotes. Folding money is considered old-fashioned.

A banker might roll his eyes and joke to a colleague: “Imagine, we are continuing to pay out good money to pile up these shiny precious metal ingots in a vault, with armed guards. What is this, the Roman Empire?”

You do not hear that in the new Millennium. Disparagement of gold bullion has quieted, in an age of terrifying global debt overhang and failing trust in eqforeign counterparts and fiat currencies. As the world’s economies glide past an estimated one quadrillion dollars in debt instruments, and inflation eats away at everyone’s assets (but not those of the gold bugs and their holdings, notably, as gold, as recently as the 1970s going for US$ 32/oz., zips past US$ 2,000) the usefulness and credibility of the so-called “petrodollar” look increasingly unappetizing.

This would have been unthinkable had it not been for the foundation of the BRICS Group of nations. Its most unlikely beginning was with avaricious Goldman Sachs – of all people – who proposed a grouping of China, India and Russia, in mutual economic interest, pointedly excluding the USA, the “center of everything” since the end of World War II in 1945.

Hu Jintao, Manmohan Singh and Vladimir Putin got together on the sidelines of the 2008 Group of 8 (G8) meeting in St. Petersburg. Russia, now blackballed because of its “Special Military Operation” in Ukraine, was a G8 member, while India and China attended the gathering as part of a purported G8 “outreach” to emerging economies.

In 2009, the first summit of “BRICs” countries (excluding South Africa) took place in Russia. In 2010, at a foreign ministers’ meeting, the initial four agreed to invite South Africa, a formidable economic power on the continent.

By 2011, now a five-country organization—with the “S” now standing for South Africa— formed up, mostly in aversion to the increasingly inconvenient burden of dealing in dollars. Joining together with a BRIC Currency could alleviate the heavy burden incurred by US dollar-denominated debt, in a zero-sum game, always favoring the wealthy western economies: interest rates soared, as the US Fed struggled against inflation.

About this time, certain countries quietly started selling their USD reserves and stowing away tons of shiny gold bars. Note that it was not simply the “mavericks” who did not care for the damage inflicted on their economies by the Fed: the Finance Minister of Norway, never thought of as “anti-American” nation, publicly belly-ached about having to sell his country’s precious hydrocarbon reserves in dollars.

The other alarming factor was the lethal weaponization of the dollar. With the ignominious ouster of the Shah of Iran and the subsequent hostage crisis, billions of dollars of Iranian assets were “frozen” in the USA. When the Federal Republic of Germany went to reclaim their gold bullion from the Bank of New York they were first brushed off and later found many bars had been melted down and recast.

Around the planet, Uncle Sam began to be perceived as an unreliable, if not unscrupulous relative, who would turn on you and pocket your valuables if you did not behave his way. Whatever happened to Khaddafi’s tons of gold, spirited off by NATO pirates?

The buzzword was “dedollarization”. Appealing though the notion might be to those whose billions are locked away by Washington, it is worthwhile to pause and consider how much time went by and effort was expended in setting up the Euro. The EU, certified in 1957 by the “Luxemburg Treaty”, took a full forty-two years of hard work, before Maastricht was hammered out, in 1999.

The most recent BRICS Summit, hosted by President Cyril Ramaphosa of South Africa in August of this year, received endorsement from outliers like Algeria, Argentina, Bahrain, Bangladesh, Egypt, Indonesia, Iran and Saudi Arabia.

Member countries might be active in their economics, trade, and finance relationships, including payment protocol, but it is an unbalanced interdependence, pitting a behemoth like the PRC against, say, Argentina. An advanced economy cannot create a common currency with a primitive one, as one is too dependent on the other: interdependence implies balance. Politics alone won’t do the job.

Bear in mind that with all the grunting and shoving toward de-dollarization, currency trading in USD still constitutes 88 per cent of the total. Global reserves sit at 60 per cent in USD, 20 per cent in Euros and only 2 per cent in Renminbi. National debts are mostly in USD. It was amusing to watch Argentina hurriedly swap their Renminbi, disbursed after a recent large purchase from the PRC, for billions of dollars.

