Italy has no chance of boosting its military spending to 2% of gross domestic product (GDP) in 2024, despite NATO requirements, and won’t likely be able to meet the target within the next five years, Italian Defense Minister Guido Crosetto has told lawmakers in Rome.
Italy’s defense spending this year will equate to 1.46% of the country’s GDP, according to a NATO estimate. The ratio will reportedly drop to 1.38% next year and to 1.26% in 2025, even as defense spending rises. Speaking to members of the defense and foreign affairs committees in both houses of Italy’s parliament on Tuesday, Crosetto said bringing military spending to 2% of GDP will be “impossible” in 2024 and “difficult for 2028 as well.” He went on to add, “We are indeed far from 2%, very far.” “NATO must not set unrealistic financial objectives,” Crosetto said. Italy won’t be able to increase its military spending as much as needed unless the defense budget is excluded from EU fiscal constraints, Crosetto has previously warned. “If we do not resolve the current framework of inconsistency between the responsibility to strengthen security and the public finance [restrictions] imposed by the EU, it will be very difficult to reach the 2% minimum threshold envisaged by NATO within a reasonable timeframe,” he said in June. Members of the Western military bloc agreed at a 2014 summit to target defense spending equivalent to 2% of each country’s GDP by 2024. The bloc agreed in July to make the 2% threshold a minimum requirement, rather than a goal. However, only 11 of the 31 current members are projected to reach the target this year. Italian Prime Minister Giorgia Meloni told lawmakers earlier this year that respecting the country’s spending commitments were necessary to protect national sovereignty and credibility. “Freedom has a price, and if you are not able to defend yourself, someone else will do it for you, but will not do it for free,” she said. “They will impose their interests, even if they differ from yours, and I don’t think this was ever good business for anyone.”
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Chinese financial institutions lent $1.34 trillion to developing countries from 2000 to 2021, U.S. researchers at AidData said in a report that showed the world's biggest bilateral lender switching from infrastructure to rescue lending.
While lending commitments peaked at almost $136 billion in 2016, China still committed to almost $80 billion of loans and grants in 2021 according to the data, which captures almost 21,000 projects in 165 low and middle income countries as probably the most comprehensive dataset of its type. Chinese financial institutions lent $1.34 trillion to developing countries from 2000 to 2021, U.S. researchers at AidData said in a report that showed the world's biggest bilateral lender switching from infrastructure to rescue lending. While lending commitments peaked at almost $136 billion in 2016, China still committed to almost $80 billion of loans and grants in 2021 according to the data, which captures almost 21,000 projects in 165 low and middle income countries as probably the most comprehensive dataset of its type. The People's Bank of China and the State Administration of Foreign Exchange (SAFE), which manages China's foreign currency reserves, accounted for more than half of lending in 2021, almost all bailout lending. "Beijing is navigating an unfamiliar and uncomfortable role — as the world's largest official debt collector," said the report by AidData, a research lab at William and Mary university. Much of China's growing rescue lending is denominated in renminbi, the report found, with loans in the Chinese currency overtaking U.S. dollars in 2020. Overdue payments to Chinese lenders have also risen. One way China is managing repayment risk is through foreign currency cash escrow accounts it controls, AidData said. The arrangement is controversial because it gives China debt seniority, meaning other lenders, including multilateral development banks, could get paid second during any coordinated debt relief. AidData identified 15 countries, primarily in Africa, with escrow accounts totaling a combined $2.5 billion at their peak in June 2023. Brad Parks, the study's lead author, said they were not able to identify all such accounts, as they are normally kept private. He noted, though, that they had found collateralized loans worth $614 billion and that cash was the main source of collateral required by Chinese lenders, indicating that the amount in escrow accounts could be far higher than $2.5 billion. China is also working more with multilateral lenders and Western commercial banks. Half of its non-emergency lending in 2021 was syndicated loans, 80% of that alongside Western banks and international financial institutions. The destinations of Chinese overseas lending have also changed. Loan commitments to African countries fell from 31% of the total in 2018 to 12% in 2021, while lending to European countries almost quadrupled to 23%. A different dataset showed loan commitments to African countries falling to a 20-year low in 2022. The former chairman of the state-owned Bank of China, has been arrested on suspicion of bribery and issuing illegal loans, the Xinhua news agency reported on Monday.
