News & Commentary:

February 2002 Archives


Finance and Development
IMF Dec 2001/Feb 2002
Eleven articles on globalization and Africa: the steps the continent is taking to meet the challenges, maximize the benefits, and minimize the risks. Other articles on IMF conditionality, human rights and the IMF, international trade and poverty reduction, oil funds, whether or not foreign investors have contributed to financial crises in emerging market countries by acting like a panic-prone herd, and a new book on John Maynard Keynes. A point of view piece by Robert Hunter Wade on the rising inequality of world income distribution.

Spreading the Wealth   Recommended!
David Dollar & Aart Kraay (Foreign Affairs) Jan/Feb 2002
One of the main claims of the antiglobalization movement is that globalization is widening the gap between the haves and the have-nots. It benefits the rich and does little for the poor, perhaps even making their lot harder.

Bretton Woods Update 26
Bretton Woods Project Jan/Feb 2002
Bank plans private sector shake-up, IMF shares blame for Argentina's collapse, IMF Evaluation Office announces programme, Turkey's political reward, and more.

Money Laundering: The Global Threat To The Integrity Of Financial Systems
Rachel Manney Feb 2002
The white collar crime of the 1990’s is here and it is money laundering.

Eurozone inflation sees sharp rise in January
FT Feb 1, 2002
Inflation in the eurozone appears to have risen sharply in January, but only partly because of the switch to euro banknotes and coins, according to official data.

Globalization Goes Upscale   Wall Street Journal Subscription Required
Douglas Lavin (WSJ) Feb 1, 2002
Protesting for the skilled, well-paid foreign employee.

Should U.S. Subsidize Argentina?   Wall Street Journal Subscription Required
Mary Anastasia O'grady (WSJ) Feb 1, 2002
More IMF aid would only sentence millions of Argentines to prolonged hard labor.

Economic Forum Draws Rich, Powerful and 'Spoiled'
NYT Feb 1, 2002
The World Economic Forum got under way in earnest last night, as rich and powerful representatives of more than 100 countries gathered at the Waldorf-Astoria to hear a panel of good-deed-doers, celebrities and even a queen reflect on whether there is still hope for hope itself in a post-Sept. 11 world - and on what the world's haves owe its have-nots.

Cutting the costs of EU enlargement   Economist Subscription Required
Economist Feb 1, 2002
The European Commission published its ideas for limiting the costs of EU enlargement: much smaller “DIRECT” subsidies-at first-to farmers in the new members than in existing ones; a limit, 4% of GDP, on regional aid.

WORLD ECONOMIC FORUM Japan's Woes Cast Pall Over Forum
IHT Feb 1, 2002
International financial leaders are growing increasingly concerned about Japan's huge debt and dire economic condition, even to the point of suggesting that further deterioration could trigger global financial instability.

Going global: The protesters bounce back   Recommended!
Economist Feb 1, 2002
The 32nd meeting of the World Economic Forum is currently taking place in New York, in a mood of growing optimism about the outlook for the world economy. But the annual schmoozing session favoured by politicians and businessmen has a new rival: the second meeting of the anti- globalisation movement in Porto Alegre in Brazil. Are the anti- globalisation protesters regrouping?

European fiscal policy: The euro's nuclear option
Economist Feb 1, 2002
The European Commission has, for the first time, issued warnings to member states about the dangers of their breaching the fiscal deficit rules laid down by the growth and stability pact. Is it credible that the commission would, if necessary, levy fines on member states who failed to toe the line?

Fears deepen over creative accounting
SCMP Feb 3, 2002
The collapse of United States energy giant Enron has prompted closer scrutiny of so-called "creative" or "aggressive" accounting practices used by firms to spruce up their balance sheet.

WORLD ECONOMIC FORUM UN Leader To Warn of Dangers in Wealth Gap
IHT Feb 3, 2002
Kofi Annan, secretary-general of the United Nations, will warn international business and political leaders Monday that globalization risks a devastating boomerang effect if the world's elite fail to increase spending to battle poverty and disease in developing countries and act quickly to open up markets in rich countries.

Argentina unveils sweeping new economic plan
FT Feb 3, 2002
Argentina set out a sweeping new plan to deal with the country's economic, social and constitutional crises. At the heart of the new plan is an effort to end Argentines' long love-affair with US dollar, which for 10 years has been used interchangeably with the peso.

Brazilian City Sees a Good Side to Globalization
IHT Feb 4, 2002
Porto Alegre in Brazil, a city of 1.2 million, offers a complex view of how the fortunes of developing countries are intertwined with international economic activity.

