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Results for recognize
Is there anyone more bland, more powerful, and less recognizable than Federal Reserve Chair Jerome Powell? He makes money moves more than Cardi B, and yet most people wouldn’t recognize him if he were sitting on their lap in the subway.
Why do relatively obscure banker meetings matter? Fair question, and it’s precisely why our GZERO team in Washington, DC, is covering the IMF-World Bank spring meetings this week.
For Masters of Monetary Policy like Powell, being bland is a strategy, not a characteristic. They speak in a purposely arcane language that requires near Bletchley Park decoding powers because everything they say makes news that impacts markets. This, in turn, affects things like your mortgage, your investments, and your grocery bill. It also impacts global poverty, which ought to make a lot more news. So understandably, they have to be careful and neutral to avoid panics or bouts of enthusiasm and ensure their signals leave lots of room for interpretation. But don’t mistake bland for lack of consequence. In global banking, bland is the brand, but influence is the purpose.
What have you missed so far?
Powell had a major bland moment at the Wilson Center’s Washington Forum on the Canadian Economy, which coincides with the spring meetings, where he hinted he would delay dropping interest rates because US inflation is proving more stubborn than predicted. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said, as the finance world listened to him emphasize every SYL-la-ble.
Then, in case anyone missed it, he took out the verbal highlight pen. “We can maintain the current level of restriction for as long as needed.” Whoa. Treasury yields moved higher that very moment, and he wasn’t even done speaking. Translation for those not steeped in Bland Banker Speak: Interest rates are gonna stay higher for longer – at least until the inflation rate hits the target goal of 2%. Govern yourselves accordingly.
That news got a tiny corner of social media all ginned up, giving us the world’s first – and perhaps last – Federal Reserve Meme: Check out this AI-generated Jerome Powell hyped on rate cuts. Maybe Blands really do have more fun.
Meanwhile, Bank of Canada Gov. Tiff Macklem, who was on the same panel with Powell, hinted he might go in the other direction – and having had many conversations with him over the years, I can say that Macklem isn’t bland at all. Just last week, he held the key interest rate at 5% because inflation had centimetered up a titch, but he still suggested a rate drop was “within the realm of possibilities” as early as June.
What would that mean? For one, if Canada drops rates faster than the US Fed, the Canadian dollar would likely weaken considerably, so depending on which way you travel, things could get either a lot cheaper or more expensive.
In short, everything central bankers say makes a difference to millions of citizens, and still, most folks only pay scant attention to talk about inflation and interest rates close to home – not internalizing how much impact these decisions have on major issues like global poverty. For example, GZERO’s own Matthew Kendrick has been reporting from the spring meetings this week, covering the impact of inflation on the most vulnerable economies like Somalia and what is being done to help. You can read his surprising look at the Somali success story on debt relief here.
But if world bankers are all so smart, why are one in three countries worse off than in 2019? Why are so many falling back into poverty post-COVID? To find out, our Head of Content Tony Maciulis sat down with Ayhan Kose, the World Bank Group’s deputy chief economist, who told him, “When the food price goes up, the price of oil goes up. That has significant implications for these economies.” He also noted that some countries have experienced “the weakest growth rate on average since the 1990s.” What are the solutions? Watch Tony’s interview here.
News about IMF and World Bank financiers doesn’t often make the front page because it’s so complex, often depressing, and … well, kinda bland. There are other riveting events, like Donald Trump’s first criminal trial, the war in Ukraine, and Iran launching missiles at Israel to grab our attention, as they should.
But spare a moment for the folks who live in Blandlandia – those people at the IMF and World Bank spring meetings. They are participating in panels like “The Path for Taxing the Super-Rich – Towards a Progressive Global Taxation Agenda,” “Biden Pauses LNG; COP 28 Fossil Fuel Phase-Out Decision – Is World Bank Lagging on Fossil Fuels?” and even “The Polycrisis – How Unchecked Public Debt Fuels Corruption and Bad Governance.”
Beneath the bland, the story of our world unfolds. Since 1944, when both financial institutions were established, the World Bank itself has funded over 12,000 programs focused on economic development and reducing poverty. Has it worked? The record is mixed.
There have been big wins – like the reconstruction of Bosnia after the war, or working on debt relief programs, like Matt described in Somalia. But the World Bank also set a goal of eliminating extreme poverty by 2023, and its leaders admit they are not even close.
Meanwhile, the IMF, whose mission is to “firefight” big, macro-economic emergencies, like a currency collapse, comes in for much harsher criticism. Its Structural Adjustment Programs – loans to low-income countries in distress – have been subjected to extensive research, often proving that they have kept people in countries like Zimbabwe or across Latin America in poverty while enriching investors. Are these Western-designed programs just a neo-liberal form of colonialism, as some suggest, or pragmatic ways to get countries onto the path of economic development? The debates are so divisive that China has moved into the space in countries that no longer trust the IMF, using its Belt and Road Initiative to invest in infrastructure and push its own influence. So, politics are driving this as well.
The IMF and World Bank may not always make things better, and there is even paranoia right now that Donald Trump, if he wins in November, might withdraw the US from the World Bank, which would devastate developing economies. Still, these two organizations are relevant and demand our attention.
At GZERO, we are committed to covering these topics and making them accessible and interesting. So please tell us what you think. If you have suggestions for things we ought to cover, or questions about events like the IMF-World Bank spring meetings, send us a note here, and we will post answers to some of your key questions next Thursday.
Thanks for your remarkable attention to all these matters, and now, let’s get at the rest of the news.
– Evan Solomon, Publisher
Ethiopia and Somalia’s relationship is in free fall, and Addis Ababa is taking steps toward recognizing Somaliland – a breakaway de facto country Somalia considers its own – in exchange for access to the Red Sea. Somalia has deemed the agreement illegal, but that is unlikely to deter landlocked Ethiopia, which is militarily dominant and desperate for port access.
