Sunday, November 25, 2012

Border Wars, Disputes and Other Global Considerations

Amid better than expected improvements in German business confidence (reported by the Ifo economic institute) and  Greek debt restructuring efforts moving forward, budget talks among 27 Eurozone leaders broke down on Friday.  European Central Bank President Mario Draghi said Eurozone leaders need "to follow up with determination on their commitment to make the institutional reforms needed to complete economic and monetary union", German Chancellor Angela Merkel said "we have reached a good basis to continue our work" and U.K. Prime Minister David Cameron said “the budget deal wasn't good enough for Britain, but it also wouldn't be good enough for a number of countries”.

Additionally, as many governments pursue financial restructuring, others confront geographic and political restructuring challenges. China recently issued passports presents maps of its boundaries extending into parts of India, Taiwan and areas of the South China Sea considered territories of the Philippines, Brunei, Malaysia and Vietnam. Today, in Catalonia, a region accounting for 20% of Spain’s economy, its citizens are considering political leaders that may lead the region toward a separation from Spain. In the Middle East, with a cease-fire in place between Hamas and Israel, Egyptian President Mohamed Morsi’s increased control over the country has triggered significant internal conflicts.  In the U.S., there is increased attention on petitions for secession by various states  - the largest effort from Texas with over 112,000 signatures (the White House will provide an “official response”  to petitions with over 25,000 names by mid-December).


MY TAKE

  • Regarding the Eurozone – with diverse economic and political interests among its 27 member countries, internal tensions will likely continue for months, if not years.
  • Regarding “border war and disputesChina’s remapping efforts present a challenge to several players in the region because of its significant position as an economic trading partner; in Catalonia, any successful actions toward separation from Spain may provide a roadmap for other Eurozone players to follow; in Egypt, President Morsi’s actions reinforce the view that political conflict is the norm within the region; in the U.S, the varied petitions highlight the divergent attitudes across the country and the challenges facing decision makers as they seek common ground to address the “fiscal cliff” and other economic challenges.

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