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Senegal goes to the polls
Back in March, Faye secured 54% of the vote in the presidential election, making him Africa’s youngest elected leader at the age of 44. His victory came less than two weeks after being released from prison. Both Faye and his mentor Ousmane Sonko had been jailed onpolitically motivated charges, spurring months of protests in which dozens of people were killed and about 1,000 people were incarcerated.
Faye now faces the Takku Wallu opposition party led by former President Macky Sall, as well as 39 other registered parties and coalitions. Analysts expect Faye’s party, PASTEF, to secure the 83 seats required for a parliamentary majority. Faye and Sonko campaigned on a left-wing pan-African vision, promising to diversify partnerships and reassess hydrocarbon and fishing deals. He will also have to tackle a debt crisis, as a $1.9 billion IMF program is on hold pending a government audit.
Provisional results are expected Monday morning, with a final count to be published later in the week.
UN's Rebeca Grynspan on the world’s debt crisis: Can it be solved?
Today, around 3.3 billion people live in countries spending more on debt than on essential services like education and healthcare, and governments worldwide are struggling to pay these debts. Rebeca Grynspan, secretary-general of the UN Conference on Trade and Development, warns of looming trade wars and faltering financial systems designed to reduce global poverty and promote development. What will it take to get countries back on track? Grynspan shares insights on this, highlighting the roles of the UN General Assembly and the International Monetary Fund in a Global Stage interview with GZERO’s Tony Maciulison the sidelines of the 7th annual Paris Peace Forum.
Watch out for more coverage of the Paris Peace Forum from GZERO this week.
Podcast: Fix the global debt crisis before it's too late, warns World Bank's David Malpass
Listen: In his final interview as World Bank president, David Malpass sits down with Ian Bremmer on the GZERO World podcast to discuss all things debt. No, not your credit card or mortgage payments, but the sovereign debt that governments use to pay their bills.
Global debt has ballooned to an eye-watering $300 trillion due to decades of low interest that made borrowing money extremely cheap, followed by runaway inflation driven by the pandemic and war in Ukraine. This dynamic has forced a lot of nations––particularly the poorest––to borrow more money than it can pay back.
In a wide-ranging interview, Malpass explains how the global debt crisis got so bad and whether there's any hope of averting economic disaster before it's too late. He also reflects on his tenure as World Bank president, advice for his successor, China's emergence in the 21st century as the world's creditor, and why the US debt limit law needs to be rewritten.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.- Odds of a global recession? 50/50, says David Malpass ›
- Explaining the long history of US debt (& which other countries are saddled with debt) ›
- US debt default would be "destabilizing," says World Bank's David Malpass ›
- World faces "lost decade" of economic growth, says World Bank economist ›
- Inequality isn't inevitable - if global communities cooperate ›
- Graphic Truth: Global inequality ›
- Debt limits of rich countries hurt poor countries' growth, says World Bank's Malpass - GZERO Media ›
- Ian Explains: Why is global debt so high? - GZERO Media ›
- World Bank economist: The poorest are getting poorer globally - GZERO Media ›
Staving off default: How unsustainable debt is threatening human progress
Three-fifths of the world's lowest income countries are debt distressed and in danger of default. Navid Hanif, assistant secretary-general for economic development at the United Nations, tells GZERO's Tony Maciulis that we need to make debt more sustainable by restructuring it. Hanif believes multilateral development banks, such as the World Bank, should offer affordable longer-term loans with lower interest rates to allow least developed countries better opportunities to deal with crises like climate change, poverty, and educating children.
During a conversation at the World Bank/IMF spring meetings in Washington, DC, Hanif explains how a financial divide will eventually become a development divide, which is not good for the world. He explains the urgency of the growing debt problem.
However, Hanif also expresses optimism about the potential for progress coming after years of the pandemic, citing the growth in people gaining access to the internet and a renewed commitment to climate goals.
What We’re Watching: NATO members’ defense budgets, Social Security as a political weapon, China’s support for Sri Lanka
NATO chief wants more defense spending
As Russian aggression in Ukraine enters year two, NATO members need to boost their defense spending. That was the message from NATO chief Jens Stoltenberg Wednesday after a summit with member states’ defense ministers. Back in 2014, around the time of Russia’s invasion of Crimea, NATO states committed to raising their respective defense spending to 2% of gross domestic product. (NATO’s direct budget is separate from national defense budgets.) Still, while many have increased their spending on military equipment and training, most NATO states – including Germany, France, Italy, and Canada – still fall short of the 2% threshold. The US, for its part, leads the pack, spending 3.47% of GDP on defense. (You’ll likely remember that former President Donald Trump made a habit of slamming NATO members, particularly Germany, for not paying their fair share. As war ravages Europe again and tensions with China soar, Stoltenberg says that the 2% target, which expires next year, should be the floor – not the ceiling. Finland and Sweden, both vying to join the bloc, respectively spend 2% and 1.3% of GDP on defense.
