World Politics News   Articles for World Politics Course

Paul Krugman has written an op-ed piece which essentially argues that Greece should leave the euro and that the troika demands for more austerity is simply a ridiculous policy.  Krugman is exactly correct, but few other analysts have been willing to make the argument in public.  Repudiating a debt is regarded as complete heresy in most mainstream circles.   The truth of the matter is that Greece has already made heroic concessions and none of those concessions have increased the economic prospects for the country in the least.  So instead of suffering for many more years under austerity, the Greeks should accept the pain of leaving the euro which will be quite intense but would last for only about two years if previous debt repudiations are any guide.  Enough of this idiocy.  The Greeks deserve more than being slaves to the troika.  The IMF can continue to insist that the Greeks raise taxes, but as long as its Director, Christine Lagarde, gets a tax-free salary, its advice is hypocritical.  Below is a photograph of an elderly woman who has just been told that she would not be able to withdraw her pension from the closed bank.

The world stock markets were rattled by the prospect of a Greek default today:  most markets suffered large losses.  According to USA Today:

“The Dow Jones industrial average fell 350 points, or 2.0%, to 17,597 for its biggest slide since June 2013. Indexes in Europe were hit even harder with Germany’s DAX index down 3.6% and France’s CAC 40 down 3.7%. In Asia, Tokyo’s Nikkei 225 fell 2.9% and China’s Shanghai composite lost another 3.3% to officially enter bear market territory — meaning a drop of 20% or more.”

But Greece is a small country and it’s not clear that such nervousness is warranted.  Robert Samuelson is an op-ed writer for the Washington Post and he goes through the underlying realities of a Greek default and concludes that the stresses will be manageable.  Samuelson’s analysis is accurate and persuasive, but he does not really address the psychological dimensions of a Greek default.  The Greek debt situation, unfortunately, is not unique:  it may be quite large, but there are several other countries in the world with similar debts.  If creditors believe that the Greek default is a harbinger of other problems, then instability may spread even though it may not be warranted.  For example, today Puerto Rico announced that it will not be able to pay off its $72 billion debt and the Obama Administration indicated that it was not going to bailout the American Commonwealth.

Tunisia is in many respects a bellweather state in the Middle East.  It was the protests in Tunisia in January 2011 that started the sequence of events that we call the “Arab Spring.”  The recent terror attack against tourists at a Tunisian beach was a devastating assault on the political consciousness of the Tunisian people.  The success of the attack has caused some Tunisians to ask the critical question of whether the price of greater freedom is a susceptibility to terrorism.  The question is a good one, but it is up to the people of Tunisia to answer it.

The Greek government has announced that Greek banks and the Athens stock market will be closed on Monday, 29 June.  The move is designed to prevent a run on the banks and a collapse of the stock market since most people believe that any reconciliation before 30 June between the Greek government and the troika is impossible.  Amid the uncertainty of what this all means, there is incredible nervousness in global markets.  The Shanghai stock market has experienced record drops over the last few weeks, the euro dropped 1.7% over the weekend, and, as I am writing this post (8:22 pm on the 28th) the Dow Jones futures are down 245 points.  I suspect the US stock market will recover by tomorrow morning since it is probably the only real safe haven in such uncharted waters.   Tomorrow should be an interesting day.

Recent research has found that eight to 11 of 37 major world aquifers are being drained faster than they are being replenished.   This underground fresh water resource is essential to the food production that nearly 2 billion people in the world rely upon.  The danger is that once these aquifers are exhausted, they are not quickly renewed.  We have only recently developed the tools to measure underground aquifers, and there is only a patchwork of laws that regulate the use of this collective good.

The troika has countered Greek Prime Minister Tspiras’s gambit to put the terms of the bailout deal to a referendum by refusing to give Greece an extension beyond 30 June.  By doing so, the troika avoided a possible embarrassing situation if democracy had repudiated the economic terms demanded by the troika.  Without a deal, Greece will not be able to make its debt payment on Tuesday.  No one knows exactly what that situation would mean, but the most likely scenario is that Greece would default on its loans and would therefore leave the eurozone and perhaps the European Union.   The world is clearly moving into uncharted territory.

