Archive for September 9th, 2020


September 9, 2020

A country which could have a promissory future, however facing many internal difficulties and challenges. Center-right President Macri inherited an economical and political disaster from his predecessor Cristina Kirchner, one of Latin America’s populist and authoritarian political leaders and a close ally of Venezuelan Maduro. Stubborn and corrupt worker unions, radical and aggressive social movements, a bad functioning justice still integrated and badly influenced by disturbing militants of the Kirchner Front of Victory, egoistic local companies with lack of competitiveness and progressiveness, which enjoyed government protection during the 12 years of the Kirchner administration and an opportunistic and small-minded opposition missing to be constructive, contribute to continued political instability. High inflation, an overvalued local currency and a declining spending capacity slowing consumer demand delay the return of the country into growth territory. The government, advancing to reintegrate Argentina back into the world, taking decisive corrective steps to stimulate, activate and normalize the economy, received considerable applause and support from important Foreign Head of States, international political leaders and chief executives of multinationals, increasing foreign commitments, investments and exposures, complementing local private initiatives or occasionally replacing them, comforting the Macri administration, promising there is no return to the past and to continue its efforts pushing the country ahead; the country’s stability and progress may depend finally on the government’s willingness and capability of compromising with remaining major local power players to implement pending essential domestic reforms, like a tax reform and a labor reform and cleaning up the justice system, to reduce risks to fail. The outcome of the legislative election to be held on October 22, 2017, will be decisive for the future of the country and should confirm that the majority of voters continue to support the Macri administration, helping an improving economic outlook for the second half of 2017, despite a still high inflation and a persisting weak consumer spending capacity.  The Peronists, divided into two main groups, the Front of Victory led by former President Cristina Kirchner, leading the parliamentary opposition to Macri’s administration, and another group composed of politicians of dissident Peronists from the Justicialist Party, the largest Party in Congress, and the Renewal Front of Sergio Massa, forming an alliance with Margarita Stolbizer’s Progressive Party to improve their chances in the coming legislative election, are not expected to obtain sufficient votes to be able to introduce political changes or reverse the economical reforms introduced by the Macri government. Argentina failed to win back its status as an emerging market in the influential MSCI benchmark equity index, relegating the country to the ranks of frontier markets for at least until 2018, contrasting the MSCI’s decision with Argentina’s success to issue a $2,75 Billion 100-year bond; the downgrade to frontier market status has been caused during the former restrictive populist Kirchner administration and the MSCI wants to be sure that Macri’s open market policies will be irreversible, waiting to see the results of the important midterm legislative elections in October 2017, still influenced by the campaigning former President Cristina Kirchner, introducing her new left-wing alliance called ‘Unidad Ciudadana’, opposing Macri’s economic reforms, which she claims are hurting the poor, launching her bid for a Senate seat and breaking with Peronism; a still more divided opposition could help Macri’s coalition for a strong showing in the coming elections, not expected to change the actual balance of power in Congress, and improve his chances to seek re-election in 2019. Obtaining Cristina Kirchner a seat in the Senate would give her immunity from arrest, but not from trial, advancing investigations of accusations of wrong doing and corruption related charges against her. Renewal Front’s Massa success strategy seems to be polarizing with former President Cristina Kirchner seeking also a Senate victory to stop her as he did winning in 2013. Cristina Kirchner won narrowly the mid-term primary elections against Macri’s candidate Bullrich and also a possible second-place finish in the October 22, 2017 election would still grant her a seat in the Senate, from where she likely will lead a most uncomfortable opposition intending to stop planned Government reforms, what advancing investigations and trial, even an eventual prison sentence against her could interrupt, cautioning her candidacy many investors; senator Pichetto, president of the Peronist/Front of Victory party bloc, already signaled that Cristina Kirchner, if elected to the Senate, will have to form her own bloc; after a strong general showing of Macri’s ‘Let’s change’ coalition in the mid-term primary elections his Government is facing the coming October challenge with confidence; but no matter how many seats he will be able to pick up he will still lack a majority and has to continue seeking, building and strengthening alliances to pass necessary reforms. A second place finish in the October 2017 election is granting Cristina Kirchner a Senate seat, giving her immunity from arrest but not from trial, and advancing legal procedures may still frustrate and limit her political ambitions. A sweeping and notably victory of the ‘Let’s Change Coalition’ in nearly the whole country allows to increase its seats in the House and the Senate, pressing and calling President Macri for a basic consensus to push ahead with tax, labor and pension reforms, as well as reforms of the country’s justice system to combat more efficiently corruption, seeking with governors to achieve a fiscal balance. Elisa Carrio and Cristina Kirchner , totally opposed political players, both tolerated and also used by the Macri-Government, likely underestimating the problems they can cause to the administration given their renewed influence and political power. Elisa Carrio, founder of the political movement ‘Civic Coalition ARI’, is actually a fundamental part of the ‘Let’s Change’ coalition, accustomed to express publicly her opinion about what’s wrong and what’s right and what and how it should be done, worrying not only the opposition but also the government. Cristina Kirchner, accused also on treason, asking a federal judge to lift her immunity from arrest as newly sworn in senator, facing also charges in several corruption investigations, creating her own political movement ‘Citizens’ Unity’ and dividing Peronists, may not be able to enjoy her role as a potential opposition figure, as she will have to face a difficult and long battle with justice. After violent protests pushed by opposition legislators, identified also as Kirchner supporters, battled to stop a congressional session on the pension reform, intending to destabilize the government, and Cristina Kirchner’s first appearance in the Senate, seen as destructive and full of hate, breaking congressional rules, her image is suffering a further deterioration, which could damage still more her remaining political influence. President Macri, recovering the initiative, leaving no doubt about his firmness and determination to fight for the pending reforms to overcome the worst legacy of the Kirchner administration, pushing grows and seeking above all to reduce deficits, stabilizing public finances and balance budget, counting on the approval and help from foreign economic powers, including the U.S. Trump administration. President Macri, seeking to position himself for re-election in 2019, delays necessary labor reform to avoid further confrontations with unions. Declining purchasing power, stagnating growth, a still uncontrolled inflation and a very high, still increasing debt level are seen as obstacles to reach a major economic recovery, making it doubtful if the government will be able to fulfill its goals, implementing all the mandatory reforms and secure re-election in 2019. During his second speech to Congress since he was elected, President Macri tried to transmit optimism, willingness to overcome difficulties, defending pending reforms, confirming that the country’s economy surged 4,1% in January 2018 compared with the same month of 2017 and the poverty rate fell to 25,7% in the second half of 2017 from 28,6% in the first half of the year and 30,3% in the second half of 2016, but overshadowed Macri’s market friendly policies designed to cut fiscal deficit, reduce inflation and attract foreign investment, by a persisting high inflation elevated due to additional increases in the prices of electricity, gas, transportation, communication and prepaid medicine, reducing again spending capacity of consumers, expecting actually analysts 2018 will be still ending with a high inflation more likely around 40%. After not very successful interventions of the Central Bank to stop the Peso sinking and to help slow down inflation, mowing rates up to growth depressing 40%, Argentina finally returns again to the IMF, seeking financial assistance, like a Standby Credit Facility to address the Peso volatility and regain the confidence of investors, hoping its program of adjustment and reforms gets back on track in time for the Presidential election late 2019, counting with little or no constructive help from a still deeply divided opposition. President Macri vetoed the law seeking to freeze utility rates agreed by an unified Peronist opposition, including followers and non-followers of Cristina Kirchner, saying there was no way the budget can stand an additional 1% of GDP, complicating still more a political relation with the divided opposition and increasing tensions with labor unions and social movements. Index provider MSCI finally reclassified Argentina as an emerging market, coming the reclassification just hours after the IMF approved a $50 Billion financing deal for Argentina as the country seeks to stabilize its currency. The IMF $50 Billion Stand By facility is considered as a political gesture to support the Macri administration, helping to avoid the return of populism in Argentina; however stagnating growth, an out of control and run away inflation, the pressure of a strong Dollar, the elevated fiscal deficit, high foreign debts and increasing social tensions require very conscious economic measures and corrections, discipline and more consensus, and do not permit arrogance and new errors, without putting at risk a possible re-election of President Macri in 2019. President Macri is obliged to resolve the fiscal deficit, cutting it according to the agreement with the IMF from 3,7% to 2,7% of GDP in 2018 and to 1,3% in 2019, meaning the government is forced to accelerate austerity rising recessionary tendencies, and to deal with the continuing lack of productivity