Liu Liange's arrest comes as part of a widespread anti-corruption crackdown by the authorities in Beijing. According to Xinhua, he has been accused of a range of crimes related to the illegal granting of loans and bringing banned publications into the country. The 62-year-old, who was Bank of China chairman from 2019 to 2023, is also alleged to have used his position to procure bribes and accept gifts and entertainment at private clubs and ski resorts. Liu announced in March that he was stepping down from his position, several weeks before the authorities revealed that he was facing corruption charges. His arrest, which was reportedly ordered by the Supreme People’s Procuratorate (SPP), comes around a week after Liu was formally expelled from the ruling Communist Party following an investigation by the Central Commission for Discipline Inspection (CCDI). Liu is the latest high-profile figure to be detained as part of widespread anti-corruption efforts ordered by President Xi Jinping into the country’s $60 trillion financial sector. Xi has made fighting corruption a key policy issue since becoming president a decade ago. The campaign enjoys considerable public support, although critics claim it allows the president to consolidate power by replacing rivals with loyalists in key positions. Wang Bin, the former chairman of China Life Insurance, was sentenced to life in prison without the possibility of parole last month for involvement in bribery. Several other prominent banking or financial sector executives have been fined, imprisoned, or are under investigation for alleged crimes. Shares in the UK’s Metro Bank were briefly suspended from trading twice on Thursday, after the stock plunged nearly 30% over reports of urgent fundraising efforts to shore up the bank’s balance sheet.
Metro Bank shares have now fallen more than 60% since September 12, when it revealed that UK regulators had failed to approve a plan that would allow Metro to run its mortgage business at a lower cost. The London Stock Exchange confirmed to CNBC that the brief suspensions were triggered by its circuit breaker mechanisms because of Metro Bank’s stock crash. The bank, which was reportedly attempting to raise £600 million ($727 million) in debt and equity, said in a statement on Thursday that it is currently considering “how best to enhance its capital resources.” The options include asking investors to help refinance $424 million worth of debt before it falls due in 2025, as well as raising hundreds of millions of pounds through the sale of debt, shares, or assets. “No decision has been made on whether to proceed with any of these options,” Metro Bank stated. Rating agency Fitch placed Metro on negative watch on Wednesday, citing increased risks to its business model, capital position, and funding. Founded by US billionaire Vernon Hill in 2010, Metro Bank became the UK’s first new high-street bank in more than a century. In 2019, it was hit by a misreporting scandal that led to the exit of its chair and chief executive.
Italian industry and manufacturing, in particular, have been struggling in the past several months due to a lack of new orders as global demand weakened. The Italian industrial economy appears to be trapped in a deep recession with no clear way out,” said Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank. “New orders, both domestic and international, are shrinking, and even expectations for future output have fallen well below their long-term average.” Although the PMI survey indicated some increase in factory employment, it mainly pointed to a shortage of skilled workers, while the previous report by S&P said Italian factories had started to lay off staff due to a deeper contraction in industrial production.
Economists forecast that the manufacturing recession, which started in the Eurozone’s third-largest economy in the middle of last year, will continue. Manufacturing accounts for around 16% of Italy’s output but its weakness continues to weigh on the Italian economy, dragging it into further contraction. The latest estimates showed that the country’s economy shrank by 0.4% – ahead of the 0.3% that had been predicted – in the second quarter of the year.
Meanwhile, public debt is surging and the budget deficit is widening despite Western aid, according to Azarov.“The best illustration of the catastrophic state of affairs is that the budget of the country at war lacks more than $6 billion to pay the Ukrainian military alone,” he said. Azarov claimed that the families of Polish mercenaries killed during the conflict had not received any compensation despite promises from Kiev. “As a result, the Ukrainian economy increasingly resembles a ‘zombie’ – it shows signs of life only with foreign financial assistance, which it requires more and more,” the former prime minister argued. According to Azarov, Ukraine’s “closest analogues” in terms of economic woes are Afghanistan and Haiti, which are faced with similar problems. He added that the “most daring” forecasts show that Ukraine will need more than 30 years to catch up with the current economic level of Romania or Poland.
Germany’s economic output will shrink this year, amid weak demand from abroad, soaring interest rates, and a protracted energy crisis, the latest forecast from the German Economic Institute (IW) revealed.
