Category Archives: Global finance

Oil Price Soars To US$100 per Barrel As Sanctions And Pressures On Russia Mount

  • Brent, WTI futures rose $7 earlier in the session
  • Russia faces disruptions to oil exports without SWIFT
  • OPEC+ revises down 2022 market surplus estimate
  • Goldman Sachs raised one-month Brent forecast to $115

Oil prices jumped on Monday as Western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports.

Brent crude rose $4.16, or 4.3%, to $102.09, at 0915 after hitting a high of $105.07 a barrel in early trade.

The Brent contract, for April delivery, expires on Monday. The most active contract, for May delivery, was up $4.16 at $98.28.

U.S. West Texas Intermediate (WTI) crude was up $4.19, or 4.6%, at $95.78 a barrel after hitting $99.10 in early trade.

“Moves by the U.S. and Europe to remove certain Russian banks from the SWIFT system have raised fears of a disruption to supply of some sort in the near term,” said ANZ commodity strategist Daniel Hynes.

“The risk to supply is the greatest we’ve seen for some time and it comes in a tight market,” he said.

Russia is facing severe disruption to its exports of all commodities from oil to grains after Western nations imposed stiff sanctions on Moscow and cut off some Russian banks from the SWIFT international payment system. read more 

Russian crude oil grades were already hammered in physical markets. 

Russia accounts for about 10% of global oil supply.

Goldman Sachs bank raised its one-month Brent price forecast to $115 a barrel from $95 per barrel previously. read more 

“We expect the price of consumed commodities that Russia is a key producer of to rally from here – this includes oil,” the bank said.

Russian invasion forces seized two small cities in southeastern Ukraine but ran into stiff resistance elsewhere. read more 

A Ukrainian delegation has arrived at the border with Belarus for talks on Monday with Russian representatives that will focus on achieving an immediate ceasefire and the withdrawal of Russian forces, the Ukrainian presidency said. read more 

“If there’s any progress made in this meeting, we’re going to see a sharp reversal in markets – we’ll see stocks rise, the dollar rise and oil fall,” said OANDA analyst Jeffrey Halley.

Amid the war in Ukraine, the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies – together called OPEC+ – are due to meet on March 2. The group is expected to stick to plans to add 400,000 barrels per day (bpd) of supply in April.

Ahead of the meeting, OPEC+ revised down its forecast for the oil market surplus for 2022 by about 200,000 bpd to 1.1 million bpd, underscoring market tightness. read more

At the same time a separate report showed OPEC+ in January produced 972,000 bpd less than their agreed targets.

“The market being so tight with OPEC producers really struggling to raise output as well, means any issue with Russian supplies would be felt pretty significantly across the market,” ANZ’s Hynes said.

Credit: Reuters

(Reporting by Bozorgmehr Sharafedin)

IMF Gives Ghana US$1 bln In SDR To Shore Up Foreign Exchange Reserves

The International Monetary Fund (IMF) will, today, August 23, 2021, make resources equivalent to US$1 billion available to Ghana, in the form of a Special Drawing Rights (SDR) allocation.

Launched for all countries to respond to the worst peacetime global recession since the great depression, the SDR allocation follows the emergency financing disbursement, also of US$1 billion, under the Rapid Credit Facility approved by the Fund 18 months ago to help in the fight against the global pandemic.

To put these amounts in perspective, the Fund disbursed a grand total of US$925.9 million to Ghana over four years under the last Extended Credit Facility (2015-2019).

The allocation is a “shot in the arm” of the Ghanaian. It comes at a pivotal moment to help shore up the country’s foreign exchange reserves at the Bank of Ghana. The COVID-19 crisis has increased the foreign exchange Ghana needs to trade with the world (e.g., to pay for imports of vaccines or of machinery and equipment) while the capacity to earn foreign exchange through exports have not necessarily improved. Until now, Ghana has turned to international borrowing to meet these additional foreign exchange needs.

This SDR allocation provides an alternative to borrowing because Ghana does not need to reimburse the Fund. The allocation is not a loan as it represents Ghana’s share of the US$650 billion-worth in SDR reserve assets created by the Fund and distributed to its members. The SDRs (SDR456 billion = US$650 billion), are distributed in proportion to countries’ shareholding in the IMF capital (or quota), which in turn closely relates to the size of their economies.

This is only the fourth general allocation since the creation of the IMF since 1944 and the largest by far. The most recent was in 2009, during the Global Financial Crisis, when the IMF allocated the equivalent of US$250 billion in new SDRs to its membership. This time around the SDR allocation would provide liquidity support to many developing and low-income countries that are struggling, allowing them to pay for healthcare and support vulnerable people.

How SDRs are used is a sovereign decision and depends on each country’s specific needs and circumstances. Initially, SDRs are placed as a reserve asset on the books of the central bank. As such, they add to foreign exchange reserves, making the country more resilient financially because it can dip into higher reserves in case of emergency.

However, the SDRs can also be exchanged for hard currency and used to finance government spending. In this case, it is best practice to allocate it to priority areas consistent with a medium-term expenditure framework. Either as foreign exchange, or as financing for government spending, the allocation will provide relief to Ghana.

Good governance and transparency are crucial in the use of these new resources. For example, enhanced budget procedures should be used to deal with COVID-19 related spending, including both internal and external audits.

But to be clear, the SDR allocation is no panacea. The allocation helps deal with the foreign exchange needs in the short-term, but it does not address the root problem. In Ghana’s case, foreign exchange needs are mainly caused by large and persistent fiscal deficits and rising interest payments. Of course, Ghana’s success in saving lives and safeguarding livelihoods during the pandemic is also behind the larger deficits.

But, going forward, deficits and financing needs will need to decline to keep debt under control and reduce demand pressures on the economy. Therefore, improving domestic revenue mobilisation remains crucial, so is reducing borrowing.

Progressive revenue measures—that spare the most vulnerable, and a faster return to the pre-pandemic level of spending should go a long way in shoring up public finances.

Credit: B&FT online

Ghana Govt Secures GH¢1.86 bln (US$320 mln) From 7-year bond At 18.10% Coupon Rate

Government secured ¢1.86 billion from the sale of the 7-year bond yesterday, which replaced the maturing 5-year bond.