Annan Cautions Business as World Forum Ends
IHT Feb 5, 2002
The United Nations chief closed the World Economic Forum by telling business leaders that "business cannot afford to be seen as the problem."

WTO Decides On Structure For Negotiations
BRIDGES Weekly Trade News Digest Vol. 6, Number 4 Feb 5, 2002
Following a week of intense consultations, delegates to the WTO's Trade Negotiations Committee (TNC) agreed on 3 February on how to organise negotiations mandated from the Fourth Ministerial Conference in Doha, Qatar last November, appointing the WTO Director-General (D-G) as 'ex officio' Chair. A group of developing countries -- including China -- that had previously opposed having the D-G chair the TNC withdrew their opposition once it became clear that certain procedures would be adopted that would help ensure Member supervision over the negotiating process.

Business, Government, Civil Society Convene At Separate World Forums
BRIDGES Weekly Trade News Digest Vol. 6, Number 4 Feb 5, 2002
Two world forums convened this week from 31 January to 4/5 February to discuss a variety of issues currently confronting the global community. Some speculate the events have a similar focus, however their divergence in approach is as vast as the income gaps they both profess to want to eliminate. The World Economic Forum (WEF), normally held in Davos, Switzerland but this year moved to New York City amid security concerns, focused on the subject "Leadership in Fragile Times". For its part, the World Social Forum (WSF), the second annual counter- conference to the WEF, held in Porto Alegre, Brazil, centred on the theme "Another World Is Possible".

EU Trade Commissioner Pascal Lamy travels to Middle East to strengthen trading relationship with the region
EU DGT Feb 6, 2002
EU Trade Commissioner Pascal Lamy will visit Syria, Lebanon and Jordan between 6 and 10 February. During his first visit to these countries he will look to strengthen the EU’s important bilateral trading relationship with these countries. Mr Lamy’s visit to the Lebanon is timely given the recent initialling of the Association Agreement. His visit to Syria will provide an opportunity to assess the prospects for the conclusion of the outstanding bilateral negotiation on a similar Agreement. In Jordan, Mr Lamy will show support for the “Agadir” regional free trade initiative and explore ways in which the EU can assist in the ongoing economic reform process. His visit to the region comes just weeks before the 2nd Meeting of EU-MED Trade Ministers takes place in Toledo, Spain in mid-March. On the multilateral front, Mr Lamy will also express support for Lebanese and Syrian decisions to apply to join the WTO. The trip will begin in Syria where Mr Lamy will meet President Bashar al Assad, Prime Minister Muhammed Miro and Economy and Trade Minister Ghassan al Rifai. In the Lebanon he will meet President Emile Lahoud, Prime Minister Rafik Hariri and Beirut’s Chamber of Commerce, Industry and Agriculture. On 9-10 February, in Jordan, Mr. Lamy will be received by King Abdullah II and Prime Minister Ali Abul Ragheb. He will also meet the Ministers of, Trade, Foreign Affairs and Planning and participate in a Regional Convention of the Euro- Mediterranean Partnership. On the eve of his departure, he said: ‘My first visit to these countries offers a valuable opportunity to reinforce our trading links with three important EU partners in a region to which we attach top priority in our bilateral trade relations. I look forward to cementing these links over the coming days”.

Restoring a Sustainable Countryside
HMS Beagle Feb 6, 2002
Economists, politicians, farmers, consumers, and conservationists are all calling for drastic changes in agricultural policies. One useful approach may be to combine carefully targeted agri-environment schemes with large-scale habitat restoration.

The euro: Still sinking
Economist Feb 6, 2002
Hopes of a significant appreciation of the euro have faded yet again, as the dollar surges amid talk of a speedy recovery in the American economy. Does the weakness of the single European currency matter?

Japan: Risks Of A Weak Yen   Recommended!
FEER Feb 7, 2002
While depreciation of the yen will aid exports and benefit domestic producers, it could end up raising long-term interest rates and thus the cost of borrowing. That would make it very difficult for both government and companies to service their debt.

Economy: Building A Wall Or A Bridge?
FEER Feb 7, 2002
China's membership of the World Trade Organization and the faster opening of its economy to the outside world are fuelling a debate between conservatives who fear dependence on foreigners and reformers who want even greater reliance on trade.

Political tensions shake Venezuelan currency
FT Feb 7, 2002
Speculation was growing in Venezuela over what action President Hugo Chávez would take to contain the rising demand for dollars that is putting pressure on the local currency and fast depleting international reserves.