The politics of entitlements
President Joe Biden has made crystal clear that he believes the protection of Social Security and Medicare benefits – federally protected pension and healthcare entitlements for seniors – is a powerful political weapon that Democrats can wield against Republicans. Some in the GOP have inadvertently helped him. A number of Republicans have signaled support for plans to reduce spending on these programs by raising retirement ages and finding other ways to reduce future benefits, and Florida Sen. Rick Scott has proposed a plan that would require Congress to reauthorize all federal programs every five years. The GOP’s House and Senate leaders, Kevin McCarthy and Mitch McConnell, respectively, have said publicly they have no such intentions. But politics aside, the funding problems that Republicans point to are real. On Wednesday, the nonpartisan Congressional Budget Office released a report warning that Social Security and Medicare spending will grow much faster than federal tax revenues over the next decade as the fast-rising number of retirees puts measurable strain on the solvency of both programs. Biden says the gap can be filled without cutting benefits by asking wealthier workers to pay more in payroll taxes. Republicans counter that tax increases on the needed scale would weigh heavily on future economic growth. The two parties remain miles apart on solutions.
Will China offer Sri Lanka debt salvation?
Sri Lanka is grasping for debt relief as it heads into a key international meeting with foreign lenders organized by the International Monetary Fund on Friday. Colombo hopes to pump the brakes on the country’s downward economic spiral that saw the country run out of foreign currency and experience its first-ever default last year, triggering food shortages, power cuts, and the wrath of protesters, which forced the resignations of the president and prime minister. The island nation pines for cuts in its debt from international backers, especially China, as the Middle Kingdom is one of Sri Lanka’s biggest creditors, holding about 10% of its $51 billion debt. Beijing has so far been opaque about debt reduction. It expressed ‘support’ for Sri Lanka this week heading into the meeting but stopped short of committing to lowering the debt. Doing so would be a dodgy proposition, not just for Chinese creditors who want to be paid, but for fear that other heavily indebted poor countries will want reductions in their debt burden as well. This puts the 22 million-strong nation, often cited as a cautionary example of China’s debt trap, in yet another tough bind: It needs an emergency IMF loan, but the Fund wants creditors to reduce Sri Lanka's debt beforehand. We’ll be watching to see how far China goes for Sri Lanka.What We're Watching: Iran weapons depot targeted, fierce battles in eastern Ukraine, Czechs back pro-EU president, McCarthy-Biden debt limit meeting
What we know about the Isfahan attack
In what’s broadly believed to have been an Israeli attack, three drones hit an Iranian ammunition factory in the central city of Isfahan, Iran, on Saturday night. Iranian state media said damage to the site was “minor,” but phone footage suggests that the compound – used to produce advanced weapons and home to its Nuclear Fuel Research and Production Center – took a serious blow. An oil refinery in the country's northwest also broke out in flames on Saturday, though the cause remains unknown. Then, on Sunday night, a weapons convoy traveling from Syria to Iraq was also targeted by airstrikes. US reports attributed the Isfahan attack to Israel – which has in the past targeted nuclear sites in Natanz and hit Iranian convoys transporting weapons to Hezbollah in Lebanon. Indeed, this comes after Russia purchased hundreds of Iranian-made “suicide drones,” which it has used to pummel Ukrainian cities. While the deepening military alliance between Iran and Russia is a growing concern for Washington, it’s unclear if Uncle Sam played a role in the Isfahan hit – or whether Israel, which has to date refused to deliver heavy arms to Kyiv, agreed to carry out this attack in part to frustrate Iranian drone deliveries to the Russians. The escalation comes just days after CIA Director William Burns flew to Israel for meetings with his Israeli counterparts – and as US Secretary of State Antony Blinken heads to Israel and the West Bank this week. Crucially, it highlights the increasing overlap between Russia’s aggression in Ukraine and the longtime shadow war between Iran and Israel.
The battle for Bakhmut
Days after securing commitments from Germany and the US for advanced battle tanks, Kyiv says it’s engaged in “fast-track” talks with its Western counterparts for long-range missiles and military aircraft to provide cover for tanks in action. This comes after a weekend of heavy fighting outside Bakhmut, a flashpoint in eastern Ukraine and a critical supply route for the Russian military. However, German Chancellor Olaf Scholz does not seem to be on board with these arms deliveries – at least for now. Ukraine, for its part, has been targeting train lines around Bakhmut, specifically in villages that are well-positioned to act as hubs for Russia to bring reinforcements into southern Ukraine. Meanwhile, as the Russians pummeled the village of Kostyantnivka on Saturday, Ukraine reportedly hit a hospital in occupied Luhansk, saying it was being used as Russian military headquarters. As heavy fighting continues – and Russia reportedly prepares to call up more troops – Kyiv says it’s having increasing difficulty fending off Russian advances.