The economy is in a state of a “shock,” according to the IW, with businesses particularly affected by geopolitical uncertainties arising from the conflict in Ukraine. German companies and industries will “feel the global problems all the harder” this year due to scarcity and surging prices of raw materials and energy, the economists warned. Sluggish global trade and weak demand will result in lower-than-expected gross domestic product for the EU’s largest economy. It’s predicted to slump by almost 0.5% compared to last year, while unemployment will reach 5.5%, the report said. Inflation has remained high since the start of the year and is likely to stay at around 6.5%, weighing on consumer spending. “ The government urgently needs to take action to end this economic downturn,” the head of the macroeconomic and the Business Cycle Research Unit at the IW, Professor Michael Gromling, said. “Lower tax burdens and attractive and un-bureaucratic support for innovation and investment would help companies cope better with the current shocks,” he added. Economic sentiment in Germany has suffered from the effects of fiscal tightening, such as increased production costs and high interest rates. Investments have become less attractive for companies, with the construction sector among the worst-hit, data showed. Investments in home building are expected to fall by 3% this year. Hawkish US Secretary of Commerce Gina Raimondo has recently undertaken an official visit to China. She is the fourth such US official to visit in the past few months, marking a stabilization – but not a breakthrough – in ties between the two powers. Here, she berated China for making its market “uninvestable” for US firms and called “on Beijing to act to reduce the risk of doing business in the country.”
This is ironic for too many reasons to list. The most obvious one is that the Biden administration recently released restrictions on US inbound foreign investment into China’s high-tech industries, including semiconductors, quantum computing, supercomputing and artificial intelligence. Although the measures are considered narrow, they are nonetheless the opposite of confidence-inducing, as Republican critics have already argued they are not enough and have demanded they be widened. This in itself tells a story about America. China isn’t making itself ‘uninvestable’; the US is doing it by deliberately creating a toxic geopolitical environment. The US does not want to see inbound investment into China and – through the stroking of tensions and military uncertainties – is heightening the risks of such investments. This makes Raimondo’s trip to Beijing immensely hypocritical. Washington’s narrative on China, peddled through compliant media, is that Beijing is primarily responsible for scaring foreign investors away due to its increasing centralization under the rule of Xi Jinping. China is being described as isolationist, rigid, unreasonable and ‘in decline’ and accused of ‘unfair’ economic practices. If only Beijing would open up more and let all these investors in, right? Everything would be fine, and the US-China economic relationship would get back on track, wouldn’t it?Possibly, but only if the US had not: 1) Placed hundreds of billions of dollars in tariffs on Chinese exports, which it refuses to remove, even with high levels of inflation; 2) Opportunistically blacklisted products from entire regions of China, such as Xinjiang, on the premise of ‘human rights abuses’; 3) Put Chinese technology companies on the commerce department ‘entity list’ prohibiting US companies from exporting to them, then blacklisted the entirety of China’s semiconductor industry and forced third-party countries to do the same. On top of all the sanctions, the US is deliberately militarizing China’s entire periphery with military bases and stoking up tensions with Taiwan, capitalizing on global uncertainty following the Ukraine war. Last but certainly not least, the mountain of news articles and commentary demonizing, attacking, accusing and doom-mongering about China grows every single day. Can the US honestly say with a straight face amidst all this that it is China who is scaring away investors? Sure, as this global environment has deteriorated, Beijing has tightened its control, and the ruling party engages in harsh regulatory crackdowns against a number of companies, which hardly creates an investment-friendly environment, but that’s a product of the insecurity being driven by tensions. So when officials like Raimondo visit China and complain the conditions are unfavorable for US businesses, the level of hypocrisy borders on extreme, when Washington itself has done more than anyone else to undermine trust in Beijing. But if that is so, why should she even complain about it? The answer is because the US does not want to have an equal economic relationship with China. Washington’s ideal relationship with Beijing is one in which it gets full access to the Chinese market and gets to sell it anything it wants, not where Chinese companies are able to compete fair and square on a global scale. This is the same level of subordination it has long sought to impose on Europe, where, for example, it is casually destroying German industry by forcing its decoupling from Russian resources, selling overpriced gas and then using protectionism through the “inflation reduction act” to disincentivise production. The US wants to economically dominate China; that’s the only “investment” it has in mind and is primarily why visits like Raimondo’s never truly make any headway and are a waste of time. Both the White House and the US Treasury Department raised objections on Tuesday to the decision by credit rating company Fitch to downrank the long-term US rating from AAA to AA+.