Editorial comment: Cold bath after a hot market   Recommended!
FT Feb 7, 2002
There can be few fields of human endeavour where historycounts for so little as the world of finance. John Kenneth Galbraith's dictum in A Short History of Financial Euphoria is worth recalling as the list lengthens of companies brought low since the collapse of the dotcom bubble. The capitalist system has proved to be a remarkable engine of economic growth and personal enrichment. But financial markets are given to periods of speculative euphoria whose subsequent collapse produces losses for many and disaster for a few.

Don't Spoil the Wedding   Wall Street Journal Subscription Required
Jacek Saryusz-wolski (WSJE) Feb 7, 2002
Enlargement will energize the EU. So why isn't Brussels playing fair in enlargement talks?

The European Central Bank   Economist Subscription Required
Economist Feb 7, 2002
Wim Duisenberg, the Dutch president of the European Central Bank, ended months of speculation with the announcement that he would step down in July 2003, on his 68th birthday. The French still hope to be able to nominate his successor.

ECB Chief Promises to Step Aside in July 2003
IHT Feb 8, 2002
The European Central Bank president, Wim Duisenberg, whose stewardship of the single currency has been plagued by a sagging exchange rate and verbal blunders, said Thursday he would resign in July 2003, ending his term three years early.

Mood in UK swings against euro
FT Feb 8, 2002
Wim Duisenberg's departure will come too late to have a big impact on Britain's debate on joining the euro, which showed signs on Thursday of swinging against Britain's entry.

Should Countries like Argentina be able to Declare Themselves Bankrupt?
Anne Krueger (IMF) Feb 8, 2002
A Commentary bt the First Deputy Managing Director, IMF.

Argentina: Floating or sinking?
Economist Feb 8, 2002
In Argentina, the government and the banking system are gearing up for the imminent flotation of the peso. This is a central element in the government s efforts to bring the country s economic and political crisis under control. But even if it succeeds, recovery is a long way off.

The euro: Duisenberg's departure
Economist Feb 8, 2002
Wim Duisenberg, the controversial president of the European Central Bank, has announced that he will step down early, in July next year. His departure could mean a protracted struggle for the presidency: but it is unlikely to have much short-term impact on the anaemic euro which has been caught, once more, in the wake of the dollar's surge. Does the weakness of the single European currency matter?

Russia and the WTO
EU DGT Feb 8, 2002
This week in Moscow EU experts met Russian authorities to discuss their respective positions towards Russia’s accession to WTO. These talks have allowed considerable advances to be made in understanding the positions on both sides. The European Union is fully committed to a rapid accession of Russia to the World Trade Organisation and has taken the lead in working with Russia and its WTO partners. WTO accession will be a significant achievement for Russia and will anchor the country in a key multilateral economic institution.

Global: Fixing the World   Recommended!
Stephen Roach (MSDW) Feb 8, 2002
It’s hard enough to diagnose what ails an economy. It’s much tougher to come up with the remedy. The just concluded World Economic Forum hammered this point home. While there was considerable disagreement over the state of the global economy, there was even less agreement on an agenda for action. The debate, however, was rich in fresh ideas and new perspectives -- food for thought that is only starting to sink in. As I ponder the experience, I see several over-arching themes coming into focus that could shake conventional wisdom on the state of the world economy in the years ahead.

Saudi Leader's Anger Revealed Shaky Ties   Recommended!
WP Feb 9, 2002
On Aug. 24, Crown Prince Abdullah ibn Abdulaziz, the leader of Saudi Arabia, was in his palace in Riyadh watching President Bush's televised news conference in Texas when Bush was asked about the Israeli-Palestinian "peace process," which had again been undermined by a new round of violence.

Oil for Security Fueled Close Ties   Recommended!
WP Feb 10, 2002
The worst day in Saudi-American relations was Oct. 20, 1973, when Saudi King Faisal joined an Arab oil embargo against the United States. In a matter of days, the global oil market was thrown into chaos. Americans waited in long lines to buy gasoline. Within weeks, the price of oil more than tripled.

After Sept. 11, Severe Tests Loom for Relationship   Recommended!
WP Feb 11, 2002
The day after the terrorist attacks on the Pentagon and World Trade Center, Crown Prince Abdullah ibn Abdulaziz, the Saudi leader, summoned Oil Minister Ali Nuaimi. Saudi Arabia, they quickly decided, would renege on a recent promise to other OPEC nations to cut oil production. Instead, it would rush an extra 9 million barrels of oil to the United States to ensure ample supplies and show Saudi support for a wounded ally.