ASEAN gave it a shot, looking to set up the “Asian Currency Unit” (ACU); that yielded nothing, except for a convenient swap facility, eventually known as “Local Currency Settlements” (LCS), still functioning as of this writing.

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When Ranil Wickremesinghe took over as Sri Lanka’s president in July after a popular uprising ousted his predecessor, the South Asian island nation was engulfed in its worst economic meltdown in 75 years.

Since then, President Wickremesinghe has managed to a keep a lid on mass protests, improve supplies of essentials and on Monday, secured a nearly $3 billion bailout from the International Monetary Fund (IMF) that opens the door to restructuring about $58 billion of debt and receive funding from other lenders.

On March 20, the IMF approved a $3 billion Extended Fund Facility (EFF) to support Sri Lanka amid its economic crisis. The approval is expected to pave the way for other financial institutions to extend support to the bankrupt South Asian country.

He has done that despite a deeply unpopular government, his own party commanding just one seat in the 225-member parliament and having to rely for support on the party of the man he replaced.

Hours-long power cuts and queues for fuel that led to the downfall of former President Gotabaya Rajapaksa are gone, thanks partly to a fuel rationing system. Tourists are returning, remittances are recovering and foreign exchange reserves are rising, though the economy is still contracting. But due largely to significant hikes in income taxes and power tariffs that were needed to get the IMF on board, the government of the 73-year-old is no favourite of the people. According to a “Mood of the Nation” poll run in February by private think-tank Verité Research, the government’s approval rating was 10%, the same as in October but higher than an all-time low of 3% in June, when Rajapaksa was in power. Only 4% were satisfied with the way things were going in Sri Lanka, down from 7% in October but higher than 2% in June.

There are no known approval ratings for Wickremesinghe as president. “He’s ready to face the people’s anger in the short term, to ensure long-term stability and growth in the country,” said Dinouk Colombage, Wickremesinghe’s director of international affairs. “Even though the president only has one seat in parliament, him carrying forward his agenda, bringing forth the reforms, once the results start showing, I think the people will come out in open support of him.”

Born into a prominent family of politicians and business-people with large interests in the media, the lawyer and six-time prime minister has little support beyond wealthy urban voters. His ability to make policy depends to a great extent on the support of the Sri Lanka Podujana Peramuna party, largely controlled by the Rajapaksa family.

For now, Wickremesinghe is enjoying that support, and he said on Sunday that his country was on the right track There’s fuel now, there’s electricity, there’s fertiliser and by April, there will be enough rice and other foodstuff,” he said at an event in Colombo. “We will no longer be declared a bankrupt nation, but a nation that can restructure its debts.”

The bailout is expected to catalyse additional external support, with funding expected from the World Bank and the Asian Development Bank to the tune of $3.75 billion, the IMF said in a statement.

In recent months, Wickremesinghe successfully negotiated economic support from top lenders China, India and Japan, culminating in the IMF bailout. He flew to Japan in October to apologise for the cancellation of Japanese-funded projects under Rajapaksa, which convinced Tokyo to back Sri Lanka’s request for the IMF bailout.

The Paris Club of creditors, which includes Japan, earlier this year gave financing assurances to support the IMF deal. A Japan-funded $1.8 billion light-railway project, which was suspended in 2019, is among infrastructure projects that Sri Lanka is now trying to restart.

But Sri Lanka still needs to renegotiate its debt, a potentially drawn-out process where Wickremesinghe, who is also the finance minister, will have to deal with demands from China, India and other creditors. He still has to turn around the economy, which shrank 7.8% in 2022 and is expected to contract by 3% this year.

Implementing further reforms under the IMF programme, reducing record-high interest rates and controlling inflation will also continue to pose challenges for Wickremesinghe, who has faced trade union strikes after the tax and power hikes.

Critics say Wickremesinghe’s economy-first approach ignores political and systemic reforms – like stronger anti-corruption measures and more transparency in government decision-making – as demanded by mass protesters who banded together as the “Aragalaya” movement last year.

“One year on, there is no real structural change in governance or system change,” said Bhavani Fonseka, senior researcher at Colombo-based Centre for Policy Alternatives. “The president does take this line that his priority is addressing the economy over everything else, but you can’t have that silo-ed approach and think people are going to be okay with it.”

