Global News February 22, 2017

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  2. Global News February 22, 2017

The Economist
“Another round in the Grexit saga: Greece’s creditors are now the main impediment to solving the country’s woes”

If history repeats itself first as tragedy and then as farce, it continues thereafter as endless iterations of Greek debt dramas. The script is wearyingly familiar. Greece’s European creditors are trying to close the second review of its third bail-out, which was signed in August 2015. That would enable them to lend Greece the funds it needs to meet €6.3bn ($6.7bn) of bond repayments due in July. But talks have run aground ahead of a meeting of euro-zone finance ministers in Brussels on February 20th. Bond yields have spiked, German ministers are issuing barbed comments, and dust is being blown off the Grexit files. The review covers everything from health care to military wages. But thanks to pressure from the IMF—which has not yet joined the bail-out, as it did the previous two—Greece faces more pressing demands: to pass tax and pension reforms worth 2.5% of GDP, to kick in after the bail-out expires. Alexis Tsipras’s hard-left Syriza government will struggle to get these measures through parliament, but the alternative is to call elections that Syriza would probably lose to New Democracy, a centre-right party. Thousands of farmers wielding their produce took to the streets in Athens in outrage at more austerity (see picture). Unions are pondering further protests. Locked inside the euro, unable to devalue, and confronted with German fears over a “transfer union”, Greece has been forced down the road of internal devaluation and austerity. The government has met current expenditures (bar interest payments on debt) from revenues since 2014; today’s arguments are largely about shuffling money from one public creditor to another. Even if the July deadline is met, further cliff-edges lie ahead, meaning more summitry and more market jitters. Northern Europeans will grow more, not less, hostile to debt forgiveness, even if it comes in disguise. The deadlock this time may not be as serious as in 2015, when Greece came close to ejection from the euro. Yet it shows the problem of a bail-out architecture that is unfit for purpose but from which neither creditors nor Greeks can work out how to extricate themselves.


“Turkey reverses female army officers’ headscarf ban”

A ban on female army officers in Turkey wearing the Muslim headscarf has been lifted by the government. The military is the last Turkish institution to see the ban removed. It has long been seen as the guardian of Turkey’s secular constitution. Wearing headscarves in public institutions was banned in the 1980s. But Turkey’s Islamist-leaning President, Recep Tayyip Erdogan, argues that the ban is an illiberal vestige of the past. The issue has been controversial in Turkey for many years. Secularists regard the headscarf as a symbol of religious conservatism and have accused President Erdogan of pushing an Islamist agenda, converting many public schools into religious ones as part of his pledge to raise «a pious generation».


The Washington Post
“With NAFTA in Trump’s crosshairs, Mexico’s border factories brace for the unknown”

The supply of cheap labor in Mexico has fueled the rise of manufacturing plants dotting the border known as maquiladoras, from El Paso to Ciudad Juarez and back, illustrates the far-reaching tentacles of free trade and its impact on the border economy and across the United States. It’s a journey now fraught with tension as President Trump moves to renegotiate — or even unilaterally withdraw the country from — the 23-year-old North American Free Trade Agreement (NAFTA), which has allowed maquiladoras to flourish but which Trump and some Rust Belt communities blame for the loss of U.S. manufacturing jobs. Perhaps no one knows the complex implications of trade agreements better than a family whose prosperity and company profits were built on their promises. Now, in a moment of uncertainty and flux, the tweaking of any trade deal will change the foundation on which the company runs as well as the economic fates of two cities that are inextricably linked. Altering NAFTA could raise another complexity — the higher prices likely to follow would make U.S. companies less competitive against manufacturers overseas. NAFTA, which Trump has called “the worst trade deal in history,” set the foundation for the current economic ecosystem in border towns by allowing companies in the United States to send raw materials to their plants in Mexico for assembly and import the finished product back to the United States — generally without paying duties. The result for consumers: finished goods at a lower price.


The Guardian
“Former Hong Kong leader Donald Tsang jailed for corruption”

The former Hong Kong leader Donald Tsang has been sentenced to 20 months in jail for misconduct in public office, making him the most senior city official to be imprisoned in a ruling some said reaffirmed the territory’s vaunted rule of law. The sentencing on Wednesday brings an ignominious end to what had been a long and stellar career for Tsang before and after the 1997 handover to Chinese control, service that saw him knighted by the outgoing British colonial rulers. Tsang, 72, wearing one of his trademark bow ties, was escorted in handcuffs to the court from hospital where he had been staying since Monday night after experiencing breathing difficulties and chest pains. is conviction adds to a number of scandals ensnaring powerful officials that have marred the city’s reputation as a relatively corruption-free society guarded by a powerful and independent anti-graft agency. His right-hand man, Rafael Hui, who worked under him for two years as the city’s second highest-ranking official, was sentenced to seven and a half years in jail in late 2014 for receiving bribes from a billionaire tycoon at the head of Sun Hung Kai, one of Asia’s largest property developers.


“HSBC hit by loss of more than $4 billion”

The hangover from the murky past of HSBC’s private banking business is still lingering. HSBC on Tuesday reported a net loss of $4.2 billion for the fourth quarter of 2016. The biggest single hit to its battered bottom line came from a $2.4 billion write-down of the value of its private banking business in Europe. The global banking giant has spent years shrinking down and cleaning up its private banking operations, notably in Switzerland. The business came under scrutiny over revelations it catered to weapons dealers, tax evaders and dictators. HSBC has been cutting tens of thousands of jobs in recent years as it tries to overhaul its sprawling businesses to keep up with changes in the global economy. Last year, it sold off its operations in Brazil. Also, HSBC, Britain’s largest bank, has already said it could move about 1,000 jobs from London to Paris to deal with the repercussions of Brexit.