Tuesday is also a big day for nuclear proliferation.  It is the deadline for an agreement on the Iranian nuclear program and the parties have assembled in Vienna to work out the final details.  Since both sides clearly want a deal, the deadline is not as significant as the deadline for the Greek debt.  A short delay in an agreement will not signal failure.  But there are still some significant details to be ironed out, such as whether the International Atomic Energy agency will have access to military facilities (usually considered off-limits in the Non-Proliferation Treaty) and the timing of how the sanctions will be lifted.  There are harsh opponents of the deal and they are working hard to derail the negotiations.  But all the governments involved in the negotiations have invested a great deal in a successful outcome.

Kurdish fighters have been quite successful against the forces of the Islamic State, but they have been hamstrung because Turkey refuses to allow them to be militarily resupplied by the US.  Turkey fears that a more powerful Kurdish force would lead to increased demands for a Kurdish state.  Kurds live in Iraq, Syria, Turkey, and Iran.  Turkey fears that Kurdish successes in Syria would lead to a Kurdish state carved out of Syrian territory, and development that might lead Turkish Kurds to make similar demands.  The unwillingness of Turkey to support the Kurds against the Islamic State leaves only Iran as a possible ally in the attempt to degrade and destroy the Islamic State.

Last month I posted about a scorching heat wave in India.  People in southern Pakistan are now enduring the same event as more than 1,000 people have died from heat-related issues.   The problems have been amplified by the fact that many are fasting during Ramadan and are therefore more susceptible to the heat.  The wave of dead bodies has been so severe that many morgues are closing due to lack of space and adequate refrigeration.  Pakistan also suffers from a lack of reliable electricity.  We can never tell to what extent the heat waves are related to climate change, but the severity of the heat waves is likely a harbinger of the future.

Greek Prime Minister Tsipras made a surprising decision to call for a referendum among the Greek people whether the terms of the troika for additional assistance should be accepted.  Greece’s creditors have made it clear that they do not wish for any more concessions to be made and are holding fast to the demand that Greek pensions should be further reduced.  Tspiras’s statement makes clear what his own position is.  According to the Greek newspaper, ekathimerini:

“After five months of tough negotiations, our partners unfortunately resorted to a proposal-ultimatum to the Greek people, I call on the Greek people to rule on the blackmailing ultimatum asking us to accept a strict and humiliating austerity without end and without prospect.”

The referendum is scheduled for 5 July, days after the bailout deadline of 30 June.

The US is now one of the 20 countries in the world that allow gay marriage.  The list now stands at Argentina, Belgium, Brazil, Canada, Denmark, England/Wales, Finland, France, Iceland, Ireland, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Scotland, South Africa, Spain, Sweden, United States, Uruguay.  The countries are overwhelmingly identified as societies that are deeply influenced by liberal ideas.

The British medical journal, The Lancet, has published a report on the effects of climate change.   A group at the University of Notre Dame broke down the countries most severely affected and those countries which will be best able to manage climate change.  Not surprisingly, the lists broke down between rich and poor countries:

One is more likely to be killed by right-wing extremists in the US than by extremists who adhere to a radical interpretation of Islam.  According to the New America foundation there have been 48 Americans killed by right-wing extremists since 11 September 2001.  Since that time, only 26 Americans have been killed by those who profess a radical interpretation of Islam.  The statistics raise serious questions about how Americans use the word terrorism, and whether there Americans have unhelpful blinders about the terms.

If the negotiations with Iran fail at the end of the month, the US has a military lever against the Iranian nuclear program that is truly out of science fiction.  Since some of the Iranian facilities are buried deep underground in hardened bunkers, the US has developed what it calls the “Massive Ordnance Penetrator” or MOP.  The MOP weighs 15 tons, of which 5,300 lbs are explosives.  It is 15 feet long and can drill down 200 feet of earth or 60 feet of concrete before it detonates.  It is delivered by a B-2 bomber and presumably could destroy the Iranian facilities.  Iran, however, has been developing anti-aircraft capabilities that could nullify this weapon.