Recovery has begun, say G7 finance ministers
FT Feb 11, 2002
The recovery in the world economy has already begun, and the US and Europe can expect to see growth strengthening as the year wears on, according to the finance ministers and central bankers who met in Ottawa at the weekend for the meeting of the Group of Seven large economies. "The signs are mounting that we've turned the corner," said David Dodge, governor of the central bank of Canada.

A Contribution to an Online Discussion on Sovereign Debt Restructuring
Thomas C. Dawson (IMF) Feb 11, 2002
A Letter by the Director, External Relations Department, IMF.

Foreign Aid in Our Own Defense
Richard Sokolsky & Joseph McMillan (NYT) Feb 12, 2002
We need a program of tightly focused foreign aid to address the economic, political and social conditions that will otherwise continue breeding new terrorists.

Unstable Currencies Plague the Economy   Recommended!
WSJ Feb 12, 2002
Moneys are only as good as those who manage them.

Agriculture: WTO Members Split On 'Development Box' And S&D
BRIDGES Weekly Trade News Digest - Vol. 6, Number 5 Feb 12, 2002
On 4-6 February, WTO Members met for the last scheduled Special Session in the current Phase II of the ongoing agriculture negotiations to discuss mainly development-related issues, including the establishment of a Development Box, special and differential treatment (S&D) for developing countries, single commodity producers, and small island developing states (SIDS). Food aid and the Green Box provisions for developing countries were also discussed under the bullet "additional issues".

WSSD Prep Meeting Highlights Importance Of Equitable Trading System
BRIDGES Weekly Trade News Digest - Vol. 6, Number 5 Feb 12, 2002
Delegates at the second meeting of the Preparatory Committee (PrepCom II) for the World Summit on Sustainable Development (WSSD) on 28 January - 8 February in New York moved a significant step closer to developing a programme of action for WSSD by adopting the Chair's Paper which will form the basis for discussions at PrepCom III and ultimately the World Summit. Clustered under nine focus points, the recommendations for immediate action, inter alia, call for a trading system that promotes sustainable development in a globalising world, mproved market access for poor countries and the reduction of environmentally harmful subsidies.

News From The Regions: Africa
BRIDGES Weekly Trade News Digest - Vol. 6, Number 5 Feb 12, 2002
The New Partnership for Africa's Development (NEPAD), adopted by African heads of state in Nigeria in October 2001, received high-level support last week from WTO Director-General Mike Moore and key Western leaders, including French President Jacques Chirac and British Prime Minister Tony Blair. Previously, Canadian Prime Minister Jean Chretien told the World Economic Forum on 1 February that his country would set aside a US$ 500m fund for NEPAD.

Peso float buys time in Argentina
FT Feb 13, 2002
The controlled flotation of the Argentine peso bought President Eduardo Duhalde's government a little time to continue improvising a plan to rescue the country from financial collapse, but pressing issues remain unresolved in the corporate sector.

AIDS Fund Falls Short of Goal and U.S. Is Given Some Blame
NYT Feb 13, 2002
The White House's pledge of $200 million to a global fund to fight AIDS this year set a poor example for other countries, advocates and some lawmakers said.

Confiscatory Deflation: The Case of Argentina
Joseph T. Salerno (Mises Daily) Feb 13, 2002
While assorted financial journalists, market pundits, policy wonks, Fed governors and even mainstream macroeconomists have been thrown into a panic by the slight whiff of price deflation they detected in the last few months in the U.S. economy, they have almost completely ignored the wrenching confiscatory deflation that is now going on in Argentina.

WTO adopts work programme for LDCs
WTO Feb 13, 2002
The World Trade Organization's Sub-Committee on Least-Developed Countries agreed yesterday (12 February 2002) on a work programme for least-developed countries. The work programme, based on instructions from the Doha Ministerial Declaration, will support LDCs' efforts to accelerate their trade development.

Southeast Asia needs more attention
Catharin Dalpino and Bridget Welsh (IHT) Feb 14, 2002
Recent news from Southeast Asia is alarming. Arrests in Singapore last month uncovered a regional network of Muslim extremists, the Jemmah Islamiah, with direct links to Al Qaeda.

Euro 'very undervalued', says Noyer
FT Feb 14, 2002
The eurozone could afford to see the euro gain appreciably against the dollar without suffering economic problems as a result, Christian Noyer, the European Central Bank's vice-president, said.