of the Argentine economy, as he seemed to have lost the political capital to carry through the much-needed labor reform. Very high interest rates accelerate advancing recession, increasing pressure on the Peso, as the confidence in Argentina is also shaken by a major corruption scandal, expected to damage further economic growth, seeing economists a contraction of at least 1% of the GDP in 2018, before returning the country eventually to growth in 2019, seeking President Macri to renegotiate the IMF- agreement getting still more flexible conditions, allowing to use all $50 Billion of the agreement in 2018/2019, helping to ease the financial pressure on Argentina and to regain calm and confidence of the people and markets. Following an urgent request from Argentina the IMF seems willing to speed up loan disbursements helping to reverse collapse in investor confidence and the local currency, after the government disclosed to impose taxes on exports and cutbacks in government ministries to ease budget deficit, needing President Macri now a political consensus to make it possible that congress approves a revised budget 2019, which sees inflation coming in at 23% with an average exchange rate of 40,1 Pesos for 1,- US-Dollar, after the inflation rate of 2018 is expected to hit 40%, while the budget deficit will be reduced to 2,7% of GDP. The IMF announced a deal extending financial institution’s support by a further $7 Billion elevating total commitment to $57,1 Billion, after the resignation of Luis Caputo from the presidency of the Central Bank, succeeded by Guido Sandleris, confirming the IMF every effort is being made to stabilize Argentina’s economy, agreeing on disbursements of $19 Billion until the end of 2019 and of the remaining $38,1 Billion until 2021, adopting the Central Bank a floating exchange rate regime between 34 Pesos and 44 Pesos for 1,- US-Dollar to face still ongoing currency crisis, allowing interventions only in case of disorderly market conditions or erratic fluctuations in exchange rates. The government seemed to ignore a nationwide strike to protest President Macri’s handling of the economy and his decision to turn for help to the IMF. Each day less people are believing in President Macri’s economic team, as it has lost credibility; the approval ratings of Macri’s top political opponent Cristina Kirchner, embroiled in a widening corruption scandal, have plunged even lower than his, giving him still hope for re-election in 2019. Eventually Argentina has lost the train against Brazil with its new elected right-wing President Bolsonaro, expected to seek new trade agreements, and to attract more international companies and foreign  investment, while the hesitating and contradictory Macri-Government, forced to ask the IMF for help to avoid default and to delay necessary reforms, leading the economy into recession, has not been able to win back the confidence into the country, as out of control inflation, record high interest rates and a dramatically shrinking money supply to protect the Peso against the U.S. currency, as well as extraordinary spending cuts to fix the permanent budget deficit are depressing demand and blocking the economic activity and expansion altogether, increasing social conflicts, probably overshadowing violent protests the coming G20 leaders summit under the presidency of Macri. Jet investors see still chances that the country’s plan seeking financial stability will be successful under the supervision and assistance of the IMF. Fitch rating agency revised Argentina’s Long-Term Foreign Currency Issuer Default Rating/IDR, leaving it at ‘B’, but downgraded outlook from stable to negative, citing a weakening economy, doubts about a multi-year fiscal consolidation and market availability when IMF funds are used up, as repayments come due in 2021, posing risks to sovereign debt sustainability; saying intense macroeconomic instability in 2018, marked by a major depreciation in the Peso, have dramatically weakened Argentina’s near-term growth prospects and prospects for economic recovery in the medium term are unclear. Leaders of the world’s most important economies will meet in Buenos Aires Nov 30-Dic 1, 2018, for the G20 summit to discuss sustainable development, existing some expectations on solving trade disputes, above all the U.S.-China trade war; before the G20 summit President Trump signed with his counterparts of Mexico and Canada the USMCA deal (the renegotiated NAFTA trade deal U.S.-Mexico-Canada). Argentina received a good notice just days before the arrival of President Trump for the G20 summit: After 17 years Argentina is set to secure a two-way trade deal with the U.S. for fresh beef products, giving the country a limit of 20.000 tonnes on exports to the U.S., valued at around $150-180 Million, and there would be no limit on beef imports from the U.S.. The final comuniquè of the successful G20 summit in Buenos Aires backed the necessary reform of the WTO to improve its functioning and encouraged energy transition that combine growth with decreasing greenhouse gas emissions towards cleaner more flexible and transparent systems and cooperation in energy efficiency, although the U.S. reiterated its decision to withdraw from the Paris climate agreement. Argentina is still pending to receive a formal invitation to join the OECD, remaining also delayed a Mercosur-EU trade agreement, now awaiting Brazil’s position under its new President Bolsonaro. If re-elected in 2019, with an economy probably still in recession, carrying out a severe austerity plan, making it difficult to obtain political concessions, Macri, most likely governing again with a marked minority in both chambers of the Congress, will necessarily have to seek stronger alliances with moderate and pragmatic Peronists, an option, he may be advised to initiate still during his first term, to get the approval of his hardest delayed decisions, such as the labor reform, an improvement to education, more ambitious tax and pension reforms and a waiting justice shake-up. Elsewise, a new Macri- Government could face another 4 years failing to push through the necessary basic reforms to stabilize the economy of the country, improving the expectations of its citizens and increasing relations with potential investors. Quite obviously there seems to be no way to make a deal with the left wing Cristina Kirchner-movement ‘Unidad Cuidadania’, and apparently the chances to reach an agreement with the volatile leader Sergio Massa of the apparently non constructive Renewal Front are doubtful. The national government confirmed electoral schedule 2019, with primary elections taking place on August 11, 2019, and the presidential elections, where also half of the Lower House and a third of the Senate are elected, taking place on October 27, 2019, while an eventual runoff, in case neither of the presidential candidates manage to obtain over 50% of the vote, would take place on November 24, 2019. Still to be seen if Federal Peronists and the Kirchner-movement will hold a large primary or if they do arrange it separately. Also pending details about a primary in the ‘Let’s change coalition’. Cabinet chief Marcos Peña has once hinted at the possibility of eliminating the primaries, calling them an ‘exorbitant expense’ that the government had to pay for. Moderate Peronists see an opportunity to beat President Macri in 2019, indicating multiple polls that Roberto Lavagna, a lifelong Peronist and a former minister of economy who helped lead the country out of its 2001/2002 economic crisis, already endorsed by important politicians and one of the country’s most popular figures, could be a perfect candidate to oppose and win Macri in the presidential elections 2019, although Macri is seen to have good chances to win re-election if the economy in the election year 2019 is improving and not getting worse and concerns about the possibility of a new default after 2021 have been duly addressed and are going to disappear. Accelerating the devaluation of the Peso against a strong U.S. currency, putting still more pressure on the out-of control inflation in the election year 2019, leading continuing high interest rates the country into a deeper recession, rising unemployment, the opposition is sharply increasing its criticism and doubts about Macri’s economic policy, practically ignoring the IMF support in propping up the still-vulnerable Peso. OECD called on Argentina to deepen its economic and structural reforms, warning that the nation must not reverse its course, a similar recommendation as received from the IMF, predicting that inflation, which topped 47% in 2018, would remain high in 2019, and that the economy would bounce back from recession and start recovery in the second half of 2019, insisting that Argentina must continue to fight against inflation and prioritize the reduction of spending. President Macri is seeking a deal with the opposition over the economic crisis, inviting the country’s political and social leaders to join negotiations on agreeing a 10-point plan to stabilize the economy, receiving some main political figures like Lavagna and Massa, and Cristina Kirchner, his invitation cool; even so the President continues to go ahead with his plan, a necessity to calm markets and improve chances for his re-election. IMF chief Lagarde said that many, including herself, underestimated the complicated economic situation in Argentina. An eventually re-elected Macri government, likely again with a minority in both chambers of the Congress, will finally have to seek a participation of moderate opposition leaders in his ‘Let’s change’ coalition to be able to deepen and push through Congress outstanding tax, labor, pension and justice reforms, and put into effect structural reforms to promote future growth; it appears to be quite doubtful that an eventual populist government under Alberto Fernandez and Cristina Kirchner would be really willing to seriously carry out such reforms, seeking probably a constitutional reform to reduce independence of justice, after Alberto Fernandez intimidated judges who are cracking down on the corruption of the last Kirchner administration. Macri chooses Peronist senator Miguel Pichetto as vice-presidential running mate, an expected and necessary step to open up the ‘Let’s change’ coalition, obviously producing positive market reactions, joining former Economic Minister Lavagna and Salta Peronist Governor Urtubey up for elections under ‘Federal Consensus 2030 banner’, formalizing Renewal Front leader Massa a deal with Kirchnerism, promised to lead a list for Lower House. Among 20 economies Argentina ranked more fragile, needing a continuation of a good relationship with the IMF, which requires an internal basic political consensus, requiring from whoever wins the general election to seek to establish cross-party bridges. The populist ticket including Cristina Kirchner as VP dominated with 48% of the vote the primaries, defeating by surprising 15 points center-right