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Iranian President Masoud Pezeshkian stands at attention while armed military personnel from the Islamic Revolutionary Guard Corps parade during a military parade commemorating the anniversary of the Iran-Iraq War in Tehran, on Sept. 21, 2024.
Hard Numbers: Iran’s elite fighters go off the grid, Cognac takes on China, Egyptian weapons flood Somalia, Argentines empty their mattresses, “Noise shouter” wins Kiwi election
800: Some 800 protesters, many on tractors, hit the streets in the southwestern French town of Cognac this week, in a “spirited” display of anger at the possibility of Chinese tariffs on European brandy. Losing the huge Chinese market could cripple the struggling Cognac industry. Beijing and Brussels are locked in a series of trade disputes over European food products and Chinese electric vehicles. The EU on Monday filed a World Trade Organization challenge against China’s recent investigation of European dairy goods.
2: A second Egyptian shipment of heavy weapons has arrived in Somalia, in a move that could stoke simmering tensions between both countries and neighboring Ethiopia. Egypt and Ethiopia are at odds over a major Ethiopian dam across a Nile tributary, while Somalia is angry at Ethiopia’s support for separatists in the region of Somaliland. Against that backdrop, Egypt and Somalia signed a security agreement earlier this year.
8 billion: Since Argentina’s radical libertarian President Javier Milei took office last December, chainsawing his way through government spending and imposing severe austerity measures, the country’s foreign currency deposits have surged by $8 billion. The data suggest growing confidence in his ability to stabilize an economy that has bounced from crisis to crisis for decades, though the upcoming expiry of an amnesty for hidden currency is also part of the story. See our exclusive interview with Milei here.
50,000: With more than 50,000 votes counted, the results are in: The hoiho, also known as the “yellow-eyed penguin,” has won New Zealand’s bird of the year election, seeing off a dark bird challenge from the karure – an all-black species of “goth” robin. The winner, whose name means “noise shouter” in the Maori language, is thought to be the world’s rarest penguin. It is also one of its most endangered, suffering a population decline of nearly 80% over the past 15 years.
Demonstrators toss a trash bin during an anti-immigration protest, in Rotherham, Britain, August 4, 2024.
Hard Numbers: Far-right unrest in UK, Nikkei plunges, Tragedies & infrastructure woes in China, Hawaii fire settlement reached, al-Qaida affiliates stir trouble in Somalia & Niger, Olympic firsts
90: Police arrested 90 people as anti-immigration, far-right protesters took to the streets of UK cities this weekend, sowing chaos in Hull, Liverpool, Bristol, Manchester, Stoke-on-Trent, Blackpool, and Belfast. Racial tensions spiked after the murders of three young girls at a Taylor Swift-themed party in Southport last week. The suspected killer was falsely rumored to have been a Muslim immigrant (he was, in fact, born in Wales to Rwandan Christian parents). This weekend’s violence and clashes with police led to scores of arrests, and PM Keir Starmer has vowed to tackle the “far-right hatred” sowing unrest on British streets.
12: Japan’s stock market had its worst day in 37 years on Monday, dropping 12% on news of a possible US recession. This followed the Nikkei’s 5.8% drop from Friday and is leading a global stock-market selloff today amid fears that the Federal Reserve may not have responded quickly enough to a slowing US economy by cutting interest rates.
2: Two people were killed in a tunnel collapse in southwestern China on Saturday. The tragedy occurred just two weeks after at least 38 people died after a bridge in northwestern China partially collapsed, plunging vehicles into a river. Two dozen people remain missing from that incident, and both accidents have raised concerns about the country’s infrastructure.
4B: Hawaii Gov. Josh Green’s office has announced that a deal in principle — for just over $4 billion — has been reached to settle roughly 450 legal cases linked to the August 2023 wildfires in the Aloha State. Seven defendants were named in the suit — including the State of Hawaii, County of Maui, Hawaiian Electric, Kamehameha Schools, West Maui Land Co, Hawaiian Telcom, and Spectrum/Charter Communications — over the blazes that destroyed the historic town of Lahaina and killed more than 100 people.
32: Somali authorities say al-Qaida affiliate al-Shabab killed 32 people and injured scores more Friday at a beach hotel in Mogadishu. Another seven people were reportedly killed by a roadside bomb in an attack just outside the capital on Saturday. Somali President Hassan Sheikh Mohamud declared a “total war” on the militants last year, but al-Shabab still controls parts of the country, and Friday’s violence notably followed Somalia’s third phase of a drawdown of peacekeeping troops under the African Union Transition Mission.