Argentine bank crisis spreads out to Uruguay
FT Feb 14, 2002
Argentina largest private bank, Banco de Galicia, suspended its operations in Uruguay, one of the first signs that Argentina's financial crisis is spreading to its neighbours.

Floating Argentina's peso   Economist Subscription Required
Economist Feb 14, 2002
Defying pessimists, Argentina's peso floated rather than sank: freed for the first time in a decade, the peso traded at around 1.90 to the dollar. But the true test will come only once a partial freeze on bank deposits is lifted. By then, the government hopes to have IMF aid, having started talks with the Fund this week. Meanwhile, Uruguay's central bank took control of the local subsidiary of Banco de Galicia, a large Argentine bank, after a run on deposits.

EU Trade Commissioner Pascal Lamy visits South East Asia
EU DGT Feb 14, 2002
EU Trade Commissioner Pascal Lamy visits South East Asia to strengthen regional and multilateral trading links between 15 and 19 February 2002.

Ersatz Climate Policy
Paul Krugman (NYT) Feb 15, 2002
The Bush administration is offering the illusion of environmentalism by announcing policies that sound impressive but are nearly content-free.

Internet payments: Collecting pennies
Economist Feb 15, 2002
The first successful flotation in more than a year of a Silicon Valley dotcom on Wall Street shows that, despite the dotcom bust, there is still some interest among investors in a good Internet idea. PayPal is one of a group of firms trying to pioneer systems for making small payments on the web. If they succeed, they will transform e-commerce.

A Blueprint for a New Beginning in the Mideast   Recommended!
Jerome M. Segal (NYT) Feb 17, 2002
From the beginning, the Bush administration rejected President Bill Clinton's objective in the Middle East. America went from actively seeking to end the Israeli-Palestinian conflict to turning away from mediating peace negotiations to trying to manage escalating violence. Such efforts are not likely to succeed, and even if it were possible to manage the violence for a time, the world needs something more. The United States has a responsibility to aim higher.

Global: Emerging Markets Decoupling?
Rebecca McCaughrin/Joe Quinlan (MSDW) Feb 18, 2002
Given the circumstances of a global recession, capital flows to emerging markets held up rather well in 2001. Still, the flight to quality following the bursting of the tech bubble in the US and the events of September 11th took a toll on emerging markets, as was evident in the decline in portfolio investment to $13 billion in net outflows. Record levels of foreign direct investment (FDI) helped to partially offset the decline, thanks to a particularly good year for M&A transactions in emerging markets. The outlook for 2002 is moderately better, with the level of capital flows to emerging markets expected to pick up, assuming no dramatic deterioration in or spillover from Argentina and Turkey. The level of direct investment is expected to decline slightly from the level of $164 billion reached in 2001, but portfolio and other private capital flows should provide enough of a boost to support the overall level of foreign investment.

Emerging Europe: Turkey's New Program, EMEA Exchange Rates, EU Convergence (Part II)
Riccardo Barbieri (MSDW) Feb 18, 2002
Parliamentary elections will take place this year in Hungary, the Czech Republic, and Slovakia (see the article by Oliver Weeks and Steve Gilmore in 2/15 Global Economic Forum). We continue to think that they are unlikely to pose problems for the convergence process toward the EU. Some of the possible outcomes may actually add momentum to this effort, for instance the scenario of a one-party government in Hungary (either the Socialists or the incumbent Fidesz). However, the risk of coalition governments among rival factions or parties, or encompassing small extremist movements, is not insignificant. In Slovakia, a return to power of Vladimir Meciar's nationalist party cannot be ruled out either. In such a scenario, a rapid accession to the EU would look less likely, despite the evolution in Mr. Meciar's views on international affairs. Tensions within government coalitions are also likely in countries that are at different stages in the electoral cycle, notably Poland and Croatia.

Newsbytes:Broadband to boom all over the world
Nua Feb 18, 2002
Newsbytes reports that revenues from broadband services in Asia-Pacific, Europe, and Latin America will amount to USD33 billion by 2006.

Chamber backs China deal before Singapore
SCMP Feb 18, 2002
The head of the Hong Kong General Chamber of Commerce has urged the Government to focus on the proposed trade deal with the mainland before considering a free-trade proposal from Singapore.