President Mauricio Macri, reflecting a general repudiation of the actual austere economic program and seen as a ‘vote of punishment’, as in the last two years businesses had to close and more than 250.000 jobs were lost, outpacing an uncontrollable inflation waged and pensions. Reflecting investors fears of a possible take over by populists, the Argentine stock market fell by 35%, the local currency declined 26% against the dollar, interest rates jumped from 64% to 74% and the country’s risk more than doubled. To calm markets and intending to win back voters before the coming general elections, President Macri, seeking his re-election, announced after years of spending cuts, significant relief measures helping to reduce the pain of the economic crisis. Of the record $57,1 Billion bailout the IMF already disbursed $44 Billion facing now the difficult choice to hand over another $5,4 Billion to the Macri government  or wait to deal with the next president, however conforming it will continue to stand with Argentina during these challenging times. Now under a new finance minister a delayed contingency plan went into action, imposing currency controls on businesses and asking creditors for more time to pay back Argentina’s $101 Billion foreign debt, including the IMF money. Macri lost the presidential primaries 47-32% to Peronist Alberto Fernandez, the likely new president, who has been sending contradictory signals about his intentions, saying he will pay back the IMF loan, but also harshly blaming the IMF for Argentina’s running away inflation and recession, adding his VP candidate Cristina Kirchner, Argentina will pay back the IMF loan but not at the expenses of suffering people. Investors and business people would like to see Mr. Fernandez and President Macri work together to calm markets and stabilize the economy, but there is now sign that either of the two presidential candidates is prepared to do so, which could be a chance to resolve united, including eventually other presidential candidates, Argentina’s political and economic problems. President Macri launches election push with Buenos Aires march, saying he could still turn the tide and win the upcoming presidential election, despite his main opponent’s wide lead, counting with considerable public support. The IMF forecasts that Argentina’s economy will contract by 3,1% in 2019, after declining 2,5% in 2018, and shrank still by 1,3% in 2020, seeing an inflation of 57,3% in 2019 and of 39,2% in 2020. Alberto Fernandez secured 48% share of the vote, returning populist y protectionist Peronists back to power, defeating conservative President Mauricio Macri who won about 41% of the vote, regaining America’s left force after several years of conservative gains. Fernandez will have to face a lengthy recession, an out of control inflation, high unemployment and a debt crunch, increasing market fears of a possible default in 2020/2021. Alberto Fernandez was sworn in as Argentina’s new president, marking a historic return to power for the leftist Peronist movement, amid a looming sovereign debt crisis and a deep recession, saying the new president that the country is willing to pay, but it needs first time to grow; creditors and bondholders have a difficult choice: negotiating or wait until there is a new plan with credible policies from the new government and it is doubtful that the IMF for now will be on board, considering the plans of Fernandez to increase subsidies, tax cuts and generally high public spending. Fernandez is close to former leftist Brazilian president Lula da Silva and Mexico’s populist president Lopez Obrador, while tensions with far-right president Bolsonaro of Brazil, Argentina’s main trading partner, have been increasing. Bolivia’s exiled former president Evo Morales has been granted asylum by the new leftist leaders of Argentina, who probably would also grant refugee status to Ecuador’s former president Rafael Correa, if asked for, both Morales and Correa accused of crimes committed in their countries. Argentina announced measures to protect Argentinians from the coronavirus outbreak , presenting the pandemia a big test for its ailing economy, the country has at least 21 confirmed coronavirus cases with two fatalities so far. The rhetorical battle between the government, the IMF and bondholders is heating up, seeking the country a sustainable debt relief agreement, while the economy on its current trajectory is itself completely unsustainable, increasing the risk of a looming financial collapse; Country risk above 4.000, an all time high, S&P credit risk for Argentina CCC-with a negative outlook. Argentina announced an obligatory quarantine, restricting people to their homes, with some exceptions, beginning at midnight March 20, 2020 until midnight March 31, 2020, confirming 31 new cases of coronavirus, bringing the total to 128, and three deaths. The World Bank predicts recession of the local economy and a contraction of up to 5,2% in 2020. Fitch puts Argentina in restricted default, offering the government to restructure foreign-law bonds proposing a 62% cut in interest payments, asking for a three-year grace period; the coronavirus crisis provides a natural argument for a postponement and it could be ideal to wait for the crisis to phase out to to initiate negotiations in earnest and avoid a protracted default; eventually creditors may accept to negotiate a standstill agreement, to allow the reprofiling of debt service with a view to new negotiations, say in 2022/23, under a more stable economy and with a better idea of what the country can afford to offer. The offer from Argentina to restructure about $ 65 Billion in foreign bonds (about 40% of its foreign currency debt) into new debt was rejected by a group of creditors that includes BlackRock and Fidelity, raising the stalemate the risk that Argentina may default again as soon as next month (Mayo 2020), which would be the ninth default of the country; the government is seeking a modest -haircut- of 5,4% on the principal (which would save the country about $3,6 Billion) and a dramatic 62% cut in interest payments; these payments would start low, at just 0,5%, and late, beginning in 2023, when an election is due, they would peak in 2029 at less than 5%; under this plan the government would save $37,9 Billion on its interest bill; the government put a 20-day limit on negotiations, but the real deadline is May 22, 2020, the end of the 30-day grace period for a missed $500 Million payment. Pressure to ease the lock-down is building up before the pandemic is expected to peak (June 2020) and the government is likely to rule out a quick return to normality; the preexisting recession makes the trade-off between public health and economic growth still more painful, and a new -patriotic- tax on the rich of the country, endorsed by the government but not yet approved by congress, may delay further or even kill any possibility of recovery. The three principal rating agencies downgraded the long-term foreign currency rating of Argentina, Fitch restricted default from CC, Moody’s from CAA2 to CA with a negative outlook, Standard & Poors from CCC- to SD;  Argentina missed the deadline on May 22, 2020, to pay $503 Millions in interest on dollar bonds issued under New York law, marking the ninth default since independence in 1816; the government intends to extend its self-imposed deadline for negotiations set to expire on May 22, 2020, until June 2, 2020 and further, planning to revise its offers to creditors, seeking eventually to avoid a hard default which carry serious economic and political costs. Due to coronavirus effects on the economy the IMF forecasts a contraction of 9,9% for the country in 2020. Argentina will unveil a new debt offer to creditors, extending deadline until August 4, 2020, and eventually until late August 2020, seeking still to strike a deal despite rising tensions with creditors. Creditors said the offer of Argentina is short of what the creditor group can accept, adding they would not meet the deadline August 4, 2020, imposed by Argentina to find an agreement; but Alberto Fernandez dismissed the counter-offer from the three groups of creditors, who said they had rejected the proposal of the country to restructure $66 Billion of debt, saying it is not possible to move from the last offer which was worth 53,5 cents on the dollar up from initially 39 cents, improving the originally three year grace period to one year, with repayments beginning September 2021;  sources said, the counter-offer from the group of creditors represents 56,6 cents on the dollar with the new bonds beginning to accrue interest from September 2020. This deal represents roughly a fifth of the total debt of the country, which reaches $324 Billion, amounting to around 90% of its GDP. Argentina has been in default for the ninth time in its history since May 2020, when the country missed the deadline to pay $500 Million in interest on the debt that is subject to the current negotiation. Standard &Poor’s lowered to the level of default the qualification of Argentina’s bonds. Argentina reached an agreement with three creditor groups, the Ad. Hoc. Group of Argentine Bondholders, the Exchange Bondholder Group and the Argentina Creditor Committee; they will now help to restructure the debt and offer a significant debt relief; Argentina agreed to make some debt payments sooner than expected and the new recovery value seems to be 54,8 cents on the dollar; bondholder will still need to vote on the deal, representing the three main bondholder groups 60% of bonds outstanding from the previous restructurings of the country known as exchange bonds, and 51% of the outstanding global bonds issued from 2016; notes issued in 2005 and 2010 require sign off from at least 85% of all bonds, versus two-thirds or 75% threshold on securities issued more recently; the country extended its debt offer invitation until August 24, 2020, while the settlement date remains September 4, 2020. Argentina will now enter into talks with the IMF, which has lent the country $44 Billion since a currency crisis in 2018, seeking to delay payments coming due in 2021-23, while avoiding strong austerity measures. Argentina succeeded in restructure $66,5 Billion in foreign debt as 93,55% of bondholders agreed, activating collective clauses lifting overall acceptance to 99%; the deal is worth 54,8 cents in the dollar, and the republic issued 12 new bonds exchanging those previous bonds, settlement date September 4, 2020, obtaining Argentina a benefit of $37,7 Billion in debt relief, dropping annual interest rate from 7% to 3%, avoiding its ninth default, which took place since May 22, 2020.
































































































































EU member States – Sanctions against Russia again extended, new U.S. sanctions against Russia, beginning ‘BREXIT’ talks after Britain’s vote and formal notification to leave the E.U.