The long term bond was marginally oversubscribed by 3.3%

At the same time, the interest cost of the debt instrument went down by 6.4% to 18.10%, saving government some significant interest payment.

The market has been favourably conditioned, in the past few weeks, with stronger demand and lower interest rate expectations.

This has triggered renewed investor interest in the domestic market, particularly, Treasury bills.

Analysts have attributed the success of the sale of the 7-year bond as critical to government quest to reducing the cost of servicing loans and lengthening the maturing period of outstanding debt as well as easing the refinancing pressure.

For now, it’s unclear whether non-resident or foreign participation was significant, until full data is published.

Government to borrow ¢2.9bn between June and August 2021

The government of Ghana is to borrow ¢2.9 billion in fresh funds between June and August 2021, the latest Issuance Calendar by the Finance Ministry revealed.

In all, the government plans to issue about ¢21.96 billion, out of which ¢19.86 billion will be used to pay maturing debt or rollover maturities.

Chunk of the funds to be mobilized will come from the 91-day Treasury bills, a clear intention of government’s quest to reduce foreign borrowing, but could crowd out the private sector from access to funds on the domestic market.

The new funds is expected to finance government projects outlined in the 2021 Budget.

In terms of the period, the government will borrow as much as GH¢8.13 billion in the month of July 2021, the highest among the three months.

Credit: myjoyonline

(Charles Nixon Yeboah)

Negative 2021 Outlook For African Banks – Moody’s

The outlook for African banks will remain negative into 2021 amid difficult operating conditions and sovereign pressures straining banks’ credit profiles, Moody’s Investors Service said in a report published today.

Loan quality, profitability, and foreign currency liquidity will be the main stress points next year for banks, although stable funding and capital could limit the impact.

Difficult operating conditions are expected to persist for African sovereigns, with the resulting pressures also weighing on banks’ credit profiles. The economic slowdown will hamper banks’ performance, while the governments’ ability to provide support remains impaired.

Furthermore, banks will remain heavily invested in government securities, which further reinforces the close credit linkages between banks and their respective sovereigns.

“Our outlook for African banks remains negative as we head into 2021, with the difficult operating conditions and banks’ close links to their sovereigns being the key driving factors,” says Constantinos Kypreos, Senior Vice President at Moody’s Investors Service. “Heading into next year, we expect nonperforming loans (NPLs) to potentially double from 2019 levels as payment holidays expire, while increased provisioning needs, reduced business generation, and margin pressure will erode banks’ profitability.”

South African and Nigerian banks will face acute macro challenges, while loan quality and liquidity are the main issues for Angolan and Tunisian banks, respectively.

East African and Francophone West African banks are better placed than Central African banks to weather the pandemic, given their more resilient economies, with Egyptian banks facing the least impact.

Overall, the banks’ financial stability will be broadly maintained. Stable local currency deposit funding, high liquidity in local currency, good capital buffers, and gradual improvements in risk management will help to contain banks’ risk over the next 12 to 18 month.

Source: Moody’s

Credit: ghanaweb

Crude Oil Fall Below US$0 In ‘Devastating Day’ For Global Industry

*U.S. crude futures plunged below zero on Monday for first time

*Rout will send a deflationary wave through the global economy

The day started like any other gloomy Monday in the oil market’s worst crisis in a generation. It ended with prices falling below zero, thrusting markets into a parallel universe where traders were willing to pay $40 a barrel just to get somebody to take crude off their hands.

The move was so violent and shocking that many traders struggled to explain it. They grasped wildly at possible causes all day long — had some big firm got caught wrong-footed? Or were inexperienced retail investors flummoxed by a market quirk? — but had no tangible evidence of anything to point to.

West Texas Intermediate futures have been the benchmark for America’s oil industry for decades, seeing the market through booms, busts, wars and financial crises, but no single event holds a candle to this. By the end of trading, the contract had slumped from $17.85 a barrel to minus $37.63.

“Today was a devastating day for the global oil industry,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “U.S. storage is full or committed and some unfortunate market participants were carried out.”

Prices rebounded Tuesday, but still were trading at just $0.50 a barrel at 8:31 a.m. Singapore time.

In one way, the negative plunge was just an extreme glitch as traders prepared for the expiry of the contract for delivery in May. Elsewhere, the market proceeded as normal — Brent futures, the benchmark for Europe in London, ended the day down sharply, but still above $25 a barrel. WTI for June delivery changed hands at $20 a barrel.

But the negative prices also revealed a fundamental truth about the oil market in the age of coronavirus: The world’s most important commodity is quickly losing all value as chronic oversupply overwhelms the world’s crude tanks, pipelines and supertankers. Ultimately, traders were left desperate to avoid having to take delivery of actual oil because nobody needs it and there are fewer and fewer places to put it.

Global Accord

Despite the OPEC+ deal to cut 10% of global production, lauded by U.S. President Donald Trump little more than a week ago, the oil market’s crisis is worsening. The rout will send a deflationary wave through the global economy, complicating the task facing central banks trying to keep economies afloat as the pandemic continues to paralyze business and travel worldwide.

The price collapse could redraw the global map of power as petrostates like Russia and Saudi Arabia, which enjoyed a resurgence over the last 20 years thanks to an oil windfall, see their influence diminished. Exxon Mobil Corp., Royal Dutch Shell Plc and other oil giants are ripping up business plans, desperate to preserve cash.

WTI is the world’s most traded financial oil contract, a benchmark followed from Zurich to New York to Tokyo. But when each month a futures contract nears expiry and traders roll their positions into further-out contracts, the real, physical world of WTI becomes very small — centered on Cushing, an oil town in Oklahoma where a massive hub of pipelines and storage tanks serves as the actual delivery point for barrels

In the past three weeks, crude has been flowing into Cushing at a breakneck speed, averaging 745,000 barrels a day and taking in more oil than a medium-sized European nation like Belgium consumes. At that rate, the tanks there will be full before the end of May, something that has never happened before.

ETF Fever

The days before expiry are often volatile as traders make the shift from a paper to a physical market. Until a few days ago, the May contract had been supported by huge financial flows by retail and institutional investors pouring money into oil through exchange-traded funds.

