The World Today for January 10, 2018
NEED TO KNOW
Do Do That Voodoo
As recently as August 2016, pundits warned Portugal might become “Europe’s next economic disaster,” thanks to its Socialist government’s decision to ignore the European Union’s austerity diktats. Instead, the finance minister who flouted the conventional wisdom is shining brighter than Real Madrid striker Cristiano Ronaldo.
Criticized for “voodoo economics” when he pledged to simultaneously reverse his predecessor’s austerity policies and meet the EU’s strict fiscal targets, Finance Minister Mario Centeno announced in December that Portugal’s budget deficit was just 0.1 percent of gross domestic product in the 12 months ending in September, putting the country on course to beat its full-year target and reduce its debt burden, Reuters reported.
Perhaps more importantly, German Chancellor Angela Merkel threw her country’s weight behind Centeno to head the Eurogroup, which monitors draft national budgets and bailout programs as part of the economic surveillance instituted as a result of the eurozone debt crises. Signaling a broad reversal, it’s as if Merkel were channeling Cole Porter to say: Do do that voodoo that you do so well.
“Centeno’s appointment is representative of a policy change in the workings of the eurozone,” Foreign Policy quoted economist Gustav Horn as saying. “It’s an admission that the hard-line austerity prescriptions and fiscal contraction haven’t worked, which we can see in Greece.”
Facing bankruptcy, Portugal signed up for a bailout in 2011 that forced its then-conservative government to reduce the budget deficit. So it raised taxes, cut wages for public servants, privatized public utilities and slashed the education budget by 23 percent. Unemployment skyrocketed and growth plunged as a result.
Under the Socialist-led government that came to power in 2015, Lisbon reversed a raft of policies, which Centeno considered to be strangling the economy. Among the highlights: the government reversed pension and salary cuts, stopped the privatization of public water and transport companies, increased the minimum wage and threw out a regressive tax hike.
Over the new government’s first year in office, Portugal saw a 13-percent jump in corporate investment and cut the budget deficit in half – meeting the eurozone’s fiscal rules for the first time, Owen Jones opined in the UK’s Guardian newspaper. In 2017, Lisbon expects economic growth to accelerate to 2.6 percent from 1.5 percent in 2016 – versus 0.9 percent in 2014 under the previous administration. “Throughout Europe’s lost decade, millions of us held that there was indeed an alternative” to austerity, Jones crowed. “Now we have the proof.”
Not everyone is convinced. The Economist warned in April that the debt-to-GDP ratio was inching up despite the rebound in growth, and cast a gimlet eye on the country’s success cutting the deficit. And even after Centeno’s promise of the biggest cut in the debt-to-GDP ratio in 19 years, the debt – at 130 percent of GDP last year – will remain at more than twice the level recommended by the EU.
Nevertheless, Portugal looks set to change the script for beleaguered countries like Spain and Greece – which may or may not have the wherewithal to duplicate Lisbon’s success.
WANT TO KNOW
The Iran-backed Houthi rebels fighting for control of Yemen are threatening to block the strategic Red Sea shipping lane if the Saudi-backed coalition continues to advance on the port of Hodeidah.
The Saudi-led coalition has been trying to capture the port since the start of the war in March 2015 and has in recent weeks launched a ground campaign and intensified air strikes, Reuters reported. Yemen’s largest, the port receives 80 percent of Yemen’s imports.
Oil tankers pass near Yemen’s shores as they pass through the Red Sea en route from the Middle East through the Suez Canal to Europe. The 12-mile wide Bab al-Mandab strait is a choke point vulnerable to a blockade.
“Their ships pass by our waters while our people starve,” said the Houthis’ Ansarullah political council chief, Saleh al-Samad.
The proxy war has left some 8 million people on the brink of famine, while more than 10,000 have been killed and tens of thousands of others are struggling against disease.
Worn Out Welcome
Ecuador is looking for somebody – anybody – to help negotiate Wikileaks’ founder Julian Assange’s exit from its embassy in London.
“We have an enormous interest in finding a definitive solution to the Assange case and for that to happen, we’re in a permanent dialogue with the government of the United Kingdom,” Bloomberg quoted Foreign Minister Maria Fernanda Espinosa as saying in Quito on Tuesday. Mediation by a third country could be the answer, she said.
Awarded diplomatic asylum in mid-2012 on the grounds that his life might be in danger were he extradited to the US, Assange relations with Ecuador soured over the past year as he clashed with President Lenin Moreno over social media and caused trouble by leaking documents damaging to Hillary Clinton during the US presidential election and backed the Catalonian separatists in Spain.
Moreno has warned Assange not to get involved in the affairs of other countries.
More People Equals More Strife
Nigeria’s president blamed communal violence that has killed at least 83 people on the country’s rapidly expanding population.
“While the land size has not changed and will not change, urban sprawl and development have simply reduced land area both for peasant farming and cattle grazing,” Reuters quoted a statement from the office of President Muhammadu Buhari as saying.
Since Dec. 31, at least 83 people have been killed in clashes between Muslim cattle herders and Christian farmers, mostly in the central state of Benue.
Nigeria’s population was around 63 million when the West African country gained independence in 1960, compared with a population now “estimated at close to 200 million,” the statement explained. According to the United Nations, Nigeria will become the world’s third largest population, behind India and China, by 2050.
Strife is rare among Nigeria’s 250 different ethnic groups, split about 50-50 between Christians and Muslims. However, the Islamist Boko Haram continues to plague the country with suicide bombings and other attacks.
Two Birds, One Stone
Sometimes, a highly sought solution gets its start in an unlikely place, suggests new evidence that a drug for type 2 diabetes can also decrease the effects of Alzheimer’s.
In a study published recently in the journal Brain Research, scientists examined the effects of a new “triple action” medication that combines three different drugs used for type 2 diabetes for its impact on dementia.
Stymied insulin production – the defining factor of type 2 diabetes – has long been known to be linked to brain degeneration, and previous reports on the effects of diabetes drugs on combating dementia have shown positive results.
But this new, multi-action drug showed even more promising results than those previously seen. Mice with genetic mutations that cause Alzheimer’s blazed through maze tests and displayed slower degeneration of nerve cells after being injected with the new drug.
Though some researchers remain skeptical, lead researcher Christian Holscher of Lancaster University in the United Kingdom thinks the drug “holds clear promise” of quickly being used on Alzheimer’s patients since it’s already cleared for human use – a sentiment echoed by British Alzheimer’s societies, the Independent reported.