September 9, 2020

Joint U.S. and EU action, stepping up punitive measures targeting key sectors like energy, arms and financing sanctioning Russia’s continued illegal actions in Ukraine, undermining Ukranian territorial integrity and sovereignty, will hurt European economies slowing recovery, hitting Russian import ban European food producers, harming above all the German economy with close ties to Russia and the already stagnating Euro-zone economy. EU agreed to extend Russia economic sanctions until January 31, 2016, leaving time to enable EU to judge the compliance and full implementation of the Minsk peace agreement, planning Russia to extend the ban on Western food imports for six months starting from early August 2015, deciding the European Union in December 2015 to extend sanctions on Russia for another six months. A further six month extension of the bloc’s economic and financial sanctions against Moscow to punish Russia for the annexation of Crimea and support of separatists in eastern Ukraine has been agreed on by the EU, extending sanctions until the beginning of 2017. EU leaders signaled a further shift form austerity of the €uro-crisis giving member States extra time to consolidate their budgets as long as they pressed ahead with economic reforms, insisting France and Italy on a further easing of EU budget rules (3% ceiling) to stimulate growth and cut unemployment, pledging Germany for budget discipline, saying countries must move faster on reforms. Euro-sceptic and populist parties scored dramatic gains in voting 2014 for the European Parliament, however continuing pro-European centre-right and centre-left parties to control more than half of the 751 seats, forced to collaborate to get key legislation through the Parliament and into law, as they will face unprecedented challenge of noisy anti-establishment members determined to stop business as usual, saying German Chancellor Merkel the EU must create jobs to counter populist wave, demanding French President Hollande EU should concentrate on what matters, on growth and employment, adding British PM Cameron that Brussels has got too big, too bossy, too interfering, seeking with Sweden and the Netherlands a repatriation of powers from Brussels. Analysts warn of increasing political risks in Europe in 2015, as protest- and populist parties are rising. ECB said European policymakers should not give up efforts to make their economies more efficient and stick to budget rules, despite a strong protest note in European elections, moving on with structural reforms to finish what was started in 1999 and make the €uro-zone work. The €uro-zone’s overall Government deficit fell to the EU limit of 3% in 2013 from 6,2% in 2010, striking the €uro-zone’s fiscal stance the right balance between cutting debt and helping growth, however warning the IMF that the unemployment rate of around 12% was still too high. Inflation moving ever closer toward zero, a stagnating economy, a double-digit unemployment rate and new signs of reform fatigue among Euro-zone Governments are posing a serious challenge for the ECB, that it says it cannot solve alone, expressing G20 concern about Europe’s extended stagnation asking for more Government spending to stimulate growth, insisting Germany in structural reforms, strict budget controls and balanced budget, rejecting stimulus, expressing ECB and IMF the need to see countries using Government money prudently to avoid the Euro-zone slipping into its third recession since 2008, increasing pressure on Governments that have fiscal space like Germany, which posted its biggest budget surplus since reunification in the first half of 2014, asking Paris for a ‘NEW DEAL’ in Europe, expecting movements from Berlin to avert a policy clash. German Chancellor Merkel insisted that all member States must fully respect the reinforced rules of the Stability and Growth Pact, reminding the Euro-zone debt crisis has not yet been overcome and its causes have not been eliminated. ECB’s Draghi warned that no amount of fiscal or monetary accomodation can compensate for necessary structural reforms in the Euro-area, delaying France and Italy labor market reforms and to open up to more competition, failing the two countries to cut their budget deficits and debt in line with EU rules, opting EU Commission not to sanction them for missing public finance targets, giving both until spring 2015 to bring their debts and deficits in line. British PM Cameron strongly opposed nomination of Jean-Claude Juncker, the candidate of the European People’s Party, which won the European Parliament elections, as the next President of the European Commission, describing him as face of the past, while Junckers, supported by German Chancellor Merkel, says the crisis is not yet over and EU budget policy must remain as it is, posing politics rather than economics the biggest risk to the long-term endurance of the €uro, saying 48% of British voters they would currently vote to leave the EU in a referendum, while 37% would vote to stay, naming EU leaders Juncker as new EU Commission President, confirming the European Parliament his nomination by a comfortable majority, announcing Juncker Euro 315 Billion investment program to bolster European economic recovery, setting up EU a 21 Billion Euro European Fund for Strategic Investment, with the aim of drawing in 15 times that amount in private- and public – sector money to boost desperately needed jobs and growth, confirming EU Finance Ministers details of the 315 Billion Euro four-year investment plan, including an eight-member committee that will choose the projects. China will pledge a multi-Billion Dollar investment in the new infrastructure fund at a summit on June 29, 2015, in Brussels, considering the fund is going to create opportunities for China to invest in the EU, in particular in infrastructure and innovation sectors. France, Germany, Italy and Poland have each announced they plan to contribute 8 Billion Euros, while Spain and Luxembourg are pledging smaller amounts. The bloc is relying mainly on private investors and developments banks to fund projects from an initial list of almost 2000 submitted by the 28 member States, from airports to flood defenses, that are together worth 1,3 Trillion Euros. In addition the EU Commission is exploring whether the EU could become collectively a member of the $100 Billion China-led Asian Infrastructure Investment Bank/AIIB, Beijing, expecting China that European companies and Governments would take a greater interest in President Xi Jinping’s ‘One Belt, One Road’ initiative, aiming to create a modern Silk Road Economic Belt with railways, highways, oil and gas pipelines, power grids, Internet networks, maritime and other infrastructure links across Central, West and South Asia to as far as Greece. Greece, taking over the EU Presidency for the first half of 2014, criticising imposition of austerity, spending cuts and fiscal policy by Berlin and Brussels, is expecting still some more debt relief, like a further reduction of interest rates on existing loans, a new extension of the maturities and amortization schedule and some relief on financing EU structural funds, planning the €uro-zone to assure IMF it will keep funding Greece, enabling the IMF to disburse its next share of international aid to Athens, despite Greek delay in implementing 153 savings measures. Greece reached a primary budget surplus in 2014, confirming it doesn’t want a third bailout, raising €3 Billion with a coupon of 4,75%, after bringing a first sale of new Greek Government bonds more than €10 Billion of bids, backing Euro-zone Finance Ministers a precautionary ESM credit line for Greece after the country exits its bailout at the end of 2014. Greek Parliament approved budget 2015, preparing for the end of ‘an era of forced bailouts’, granting Euro-zone Finance Ministers Greece a two-month extension of the current bailout program, calling the country for early Presidential elections December 17, 2014, mounting political uncertainty, including fears Greece may exit Euro-zone, seeing European leaders no risk of contagion from Greek vote. PM Samaras failed to gather enough support for his candidate, Stavros Dimas, in a first, second and third Parliament vote, calling for national general elections to be held on January 25, 2015, suspending the IMF new disbursements of aid money until a new Government takes office, saying a Merkel ally that Euro-zone politicians are not obliged to rescue Greece as the country is no longer of systemic importance for the bloc, as Germany seems to believe an exit of Greece is manageable and the danger of contagion is limited, because Portugal and Ireland are considered rehabilitated, revising Fitch outlook on Greece to negative from stable. Greek leftist Tsipras was sworn in as new PM, after forming Government with a small Party of nationalist independent Greeks, winning Tsipras’ anti-austerity, left-wing Syriza 36,3% of the votes in general election and 149 seats in the 300-seat Parliament, just two short of an absolute majority, and Kammenos’ right-wing Party the Independent Greeks 4,8% of the votes and 13 seats, while ruling conservative coalition won just 27,8% and the extreme right Golden Dawn in third place 6,28% of the votes. Syriza’s Tsipras has pledged to renegotiate Greece’s debt arrangements with EU, ECB and IMF/amounting to €257 Billion, naming radical Yanis Varoufakis as Finance Minister, while Independent Greek leader Kammenos will take over the Defense Ministry, aiming France’s Socialist Government to facilitate Greece-Euro-zone talks. Moving to change Europe, leftist Greek Government is seeking anti-austerity allies in Spain, Italy and France, saying Greek Finance Minister he is looking for a new deal with the EU, ECB and the IMF, putting in doubt if Greece will continue to cooperate with the TROIKA and comply with its austerity program, but not calling any more for a write-off of Greece’s foreign debt, but proposing now a ‘menu of debt swaps’, making the ECB already €65 Billion available in emergency liquidity to Greek banks, as long as Athens will give compliance with the terms of the EU/ECB/IMF bailout program. The U.S. expressed support for a positive outcome of Greece-EU talks intending reaching a deal on a new aid program that would put an end to austerity and pursue necessary reforms. Greece’s negotiations with the EU failed to reach an agreement and Athens has been given time until February 20, 2015, to renew bailout-program, of which 70% would be acceptable for Greece and 30% could be replaced, announcing Greece it will submit a request