We strongly disagree with this decision,” White House press secretary Karine Jean-Pierre told reporters, claiming it “defies reality” because President Joe Biden has led the American economy to a “robust recovery.”Treasury Secretary Janet Yellen also “strongly disagreed” with Fitch’s decision, arguing it was “arbitrary and based on outdated data” and that US Treasury securities remained the world’s “preeminent safe and liquid asset.” Fitch is one of the big three US credit rating agencies, next to Moody’s and Standard & Poor’s. On Tuesday afternoon, it announced that Washington’s “long-term foreign-currency issuer default rating” would be downgraded, citing issues with governance, rising deficits, and a looming recession, among other things. The decision “reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance” relative to other countries with the similar rating over the past 20 years, “that has manifested in repeated debt limit standoffs and last-minute resolutions,” Fitch said. The company predicted a growing government deficit, noting that the US debt-to-GDP ratio was currently at 100.1%, two and a half times higher than the AAA-rated countries’ median of 39.3%. Fitch also cited the Federal Reserve’s recent credit rate hikes, “weakening business investment, and a slowdown in consumption” to predict a “mild recession” in the fourth quarter of 2023 and the first quarter of 2024. The introduction of a Digital Euro, a digital form of the European currency, offers numerous advantages in today's rapidly evolving digital world. Here are some key benefits of a Digital Euro:
While the advantages of a Digital Euro are compelling, it is crucial to address concerns such as data privacy, cybersecurity, and the digital divide to ensure that the benefits are accessible to all and that the system is secure and reliable.
The world’s largest cryptocurrency by market capitalization, Bitcoin, has jumped to its highest level since June 2022 this week, according to CoinDesk crypto trading tracker.
The token rose as high as $31,411 per coin on Friday before the gains were pared later in the day. Around 07:30 GMT on Sunday, Bitcoin was trading at $30,814, up about 0.4% over the past 24 hours, data shows. It is up around 20% over the past week, and roughly 87% since the start of the year. It is still more than 50% below its all-time high of almost $69,000 in November 2021. Analysts attribute the surge to the recent spike of interest in crypto from financial giants. Last week, the world’s biggest asset manager, US-based BlackRock, applied to register a Bitcoin spot exchange-traded fund (ETF), which would allow investors to gain exposure to the cryptocurrency without necessarily buying it. Two other financial services majors, Invesco and WisdomTree, also recently refiled applications for similar products. These applications came shortly after the cryptocurrency industry faced a regulatory crackdown in the US. Earlier this month, the US Securities and Exchange Commission (SEC) sued major exchanges Coinbase and Binance on alleged violations of securities laws. Binance, the world’s largest crypto exchange, was accused of operating illegally on US soil, while Coinbase, America’s own major crypto trading platform, faced charges as an unregistered broker. Industry experts, however, believe that a Bitcoin ETF could be seen as a positive development in the crypto sector’s quest for regulatory approval, and the recent surge in Bitcoin price signals the resilience of public interest in crypto.
America’s chances of paying its bills after June 1 are “quite low,” US Treasury Secretary Janet Yellen warned on Sunday in an interview with NBC’s ‘Meet the Press’. According to Yellen, if Congress fails to reach an agreement on raising the country’s $31.4 trillion borrowing limit by that time, it will be forced to default on “some bills” shortly after.
“There’s always uncertainty about tax receipts and spending. And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15, while being able to pay all of our bills, is quite low… My assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid,” Yellen said. The treasury secretary did not say which ‘bills’ she had in mind, but noted that the government’s most immediate obligations range from paying interest on outstanding debt to “obligations to seniors who count on social security, military, contractors who’ve provided services to the government.” She added that “there can be no acceptable outcomes if the debt ceiling isn’t raised.” The administration of US President Joe Biden and Republicans led by House Speaker Kevin McCarthy have been at an impasse over raising the debt ceiling for several months, despite warnings that the US could face its first-ever default unless it is raised by June 1. Republicans are refusing to agree to the move unless Biden agrees to government spending cuts and curbs on social programs. |
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