G8 cannot provide immediate backing for Africa fund
FT Feb 20, 2002
The world's most industrialised nations were unable to meet African expectations of immediate financial support for the New Partnership for Africa's Development (Nepad), a plan to stimulate economic recovery and ensure good government, Michel Camdessus, France's special envoy, said.

The Saudi Challenge
Thomas L. Friedman (NYT) Feb 20, 2002
With the oil boom over, Saudi Arabia will be able to thrive only if it can reform its schools to build young people who can innovate and create wealth from their minds not just from their wells.

Currencies: Anti-Reformists Taking on Koizumi
Stephen L. Jen (MSDW) Feb 20, 2002
A vicious circle for the JPY.

Improving the IMF: Learning from Argentina
Economist Feb 20, 2002
With Argentina still reeling from the economic and financial crisis which saw the world’s largest sovereign-debt default, attention is beginning to focus on ways of preventing future crises, and making those that do occur easier to deal with.

Dollar rises on subdued U.S. inflation data
IHT Feb 21, 2002
The dollar gained Wednesday after a report showed U.S. consumer prices rose only 1.1 percent over the 12 months ended in January, the smallest increase since 1986.

WTO Agrees On Chairs, Ready To Begin Substantive Negotiations
BRIDGES Weekly Trade News Digest - Vol. 6, Number 6 Feb 20, 2002
On 15 February, WTO Members re-convened their deferred General Council session (from 13 February) to agree on Chairs for both new negotiating groups and regular bodies of the WTO. The decision, based on many weeks of informal consultations by former General Council Chair Stuart Harbinson, paves the way for Members to begin scheduling the negotiations timetable to execute the mandate from the Doha Ministerial Declaration agreed in Qatar last November.

WTO Development Committee Tweaks Technical Assistance Plan
BRIDGES Weekly Trade News Digest - Vol. 6, Number 6 Feb 20, 2002
The second meeting of 2002 of the Committee on Trade and Development (CTD) convened on 14 February. This 38th Session of the CTD had a varied agenda looking primarily at elections for CTD and LDC Chairs and further work on the annual technical assistance plan.

New Proposed EU WSSD Strategy Heavy On Globalisation
BRIDGES Weekly Trade News Digest - Vol. 6, Number 6 Feb 20, 2002
On 13 February, EU Development Commissioner Poul Nielson presented a long awaited Communication prepared by the European Commission on the EU's external sustainable development (SD) strategy designed -- amongst other things -- to establish policy components for a "Global Deal" at the Johannesburg World Summit on Sustainable Development (WSSD). Unlike previous SD-related communications from the EU's executive body, the new paper emphasises the beneficial effects of globalisation with regard to economic development, living standards and "global resource efficiency" resulting from optimal exploitation of countries' "comparative advantages". Moreover, the Commission creates a link between poverty and deprivation, on the one hand, and international terrorism, on the other.

Treasury anger at Hain over euro membership timetable
FT Feb 21, 2002
The Treasury has signalled its anger at Peter Hain, the minister for Europe, for laying out a possible timetable for euro membership. .

Argentines' love of dollar is key to economic fortune
FT Feb 21, 2002
The relationship between Argentines and the US dollar is at the centre of the country's efforts to pull itself out of crisis. The success of the government's latest plan hinges on its ability to convince Argentines to accept the peso as their currency..

Global: Deflationary Tremors
Stephen Roach (MSDW) Feb 22, 2002
Deflationary forces are intensifying in the global economy. That’s especially the case in Asia, a region that accounts for about 30% of world GDP. And it could also be the case for the rest of the world. Yet financial markets are leaning the other way. With hopes of economic recovery in the air, the fear of inflation is starting to creep back into asset prices. Have the markets got it right or wrong?

Who will budge first in Argentine aid talks?
IHT Feb 25, 2002
Though Argentina and the International Monetary Fund are talking once again about new loans to help ease the country's economic crisis, a major obstacle has emerged.

IMF did help Argentina
Thomas C. Dawson (IMF) Feb 25, 2002
For Makoto Utsumi to assert that the IMF "refused to extend a helping hand" to Argentina ("IMF must help guide Argentina to recovery", Daily Yomiuri, February 15, 2002) suggests that he is not in touch with the facts of the situation.

A tribal mentality keeps Saudi Arabia secret   Recommended!
Thomas L. Friedman (IHT) Feb 25, 2002
I was riding the elevator the other day in my hotel when a Saudi gentleman got in on the floor below me. He was wearing a traditional Saudi robe and red headdress, and I was in a suit and tie. He looked me up and down for a second, before asking, "American?" Yes, I nodded. Then, reaching out his huge hand to me and smiling warmly, he said, "Saudi." It was a kind gesture, meant to say, "We still like you - we hope you still like us."