2: In a video released on Friday, two men claiming to be Russian nationals say they were taken captive by al-Qaida-linked militants in northeastern Niger. One man called himself Yury and said he was a geologist working for a Russian firm in the region when armed men detained him. This could be the first time jihadis have kidnapped Russians in the Sahel, but outlets have yet to confirm the identities of the men.
3: We’ve seen a lot of great footage from the Summer Games in Paris this past week — everything from Simone Biles and Katie Ledecky racking up their piles of gold to Snoop Dogg’s Greatest Hits (and a swim lesson with Michael Phelps). But three countries have celebrated some impressive Olympic firsts this past week. Julien Alfred won the first-ever Olympic medal for St. Lucia on Saturday, racing to gold in the women’s 100-meter dash. That same day, Thea LaFond did the same for Dominica, nabbing the Caribbean island nation its first medal — and the gold — in the women’s triple jump. And Kaylia Nemour won Algeria its first gold in gymnastics, beating the competition on the uneven bars on Sunday.
How to tackle global challenges: The IMF & World Bank blueprint
The International Monetary Fund and World Bank’s Spring Meetings in Washington have told a tale of two economies: In the developed world, inflation is falling, and recession looks unlikely. But many of the world’s poorest countries are struggling under tremendous debt burdens inflated by rising interest rates that threaten to undo decades of development progress. That means these key lenders of last resort have their work cut out for them.
The good news? There’s a proven model, as GZERO Senior Writer Matthew Kendrick discussed with Tony Maciulis at a Global Stage event while reporting on the meetings. Somalia, once the byword for a failed state, managed to implement massive reforms to its financial system to meet the guidelines of the IMF’s Highly Indebted Poor Countries Initiative.
“Because they met those guidelines — while still in a very fragile environment where they were fighting Islamic extremists in the country, dealing with semi-autonomous zones in the north — they managed to discharge 90% of their debt,” said Kendrick. “It's proof that even in very fragile countries, if, as the Somali finance minister said yesterday, you build these projects into nationally unifying efforts to build a better future, they can have tremendous success.”
Kendrick also cited comments from experts calling for the IMF and World Bank to change how they view humanitarian work more generally and not back away from countries amid war. “Conflicts are becoming a day-to-day part of our lives all over the world,” he says. “That means that the IMF and World Bank, in order to make progress on development, have to figure out ways to work with the institutions in these countries as they are also in conflict.”
For more of our 2024 IMF/World Bank Spring Meetings coverage, visit Glogal Stage.
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- Why Africa's power partnership with the World Bank should attract investors - GZERO Media ›
The Bland Bombshell and the Big Banks
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 reliefhere.
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
Students read Koranic verses at a madrasa, or Koranic school, in Dhusamareeb, central Somalia, December 16, 2012.
IMF says economic picture is rosy, but how does it look from the bottom?
Inflation looks set to fall globally, and a global recession is unlikely in 2024, according to the IMF’s April update to the World Economic Outlook. That so-called “soft landing” is great news for those in New York or Paris, but what does the picture look like from the most vulnerable economies?
Money has been tight for developing countries in sub-Saharan Africa, in particular, with many over-indebted states are only just returning to capital markets after COVID-19’s economic knock-ons shut them out, and face dim medium-term growth prospects.
IMF Chief Economist Pierre-Olivier Gourinchas told the IMF/World Bank Spring Meetings in Washington, DC, that low-income countries should focus on structural reforms to make their economies and governments more efficient.
“This will help lower borrowing costs and reduce funding needs,” he said, adding that such countries should lean into their demographic advantages and “improve the human capital of their large, young populations, especially as the rest of the world is aging rapidly.”
That’s easier said than done, but the IMF can point to a massive success story: Somalia. In December last year, Mogadishu was able to discharge some 90% of its external debt after meeting the specifications of an IMF program called the Heavily Indebted Poor Countries Initiative. That achievement followed years of hard work by Mogadishu.
In 2012, decades of war had left Somalia’s federal government barely functional and without a proper budget. If salaries were paid, it was through unaccountable cash. But now, it has fully digitized payroll, invoice tracking systems, and cash management tools, all of which have helped Somalia massively increase social spending, from $8 per person per year a decade ago to $48 per person per year today.
Such success in a fragile country has raised hopes that the model can be exported. But Somali Finance Minister Bihi Iman Egeh cautions that his country’s program “was only successful because it reflected Somalia’s needs and priorities,” meaning other countries need to tailor the approach to suit their unique challenges.
Building broad consensus meant “the economic reform program was among the few common national priorities that was elevated above our lively national politics,” said Egeh. “It was a successful unifying national exercise.”