Czechs choose "calm"
In a second-round run-off, the Czech Republic elected retired general Petr Pavel as its new president. The pro-Europe, former NATO four-star officer beat populist Andrej Babis, a former PM, reaping 58.32% of the vote compared to his opponent's 42%. Three of the candidates who dropped out after the first-round backed Pavel in a contest marred by threats and disinformation – and cast as a fight between Pavel’s pro-Europe multilateralism and Babis’ populism, which resonated largely with rural voters. Pavel, a former chief of general staff of the Czech military, who vowed to "lead with experience and calm" wants to continue aiding Ukraine in lockstep with the West. Babis, who would have likely adopted many of the same policies as current populist President Milos Zeman, recently said he would not honor NATO’s mutual defense clause, but later walked that back. Even though the role of the president is largely ceremonial, the office still carries weight, including being responsible for choosing the prime minister and the central bank chief. Indeed, Pavel’s win reiterates the country’s pro-Western leanings and will be music to the ears of bureaucrats in Brussels.
Can Biden and McCarthy solve the debt limit crisis?
Newly confirmed House Speaker Kevin McCarthy said on Sunday that he will meet President Joe Biden at the White House on Wednesday to try and chart a path on raising the debt ceiling to avoid default. (For context on what the debt ceiling is and why it matters, see this GZERO explainer.) Interestingly, McCarthy said that cuts to Medicare and Social Security – which some fiscal hawks in his party had been pushing for – were “off the table.” Indeed, it’s a good sign that the two are set to meet face-to-face to try and solve a looming catastrophe, but they are still miles apart in finding common ground. Biden, for his part, says he won’t negotiate and that the Republican-controlled House needs to raise the debt limit without preconditions in order to avoid an economic crisis. But McCarthy – who is being held hostage by the far-right faction of his party that nearly torpedoed his speakership bid – can’t make many concessions on increasing the federal government’s borrowing capacity without putting himself at risk of being booted out by his own caucus. While neither side has much political wiggle room, emergency measures put in place by the US Treasury to avoid default will expire in June.
Can the world avoid a global recession?
This year, the annual fall meetings of the World Bank and the IMF are all about global economic doom and gloom.
How bad will it get? Are we headed toward a worldwide recession? And who will bear the brunt of the pain?
To get some answers, GZERO World with Ian Bremmer has two very special guests: World Bank President David Malpass and IMF Managing Director Kristalina Georgieva.
Malpass tackles the elephant in the room: whether he's a climate denier. His odds of a global recession? 50/50. But the World Bank chief is more worried about the poorest countries going backwards on their development goals.
For her part, Georgieva explains the three drivers that'll likely trigger a worldwide economic slowdown next year. She also predicts that the coming winter will be bad for Europe — but the next one will be worse.
- Is the world on the brink of another global recession? - GZERO Media ›
- Will stagflation make a comeback? - GZERO Media ›
- David Malpass: I'm not a climate denier - GZERO Media ›
- Is the global debt apocalypse here? - GZERO Media ›
- Europe's 2023 energy scarcity will drive green transition, says IMF chief - GZERO Media ›
- The state of the global economy is … not good - GZERO Media ›
- World faces "lost decade" of economic growth, says World Bank economist - GZERO Media ›
Is the world on the brink of another global recession?
The global economy's 2023 outlook is ... bleak. Why? Ayhan Kose, the World Bank’s chief economist for Equitable Growth, Finance, and Institutions, says that unlike the 2009 and 2020 global recessions, next year's likely slowdown in economic activity — coupled with growing inflation — could be more like the one of 1982, which also came with a string of debt crises.
And with growing food insecurity and climate change challenges ahead, for emerging markets and low-income countries, “things are going to get worse before they get better,” Kose says. “That’s why the global community has to show willingness, consensus, and at the same time, financing, to address these problems.”
Kose spoke with Shari Friedman, Eurasia Group's Managing Director, Climate and Sustainability in a Global Stage interview on site at the World Bank/IMF fall meetings in Washington, DC.
- Is global economic inequality getting worse? - GZERO Media ›
- Global inflation shock - GZERO Media ›
- Is the global debt apocalypse here? - GZERO Media ›
- Are we in a recession? - GZERO Media ›
- Winter is coming. Global recession, too? - GZERO Media ›
- The state of the global economy is … not good - GZERO Media ›
- Podcast: China's economic head start & a world accelerating into recession - GZERO Media ›
- Emerging markets most vulnerable to recession and political discontent - GZERO Media ›