A Russian tonic of supply and demand   Recommended!
Bill Keller (IHT) Feb 25, 2002
One way to measure Russia's slow recovery from the 70-year coma of communism is to count lobster tanks and sushi bars. Old Russia hands like me, who remember when a banana was more wondrous than a Faberge egg, swoon at the profusion of delicacies available these days in the showcase cities of Moscow and St. Petersburg.

Trade surplus raises hopes of recovery
SCMP Feb 26, 2002
The trade surplus was 188.1 billion yen (about HK$10.93 billion) for last month, helped by growing demand from the United States, which has raised hopes that overall Japanese exports could be heading for a recovery.

ECB hails euro effects on labour markets
FT Feb 26, 2002
The European Central Bank made its most confident assertion since the euro's launch in 1999 that the new currency is helping to reform Europe's labour markets. Sirkka Hamalainen, a member of the ECB's executive board, said labour flexibility had improved and wage settlements had become more moderate since the euro's introduction.

Venezuela: Three Challenges
Gray Newman and Fergus McCormick (MSDW) Feb 26, 2002
In a surprising move in early February, Venezuela scrapped its exchange rate bands and allowed its currency to float. While we are encouraged by the move to float the bolivar, we remain cautious on the ultimate outcome. Indeed, we fear that the economy is set to contract this year and fear that the downturn could provide the conditions for a more serious political confrontation in the coming months. We would encourage investors to focus on three challenges in Venezuela that are likely to dominate the headlines in the months to come: the exchange rate, public finances, and political leadership.

To make sovereign debt restructuring smoother, not to dictate the terms
IMF Feb 26, 2002
Interview with Anne Krueger, First Deputy Managing Director, IMF.

Lamy visits Argentina, Brazil, and Chile to strengthen EU trade links with region (27 February - 4 March)
EU DGT Feb 26, 2002
EU Trade Commissioner Pascal Lamy will visit Argentina, Brazil and Chile from 27 February until 4 March. In Argentina, Mr. Lamy will express the EU's solidarity with Argentina as it strives to recover from the recent dramatic economic crisis. On the eve of his departure Mr. Lamy said, “We stand by Argentina when it most needs the support of its friends and neighbours. It is at times like these that the value and importance of being part of the Mercosur is brought into sharper focus. Our commitment to strengthening the Mercosur family through our on-going negotiations is if anything stronger now” Mr Lamy’s visit to Brazil will also serve to underline the importance the EU attaches to the Mercosur negotiation as well as to nurturing the excellent relationship struck up with Brazil in the WTO context. In Chile, the Commissioner will attend the opening session of the 9th round of negotiations for an EU-Chile Association Agreement that both sides hope to conclude, at the Second EU-Latin American Summit to be held in Madrid in May. The visit will provide an opportunity for the EU and Brazil, Argentina and Chile to underline their commitment to the new WTO round of multilateral trade talks agreed last year in Doha (Doha Development Round). During his trip, Commissioner Lamy will meet with the President Cardoso of Brazil, Argentine President Duhalde and President Lagos in Chile. He will also meet his Ministerial counterpart, as well as representatives of business and civil society.

Leadership on Corporate Governance   Wall Street Journal Subscription Required
Hugo Restall (WSJE) Feb 27, 2002
Even Asia's best companies are being forced to change.

New EU Food Safety Law Defines Precautionary Principle
BRIDGES Weekly Trade News Digest - Vol. 6, Number 7 Feb 26, 2002
A new European regulation that entered into force on 21 February for the first time defines the controversial precautionary principle in EU food legislation. The directive (178/2002) lays down principles governing food and feed in general, and food and feed safety in particular. To this end, Article 7 of the Regulation states that in cases where the possibility of harmful effects on health have been identified "but scientific uncertainty persists, risk management measures...may be adopted, pending further scientific information for a more comprehensive risk assessment." The language states that such measures should not be more trade-restrictive than required to meet the desired level of health protection and should be reviewed "within a reasonable period of time".

GMO Update: European Commission Proposal; US Report On Safety Testing
BRIDGES Weekly Trade News Digest - Vol. 6, Number 7 Feb 26, 2002
The European Commission on 22 February released its long-awaited proposal on regulating cross-border movements of genetically modified organisms (GMOs), which aims to implement the provisions of the Cartagena Protocol on Biosafety into EU legislation.

