10 August 2018   Leave a comment

Global financial markets were roiled today as the Turkish lira fell by almost 17% in value.  The Turkish economy has been sputtering lately as confidence in the Erdogan government has declined, but the diplomatic spat between the US and Turkey over the imprisonment of an American evangelical, Andrew Brunson two years ago on charges that he had participated in a failed coup attempt against Erdogan.  The US slapped sanctions on Turkish officials to coerce Brunson’s release, but the Turks have adamantly refused.  In retaliation, US President Trump doubled the tariffs on Turkish aluminum and steel and the global markets took this as a sign that the Turkish economy would stop growing.  In turn, markets feared that banks which have lent money to Turkey–primarily Spanish, Italian, and French banks–would lose substantial amounts of money.  Global stock markets slumped on the fears of contagion.

 

The Russian ruble also fell as Russia angrily denounced the additional sanctions the US has imposed on it for the chemical weapons attack in Great Britain.  Those sanctions are required by US law and will become even more severe–including the right to deny the Russian airline, Aeroflot, from landing on US soil–if the Russians deny the UN the right to inspect its chemical weapons facilities (also required by US law).  According to Politico: “Russian Prime Minister Dmitry Medvedev warned Friday that his nation could retaliate against the United States’ newly issued economic sanctions, saying it would consider any action against its banks an act of economic war.”  The ruble fell by about 5% as investors feared that foreign investors will stay away from Russia because of likely economic weakness in the year ahead.

 

Democratic Republic of Congo’s President Joseph Kabila announced that he will not seek a third term.  Kabila came to power in 2001 after his father was assassinated and his second term–his last according to Congo’s constitution–ended in 2016.  He has refused to step down, citing unrest in the country, but there was tremendous domestic and international pressure for him to obey the constitution.  Congo has a tremendous resource base and could potentially be a very rich country, but years of colonial and strongman rule have made effective governance impossible.  Perhaps, Kabila’s decision will turn that page.

Joseph Kabila

Posted August 10, 2018 by vferraro1971 in World Politics

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