The largest crude ETF, known as the U.S. Oil Fund, received billions of dollars in fresh funds in recent weeks, accumulating a fifth of all the outstanding contracts in the May futures contract. But last week, it rolled its position into the June contract, and evaporated from May. Without the fund, the contract was abandoned to the the forces of physical supply and demand.

As the market opened early in Asia’s Monday morning, the May contract traded at $17.85. As New York traders were firing up workstations in their makeshift home offices, it was below $15

Then prices really started to slide, making history all the way down. By 8 a.m. New York time, the decline had reached 37%, the biggest intraday drop since the futures started trading in 1982. At around 11 a.m., it passed the low of $10.35 set in the oil bust of 1998. About an hour later, it took out $10 a barrel.

‘Not a Single Bid’

When CME Group Inc., which runs the exchange where WTI futures trade, said prices would be allowed to go negative, the selling accelerated. By 1:50 p.m. the contract was below $1 a barrel. Less than 20 minutes later, prices went below zero for the first time and just kept falling.

“No bids. Mental!,” said one trader at a top merchant in a vain attempt to explain the collapse as prices went negative. “No bids; not a single bid,” said another one in London. “Ridiculous,” said a third senior trader in Geneva.

Retail traders were likely sitting on long positions coming into the week and were forced to liquidate them, which would be consistent with the sell-off accelerating in the 30 minutes ahead of Monday’s close, Goldman Sachs analysts including Damien Courvalin theorized.

The contract settled at minus $37.63, a drop of $55.90. And there’s still another day of trading to come before it finally expires.

The May crude oil contract is going out not with a whimper, but a primal scream,” said Daniel Yergin, a Pulitzer Prize-winning oil historian and vice chairman of the research and information company IHS Markit Ltd.

Even discounting the oddity of the May contract’s plunge into negative prices, the world of physical oil suggests widespread pain.

Many refineries and pipeline companies told producers on Monday that they would only take their oil if they were paid. The daily price bulletin from Enterprise Products Partners LP, one of America’s largest pipeline companies, showed negative prices for all of the crude it buys. Another giant, Plains All American Pipeline LP, told producers the same.

Bob McNally, a consultant and oil historian, said the energy market was getting “reacquainted with how the price mechanism for oil works” — and why “for most of oil history, the industry and governments strive to stabilize prices through supply control, be it a tolerated cartel, government regulation, or both.”

The OPEC+ coalition of oil producing countries has failed to stop the rout. Saudi Arabia, Russia and other producers announced a week ago an historic deal to cut global production by nearly a tenth, or 9.7 million barrels a day, from May. The U.S., Canada, Brazil and others have said their own production is also falling as companies stop drilling new wells

For Trump, who personally brokered the OPEC+ deal, negative prices means more trouble in the U.S. oil patch. Pressure is building within the Republican party to use trade barriers to save the shale industry, including placing tariffs on foreign oil.

Trump responded to the negative prices at a White House press conference Monday with plans to fill the spare space in the Strategic Petroleum Reserve and by saying he would look into a proposal to stop shipments of Saudi Arabian oil that are currently en route to the U.S. But he shrugged off the larger impact, calling it “largely a financial squeeze” that would be that would be over in the “very short term.”

But the market — negative prices and all — isn’t waiting for OPEC to cut production, or for tariffs to slow imports. Rather than being an isolated event, Monday’s unprecedented oil market plunge serves as a warning of more pain to come.

“If global storage worsens more quickly,” veteran Citigroup oil analyst Ed Morse said, “Brent could chase WTI down to the bottom.”

credit: Bloomberg

(By Javier Blas and Will Kennedy With assistance by Catherine Ngai, Alex Longley, and Dan Murtaugh

Africa Delivers Largest Profits On Investment For UK – ODI Report.

British companies have made bigger profits investing in Africa than in any other region of the world, according to a new report from the Overseas Development Report (ODI) , which urges firms to seek profits on the continent rather than seeing it as a place to do charitable work.

With 1.2 billion people and eight of the world’s 15 fastest-growing economies, the ODI says Africa offers world-beating returns on investment.

The report looks at investment by British firms in Ghana, Kenya, Nigeria and South Africa. Its authors say the “young population, growing middle class, and planned industrial growth make the continent a great place to do business.”

In 2019, the rate of return on all inward foreign direct investment in developing African countries was 6.5 percent, higher than the rates in developing Latin America and the Caribbean at 6.2 percent, and also higher than the 6 percent return in developed economies.

The report was published as Britain formally left the European Union on January 31. The government repeatedly has said its ambition is to create a “global Britain” with new trading partners beyond the European continent. As part of the effort to court new partners, London hosted the Britain-Africa Investment summit last week.

Proactive approach needed

Recent data from agency the International Trade Center show France and Germany export more than double the value of goods to Africa than Britain does. London must get proactive post-Brexit, according to Lourenço Sambo, director general of Mozambique’s Investment Promotion Center, who spoke to VOA on the sidelines of the summit.

“Nowadays, we very often say, ‘we are not just talking about Africa, we have to talk with Africa,’ Sambo said. “The UK [Britain] has to talk with Africa. If the UK just sits down, the vessel will go, that train will move.”
Nigerian entrepreneur Samuel Onwubu said the days when foreign companies could dictate terms to Africa are gone.

“UK companies need to come and work with the African business model,” he told VOA.

British companies believe they have an edge against their rivals in the field of technology. The UK Space Agency is backing satellite firms that offer services to African farmers, such as PRISE, or Pest Risk Information Service.

“It’s taking terabytes of satellite data and sending out text alerts to farmers, which can tell them when pests might become a problem in the future,” explained Chris Castelli, director of programs at the UK Space Agency.

Investment in Africa

African entrepreneurs are seeking investment in proprietary technology. Mobihealth is a mobile app that seeks to offer top-level health care access across Africa. Founder Funmi Adewara believes Britain’s expertise in finance could help.

“Ninety percent of our doctors are from Western countries, 10 percent from the rest of Africa,” Adewara said. “They provide video consultation, prescriptions, diagnostic tests. We are looking here to connect with people who can help us to scale up our business and take this global.”