Sometime within the next few days a “Freedom Flotilla” will sail to the Gaza Strip bringing humanitarian supplies to the besieged Palestinians there.  Israel has maintained a tight blockade of the Gaza for a number of years and since the war in 2014 the situation in the Gaza has deteriorated severely.   This will be the third flotilla since 2010–none has been successful, and the last one was stopped by Israel with the loss of nine lives on the ships bringing supplies.  This time there will be an Arab member of the Knesset, the Israeli Parliament, on the flotilla.  Israel has vowed to stop this flotilla as well.

The Senate approved Trade Promotion Authority (or “fast-track”) for President Obama’s proposed Trans-Pacific Partnership.  The vote was 60-38 passing with the minimum number of votes to prevent a filibuster.  The President joined forces with the Republicans in Congress to get the bill passed.   The Authority means that once President Obama finalizes the Agreement (we still do not know the specific details of the bill), the Congress will only be able to vote yes or no on the bill–no amendments or negotiations will be allowed.  Democracy Now has published a debate between a supporter of the TPP and an opponent of the agreement on the merits of the Trans-Pacific Partnership which is fairly even-handed, although Democracy Now opposes the bill.

A class-action suit was brought against the Dutch Government arguing that failing to stop the process of global warming constitutes a violation of fundamental human rights.  The suit was brought by the Urgenda Foundation and the foundation won the case.  According to Ars Technica:

“Today, a Dutch court at The Hague ruled in favour of Urgenda, ruling that the Netherlands’ plans to cut emissions by only 14-17 percent from 1990 levels by 2020 were illegal. Moreover, the wording used by the judges in the ruling is incredibly strong and clear-cut: ‘The state should not hide behind the argument that the solution to the global climate problem does not depend solely on Dutch efforts … Any reduction of emissions contributes to the prevention of dangerous climate change and as a developed country the Netherlands should take the lead in this.’”

The court ordered the Dutch state to reduce greenhouse gas emissions by 25% by the year 2020.

The US intends to station 250 troops and heavy military equipment in several NATO countries close to the Russian border in response to Russian activities in the region.  The moves could violate the 1997 NATO-Russian Founding Act of 1997 signed by US President Clinton and Russian President Yeltsin.  This move comes after the European Union voted to extend sanctions against Russia for another 6 months.  The world could be moving into a second Cold War if these moves and countermoves continue to escalate.

The Greek tragedy continues, although it is difficult to know exactly what the current situation is.  Over the weekend, Greek Prime Minister Tsipras presented a plane to the troika which was labeled as “promising” by some of the participants.   In essence, if the news reports are to be believed, Tsipras capitulated on most of the major points, accepting the terms that were available 5 months ago (a lot of drama, little results).  But now the issue is whether Tsipras can get his party to accept the terms, and there is a possibility that the deal will be rejected by Syriza hardliners.   If that happens, then Tsipras will either have to call for a referendum on the deal or to seek new elections to form a new government.  In short, with the deadline of 30 June as the absolute deadline (unless the troika decides to change the rules), we still do not know what will happen.

A UN Commission of Inquiry has found that both Israel and Hamas committed war crimes during the Gaza war of 2014.   The New York Times summarized the finding of the Commission in this way:

• The report says 65 percent of 2,251 Palestinians killed were civilians, down from earlier United Nations estimates.
• Israel says it has documented militant activity by at least 44 percent of the dead.
• The report mainly refers to “Palestinian armed groups,” rather than Hamas, which controls Gaza and led the fight against Israel.
• Israel blocked investigators and declined to answer questions, as did Hamas; the Palestinian government cooperated.
• The report cites the killing of 21 suspected collaborators by Hamas’s armed wing and Israeli operations in residential neighborhoods as possible war crimes.

Both Israel and Hamas rejected the findings of the Commission, but there is no statute of limitations on war crimes.  The matter will likely be pursued at some point in the future.

The newly elected President of Nigeria, Buhari, has  made considerable progress in a very short period of time in at least setting a better tone for the political and economic stability of the country.  Most importantly, the military has been able to get a handle on the violence inflicted by Boko Haram.  The insurgency is still alive, but it is no longer making substantial territorial gains.   The roots of the insurgency are easy to visualize by looking at the distribution of wealth in the country which is weighted toward the south and Christian part of the country.  The larger issue, whether Nigeria can free itself of the corruption that compromised the economic potential of the country so severely.  In that respect, President Buhari has a strong favorable reputation.