Ethiopian Prime Minister Abiy Ahmed has been calling for sea access for months. After initially pressuring neighboring Eritrea, it realized it had more leverage over Somaliland, which granted it access to the UAE-developed Port of Berbera in exchange for a vague promise of eventual recognition and a stake in Ethiopian Airlines. Ahmed hopes the port partnership may help Ethiopia's dwindling economy, which he blames on its lack of ports.
Somaliland is divided on the deal. While it promises international recognition and economic gains, it has triggered protests across Somaliland over fear that it compromises their sovereignty. The defense minister resigned because the agreement grants Ethiopia permission to develop a naval base and station troops on the coast.
For Somalia, which lost control of Somaliland in 1991, Ethiopia’s recognition is opening a door that could greatly weaken the government if more countries follow suit.
Somali President Hassan Sheikh Mohamud has called on his nation’s youth to prepare to defend the country, “by all means necessary.” But Ethiopia’s military is a goliath compared to Somalia’s, and right now Mogadishu appears to be seeking international diplomatic support, not head-to-head conflict.
President Tsai Ing-wen visits last African state that recognizes Taiwan's independence
Taiwan’s President Tsai Ing-wen is currently on a diplomatic visit to Eswatini, the country’s last remaining ally on the vast African continent. The southern African country is hardly a natural ally for democratic Taiwan: King Mswati III has ruled the landlocked country of 1.1 million with an iron fist since he assumed the throne in 1986 at age 18. It’s the region’s last absolute monarchy.
What’s Tsai doing there? Eswatini is one of just 13 remaining countries worldwide that has not ditched ties with Taiwan in favor of relations with China, which views the self-ruled territory as part of the mainland. Since Tsai took office in 2016, Beijing has coaxed nine countries into switching alliances, most recently Honduras, and continues to pressure other holdouts to follow suit.
Tsai’s trip – notably on the heels of Chinese President Xi Jinping’s visit to South Africa – saw Taipei dole out $1 million in funds to the kingdom. And it comes ahead of Taiwan’s election in Jan. 2024, where Tsai’s VP William Lai is ahead in the polls. (Tsai is term limited.)
Though Indonesia is the world’s fourth most populous country (pop. 276 million) and its largest majority Muslim state, it’s long been recognized more for its potential than its accomplishments. But as rivalries grow among the United States, China, and India, this archipelago nation stretching from the Indian Ocean to the Pacific is emerging as a more strategically important partner. It could also become one of the world’s 15 largest economies in the coming years.
Indonesia’s popular current president holds an approval rating of nearly 80% after nine years in power. Yet, Joko Widodo, widely known as Jokowi, is term-limited, and Indonesians will face elections next year to choose his successor. The first round of presidential voting will be held on Feb. 14, with a probable second-round runoff scheduled for June 26.
The deadline for registering presidential candidates for the election closed on Wednesday, and we now know the field. The bottom line: Next year’s election is very likely to produce political continuity.
Defense Minister and former Army General Prabowo Subianto is the favorite, in large part because he’s considered Jokowi’s anointed successor. (Prabowo’s vice presidential running mate is Jokowi’s son.) Prabowo’s strongest challenger, former Central Java Governor Ganjar Pranowo, is also considered close to Jokowi. The outsider candidate, former Jakarta Governor Anies Baswedan, is probably a long shot.
But Prabowo comes with baggage. As an army commander during the closing days of the three-decade Suharto dictatorship, which ended in 1998, he was accused of human rights abuses and banned for a period from entering the United States. He lost the 2014 and 2019 presidential elections to Jokowi. It appears, however, that the incumbent has calculated that Prabowo will allow him to retain political influence.
The greatest threat a Prabowo presidency appears to pose is to Indonesia’s economic policy. He’s viewed as a populist-nationalist, a leader more likely to govern Indonesia’s economy to sustain his popularity rather than to increase the country’s dynamism.
The campaign is now officially underway.
Mastercard’s Center for Inclusive Growth and CARE, an international humanitarian organization, have launched a new program to strengthen the financial health and resilience of small businesses, particularly those led by women, in Pakistan, Peru, and Vietnam. Mastercard Strive Women recognizes that women-led small businesses are critical contributors to economies, communities, and households worldwide and will work with local partners in each market to deliver tailored financial products and support services.
Mastercard’s Center for Inclusive Growth and CARE, an international humanitarian organization, have launched a new program to strengthen the financial health and resilience of small businesses, particularly those led by women, in Pakistan, Peru, and Vietnam. Mastercard Strive Women recognizes that women-led small businesses are critical contributors to economies, communities, and households worldwide and will work with local partners in each market to deliver tailored financial products and support services.
A new game show gives current world leaders' clues to see if they can recognize former world leaders. In this episode, Xi Jinping and Joe Biden face off, but someone else seems to be the elephant in the room...
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Somaliland, a self-governing breakaway region of Somalia, is set to hold a delayed presidential election on Nov. 13 at a crucial moment in the Horn of Africa and Red Sea region. Muse Bihi Abdi, the incumbent president who controversially remained in power after his term was set to expire in November 2022, could potentially seek reelection. Some opposition politicians have since said they no longer recognize him as president. It’s unclear who else might run this year.
Though Somaliland faces limitations on the global stage, given its lack of international recognition as an independent state, it’s still been able to foster investment deals with foreign powers like Ethiopia and the UAE. This has raised tensions with Mogadishu and increased the prospect of warbetween Somalia and Ethiopia — particularly in the wake of a recent deal for Somaliland to offer Addis Ababa port access in exchange for recognizing its independence.