The secretary-general of the United Nations Conference on Trade and Development, Mukhisa Kituyi, told VOA in a recent interview that African nations need to work harder to attract investment.

“We need to develop this human resource as a contribution to the world’s economy, we need to create the conditions to make Africa the next factory of the world. Then you can say, can Britain step in, just like any other friend of Africa, and offer some of the solution?”

Britain says it can offer solutions. Many analysts warn, however, that negotiations over its future relationship with Europe likely will dominate trade talks in the coming months and years.

Credit: VOA

(By Henry Ridgwell)

West Africa Renames CFA Franc But Keeps It Pegged To Euro

West Africa’s monetary union has agreed with France to rename its CFA franc the Eco and cut some of the financial links with Paris that have underpinned the region’s common currency since its creation soon World War Two.

Under the deal, the Eco will remain pegged to the euro but the African countries in the bloc won’t have to keep 50% of their reserves in the French Treasury and there will no longer be a French representative on the currency union’s board.

Critics of the CFA have long seen it as a relic from colonial times while proponents of the currency say it has provided financial stability in a sometimes turbulent region.

“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said during a news conference with French President Emmanuel Macron in the country’s main city Abidjan.
In 2017, Macron highlighted the stabilising benefits of the CFA but said it was up to African governments to determine the future of the currency.

“Yes, it’s the end of certain relics of the past. Yes it’s progress … I do not want influence through guardianship, I do not want influence through intrusion. That’s not the century that’s being built today,” said Macron.

The CFA is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.
However, the changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo – all former French colonies except Guinea Bissau.

The six countries using the Central African CFA are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon, – all former French colonies with the exception of Equatorial Guinea.

The CFA’s value relative to the French franc remained unchanged from 1948 through to 1994 when it was devalued by 50% to boost exports from the region.
After the devaluation, 1 French franc was worth 100 CFA and when the French currency joined the euro zone, the fixed rate became 1 euro to 656 CFA francs.

The agreement follows talks in Nigeria’s capital Abuja on Saturday between West African leaders.

Countries in the CFA bloc and other West African nations such as Nigeria and Ghana have for decades debated creating their own currency to promote regional trade and investment.

The CFA franc was born in 1945 and at the time stood for “Colonies Francaises d’Afrique” (French Colonies in Africa).

It now stands for “Communaute Financiere Africaine” (African Financial Community) in West Africa and in Central Africa it means “Cooperation Financiere en Afrique Centrale” (Financial Cooperation in Central Africa).

Credit: Reuters

(Reporting by Ange Aboa; Writing by Alessandra Prentice; Editing by David Clarke)

US Holds The World Largest Gold Reserves Of 8,133 Tonnes, Followed By Germany & IMF

Who Owns the World’s Gold Reserves
In 2010, the world’s central banks stopped selling gold and started accumulating it.

As gold provides a hedge against economic uncertainty and currency manipulation, the action of these central banks gives us insight as to which countries are most capable of handling an economic storm.

Here’s what you’ll learn in this article:
Data from – courtesy of the International Monetary Fund’s International Financial Statistics – shows the U.S. by far has the world’s largest gold reserves, followed by Germany and the IMF.

Two rivals of the U.S., Russia and China, come in and 6th and 7th, respectively.

China and Russia have been some of the most aggressive buyers of gold in recent years. Both Russia and China top the list of the most aggressive gold buyers since 2014.

Although China is the world’s largest producer of gold, its overall gold stores have been anemic compared to its competitors, especially as it relates to total economy size.

Recently, the price of gold has moved up, especially as trade talks between the U.S. and China have put some fear into the markets and sent investors looking for safe havens.

A common theme in economics is “those who own the gold make the rules.” Recent statistics suggest a large disparity between the top gold holders in the world and those governments holding less of the yellow metal.

The Ranking of the World’s Top Gold Owners

  1. United States – 8,133 tonnes – $373,430,444,426
  2. Germany – 3,369 tonnes – $154,711,817,616
  3. IMF – 2,814 tonnes – $129,198,164,458
  4. Italy – 2,451 tonnes – $112,568,606,829
  5. France – 2,436 tonnes – $111,843,187,142
  6. Russia – 2,168 tonnes – $99,552,373,843
  7. China – 1,885 tonnes – $86,568,279,703

Understanding the Power of Gold Across the World

According to the latest IMF statistics , the United States remains the largest holder of gold, holding some 8,133 tonnes of it in its stores. Most other countries fall below the 3,000 tonne mark, with the IMF taking third place on the list.

Gold is famous amongst investors for being a safe haven asset–a place to which money can flow when there’s uncertainty in the stock market or in currencies. Those countries with large storehouses of gold have access to a stable asset that tends to weather financial storms.

In recent years, there’s been a shift.
Russia and China are fast becoming the world’s top buyers of gold , with their central banks rapidly turning to the yellow metal since 2014. We see that reflected in the rankings, where both countries rank among the top 7 holders of gold.

According to , the price of gold has increased recently, especially with the trade wars between the U.S. and China.

As investors grow increasingly uncertain about the economic future of each country’s economies, a flight to gold tends to drive up demand and, with it, prices. This increases the value of each country’s gold stores, as well.

With gold where it is, those countries with large gold reserves are in good shape. But you can watch how each country looks for more independence from global currencies (as China moves away from the dollar by buying gold) based on the movement of these numbers.


EU Member States Reject The Proposal To Blacklist 23 countries Including Ghana

European Union governments unanimously rejected a list of foreign jurisdictions posing higher risks of money laundering, criticizing officials in Brussels for drawing up the document in a flawed manner.

The list was presented last month by the European Commission, the EU’s executive arm, as a measure to protect the financial system from dirty-money risks stemming from outside the bloc.

It ranked Saudi Arabia alongside Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa and Panama as jurisdictions posing increased risks of illicit finance.

EU banks would have to apply tougher checks on transactions involving these regions.
EU member states “cannot support the current proposal that was not established in a transparent and resilient process,” according to a
statement from the Council of the EU, which represents national governments.

They called for a list “that meets our high standards and thereby further strengthens anti-money laundering and the combat against terrorist financing.”
According to diplomats involved in the process, the rejection also reflects concerns that member states weren’t properly consulted during the process, and that the document could have been challenged too easily by some of the 23 targeted jurisdictions.