News from the Regions: Africa
BRIDGES Weekly Trade News Digest - Vol. 6, Number 7 Feb 26, 2002
Meeting with representatives from the South African Development Community (SADC) as part of his African tour, US Trade Representative Robert Zoellick announced US grants totalling USD 8.7 million to help improve Southern Africa's trading capacity. In particular, the US will provide $US 3 million over three years to support SADC's regional integration plans and link them to the Africa Growth and Opportunity Act (AGOA), $US 2.7 million over two years on customs reform and trade facilitation, and $US 3 million over two years to help local food producers to meet US and EU health standards. In addition, USAID will provide scholarships to one trade official from each SADC member to participate in a WTO training course. While Malawi's Minister for Commerce and Industry Peter Kaleso welcomed US cooperation on social and political development, he stressed that "such initiatives must be tailor made in order to cater for the distinctive nature of the member states of SADC."

Upcoming Services Talks To Address Range Of Issues
BRIDGES Weekly Trade News Digest - Vol. 6, Number 7 Feb 26, 2002
Convening for this year's first 2-week services block, Members will meet in the Council for Trade in Services (CTS) subsidiary bodies such as the Working Party on GATS Rules (WPGR) and the Working Party for Domestic Regulation (WPDR) during the first week starting 11 March, followed by regular and special sessions of the CTS from 18-22 March. Within the services negotiation process, Members are expected to deal principally with the organisation of future work and the discussion of submitted proposals on both sectoral and horizontal issues. Furthermore, Members are discussing the prospect of extending the 15 March deadline for determining whether or not an emergency safeguard (EMS) should be established.

WTO General Council To Allocate Small Economy Concerns To CTD
BRIDGES Weekly Trade News Digest - Vol. 6, Number 7 Feb 26, 2002
On 1 March, the WTO General Council will reconvene from its deferred meeting of 13/15 February to conclude consideration of the organisation's work programme on small economies. Paragraph 35 of the Doha Ministerial Declaration mandates Members to establish a work programme on small economies in order to "frame responses to the trade- related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference."

The world economy: Turning a corner?
Economist Feb 27, 2002
Sighs of disappointment have greeted the Japanese government s latest economic-recovery plan. There are some signs that the worst might be over in America and Germany. Alan Greenspan observed this week that the recuperative powers of the American economy as remarkable. But with the world s three-largest economies in, or just emerging from, recession, the outlook for the global economy is still uncertain.

Global: Smoking Gun
Stephen Roach (MSDW) Feb 27, 2002
Nearly two years after the popping of the Great American Asset Bubble, the US economy is still sputtering. Whatever the outcome -- double dip or anemic recovery -- it’s a far cry from the froth of the Roaring 1990s. Of course, the post-bubble experience of the US pales in comparison with that of the Japanese economy -- four recessions in over a dozen years. Yet asset bubbles wreak havoc on any economy. If left unattended, their impacts spread like wildfire -- damaging financial institutions and, ultimately, infecting the real economy. The authorities know full well that such bubbles are to be avoided at all costs. The trick is to be early in identifying the bubble and then determined in taking action to pop it.

Greenspan sees signs of rebound in economy
IHT Feb 28, 2002
Alan Greenspan, chairman of the Federal Reserve, said Wednesday that the U.S. economy was "close to a turning point" but cautioned that the recovery would be weaker than other postwar rebounds.

Interview: Stanley Fischer - An Economic Insider's View   Recommended!
FEER Feb 28, 2002
Few people are ever privy to how world leaders try to cope with their economic woes. But from his position at the IMF, Stanley Fischer certainly was. Interview conducted by Review editor Michael Vatikiotis.

Report casts doubt over Chinese data
FT Feb 28, 2002
An internal investigation by the Chinese statistics authority has uncovered endemic fabrication of official statistics, hardening doubts over the credibility of national growth figures and applying pressure on economists to reappraise the way they judge China's economic performance.

Argentina on the Brink
Hans Sennholz (Mises Daily) Feb 28, 2002
It is hard to exaggerate the economic and political conditions in Argentina. With the economy in the grip of a paralysis, with unemployment soaring to depression levels, and with street rioting killing 28 people just before Christmas, the country is on the brink of civil war.

Explaining Argentina's economic collapse
Economist Feb 28, 2002
In Argentina, the government of Eduardo Duhalde made slow progress towards persuading provincial governors to accept cuts in revenue transfers from the centre. Groups of unemployed protested against planned budget cuts.

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