In about a year, the US Navy will launch its newest aircraft carrier, the U.S.S. Gerald Ford. It will be the largest vessel ever launched:, 1,092 feet long and it will displace 100,000 tons.  It will be serviced by about 4,000 sailors and will carry 75 aircraft.  The US currently has 10 aircraft carrier groups and no other country comes close to that number.  The Ford will cost about $13 billion when it is completed.

The typical CEO made about 300 times more than the typical worker in 2014.  That ratio is not as extreme as the record of 376:1 in 2000, but it is still higher than most periods in American history.   The rate of increase for CEO compensation has been extraordinary over the last 47 years:

“From 1978 to 2014, inflation-adjusted CEO compensation increased 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s annual compensation over the same period.”

It is very difficult to figure out a justification for the increasing discrepancy in terms of traditional concerns on what constitutes appropriate compensation for a good day’s work.

Marjory Wentworth was a student in the very first class I ever taught at Mount Holyoke College.  She is now the Poet Laureate of South Carolina and she has written a poem, “Holy City”, to commemorate the lives of the people who were killed in the shootings at the Emanuel A.M.E. Church in Charlston.  She recites the poem for the BBC.

The opposition party in South Africa has called for an investigation into why Sudanese president Omar al-Bashir was allowed to leave the country without being arrested.  Bashir is under indictment by the International Criminal Court for war crimes and crimes against humanity in the war against his people in what is now South Sudan.  South Africa, unfortunately, not alone among African countries that have failed to honor the arrest warrant for Bashir.  African states are deeply suspicious of the International Criminal Court since the majority of its cases have been pursued against African leaders.

Ambrose Evan-Pritchard is an economic journalist who I regard very highly even though his analyses are usually contrary to the “mainstream” view.  His views on the bad behavior of the troika in its dealings with Greece are similar to mine.  In his most recent column he wrote:

“The spectacle is astonishing. The European Central Bank, the EMU bail-out fund, and the International Monetary Fund, among others, are lashing out in fury against an elected government that refuses to do what it is told. They entirely duck their own responsibility for five years of policy blunders that have led to this impasse.”

To get an idea of how far Greece has gone in its reforms, check out this chart on the “primary” government budget surplus among the various states in the EU.  The primary budget surplus is the budget surplus (or deficit) without including debt repayments.   Greece has cut its expenditures far beyond the norm in Europe.

The number of displaced persons in the world is the highest ever recorded by the UN High Commissioner on Refugees:  60 million.  These people have been displaced by conflicts in their own countries and the number of refugees–who have fled their own countries–in 2014 reached 14.4 million.  The largest number of refugees come from Syria, but six of the main sources of refugees are African countries.  The circumstances of these displaced persons are miserable.

There were large protests throughout Great Britain against the austerity programs proposed by  the newly empowered Conservative government.   The protesters were a loose amalgam of groups who do not wish to see any further budget cuts to public sector services.  The fear is that with its large majority in Parliament, the government will seek to balance the budget at the expense of vulnerable parts of the population.  According to Reuters:

“Since winning the election, finance minister George Osborne has said he wants government departments to make extra cuts this year and to commit future governments to run budget surpluses during normal economic times.

“The government also plans to reduce spending on social security benefits by a further 12 billion pounds ($19 billion), arguing that high levels of public debt make Britain vulnerable if there is another global financial crisis.”

One wonders if the British government will pay attention to the recent IMF report that suggests that austerity programs rarely work.

Apparently, frantic negotiations are going on over the weekend between Greece and the troika as both sides try to avoid a Greek default.  If these talks do not yield a compromise, then many expect that Greece will be forced to implement capital controls on its banks in order to prevent people from withdrawing their money out of Greek banks to avoid losing money in the case of a default.  If the talks fail, then it is likely that Greece will have to take action on Monday.  So we should all watch to see what happens on Monday–we could witness a genuine bank run if it appears as if reconciliation is hopeless.