(Current Affairs) International Events | September: 2015

International Events

European stocks pause before Greek vote on bailout terms

  • Yields on peripheral bonds dipped, while European stocks and the euro held their breath on Wednesday as fractious parties in the Greek parliament prepared to vote on EU-prescribed austerity measures needed to unlock a third bailout.

  • Lawmakers from Prime Minister Alexis Tsipras’ Syriza party and their allies argued behind closed doors about whether to back the reforms. Tsipras defended the deal, saying it was better than the alternative of being forced out of the euro zone.

  • The parliamentary vote is seen as the key hurdle to a final agreement for the bailout, which could end — at least temporarily — months of increased uncertainty, volatility and frequent risk aversion in financial markets.

  • The pan-European FTS Eurofirst 300 index fell 0.1 percent to 1,578.71, having risen for five days in a row until Wednesday. Yields on German Bunds, top-rated assets often sought in times of uncertainty, dipped 2 basis points to 0.82 percent. The euro, which has lost 1.5 percent this week, was little changed at $1.1001.

  • But 10-year yields on Spanish, Italian and Portuguese bonds, seen as vulnerable to spillovers from the Greek crisis, fell 2-3 basis points to 2.06 percent, 2.08 percent and 2.75 percent respectively.

Ecoside of south china sea

  • The escalating territorial dispute in the South China Sea is as much an ecological crisis as it is a geopolitical one. Dredging, land reclamation and the construction of artificial islands could be swamping centuries old reefs in sediment, endangering ecosystems that play a key role in maintaining fish stocks throughout the region. According to leading marine biologist Professor John McManus, a proper understanding of the marine ecosystem and its role in food security is key to finding a solution to both the environmental and political issues.

  • McManus discovered that periodic ‘pulses’ of larval fish were being carried on shifting currents throughout the South China Sea, replenishing coastal fish stocks and that they were being spawned in the offshore reef ecosystems at the heart of the current geopolitical fracas.

  • Conflict over territory in the South China Sea is not new, with China, the Philippines, Malaysia, Vietnam, Taiwan and Brunei all staking contrary claims. It has been making headlines again since China began building artificial islands in the Spratly Islands – something of a misnomer since the archipelago covers an area the size of Tunisia, only 4 sq km of which is above sea level. Or was. According to McManus, as of June, satellite images appeared to indicate China had reclaimed a total of 12.82 sq km of land. In 2013, The Philippines filed an ongoing lawsuit at the UN International Court of Arbitration, questioning the legality of China’s territorial claims and its development of tidal reefs that are only periodically above water, which it alleges violates the United Nations Convention on the Law of the Sea (Unclos). China has refused to participate in the arbitration, questioning its validity.

  • China also claims its island building activities have caused only minimal, recoverable damage, but McManus, an expert in reef ecology, doubts this is the case. “The reef crest is a tiny thing about the same height as the tide range,” he explains. “That’s what is protecting everything – waves lose more than 90% of their energy when they hit the reef crest, reef flat and reef slope.” What’s more, this is an area that is prone to typhoons. “And you can’t build anything on an atoll without a wave-breaking crest in a big storm region.”

Nuclear deal between Iran and six world powers

  • A landmark Iran nuclear agreement was reached on Tuesday after clearing final obstacles, and a senior diplomat said it included a compromise between Washington and Tehran that would allow UN inspectors to press for visits to Iranian military sites as part of their monitoring duties.

  • But access at will to any site would not necessarily be granted and even if so, could be delayed, a condition that critics of the deal are sure to seize on as possibly giving Tehran time to cover any sign of non-compliance with its commitments.

  • IUnder the deal, Tehran would have the right to challenge the UN request and an arbitration board composed of Iran and the six world powers that negotiated with it would have to decide on the issue.

  • Still, such an arrangement would be a notable departure from assertions by top Iranian officials that their country would never allow the UN’s International Atomic Energy Agency into such sites.

  • Iran has argued that such visits by the IAEA would be a cover for spying on its military secrets.

  • On Tuesday morning, the European Union announced that the final plenary of Iran and the six countries negotiating with it will take place at 10:30 Vienna time, followed by a news conference.

  • A Western diplomat said they will endorse the deal, reached in the early morning hours. He demanded anonymity because he was not authorized to comment on the confidential talks.

  • The wholesale food index rose 2.88 percent year-on-year, while fuel prices fell 10.03 percent from a year ago.

Athens about to reach bailout worth €86 billion

  • Greece reached a desperately needed bailout deal with the Euro zone on Monday after marathon overnight talks, in a historic agreement to prevent the country crashing out of the European single currency.

  • Leftist Prime Minister Alexis Tsipras agreed to tough reforms after 17 hours of gruelling negotiations in return for a three-year bailout worth up to €86 billion ($96 billion), Greece’s third rescue programme in five years.

  • The new rescue is the country’s third since 2010 and came after a bitter six-month struggle following Mr. Tsipras’s election in January that put Greece’s membership of the Euro zone in the balance.

  • Greek banks have been closed for nearly two weeks, and there were fears they were about to run dry owing to lack of extra funding by the European Central Bank, meaning Athens would have had to print its own currency and effectively leave the single currency. “Grexit has gone,” European Commission president Jean-Claude Juncker told AFP.

  • Europe’s first step will be to push the deal through several national parliaments, many in countries that are loath to afford Greece more help.