A crisis-weary public may still have to absorb years of continuing hardship as Sri Lanka tries to fix its economy during the four-year IMF programme, warned Jayadeva Uyangoda, a senior political analyst. “Wickremesinghe has managed to neutralise the Aragalaya and that was a major success, but the economic and social crisis goes on,” he said.

“Economic stability will take at least another couple of years.”

Source : Reuters

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London (07/11 – 70)

President Ranil Wickremesinghe, at the helm of the United National Party (UNP), has orchestrated a remarkable turnaround for Sri Lanka’s tumultuous economy, tackling persistent challenges with a steadfast determination that has garnered widespread support across the national and international communities.

Upon assuming office, Wickremesinghe confronted an array of pressing issues, including severe electricity shortage resulting in daily power cuts, soaring inflation, an all time low foreign reserve value and scarcities in essential commodities such as fuel and milk powder. Swift and strategic actions within his first six months in power yielded tangible results, with the electricity crisis resolved and power outages becoming a thing of the past. Notably, the restoration of a stable supply of fuel and commodities has revitalised the country’s markets, marking a significant shift from the uncertainties of pre-Ranil Sri Lanka.

Sri Lanka’s President Ranil Wickremesinghe tackled persistent challenges with a steadfast determination that has garnered widespread support across the national and international communities, including managing the IMF program.

Despite the persistent specter of inflation, the president’s administration has implemented measures to mitigate its impact, gradually stabilising the economy and fostering an environment conducive to growth. The successful repayment of a substantial USD 200 million loan from Bangladesh underlines the administration’s commitment to fiscal prudence, earning commendation both domestically and internationally.

Managing the International Monetary Fund (IMF) program has presented its share of challenges, but President Wickremesinghe’s deft navigation of these complexities has underscored his administration’s dedication to responsible economic governance and effective policy implementation.

An assertive move that defined his tenure was the swift handling of disruptive protests that posed a threat to public order. Upholding the rule of law, President Wickremesinghe quelled dissenting voices with the assistance of law enforcement, demonstrating his resolve to ensure the seamless functioning of the government and the preservation of social stability.

The persistent opposition from the communist factions in Sri Lanka, notably including the Marxist-Leninist former armed insurrectionist Janatha Vimukthi Peramuna (JVP) political party and its affiliated front organisations such as the Frontline Socialist Party (FSP) and the Inter-University Student Federation (IUSF), commonly known as ‘Anthare,’ continues to pose a challenge to President Ranil Wickremesinghe’s administration. After failing to launch armed insurrections against the state in the 70s and 80s, these groups have been known to mobilise protests, riots, and disruptive activities, often with the intention of undermining public peace and stability. Additionally, the communist-influenced trade unions across various sectors have resorted to strikes and sit-ins, leveraging their collective power to impose self-serving demands and disrupt the normal functioning of key industries. Notably, the Aragalaya movement, also influenced by communist elements, underscored the pervasive influence of such groups within the social and political fabric of the nation. President Wickremesinghe’s firm and resolute approach to tackling these disruptive forces has effectively marginalised their impact, marking a stark departure from the previous administration’s inability to address similar challenges. His unwavering stance against agitators and hooligans has relegated these disruptive elements to the fringes of the political landscape, highlighting his adeptness in managing volatile political dynamics and ensuring the preservation of public order and stability.

President Wickremesinghe’s political journey is marked by intrigue and challenges, with his lineage and astute leadership consolidating his position within the UNP. The rift with Sajith Premadasa, the current opposition leader, exemplifies the complexities of Sri Lankan politics. Despite internal divisions and external pressures, President Wickremesinghe’s ability to secure the presidency with a solitary parliamentary seat underscores his political acumen and resilience in the face of adversity, leaving an enduring imprint on the nation’s political landscape.

As President Ranil Wickremesinghe continues to navigate the intricacies of governance and policymaking, his commitment to fostering economic stability and upholding social order serves as a testament to his leadership and vision for a prosperous Sri Lanka. With a resolute stance against disruptive elements, President Wickremesinghe has solidified his position as a bulwark against political turbulence, ensuring that the nation marches forward on a trajectory of progress and prosperity.