Shohei Ohtani of the Los Angeles Dodgers and his interpreter Ippei Mizuhara watch Major League Baseball's season-opening game against the San Diego Padres at Seoul's Gocheok Sky Dome on March 20, 2024
Hard Numbers: Curveball drama, Development & the deep blue sea, Turkey hikes rates, Somali pirates plot comeback
4.5 million: At least $4.5 million in wire transfers sent from the bank account of American baseball superstar Shohei Ohtani has reportedly ended up with a California bookmaker now under federal investigation. Ippei Mizuhara, Ohtani’s longtime friend and interpreter, says the ballplayer was generously paying off Mizuhara’s gambling debt. A day later, Ohtani’s lawyer claimed Mizuhara had robbed his client. Stay tuned.
2: In competition with China, Russia, and others to reach large deposits of cobalt, nickel, copper, and manganese buried beneath the surface of the Indian Ocean, India has applied to the UN-affiliated International Seabed Authority for two new deep-sea exploration licenses. (India already has two others. China has five total, and Russia has four.) These minerals are essential for the development of solar and wind power, electric vehicles, and battery technology.
5: Turkey’s Central Bank surprised just about everyone on Thursday by raising its main interest rate by 5 percentage points to 50%. The move comes ahead of important local elections on March 31, signaling that President Recep Tayyip Erdoğan is allowing central banker Mehmet Simsek to set rates without political interference.
20: As Yemen’s Houthis make headlines by firing on shipping hundreds of miles to the north to protest Israel’s operations in Gaza, Somali pirates are using the distraction to stage a comeback. They’ve launched at least 20 attempted ship hijackings since November, once again driving up shipping costs.
SpaceX's next-generation Starship spacecraft atop its powerful Super Heavy rocket lifts off on its third launch from the company's Boca Chica launchpad on an uncrewed test flight, near Brownsville, Texas, U.S. March 14, 2024.
Hard Numbers: SpaceX has a rocky reentry, Norway to hit NATO target early, British MPs are OOO, Somalia debt is canceled, Berlin techno is protected
2: Norway announced that the country intends to meet its NATO defense spending target of 2% this year — two years ahead of schedule — citing a “serious” security situation. Sweden, the alliance’s newest member, says it will do the same. The two Nordic states can now rest assured that at least Donald Trump would protect them from a Russian invasion.
49: A new analysis found the workday for members of UK Prime Minister Rishi Sunak’s parliament is 49 minutes shorter than the 1997-2023 average, clocking in at only seven hours and nine minutes long. With all that extra time on their hands, Kate Middleton should be found in no time.
99: This week, 99% of Somalia’s debt was canceled by the Paris Club — a group of officials from major creditor countries including the United States, Japan, and Russia. Somalia’s information minister, Daud Aweis, called the move a “big milestone in the country’s journey to financial recovery.”
150: The number of UNESCO heritage sites in Germany rose to 150, with six entities being added this week. Notably, an Intangible Cultural Heritage designation was given to Berlin’s techno scene for its contribution to German culture. Oonts Oonts.FILE PHOTO: Republican presidential candidate and former U.S. President Donald Trump speaks on stage during a campaign rally tonight in Richmond, Virginia, U.S. March 2, 2024.
Hard Numbers: Republicans regret Trump, Bosnia gets EU pathway, Pakistan swears in cabinet, Somalia’s pirates seize the moment
50 million: Donald Trump may have a chokehold on the Republican Party, but that doesn’t mean he has a grip on all Republicans. The group Republicans Voters Against Trump, which first appeared in 2020, has recently raised $50 million to produce a campaign of video testimonials by Republicans who voted for Trump in 2016 and 2020 but say they just can’t do it again this year.
30: Almost 30 years since the end of the Yugoslav civil wars, Bosnia and Herzegovina will be invited to begin EU accession talks, despite still-simmering ethnic tensions between Bosniaks and Serbs in the country. The talks are no guarantee of joining, which can take many years, but the perception of growing Russian influence in the Balkans has heightened Brussels’ interest in getting membership talks on track. Of the six former Yugoslav republics, only Slovenia and Croatia are in the EU.
19: Pakistan’s newly elected Prime Minister Shehbaz Sharif has a cabinet in place after its 19 members were sworn in earlier this week. They have their work cut out for them. Pakistan is mired in a severe economic crisis and must, almost immediately, negotiate a fresh $3 billion IMF loan package. Meanwhile, the streets are still hot with protesters supporting jailed opposition leader and former PM Imran Khan, whose alliance won the most votes in last month’s election but was shut out of government by Sharif’s coalition.
23: For the first time since December, Somali pirates successfully hijacked a vessel off the Horn of Africa, taking the 23 crew members of a Bangladeshi-flagged bulk carrier hostage. As Houthi attacks in the Red Sea draw much of the naval security attention in the region, the fearsome pirates of Somali are letting that Jolly Roger fly.