to extend ‘loan agreement’ for up to six months, saying Germany no such deal was on offer, demanding that Athens must comply with the terms of its existing international bailout-program, sealing Euro-zone Finance Ministers finally a four-month extension after Athens sent a detailed list of reforms it plans to implement by the end of June 2015, returning Greece after seven years to growth, expanding its GDP by 0,8% in 2014, after shrinking by 0,4% in the final quarter of 2014, seeing the EU Commission a contraction of 1,4% in 2015. Athens is determined to loosen austerity to revive its economy. Greek Parliament elected pro-European former Minister Prokopis Pavlopoulos as new President. Fitch lowered Greece’s rating by two notches to the high-risk level of CCC down from B, saying it nevertheless expects the Government would survive its cash squeeze, cutting the rating agency Athen’s growth forecast 2015 to 0,5% from 1,5%. Berkshire’s Buffett said ‘Grexit’ ‘may not be bad’ for the Euro-zone and could be ‘constructive’ for the region. Greece confirmed loan repayment €450 Million to the IMF, while still struggling to pay other debts, and has been requested to improve package of proposed reforms in time for the meeting of €uro-zone Finance Ministers on April 24, 2015, to decide whether to release more funds to keep the country afloat. Moody’s further downgraded Greek Government bonds to junk territory, cutting rating to Caa2 from Caa1, a level that is equivalent to an extremely speculative junk bond, lowering also Greek local and foreign currency bond ceilings to B3 from Ba3, citing the increased probability that Greece may exit the €uro-zone in the event of a sovereign default, saying Greece it will default in June 2015 without aid from lenders, suggesting the $300 Million-IMF payment on June 5, 2015, is under question, allowing creditors Athens to bundle four payments due in June 2015 into a single €1,6 Billion lumpsum, which is now due on June 30, 2015. EU President Juncker declined to speak to Greek PM Tsipras after the leftist leader rejected as ‘absurd’ international creditors’ terms for a cash-for-reform deal to keep Athens from default, saying ultimate proposals are not realistic, warning not to impose humilating conditions on his country. The IMF quits Greek negotiations because of major differences, telling EU PM Tsipras to stop gambling, leaving for home also the entire Greek delegation after continuing disagreements, downgrading Standard & Poor’s Greek long term credit rating from CCC+ further into junk territory to CCC with a negative outlook, cutting also further the credit rating of Greece’s biggest four banks, reflecting the probability that Greek banks will default if Athens doesn’t reach an agreement with its creditors, discussing Senior EU officials formally for the first time a possible Greek default. Greece and creditors failed in a ‘last attempt’ to reach a deal, coming a Greek default and a possible ‘Grexit’ closer, shifting the focus now to a June 22, 2015, EU emergency summit after Greek talks collapsed, to discuss the situation of Greece at the highest political, increasing ECB again emergency liquidity for Greek banks valid until Monday, June 22, 2015, moving Greece on the road of a possible Euro-zone exit. EU leaders received new Greek reform proposals cautiously, saying German economic experts the ‘Grexit’ is the solution, raising ECB its Emergency Liquidity Assistance/ELA to Greek banks again to €89 Billion. Greek debt declared by analysts as still sustainable, but will miss debt targets set out by creditors in 2012, seeing the IMF as worst case Greek debt falling to 142,2% of GDP in 2022 from 176,7% of GDP in 2015, assuming a new bailout program of at least 3 years with concessional financing. The Euro-zone readies to deal with a Greek debt default after its other 18 members refused unanimously to extend bailout program beyond June 30, 2015, the day Greece must pay €1,6 Billion to the IMF, following PM Tsipras’s surprise announcement of a referendum to take place on July 5, 2015, on an offer from creditors that his leftist Government rejected. Greece is set to introduce capital controls, keeping from June 29, 2015, Athens stock exchange and Greek banks closed, after ECB refused to increase emergency funding to Athens, saying analysts there may be a wave of contagion, affecting peripheral Government bond spreads, eventually weakening the Euro and contributing to new market volatility. Standard & Poor’s downgraded Greece’s credit rating again from CCC to CCC-, after Athens announced it will not pay €1,6 Billion to the IMF due on June 30, 2015. Greek aid Program expired on June 30, 2015, missing Athens its June 30, 2015-payment to the IMF, finding itself effectively in default, saying the Eurogroup Athens’ stance towards its creditors would have to change before its Euro-zone partners could consider any additional financial assistance, depending on the result of the referendum on previous EU credit terms, warning the IMF Greece will need €50 Billion more in financial assistance until the end of 2018, and must reform before getting debt relief. After the referendum, voting Greeks against the new EU bailout conditions, supporting their leftist Government, PM Tsipras offered creditors a reform package, including last-minute concessions, appealing to his party’s lawmakers to back it, intending to save the country from a financial meltdown, calling France the new proposal as trustworthy and serious. Greece won a conditional agreement to receive a third bailout of €86 Billion over three years, which may still face opposition within the Greek’s coalition government, needing the authorization of the German Parliament to opening loan negotiations. According to IMF secret report Greece will need far bigger debt relief the Euro-zone partners have been prepared to envisage so far, expecting a 30-year grace period on servicing all its European debt, including new loans, and a very dramatic maturity extension, passing Greek lawmakers a tough economic package demanded by Euro-zone as part of the bailout deal, rising ECB Emergency Liquidity Assistance/ELA for Greek banks by €980 Million to nearly €90 Billion, approving European Finance Ministers €7 Billion in bridge loans, allowing Greece to pay a key obligation of €4,2 Billion to the ECB and clear its arrears of about €2 Billion with the IMF, reopening Greece its banks, deciding the European Stability Mechanism/ESM to open formally negotiations with Greece on a third bailout program worth up to €86 Billion over three years, after German lawmakers backed the new Greek bailout, seen as a last attempt to fulfill this extraordinary difficult task, raising Standard & Poor’s Greece’s sovereign credit rating by two notches to CCC+ from CCC-. Greece and its lenders reached a new up to €86 Billion bailout agreement, needing to be adopted by the Greek Parliament and approved by Euro-zone countries, while a strong first review of the implementation of measures will take place in October 2015 and any discussion of debt relief has to come later. Greece will get €26 Billion as a first tranche of the three-year bailout program, €13 Billion very early to cover its debt repayment needs and an initial €10 Billion to be set aside at the ESM to bolster the capitalization of  Greek banks, which will have to pass a stress test before receiving fresh equity, while the remaining €3 Billion of the first €26 Billion tranche will be disbursed in the coming months in return for Greek reform progress, renewing the IMF call for the Europeans to grant Athens debt relief to make its global debt sustainable as condition to study an involvement in the bailout deal, considered as indispensable by the Eurogroup. Euro-zone Finance Ministers agreed with some additional measures to the Memorandum of Understanding to lend Greece up to €86 Billion, after Greek lawmakers accepted their stiff conditions despite a revolt by supporters of leftist PM Tsipras, which may lead to a confidence vote and eventually to early elections. PM Tsipras resigned paving way for snap elections to be held on September 20, 2015, which could allow him to return to power in a much stronger position without anti-bailout rebels in Syriza to slow him down, opposing the toughest part of the latest program, including further pension cuts, more value-added tax increases and a ‘solidarity’ tax on incomes, hoping the Eurogroup that the resignation would not delay or derail implementation of the bailout package, increasing eventually support in Greece for the third Euro-zone bailout program. Greece’s interim cabinet headed by caretaker PM Vasiliki Thanou has been sworn in and the Greek Parliament has been dissolved ahead of the snap elections to take place on September 20, 2015, giving the latest opinion survey Ex PM Tsipras a lead against his opponents backing 23% of voters his Syriza party. Leftist Tsipras and his Syriza party return to power with an unexpectedly clear election victory, forming Tsipras as new PMagain a coalition Government with his former partner, the right-wing populist party of independent Greeks/ANEL, obtaining Syriza 145 seats and ANEL 10 seats, gaining a narrow majority of 155 seats of the 300-member legislature, expecting Greece’s European creditors a swift and full implementation of the bailout deal. Greece is likely to qualify for recapitalization funds for its banks by a November 15, 2015, deadline, as the ESM has up to €25 Billion earmarked for the recapitalization of the Greek banking sector, having already disposed €10 Billion to be available, ready to be wired to Greece. According to the stress tests of Greek banks they have to raise €14,4 Billion of extra capital to cover mounting unpaid loans, reaching the total of non-performing loans €107 Billion, expecting the ESM that the third bailout for Greece will be smaller than the initially envisaged €86 Billion because Greek banks need less recapitalization. Greek Parliament approved a 2016 budget, including sharp spending cuts and some tax increases to satisfy the country’s internacional lenders, at a time of growing austerity fatigue. EU Ministers explored specific measures for a possible debt relief, which could be offered to Greece, ‘if necessary’, at the end of the bailout in 2018 if the country implements all the agreed reforms; the IMF however is insisting to give Greece eventually earlier a break on its future massive debt repayments. Euro-zone Finance Ministers will release €10,3 Billion in new funds for Greece in recognition of painful fiscal reforms pushed through by PM Tsipras, agreeing also to offer Athens