Quickly Criticized

The U.S. Treasury also quickly criticized the list, saying it didn’t get enough time to respond, nor “any meaningful opportunity” to challenge the document.

Vera Jourova, the EU commissioner in charge of the proposal, on Thursday denied these allegations, saying the EU executive “engaged with the third countries concerned” as well as with experts from the bloc’s member countries.

The back-and-forth over the measure comes as European banks are being rocked by revelations that they played a part in shoveling dubious funds from the former Soviet Union to the West.

The EU governments said they are “strongly committed to the fight against money laundering and terrorist financing,” adding that “further progress is needed in our joint fight.”

Credit: Bloomberg

(By Alexander Weber

With assistance by Stephanie Bodoni)

UK Export Finance(UKEF) Supports UK Firms With Over £130 mln To Develop Ghana Infrastructure

  • International Trade Secretary, Dr Liam Fox MP, announces over £130 million in support for UK firms’ contracts to develop Kumasi market, build a new hospital and expand an airport.

International Trade Secretary Dr Liam Fox has today (27 February 2019) announced that UK Export Finance (UKEF) will support UK firms with £130 million for three projects in Ghana.

Support will be provided to projects that have a direct impact on the country’s infrastructure and economic development, while delivering opportunities for British companies.

The announcement was made at the latest meeting of the UK Ghana Business Council, a strategic partnership designed to encourage trade between the two countries.

£70.3 million of the support will go towards a contract for Contracta Construction UK to develop and modernise Kumasi Central Market, a major trading centre in the Ashanti region which is currently visited by up to 800,000 people daily.

UKEF will provide a direct loan and bank guarantee to Ghana’s Ministry of Finance to fund the contract, which will include improvements to electrical networks, water supplies, generators, fire detection systems and public transport.

A guarantee for a £43.8 million loan will also be provided by UKEF to the Ministry of Finance to support the contract with QG Construction UK for the modernisation of Tamale Airport in the northern region of Ghana.

The project will include the construction of a modern new international terminal building, access roads and ancillary facilities exclusive for civil aviation in the existing airport space.

The expansion is designed to promote economic growth, to increase tourism and to boost socio-economic development by improving connections to the north of Ghana. It will also benefit Hajj pilgrims with the new Multipurpose Facility serving as a terminal building during the Hajj Season.

Bekwai hospital will be provided with a guarantee for a £17.6 million loan from UKEF to support a contract between Ellipse UK and the Eurofinsa group. The companies will manage every aspect of the hospital’s completion including the supply and installation of medical equipment.

Once completed, the hospital will have 120 beds, an emergency department, a maternity ward and an operating theatre.

International Trade Secretary Dr Liam Fox MP said:

Ghana is an increasingly dynamic economy and I am delighted that UKEF is supporting the development of the vital infrastructure that will underpin this growth. These projects will have a dramatic impact on trade, healthcare and transport in the country and demonstrate how British expertise across a number of sectors is improving vital infrastructure all over the world.

This is just one example of the work we are doing as part of the Government’s Export Strategy, an ambitious plan to grow exports to 35% of UK GDP. We’re supporting UK businesses with financial support provided by our award-winning export credit agency UK Export Finance, and teams around the world are on hand to provide market-specific support where needed. I encourage any business looking for similar financing support to get in touch with our team through the website.

Fabio Camara, Director, Contracta Construction UK Ltd said

UKEF’s flexible financial support played a key part in securing the Kumasi Central Market contract. Kumasi is a vital trading hub for the Ashanti region and West Africa’s largest market, and this modernisation will have huge benefits for vendors and customers, as well as for our continued international growth and UK supply chain.

Cristiano Becker Hees, Managing Director, QGMI UK said

Tamale airport’s expansion is a priority for the Ghanaian Government, demonstrating the importance of improved transportation links to the continuing growth of the country’s economy and, particularly, the northern region of the country. We look forward to working on this transformational project and welcome the UK Government’s continued support of British exports overseas.

Matthew Shires, Managing Director, Eurofinsa said

The completion of the Bekwai district hospital will have a significant positive impact on the standard of healthcare provided to the inhabitants of Bekwai. This crucial project would not have been delivered without the government’s support and we are delighted that UKEF has chosen to support Ghana’s on-going development and our overseas expansion.


UK Export Finance is the UK’s export credit agency and a government department, working alongside the Department for International Trade as an integral part of its strategy and operations.

Our mission is to ensure that no viable UK export should fail for want of finance or insurance from the private market. We provide finance and insurance to help exporters win, fulfil and ensure they get paid for export contracts.

Sectors in which UKEF has supported exports include: aerospace, healthcare, infrastructure, telecommunications and transport.

UKEF has a national regional network of 24 export finance managers supporting export businesses.

Our range of products includes:

  • Bond insurance policy
  • Bond support scheme
  • Buyer & supplier credit financing facility
  • Direct lending facility
  • Export insurance policy
  • Export refinancing facility
  • Export working capital scheme
  • Letter of credit guarantee scheme

Our country cover positions outline our current cover policy and risk appetite for each country

Source: GOV.UK

EU Blacklist Ghana & Other African Countries For Weak Money Laundering Laws

The European Commission added Saudi Arabia, Panama and four U.S. territories to a blacklist of nations it considers a threat because of lax controls on terrorism financing and money laundering, the EU executive said on Wednesday.

The move is part of a crackdown on money laundering after several scandals at EU banks, but it has been criticized by several EU countries, including Britain, that are worried about their economic relations with the listed states, notably Saudi Arabia. The United States has also disapproved.

The Saudi government said it regretted the decision in a statement published by the Saudi Press Agency, adding: “Saudi Arabia’s commitment to combating money laundering and the financing of terrorism is a strategic priority”.

Panama said it should be removed from the list because it recently adopted stronger rules against money laundering.
Despite pressure to exclude Riyadh from the list, the commission decided to list the kingdom, confirming a Reuters report in January.

Apart from reputational damage, inclusion on the list complicates financial relations with the EU. The bloc’s banks will have to carry out additional checks on payments involving entities from listed jurisdictions.

