World Politics News   Articles for World Politics Course

• Fire on Train in India Kills Dozens 3:11 AM ET

• Protester Killed in New Thai Violence 2:15 AM ET

• Anti-Polio Worker Killed in Pakistan 3:05 AM ET

• 6 Killed as Iraqi Troops Arrest Sunni Lawmaker

• Beirut Bombing Kills Politician, a Critic of Syria

Aren’t there any stories where no one is killed?

The turmoil in Turkey is leading to serious economic problems.  Not only are investors worried about the stability of the Turkish government, they are also being attracted to US dollar assets as the US Federal Reserve begins to ease off its program of quantitative easing (QE).  The Federal Reserve’s easing is colloquially referred to as the “taper”.  QE kept the yields on US Treasury bonds low and the taper means that interest rates on US Treasury bonds will now begin to rise slowly.  As the yields rise, they become more attractive to investors.  So the fearful investors in Turkish assets now have a more profitable alternative.  If money begins to flow out of Turkey into the US, the Turkish economy will become weaker as it loses capital.  The larger issue is that the “taper” will also attract investors in other countries that may be experiencing political turmoil, such as Ukraine and Thailand.  A widespread capital flight from these emerging economies will trigger off a serious economic problem for these weaker economies.

The global balance of power began to shift slowly after the US invasion of Iraq.  The removal of a Sunni government in Iraq and its replacement by a Shia-oriented government in 2004 was the beginning of a shift that accelerated in 2013 as the US and other powers sought an agreement with Iran on its nuclear program.  Other governments have had to re-balance their interests to adjust to these changes, and the shifts are beginning to become quite dramatic.  Nowhere are these changes more obvious than in Asia, and the US and Europe have been slow to anticipate the differences.