debt relief in 2018 if that is necessary to meet agreed criteria on its payments burden, securing an agreement with the IMF to again joining the Euro-zone in funding the bailout for Greece. The Euro-zone granted Greece a short -term debt relief, while it’s still unclear if the IMF may join the Greek bailout Program of up to €86 Billion, continuing discussions how far Greece has advanced with reforms needed  for the release of the next tranches of loans. Greece received another credit lifeline worth $9,5 Billion advancing negotiations for a possible debt relief including finally also the IMF. Italy took over EU’s rotating Presidency for the second half of 2014, winning Renzi’s centre-left Democratic Party/PD by nearly 41% of the vote at European elections, coming not only first, but first with a margin of almost 20 points, getting chief rival anti-Establishment Five Star Movement  /M5S of Beppe Grillo only 21,2%, becoming PD, winning more votes that any other party in the EU, the second largest force in the European Parliament, pledging Renzi that EU should focus more on growth, employment and reforms. Re-elected British PM Cameron promised an in-out EU referendum before ending 2017, warning President Obama Cameron of risks if Britain exits EU, signaling Goldman Sachs European banks would leave London ‘in very short order’ if Britain voted to exit EU, saying Standard & Poor’s Britain’s top credit rating is at risk because of the planned European Union referendum, lowering the outlook on the country’s AAA rating to negative from stable. Legal protection for London’s banks will be at the heart of UK’s EU reform plans, warning British Chancellor Osborne that a failure to change Lisbon treaty would prompt Britain to leave EU, saying shortly non-€uro-zone States will have to choose between joining the €uro or leaving EU, insisting ‘we don’t want to join the €uro’. EU leaders agreed on budget deal cutting ‘payment ceiling’ to €908,4 Billion, meeting austerity demands of British PM, reducing the higher ‘commitment ceiling’ to €960 Billion for the next seven-year budget 2014-2020. PM Cameron won a surprisingly solid victory in the British general election, leaving a stunning disappointment for the opposition Labour Party and its leader, Ed Miliband, who stepped down, gaining Conservatives in the 650-seat-House 331 seats, while Labour will hold 232 seats, accepting for five more years re-elected PM Cameron mandate to form first majority Conservative Government since John Major’s surprise victory in 1992, repeating Cameron a promise to hold a referendum on the membership in the EU. Moody’s downgraded UK’s AAA rating one notch to AA1. Greece’s international lenders discussed Greek financial requirements and extrafunding needs over €32,6 Billion, agreeing to reduce Greek debt by €40 Billion to 124% of GDP by 2020, putting together a package of steps, including debt buyback from private investors providing EFSF/ESM funding of about €10 Billion, return of profits of €11 Billion and also future accounting profits on ECB’s holding of Greek bonds, a reduction of lending rates on the first Greek aid package, an extension of repayment terms by 15 years of old and new bilateral and EFSF loans and deferring EFSF loans’ interest for 10 years. Greece’s leftist PM Tsipras said the EU was ‘sleepwalking towards a cliff’, expecting a debt relief for itself to be honored by end-2016 so that the economy could recover, considering that ‘Brexit’ will either awaken European leaderships or it will be the beginning of the end of the EU. After contracting the Greek economy by 0,2% in the 1stQ. 2016, it expanded by 0,2% in the 2ndQ. 2016, expecting the EU a full year decline of 0,5% or slightly better for 2016, seeing Greece’s economy rebounding by 2,7% in 2017. The German-led European fiscal pact was signed by 25 of the 27 EU nations, with the exception of Britain and Czech Republic. The EU Commission started a European project bond program to finance infrastructure projects involving a cooperation between private stake holders and EIB, EU and member States. The permanent €uro-zone bailout fund ESM entered officially into force October 8, 2012, after the German Constitutional Court ratified with conditions treaty to establish the ESM, saying Euro-zone rescue measures and transfers of competences to Brussels exhaust constitutional framework, remaining Germany’s liability capped at €190 Billion. Euro-nations will allow ESM to leverage its capital with the same techniques as its predecessor EFSF, which failed to attract investors, hoping to boost ESM lending capacity eventually to more than €2 Trillion to bailout if necessary Spain and Italy. The IMF increased its funding of currently around $380 Billion to address global financial needs, totaling new pledges from 37 nations $456 Billion, agreeing the €uro-group to boost the bloc’s bailout lending limit to €800 Billion. Spain asked for €uro-zone help to recapitalize its ailing banks agreeing European Finance Ministers to provide up to €100 Billion, approving EU Commission payment of a rescue package of €37 Billion to bailout troubled banks and of €2,5 Billion for Spain’s planned ‘bad bank’, granting EU Spain two extra years to meet deficit reduction target. €uro-zone rescue funds will be allowed to directly recapitalize banks, not adding to national debt level, once a single banking supervisory mechanism overseen by ECB has been set up, obtaining Italy commitment that the EFSF may purchase limited amounts of Government debt provided the country sticks to its current reform program, approving leaders a €120 Billion growth package, including proposed EIB €10 Billion capital increase. The ECB announced to expand its sovereign bond-buying program reaching actually €208,7 Billion, setting initially no limits on the amounts of bonds to be purchased with remaining maturities of one to three years to bring down the interest rates of crisis nations, confirming it will not treat itself as a preferred creditor, announcing January 2015 a more than Euro 1 Trillion QE program, saying it will buy Euro 60 Billion in sovereign debt from March 2015 through September 2016 to revive Euro-zone economy, warning analysts you cannot address structural reforms with monetary policy. There was a consensus about risk sharing, meaning only 20% of purchases will be the responsability of the ECB and 80% of national central banks, buying up sovereign bonds in proportion to their ‘capital key, which would have to absorb any potential losses should a Government of the Euro-zone default. After Standard & Poor’s and Moody’s also Fitch lowered French sovereign debt rating from ‘triple A’ to ‘AA+’, agreeing EU to give France two extra years to meet EU deficit target of 3%, asking France for still more time to cut budget deficit, rejected by the European Commission, cutting Standard & Poor’s France credit rating from AA+ to AA, saying Paris is not implementing needed reforms to repair economy, unveiling French President Hollande plans to find around €50 Billion of spending cuts between 2015-2017 to help narrow budget deficit, reducing corporate charges by €30 Billion as part of a ‘responsability pact’ with employers. Shifting the ECB away from austerity, France announced in September 2014 it will not reduce its budget deficit to within EU limits until 2017, finally accepted by the EU, growing deficit steadily to 4,7% of GDP in 2016, despite having already been granted extra time to do that by 2015, although it has been expected France would set an example and show budget discipline, seen as the anchor of confidence in the European Union. Ruling Socialist lost local French elections, naming Hollande, facing the lowest popularity levels, new PM, winning Le Pen’s anti-Euro National Front with 25% of the vote European Parliament elections, becoming the strongest party in France, pushing Hollande’s ruling Socialists with only 14% into third place, gaining French far-right first Senate seats, losing Hollande’s Socialist Party its majority in the Upper House to centre-right UMP. Fitch cut France’s credit grade one notch from AA+ to AA, saying Paris has fallen short in its efforts to trim fiscal deficit, lowering Standard & Poor’s, which already reduced France’s rating to AA, its expectations of a debt reduction of the country, lowering Moody’s France’s Government bond rating one notch to ‘Aa2’ with a stable outlook from ‘Aa1’ with a negative outlook, because of the country’s continuing weakness in the medium-term growth outlook. Liberal Emmanuel Macron has been elected as new President of France, succeeding Hollande, giving a vote of confidence to France and Europe, reducing uncertainties of the Euro-zone, seen as a good news to open trade and globalization. German Chancellor Merkel y President Macron agreed to draw up a road map to deeper EU integration, despite scepticism in Berlin over his proposed reforms. EU plans to implement the 11-nation financial transaction tax from 2014, failing its introduction EU-wide, opposed by Britain and Sweden. European leaders agreed on a supervision plan putting €uro-zone’s about 130 largest banks under the direct oversight of the ECB, which promised to put €uro-zone banks through a rigorous stress test before assuming supervisory role in November 2014, becoming French central banker Danièle Nouy €uro-zone’s new super-regulator. Italian Senate approved expulsion of Berlusconi from Parliament following his conviction for tax fraud, given for his year sentence community service. Florence mayor Renzi, who wants to remodel the left, became the new leader of Letta’s centre-left Democratic Party, voting the party in favor of urgently needed reforms, prompting Letta’s resignation accepted by President Napolitano, asking Renzi to form a new Government, who was sworn in as PM, promising to quickly enact economic reforms to get the country out of financial difficulties, announcing a sweeping fiscal reform, reducing income tax by a total of €10 Billion annually for 10 Million low and middle income workers from May 1, 2014, saying they would help economic recovery without breaking EU budget deficit limits. Standard & Poor’s downgraded Italy’s long-term credit rating due to economic weakness from BBB to BBB-, just one level above junk, with a stable outlook, expecting a growth of only o,2% for 2015, measure seen as a blow to PM Renzi, resigning President Napolitano January 14th, 2015, giving the country two weeks to find a successor, posing new risks for PM Renzi, whose candidate is constitutional court judge and one-time Christian Democratic Minister Sergio Mattarella, with a reputation of integrity, who finally was elected in a fourth vote by the Italian Parliament as new President, considered as a victory for PM Renzi. Italians voted no rejecting in a referendum on whether to streamline its baroque legislation, constitutional changes, dealing a blow to PM Renzi, who resigned, succeeded by Italy’s new PM Paolo Gentiloni, a loyalist from Renzi’s Democratic Party (PD). Italy’s Government adopted to support the banking sector starting with a bailout of Monte dei Paschi di Siena and should reduce contagion risks for other banks. Standard & Poor’s downgraded Finland from AAA to AA+, leaving only Germany and Luxembourg with the AAA rating in the Euro-zone, maintaining Moody’s and Fitch still Finland’s AAA rating. Chancellor Angela Merkel secured a big election win, beginning her third four-year term as German Chancellor after forming a ‘grand coalition’ with the Social Democrats.  