  • Athens will now have to rush through tough reform laws by Wednesday, according to the document agreed on by Mr. Tsipras and his Eurozone counterparts. Greece has to introduce harsh conditions on labour reform and pensions, VAT and taxes, and measures on privatisation.

  • Under the agreement, it will park assets for privatisation worth up to €50 billion in a special fund. The money will then be used to recapitalise Greece’s cash-starved banks.

Warming ‘worst case’ must be considered say experts

  • For too long the world has seen rising temperatures as a problem of predicting long range weather forecasts.
  • The authors says that that leaders must focus on the ‘worst case scenarios’ and how likely they are to occur.
  • The report has been compiled by an international group of scientists and experts in risk.
  • In a foreword to the new study, UK foreign minister Baroness Anelay says that previous responses to the threat of climate change have been far too narrow.
  • “When we think about keeping our country safe, we always consider the worst case scenarios. That is what guides our policies on nuclear non-proliferation, counter-terrorism, and conflict prevention. We have to think about climate change the same way,” she said.

Systemic risks

  • The report underlines, once again, the direct risks that warming poses. It says that at current rates of carbon emissions, a temperature rise of 4 degrees C is “as likely as not” by 2050.
  • This would lead to significant impacts with lethal levels of heat stress, drought and crop failures among a host of other negatives.
  • The report also warns that the security implications of high levels of warming are considerable. Growing populations competing for resources could threaten the stability of countries that are currently considered developed.
  • Migration, the authors warn, could become “more of a necessity than a choice”.
  • Politicians needed to consider the bigger picture, said Fiona Morrison, from the Institute and Faculty of Actuaries, a co-sponsor of the report.
  • Commissioned by the UK Foreign Office the authors include Sir David King, the UK Foreign Secretary’s Special Representative for Climate Change and leading members of US and Chinese scientific committees along with experts in risk in energy, finance and military issues.
  • Campaigners and environmentalists welcomed the report as a useful contribution, saying they believed it would help put pressure on politicians to deliver a new global deal by the end of this year, that would limit warming to 2 degrees C above pre-industrial levels.

Greece exit’ will be extremely costly

  • “There should be no doubt that exit from the Euro would be extremely costly for Greece and its creditors,” said the International Monetary Fund’s (IMF) Chief Economist Olivier Blanchard, writing in his blog on imfdirect , the Fund’s global economy forum.

  • Underlining the Fund’s commitment to providing assistance, Mr. Blanchard ruled out further IMF funding for Greece until old arrears are cleared.

  • Greece defaulted on a loan repayment of €1.55 billion due to the IMF on June 30. Greece owes a total of €6.95 billion to its creditors in July alone, of which €452 million is owed to the IMF.

  • Taking on the main critiques of the 2010 bail-out programme for Greece, Mr. Blanchard said he wanted to clarify points of contention and support a way forward.

  • Refuting the claim that the 2010 programme only raised debt levels and demanded excessive fiscal adjustment, Mr. Blanchard argued that without assistance, Greece would have had to make fiscal cuts of between 20-25 per cent of GDP, leading to more severe adjustments and higher social costs than under the five-year bail-out programme. ‘

  • Mr. Blanchard also countered the criticism that finance provided to Greece was simply used to pay back foreign banks, saying that while it was correct to say that Greece’s debt was not restructured for two years, it was due to fears of contagion risk — the risk that macro-economic shocks in once country are transmitted through price-level changes, for example, to other countries.

  • Mr. Blanchard ruled out further IMF funding for Greece until old arrears are cleared. Greece defaulted on a loan repayment of €1.55 billion due to the IMF on June 30. Greece owes a total of €6.95 billion to its creditors in July alone, of which €452 million is owed to the IMF.

Airbus flew its electric plane

  • Airbus flew its electric plane across the English Channel for the first time on Friday, hours after an independent French pilot made a similar voyage, beating the aeronautics giant in this symbolically important step toward making electronic flight viable in the long term.

  • European planemaker Airbus flew its E-fan plane from Lydd, England, to the French port of Calais on Friday morning. The plane operates on batteries. The 20-foot long, 1300-pound jet releases zero emissions.

  • About 12 hours before Airbus’ Channel flight, French pilot Hugues Duval took his two-engine, one-seat Cricri plane from Calais to Dover and back.

  • Because he lacked authorisation to take off from Calais, another fuel-driven plane towed his 100-kilogram (220-pound) Cricri for the start of the trip, he said. Then he flew autonomously back to Calais and landed safely.

Greece needs debt relief: Tusk

  • EU President Donald Tusk said on Thursday that Greece’s creditors must make a “realistic” proposal for managing the country’s huge debt, as Athens faced a midnight deadline to submit reform plans for an international bailout.
  • Greece’s calls for its debt to be tackled have been backed by the International Monetary Fund and U.S. Treasury Secretary, but Germany leads a hard-line group of Eurozone nations that are strongly opposed.
  • If Greece were to submit its proposals on time on Thursday, they will then be examined by the “troika” of creditor institutions — the European Commission, the European Central Bank and IMF — before going on to political leaders. Mr. Tusk has set a special EU summit on Sunday as the final deadline for a deal to bail out Greece.
  • Premier Tsipras has called for a reduction of Greece’s massive €320-billion debt mountain to be part of any deal for its third international bailout since 2010.
  • But Germany and many other Eurozone nations reject any move to write off Greek debts, especially after Greeks in a referendum last weekend backed Mr. Tsipras’s decision to reject the creditors’ demands for further austerity.

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