The list now includes 23 jurisdictions, up from 16. The commission said it added jurisdictions with “strategic deficiencies in their anti-money laundering and countering terrorist financing regimes”.

Other newcomers to the list are Libya, Botswana, Ghana, Samoa, the Bahamas and the four United States territories of American Samoa, U.S. Virgin Islands, Puerto Rico and Guam.
The U.S. Treasury said the listing process was “flawed” and rejected the inclusion of the four U.S. territories on the list.

The other listed states are Afghanistan, North Korea, Ethiopia, Iran, Iraq, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
Bosnia, Guyana, Laos, Uganda and Vanuatu were removed.


The 28 EU member states now have one month, which can be extended to two, to endorse the list. They could reject it by qualified majority.

EU justice commissioner Vera Jourova, who proposed the list, told a news conference that she was confident states would not block it.
She said it was urgent to act because “risks spread like wildfire in the banking sector”.

But concerns remain. Britain, which plans to leave the EU on March 29, said on Wednesday the list could “confuse businesses” because it diverges from a smaller listing compiled by its Financial Action Task Force (FATF), which is the global standard-setter for anti-money laundering.

The FATF list includes 12 jurisdictions – all on the EU blacklist – but excludes Saudi Arabia, Panama and U.S. territories. The FATF will update its list next week.

London has led a pushback against the EU list in past days, and at closed-door meetings urged the exclusion of Saudi Arabia, EU sources told Reuters.

The oil-rich kingdom is a major importer of goods and weapons from the EU and several top British banks have operations in the country.

Royal Bank of Scotland is the European bank with the largest turnover in Saudi Arabia, with around 150 million euros ($169 million) in 2015, according to public data.

HSBC is Europe’s most successful bank in Riyadh. It booked profits of 450 million euros in 2015 in the kingdom but disclosed no turnover and has no employees there, according to public data released under EU rules.

“The UK will continue to work with the Commission to ensure that the list that comes into force provides certainty to businesses and is as effective as possible at tackling illicit finance,” a British Treasury spokesman said.


Criteria used to blacklist countries include weak sanctions against money laundering and terrorism financing, insufficient cooperation with the EU on the matter and lack of transparency about the beneficial owners of companies and trusts.
Five of the listed countries are already included on a separate EU blacklist of tax havens.

They are Samoa, Trinidad and Tobago and the three U.S. territories of American Samoa, Guam and U.S. Virgin Islands.

Critics said the list fell short of including several countries involved in money-laundering scandals in Europe.

“Some of the biggest dirty-money washing machines are still missing. These include Russia, the City of London and its offshore territories, as well as Azerbaijan,” said Greens lawmaker Sven Giegold, who sits in the European Parliament special committee on financial crimes.

Jourova said the commission will continue monitoring other jurisdictions not yet listed. Among the states that will be closely monitored are the United States and Russia.

Credit: Reuters

(By Francesco Guarascio, Additional reporting by Alistair Smout in London and Mohamed El-Sherif in Cairo; Writing by Francesco Guarascio in Brussels; editing by Mark Heinrich and Rosalba O’Brien)

LSE Controls US$1trillion Worth Of Africa’s Resources In Just 5 Commodities

Companies listed on the London Stock Exchange control over $1trillion worth of Africa’s resources in just five commodities – oil, gold, diamonds, coal and platinum. My research for the NGO, War on Want, which has just been published, reveals that 101 companies, most of them British, control $305billion worth of platinum, $276billion worth of oil and $216billion worth of coal at current market prices.

The ‘Scramble for Africa’ is proceeding apace, with the result that African governments have largely handed over their treasure.

Tanzania’s gold, Zambia’s copper, South Africa’s platinum and coal and Botswana’s diamonds are all dominated by London-listed companies. They have mines or mineral licences in 37 African countries and control vast swathes of Africa’s land: their concessions cover a staggering 1.03million square kilometres on the continent.

This is over four times the size of the UK and nearly one twentieth of sub-Saharan Africa’s total land area. China’s resources grabs have been widely vilified but the major foreign takeover of Africa’s natural riches springs from a lot closer to home.

Many African governments depend on mineral resources for revenues, yet the extent of foreign ownership means that most wealth is being extracted along with the minerals. In only a minority of mining operations do African governments have a shareholding.

Company tax payments are minimal due to low tax rates while governments often provide companies with generous incentives such as corporation tax holidays.

Companies are also able to avoid paying taxes by their use of tax havens. Of the 101 London-listed companies, 25 are actually incorporated in tax havens, principally the British Virgin Islands.

It is estimated that Africa loses around $35billion a year in illicit financial flows out of the continent and a further $46billion a year in multinational company profits taken from operations in Africa.

UK companies’ increasingly dominant role in Africa, which is akin to a new colonialism, is being facilitated by British governments, Conservative and Labour alike. Four policies stand out. First, Whitehall has long been a fierce advocate of liberalized trade and investment regimes in Africa that provide access to markets for foreign companies.

It is largely opposed to African countries putting up regulatory or protectionist barriers to such investment, the sorts of policies where have often been used by successful developers in East Asia. Second, Britain has been a world leader in advocating low corporate taxes in Africa, including in the extractives sector.

Third, British policy has done nothing to challenge multinational companies using tax havens; indeed the global infrastructure of tax havens is largely a British creation.

Fourth, British governments have constantly espoused only voluntary mechanisms for companies to monitor their human rights impacts; they are opposed to enhancing international legally binding mechanisms to curb abuses.

The result is that Africa, the world’s poorest continent, is being further impoverished. Recent research calculated, for the first time, all the financial inflows and outflows to and from sub-Saharan Africa to gauge whether Africa is being helped or exploited by the rest of the world. It found that $134billion flows into the continent each year, mainly in the form of loans, foreign investment and aid. However, $192billion is taken out, mainly in profits made by foreign companies and tax dodging.

The result is that Africa suffers a net loss of $58billion a year. British mining companies and their government backers are contributing to this drainage of wealth.

We need to radically rethink the notion that Britain is helping Africa to develop. The UK’s large aid programme is, among other things, being used to promote African policies from which British corporations will further profit.