Germany’s current account surplus has come under scrutinity from the U.S., the IMF and the EU, as it hits about 7% of GDP since 2007, expected to remain also in 2014 and 2015 above the EU 6% threshold, facing the ‘slow’ pace of domestic demand growth and the dependence on exports criticism, calling the U.S. Treasury on Germany to push domestic demand, importing more to boost other economies in Europe. German officials explain that the €uro-zone as a whole has a very small surplus and without the German surplus toward third countries the €uro-zone would have no surplus at all but a deficit; the U.S. deficit won’t be improved by an European one being added to it; the German economic growth has been driven mainly by domestic demand recently. EU leaders postponed a deeper discussion of the future of the Economic and Monetary Union/EMU because of no reform consensus between France and Germany and because of the more pressing migration issue, planning the European Commission to give more budget leeway to States that can prove to have suffered extraordinary costs to face the refugee crisis. German Chancellor Merkel, facing pressure from her conservative supporters as much as from opponents, called Europe vulnerable and the fate of the Euro ‘directly linked’ to resolving the migration crisis, while Berlin and Brussels continue to ask for more distribution across Europe. But Germany is counting on little help as leaders of EU co-founder France fear an anti-immigrant National Front and EU’s third largest economy Britain is consumed with its own debate on whether to just quit the European Union all together. Europe could face a wave of migration that may eclipse today’s refugee crisis if growing global economic troubles are getting worse. The European Union sealed a controversial deal with Turkey intended to halt illegal migration flows to Europe in return for financial and political rewards for Ankara, remaining doubts if it’s legal and workable as German Chancellor Merkel recognized, who was a driving force behind the agreement. Germany is seeking the creation of ‘safe zones’ to shelter refugees in Syria; keeping refugees on the Syrian side of the border would help Brussels and Ankara, which hosts 2,7 Million Syrian refugees, stem the flow of migrants to European shores, warning the U.N. against the plan unless there was a way to guarantee the refugees’ safety. The EU is intending to convince Britain with a new compromise reform package to accept a deal in a bid to prevent a ‘BREXIT’, saying PM Cameron he’ll hold the long-pledged referendum on the UK’s membership in the European Union on June 23, 2016, recommending to remain in a reformed EU, warning U.S. President Barack Obama during his visit to London that if Britain votes to leave the European Union it will only suffer disadvantages and could be waiting a decade for a free trade deal with the United States. British voted for EU exit, as 52% were in favor of leaving the European Union, claiming they want an independent Britain, resigning PM Cameron, plunging global markets, expected to slow further global growth. Theresa May will become British PM on July 20, 2016, succeeding Cameron, and is the new leader of the Conservative Party who will lead Britain’s negotiations to exit the European Union. British PM May will not hold a parliamentary vote on ‘BREXIT’ before formally triggering Britain’s withdrawal from the EU, as a majority of the 650 lawmakers had declared themselves ‘remainders’. According to opponents elected lawmakers should review the vote before the process is started, since the EU-referendum is not legally binding. ‘BREXIT’ will require a vote in Parliament, U.K. court rules, a decision which seems likely to slow, but not halt the process. Britain’s Supreme Court ruled that the Government must seek parliamentary approval before invoking the formal process for leaving the EU, a decision considered as a victory to parliamentary democracy; the ‘BREXIT’ process has been formally activated by British PM May on March 29, 2017. The EU-Parliament, which has the final say on any ‘BREXIT’ deal, adopted its ‘red lines’ for tough ‘BREXIT’ negotiations, insisting Britain first agree divorce terms before striking a new trade deal. EU27 adopted a united stance on ‘BREXIT’ and urge Britain to be more realistic in its approach, suggesting that tough negotiations are ahead. EU officials are preparing for talks on Britain’s exit from the bloc to begin on June 19, 2017, after the British election on June 8, 2017. Ruling British Conservatives lost their parliamentary majority forming PM May a minority government backed by a small Northern Irish party, seen fighting for survival, weakening her position for the coming ‘BREXIT’ negotiations. German officials said the plan was to agree a rollover of EU sanctions against Russia, which are due to expire at the end of January 2017, but there is concern that President-elect Republican Trump might move in the opposite direction after his inauguration on January 20, 2017, fearing the EU that Russia will use the time before Trump’s inauguration to launch new offensives in Syria and Ukraine. The EU agreed to extend Russia sanctions until mid-2017 in a signal to Trump, formally extending again its sanctions against Russia until January 31, 2018. European Parliament President Martin Schulz steps down, saying he would not stand for re-election as speaker of the EU legislature, returning to German politics, becoming the Social Democrats candidate to challenge Conservative Merkel’s bid for a fourth term as Chancellor. Italian conservative Antonio Tajani, a former EU commissioner and an ally of former premier Silvio Berlusconi, was elected president of the European Parliament, succeeding German Social Democrat Martin Schulz. The recent lack of a G20 rejection of protectionism evidenced the pressure of an increasingly protectionist United States under President Trump and may lead to a weakening of the World Trade Organization/WTO and a more aggressive use of protectionist policies, pledging two of the world’s strongest export nations, Germany and Japan, to keep global trade free and open defending globalization, supported also by China, saying globalization is unstoppable, marking eventually China’s rise and America’s decline, where growth under President Trump remains modest. After President Trump declined to endorse in Brussels NATO’s doctrine of collective defense, leaving a fragile Atlantic alliance, and resisted during the G7 summit in Sicily to agree to any deal that would see the U.S. remain in the Paris climate accord, and allowing only shaky agreement of free trade, a frustrated German Chancellor Merkel convinced that the times when we could completely rely on others are over to a certain extend, underlining her doubts about the reliability of the United States as an ally, said Europeans must really take our fate into our own hands, without the United States and Britain. President Trump announced that the U.S. will pull out of the Paris climate change agreement, rejecting and regretting international leaders his decision, reaffirming China and India their commitment to meeting their targets, responding France and Germany that the Paris agreement could not be renegotiated. In the eve of the G20 meeting in Hamburg, Japan and the European Union signed the Japan-EU Economic Partnership Agreement/JEEPA, a trade deal that has been four years in the making, wanting both sides to show they can fill the vacuum left by America’s withdrawal from its role as the world’s trade dealer. The European Union and Canada said they agreed to start a free trade agreement, the Comprehensive Economic and Trade Agreement/CETA, on September 21, 2017, paving the way for over 90% of the treaty to come into effect. Once dominant the United States found itself isolated at the G20 in Hamburg, as on issues like immigration, trade and climate change the Trump administration stands alone. According to the latest reports UK’s final Brexit divorce bill will reach more or less €50 Billion, which the British would have to pay to leave the EU. EU opened next Brexit phase allowing to begin crucial talks on a future relationship with Britain, after 27 EU-counterparts of PM May endorsed an interim deal on the terms of Britain’s divorce from the EU. The European Union wants transition period after Brexit to end not later than the last day of 2020, according to the EU’s negotiating directives now agreed on. Brexit: UK’s PM May gave a two years’ notice under Article 50, and that takes effect at 11:00 p.m. London time  on Friday, March 29, 2019. A final deal has to be ratified by all remaining EU 27 members, the European Parliament and the European Commission. After Italian elections, gaining populist parties ground at the expense of establishment voices, coming lengthy coalition talks with no clear winner, with no single party or straightforward coalition seemingly able to form government. Italy will be led by populist Guiseppe Conte, initiating the EU-critical government, which opposes the Euro and illegal migrants. Prime Minister Mariano Rajoy of Spain lost a no-confidence vote, ousting one of Europe’s longest serving leaders from office over a major corruption scandal within the Conservative Party, becoming socialist Pedro Sanchez Spain’s new PM, adding to political uncertainty in Southern Europe, after populist Conde was sworn in as PM in Italy. European Union leaders agreed a hard-fought accord on migration, combining a more effective control of EU’s external borders. European leaders agreed to extend their economic sanctions against Russia for six months until the end of January 2019, for annexing Crimea from Kiev and backing rebels fighting Government