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Both the treasury secretary, Janet Yellen, and Fed chairman, Jerome Powell, were wrong about inflation, having first called rising prices “transitory” after Covid disrupted the entire world’s supply chain. Nobel winner Paul Krugmanpublicly admitted his mistakes. They were not alone.

In 2021, 16 of the 36 living American Nobel economists declared, incorrectly, that “whatever upward pressure on prices all this new money (ie government stimulus) might bring there was no threat of inflation”. According to a recent report, 70% of economists polled by Bloomberg expected a US recession in 2023 and at the same time another poll from the National Association for Business Economics (NABE), found that 58% of economists believed there was a more than 50% chance of the US entering a recession this year. Never happened. GDP growth rate in the third quarter (4.9%) rivaled some of the strongest post-war periods in American history.

Could any of these people have told us 18 months ago that interest rates above prime charged to many of my clients would be in the double-digits today? Could they have had an inkling that, despite wars, volatile prices, historically low housing affordability, uncertain markets and wages that have been trailing sticky inflation levels that American consumers would still continue to spend at historically high amounts? Our great economists missed all of that too.

Now, many of them are making their economic predictions for 2024. Which begs the question: should we even be paying attention? This data is critical. Business leaders are making budgets, deciding on hiring plans, targeting their investments, and understanding the economy plays a huge role in those decisions. Base your strategies off bad data and you could find yourself losing money next year. That impacts not only your cash, but your ability to employ people and grow your business. It’s a big deal.

There are sites like Trading Economics and Fred that can bury you in all sorts of arcane economic data from worldwide steel production to plant capacity utilization to the price activity of corrugated shipping containers. Some of this stuff gets reported in the media. But after almost 30 years of looking at this information I’ve come to the realization that most of this data isn’t very useful. Why? Because most of it ignores the core driver of the economy: the consumer.

So if you want to know how 2024 is going to be, pay attention to these consumer metrics:

Paychex and ADP employment indexes

These are the two largest payroll service providers in the country and every month they release data about employment and wages. Their data is based on actual payroll from actual companies. When wages are growing that’s a sign of strength in the job market as employers are willing to pay more for talent. Spoiler alert: wage growth is still pretty strong and unemployment remains low, both good signs.

Consumer delinquencies

Consumer loan delinquencies are gathered monthly and directly from banks across the country by the Federal Reserve as well as auto loan delinquencies. Mortgage delinquencies comes from the Consumer Financial Protection Bureau. These are backward-looking, but all of these numbers are rising, which is not a good sign.

Consumer and small business confidence

I’m not a fan of surveys because they oftentimes come with an agenda. But both the University of Michigan and the National Federation of Independent Businesses have been doing their consumer and small business confidence surveys for decades. The numbers are consistently analyzed and have enough of a history to rely on trends. Both levels of confidence are very low and trending down.

Bank CEOs

Every quarter our nation’s largest banks release their earnings and their CEOs tell it like it is. So how is it as of 30 September? Charles Scharf the CEO of Wells Fargo says “while the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly.” Jamie Dimon who runs JP Morgan Chase warned “currently, US consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers” and that “this may be the most dangerous time the world has seen in decades.” Jane Fraser, CEO of Citi also warns that “we are seeing some cracks in the lower [credit score] consumer.”

Retail CEOs

They’re far from perfect, but if there’s anyone who’s got a pulse on the consumer it’s the big companies selling directly to them. What are they seeing? Brian Olsavsky, Amazon’s CFO, says “consumers are still spending, though are “deal driven” and focusing on lower cost items”. Jeff Gennette, the CEO of Macy’s says that “we continue to see uncertainty in the macroeconomic environment.” While the National Retail Federation is predicting strong holiday sales, not one big-box CEO that I’ve followed has expressed lots of cheer for 2024.

These are not government surveys and they’re not from an economist sitting in Cambridge or New Haven.

This information is from real-life companies based on their real-life data and it’s all about the consumer. It’s about what people are getting paid and how they’re spending their money. And when the consumer stops spending, that’s when the economy slows. You don’t need an economist to tell you that.

Source: The Guardian

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