British policy in Africa, and indeed that of African elites, needs to be challenged and substantially changed if we are serious about promoting long term economic development on the continent.

Source: HuffingtonPostUK

(By Mark Curtis)

Crude Oil Slides Below $50 For First Time In Over A Year

    • Total U.S. production rising at fastest pace in 98 years
    • Pipeline bottleneck in Texas set to ease by end of 2019

    Oil prices were hit by another wave of heavy selling Thursday, with fears of climbing production dragging the two most popular benchmarks to lows not seen in more than a year.

    Brent, the global benchmark, was down 1.6% at $58.15 a barrel, its lowest since late October 2017, on London’s Intercontinental Exchange .

    On the New York Mercantile Exchange, West Texas Intermediate futures were down 1.1% at $49.75 a barrel, falling below $50 a barrel for the first time in almost 14 months.

    In less than a decade, U.S. companies have drilled 114,000. Many of them would turn a profit even with crude prices as low as $30 a barrel.

    OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day.

    “The Permian will continue to grow and OPEC needs to learn to live with it,’’ said Mike Loya, the top executive in the Americas for Vitol Group, the world’s largest independent oil-trading house.

    The U.S. energy surge presents OPEC with one of the biggest challenges of its 60-year history. If Saudi Arabia and its allies cut production when they gather Dec. 6 in Vienna, higher prices would allow shale to steal market share. But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall.

    Cartel Decision

    Even so, Saudi Arabia’s output swelled to a record this month, according to industry executives. That means the three biggest producers — the U.S., Russia and Saudi Arabia — are pumping at or near record levels.

    A similar scenario unfurled in 2016, when Saudi output rocketed just before OPEC agreed to cuts. This time the cartel’s 15 members, and allies including Russia, Mexico and Kazakhstan, will discuss the possibility of their second retreat from booming American production in three years.

    OPEC helped create the monster that haunts its sleep. After it flooded the market in 2014, oil prices crashed, forcing surviving U.S. shale producers to get leaner so they could thrive even with lower oil prices. As prices recovered, so did drilling.

    Now growth is speeding up. In Houston, the U.S. oil capital, shale executives are trying out different superlatives to describe what’s coming. “Tsunami,’’ they call it. A “flooding of Biblical proportions’’ and “onslaught of supply’’ are phrases that get tossed around. Take the hyperbolic industry talk with a pinch of salt, but certainly the American oil industry, particularly in the Permian, has raised a buzz loud enough to keep OPEC awake.

    Price Tumble

    “You’ve got an awful lot of production that can come in very economically,’’ said Patricia Yarrington, Chevron Corp.’s chief financial officer. “If you think back four or five years ago, when we didn’t really understand what shale could do, the marginal barrel was priced much higher than what we think the marginal barrel is priced today.’’

    That shift makes shale resilient to a price tumble. After touching a four-year high in October, West Texas Intermediate, the U.S. benchmark, has fallen by more than 20 percent

    Only a few months ago, the consensus was that the Permian and U.S. oil production more widely was going to hit a plateau this past summer. It would flat-line through the rest of this year and 2019 due to pipeline constraints, only to start growing again — perhaps — in early 2020.

    If that had happened, Saudi Arabia would’ve had an easier job, most likely avoiding output cuts next year because production losses in Venezuela and sanctions on Iran would have done the trick.

    Instead, August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month last year. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.

    Saudis Concede

    Saudi officials concede that the tsunami is coming. OPEC estimates that to balance the market and avoid an increase in oil inventories, it needs to pump about 31.5 million barrels a day next year, or about 1.4 million barrels a day less than what it did in October.

    Global oil demand has so far absorbed the extra U.S. crude barrels, limiting the impact on prices. The loss of output from Venezuela and to a lesser extent, Iran, even allowed Saudi Arabia, Russia and a few others to boost production. But for the cartel, U.S. shale remains as intractable as in the past.

    In early 2017, Khalid Al-Falih, the Saudi oil minister, told an industry forum that Riyadh has learned the lesson that cutting production “in response to structural shifts is largely ineffective.’’ The kingdom would only make one-time supply adjustments to react to “short-term aberrations,” he said, and otherwise allow “the free market to work.”

    Nearly two years later, Al-Falih has lost enough proverbial sleep. He’s about to make a U-turn. He’ll battle what increasingly looks like a structural problem: booming U.S. production.

    Sources: WSJ / Bloomberg

    JP Morgan Predicts The Next Financial Crisis Will Strike In 2020, If Not Earlier

    5 Biggest Risks To The Global Economy Today

    • Global debt recently hit a new record high of 225% of world GDP, amounting to US$164 trillion.

    Wall Street giant Lehman Brothers filed for bankruptcy on September 15, 2008, triggering the most significant global financial crisis since the great depression.

    Lehman’s collapse was not triggered in a day but over a much longer period, with assets of US$680 billion (£518 billion) supported by only US$22.5 billion of capital by the time it went under.

    As the subprime mortgage crisis began to eat up financial institutions, this once invincible bank was suddenly no more.

    A decade later, with many of the world’s leading economies struggling to grow consistently, one would have hoped that the banking industry and its regulators would have learned from what happened.

    Gordon Brown, UK prime minister at the time of the collapse, doesn’t think so.

    Brown believes we are “sleepwalking” into the next global financial crisis. He sees insufficient headroom to resuscitate economies by cutting interest rates or raising public spending.

    He describes a “leaderless world” in which it looks harder to achieve the global coordinated actionthat was critical for avoiding even greater disaster ten years ago.

    Is there any room for cheer? Here’s my brief assessment of the indicators that will be crucial in any future crisis.

    1. Debt

    Global debt recently hit a new record high of 225% of world GDP, amounting to US$164 trillion. The world is now 12 points deeper in debt than the previous peak in 2009, with advanced economies’ ratios at levels not seen since World War II.

    This is forcing countries with large fiscal deficits to pay ever more interest to cover their bills. And if they can’t reduce their deficits, they will find it tough to deal with even the lightest economic downturn.

    Hence the recent call from IMF director Christine Lagarde for countries to fix “the roof while the sun is still shining”, by cutting deficits, improving banking capital buffers and maximising exchange rate flexibility.