troops in east Ukraine. The two populist parties governing in Italy agreed on a 2,4% deficit target for 2019, still below the EU’s threshold of 3%, but three times higher than the number the previous government had planned, and could spark negative market reactions, given that Rome holds the second highest debt pile in the Euro-zone totaling €2,3 Trillion/$2,67 Trillion. Brexit seems to be heading towards no-deal, as UK’s exit from the European Union is scheduled to occur in March 2019, actually at a very critical moment, intending negotiators to conclude talks before November 2018. Europe’s 48 Bigger banks passed the EU wide examination carried out by the European Banking Authority/EBA and the Single Supervisory Mechanism/SSM,  beating the common tier ratio of 5,5% under adverse stress, ranking British Barclays Bank lowest in the test. Britain and the EU agreed on a draft text setting out a close post-Brexit relationship. British PM May and the 27 remaining European Union member countries sealed a deal, the withdrawal agreement and an outline for a future trade negotiation, which will start once the U.K. has left, saying E.U. it was the best package Britain will get in a warning to the British Parliament not to reject it. Now PM May will have to win over critics in her own Conservative party and must get the deal through a vote in Parliament. If the agreement fails to win approval of the House of Commons, the U.K. will be on course to crash out of the E.U. in a chaotic ‘no deal’ split on March 29, 2019. President Trump warned that the Brexit agreement could threaten future U.S.-U.K. trade deal. Meanwhile the European Court of Justice will hear arguments in Luxembourg on whether the U.K. can unilaterally reverse its decision to leave, and if so, under what conditions. But what’s worrying the E.U. still more are Italy’s budget difficulties, starting disciplinary measures against the country which confirmed it would not backtrack on its expansionary 2019 budget law, however finally says if it appears necessary to reduce deficit a little bit during negotiations with the European Union, it won’t be a problem. British Parliament is due to vote on December 11, 2018, on EU divorce deal. British Pound jumps, after a senior European Union legal advisor said Britain could unilaterally withdraw its Brexit notice. EU’s 27 finance ministers, without Britain, reached a Euro-zone reform deal to fight against a financial crisis, expanding the responsabilities of the European Stability Mechanism/ESM, but without including far grander visions, such as designating a Euro-zone finance minister or setting up a European-style IMF. Party members voted for the preferred Chancellor Angela Merkel’s candidate Annegret Kramp-Karrenbauer, a centrist, considered by the opposition as a continuity candidate, to replace Merkel as new German CDU party leader. PM May abruptly postponed a parliamentary vote on her Brexit deal, throwing Britain’s plan to leave the E.U. into a chaos, saying she would return to the E.U. for further talks in a perceived sign of weakness. The U.K. would meanwhile step up contingency planning for a no-deal Brexit, when it is due to leave on March 29, 2019. The European Council President Donald Tusk cited that the E.U. was ready to discuss how to smooth ratification of the deal by Britain’s Parliament. May will seek further assurances from the E.U. on the working of a backstop that could align Northern Ireland more closely with the E.U. than the rest of the United Kingdom. PM May survived a crucial no-confidence vote, but more than a third of lawmakers said she was no longer the right leader to implement Britain’s exit from the European Union. The U.K. cabinet agreed that delivering the deal that the PM agreed with Brussels remains the Government’s top priority and the best no-deal mitigation. However decided that emergency no-deal Brexit contingency plans must now be implemented across Government, including reserving ferry space for supplies and putting 3.500 armed forces personnel on standby to deal with any disruption. The British Government said it would send advice on preparing for no-deal to all U.K. businesses and suggested they should begin implementing their own contingency plans as they saw fit, growing calls for a second vote on Brexit. The European Commission is revealing that it has started to implement its preparation for a no-deal Brexit in case the U.K. crashes out of the E.U. without a plan in March 2019. The measures are designed to limit disruption in certain key areas, such as finance and transport, but will not – and cannot mitigate the overall impact of a no deal scenario, it’s an exercise in damage limitation. Most of U.K. PM May’s Conservative Party members oppose her Brexit deal, a survey showed. Britain plans to hold a vote in parliament on the government’s deal to leave the E.U. on January 15, 2019, amid talk of delay. British lawmakers defeated by a record margin PM May’s withdrawal deal from the E.U., facing PM May after her Brexit plan was crushed a no-confidence vote that could topple her government, suggesting European Council President Tusk that U.K. lawmakers revoke the country’s decision to leave the E.U., saying it’s the only positive solution left on the table. PM May survived a vote of no-confidence in Parliament, but the path of Brexit remains unclear. Political leaders are calling on their fellow opposition party, Labour, to join them in a growing opinion for a second Brexit referendum, known as a ‘People’s Vote’, while PM May is telling Labour leader Corbyn that it’s ‘impossible’ to rule out a ‘no deal Brexit’ before talks, saying Corbyn that the starting point for any talks to break the Brexit deadlock must be to rule out a disastrous no deal outcome. Germany and France signaled willingness to delay Brexit extending the negotiating time beyond March 29, 2019, announcing France that it is activating a no deal Brexit plan. According to the U.K. government Parliament will debate and vote on a PM May’s Brexit plan ‘B’ on January 29, 2019. Theresa May insists Brexit deadline March 29, 2019, still stands. The British opposition Labour Party said it would support a new Brexit referendum, offering new hope to opponents of withdrawal from the E.U.. The E.U. warned that Britain could be heading for a potentially disorderly exit in just 10 days, the actual April 12 date to leave the E.U., as PM May continues to seek ways to break the protracted Brexit deadline. Apparently PM May will seek again an extension of the Brexit date from the E.U. saying she would work with the opposition Labour Party on a Brexit compromise. E.U. extended Britain’s deadline to leave the bloc to October 31, 2019, averting a cliff-edge divorce that was set to happen on April 12, 2019, scrapping PM May’s proposal for a postponement until June 30, 2019, concluding that such a short deadline was unrealistic for the departure known as Brexit. PM May resigned throwing a fractured Britain into further turmoil, after three years of trying and failing to pull the country out of the European Union. New British PM Boris Johnson said the Brexit divorce was dead and warned that unless the EU renegotiated Britain would leave on October 31, 2019, without a deal. British Parliament voted against leaving the EU without a previous agreement and a law went into effect barring a now-deal Brexit, recommending to extend actual deadline of October 31, 2019 until January 31, 2020. Britain and the European Union said a lot more work would be needed to secure an agreement on Britain’s departure from the bloc, continuing Brexit-talks after ‘promising signals’ that a deal is possible. After PM Johnson secured Brexit deal with the European Union, UK lawmakers endorsed the agreement, but voted against a proposed timetable to push it through Parliament by October 31, 2019, the present Brexit deadline, forcing PM Johnson to beg the EU for delay, sending an unsigned letter to the EU asking for delay., calling PM Johnson for December 12, 2019, snap election in his latest effort to break the Brexit deadlock. The European Union agreed to London’s request for a Brexit deadline extension, but set now new departure date, giving Britain’s divided Parliament time to decide on PM Johnson’s call for general election. UK Parliament rejected PM Johnson’s call for an early election on December 12, 2019, but a pre-Brexit election remains likely. The EU agreed to extend the Brexit deadline until January 31, 2020, with an option for Britain to leave sooner if Parliament approves PM Johnson’s divorce deal. PM Johnson wins backing from Parliament to hold a general election on December 12, 2019, throwing the Brexit debate back to British people. PM Boris Johnson’s Conservative Party wins British election, obtaining according to polls a substantial parliamentary majority, with 368 seats, leaving behind Labour with 191 seats, counting Liberals and others with 91 seats, clearing the way for Brexit in January 2020. PM Johnson said the election victory provided an overwhelming mandate to take Britain out of the European Union on January 31, 2020. PM Johnson said he would use his huge majority to have revised the Withdrawal Agreement Bill put into law that the arrangements for the United Kingdom to leave the European Union must end by December 31, 2020. The EU Withdrawal Agreement Bill passes final reading in the House of Commons, another step on the way to British independence on January 31, 2020, and must clear the House of Lords; the UK and European parliaments must formally ratify Brexit deal, meaning Brexit will almost certainly happen on January 31, 2020. Britain’s parliament finally approved historic Brexit deal, allowing it to become the first country to leave the European Union by the end of January 31, 2020, ending years of arguments and divided a nation; in 2020 talks will focus on post-Brexit trade relations, with a tight timetable and the threat of no deal. The European Parliament gave its final approval to Britain’s divorce deal from the bloc, paving way for Brexit to take place on January 31, 2020. EU-UK Brexit talks stalled, as UK resists EU demands on fair competition, nearing the possibility of a hard Brexit, or a no-deal Brexit. EU renewed sanctions on Russia over Ukrainian crisis for six months more until January 31, 2021. Britain plunged Brexit trade talks into crisis by explicitly acknowledging that it could break international law by ignoring some parts of its European divorce treaty, prompting a rapid rebuke from EU’s chief executive.













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September 9, 2020