    2. Emerging markets

    Nervous investors have been heavily selling assets in emerging markets, such that inflows into these countries plummeted to US$2.2 billion in August compared to a high of US$13.7 billion only a month before.

    The outflow of money has emaciated the currencies of Turkey, Indonesia and Argentina. Meanwhile, the US greenback gets stronger and stronger as investors seek to benefit from the strength of US treasury bonds and other dollar-denominated assets.

    These changes are bound to affect international trade, heightening the prospect of contagion to other countries.

    3. Trade

    The trade tensions between the US and China represent a massive geopolitical risk. These countries have the highest debt piles in the world, US$48.1 trillion and US$25.5 trillion respectively.

    Any economic fallout from their trade posturing could put global financial markets in a fix.

    We are already seeing the impact on the Chinese stock market, which has lost about 20% of its value already this year. There are knock-on effects in Hong Kong, dragging down the Hang Seng trading index to a 14-month low lately.

    The contagion could soon spread around the globe, including to emerging economies already reeling from the aforementioned currency crises discussed above.

    4. Banking

    In the aftermath of Lehman, the world’s major banks have moved from depending on short-term borrowings to building larger capital buffers to help them steer through another credit crunch. Be that as it may, many other banks have still looked vulnerable – especially after the Greek, Spanish and Italian banking crises of recent years. It is a strong signal that regulations are still insufficient to protect the system overall.

    Then there is shadow banking – essentially financial institutions which aren’t banks, such as insurance companies or hedge funds, providing banking services such as lending. This grewrapidly after the previous crisis, since the institutions in question are subject to fewer regulatory restrictions as the banks.

    A mind-boggling study from the US last year, for example, found that the market share of shadow banking in residential mortgages had rocketed from 15% in 2007 to 38% in 2015. This also represents a staggering 75% of all loans to low-income borrowers and risky borrowers. China’s shadow banking is another major concern, amounting to US$15 trillion, or about 130% of GDP. Meanwhile, fears are mounting that many shadow banks around the world are relaxing their underwriting standards.

    5. Cyber hazards

    Some analysts also worry that the next financial crisis could be triggered by cyber attacks on today’s fully digital and interconnected financial system. This has consistently been rankedas the number one concern by respondents to the Depository Trust’s Systemic Risk Barometer since its surveys began in 2013.

    In sum, despite the efforts to strengthen the financial system, it looks far from failsafe. Gordon Brown is unfortunately right that the world has not managed to do enough to prepare itself for the next shock, and the growing divisions within the international community make the situation look particularly dangerous.

    We have not been able to curb the tendency of financial institutions to take on excessive risk, and as Brown also said, there is still not enough of a corrective mechanism for those who act irresponsibly.

    JP Morgan is predicting the next crisis will strike in 2020, if not earlier, and this does seem quite foreseeable. So brace yourself and stay prepared, and let’s hope that things don’t turn out as badly as they potentially could.

    Source: wef

    (By Nafis Alam Associate Professor of Finance, University of Reading)

    The Next Economic Crisis Could Cause A Global Conflict. Here’s why

    The response to the 2008 economic crisis has relied far too much on monetary stimulus, in the form of quantitative easing and near-zero (or even negative) interest rates, and included far too little structural reform. This means that the next crisis could come soon – and pave the way for a large-scale military conflict.

    The next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict.

    The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates.

    But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labor markets to tax systems, fertility patterns, and education policies.

    Policymakers have utterly failed to pursue such reforms, despite promising to do so. Instead, they have remained preoccupied with politics. From Italy to Germany, forming and sustaining governments now seems to take more time than actual governing. And Greece, for example, has relied on money from international creditors to keep its head (barely) above water, rather than genuinely reforming its pension system or improving its business environment.

    The lack of structural reform has meant that the unprecedented excess liquidity that central banks injected into their economies was not allocated to its most efficient uses. Instead, it raised global asset prices to levels even higher than those prevailing before 2008.

    In the United States, housing prices are now 8% higher than they were at the peak of the property bubble in 2006, according to the property website Zillow. The price-to-earnings (CAPE) ratio, which measures whether stock-market prices are within a reasonable range, is now higher than it was both in 2008 and at the start of the Great Depression in 1929.

    As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications. A decade of regular adrenaline shots, in the form of ultra-low interest rates and unconventional monetary policies, has severely depleted their power to stabilize and stimulate the economy.

    If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterized also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war.

    For example, during the Great Depression, US President Herbert Hoover signed the 1930 Smoot-Hawley Tariff Act, intended to protect American workers and farmers from foreign competition. In the subsequent five years, global trade shrank by two-thirds. Within a decade, World War II had begun.

    To be sure, WWII, like World War I, was caused by a multitude of factors; there is no standard path to war. But there is reason to believe that high levels of inequality can play a significant role in stoking conflict.

    According to research by the economist Thomas Piketty, a spike in income inequality is often followed by a great crisis. Income inequality then declines for a while, before rising again, until a new peak – and a new disaster. Though causality has yet to be proven, given the limited number of data points, this correlation should not be taken lightly, especially with wealth and income inequality at historically high levels.

    This is all the more worrying in view of the numerous other factors stoking social unrest and diplomatic tension, including technological disruption, a record-breaking migration crisis, anxiety over globalization, political polarization, and rising nationalism. All are symptoms of failed policies that could turn out to be trigger points for a future crisis.

    Voters have good reason to be frustrated, but the emotionally appealing populists to whom they are increasingly giving their support are offering ill-advised solutions that will only make matters worse. For example, despite the world’s unprecedented interconnectedness, multilateralism is increasingly being eschewed, as countries – most notably, Donald Trump’s US – pursue unilateral, isolationist policies. Meanwhile, proxy wars are raging in Syria and Yemen.

    Against this background, we must take seriously the possibility that the next economic crisis could lead to a large-scale military confrontation. By the logic of the political scientist Samuel Huntington , considering such a scenario could help us avoid it, because it would force us to take action. In this case, the key will be for policymakers to pursue the structural reforms that they have long promised, while replacing finger-pointing and antagonism with a sensible and respectful global dialogue. The alternative may well be global conflagration.

    Source: wef

    (Written by Qian Liu )