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Argentina Faces Fresh Turmoil From Resignation, Debt Downgrades

18.08.2019 12:12

(Bloomberg) -- Life just got a whole lot tougher for Argentina’s Mauricio Macri a week after his shock primary-election defeat sent markets into a tailspin.The embattled president is suddenly grappling with the resignation of his economy minister and a double downgrade to the nation’s debt. Meanwhile, his opponent Alberto Fernandez, now favorite to win the presidency on Oct. 27, is calling on Macri to renegotiate the terms of a record $56 billion credit line with the International Monetary Fund.The slew of negative headlines may unleash a fresh bout of market turmoil after a brief respite at the end of last week. Argentina’s global bonds will be the first to react, while the nation’s currency and stock markets remain closed on Monday due to a local holiday.“This will inject more uncertainty,” said Nader Naeimi, the head of dynamic markets at AMP Capital Investors Ltd. in Sydney. “It puts a huge question mark over the creditworthiness of the country and is likely to further pressure the peso and Argentine bonds. We are staying out.”Economy Minister Nicolas Dujovne, who led bailout negotiations between Argentina and the IMF last year, stepped down on Saturday, saying in a letter to Macri that the country needs “significant renewal in the economic area.” Hernan Lacunza, economic minister for the province of Buenos Aires, will replace him.Dujovne’s resignation came a day after Argentina’s credit profile was cut deeper into junk territory by Fitch Ratings and S&P Global Ratings. Both cited the possibility of a sovereign debt default.IMF and DefaultThe IMF bailout had been instrumental in Macri’s strategy to stabilize the peso and ensure the country’s solvency. Yet, in an interview with La Nacion published Sunday, Fernandez said the deal needs to be reviewed because Argentina isn’t meeting the targets it agreed upon. He added that it’s “impossible” to repay the IMF on time, and that the only solution is to reschedule payments, according to the newspaper.In a separate interview with Clarin, Fernandez had a mixed message about the possibility of default. While saying the sensible thing is for Argentina to keep paying its obligations, he added that the country already finds itself in default conditions, as signaled by bond prices.Argentines Reflect on Last Week’s Election Results, Market ShockThe implied chance that Argentina will miss a debt payment, as measured by credit default swaps, soared last week. The Merval stock index lost 45% in dollar terms in the five days through Friday, bond prices tumbled about 30% and the peso weakened 18%.“While Argentina has been trading at distressed price levels already, we expect further downside on this news as it highlights an increased likelihood of a credit event,” Citigroup Inc. strategists including Dirk Willer wrote in a report.(Updates with Fernandez comments from seventh paragraph.)--With assistance from Dana El Baltaji, Abeer Abu Omar and Jorgelina do Rosario.To contact the reporters on this story: Justin Carrigan in Dubai at [email protected];Walter Brandimarte in Brasilia at [email protected] contact the editors responsible for this story: Justin Carrigan at [email protected], Dana El Baltaji, Ros KrasnyFor more articles like this, please visit us at©2019 Bloomberg L.P.

Putin’s Iconoclastic Economics Guru to Lose Kremlin Post

16.08.2019 3:34

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. An economist known for challenging Russia’s tight-money policies as a top adviser to President Vladimir Putin is leaving the Kremlin after seven years.Sergei Glazyev will switch to the Eurasian Economic Commission that oversees relations between member states of the Eurasian Economic Union, comprising Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, a commission spokesman said Friday. His appointment as minister for integration and macroeconomics is planned to be confirmed formally at a summit of leaders of member states on October 1.Glazyev alarmed investors over the years with calls for massive state spending, abandoning the dollar and restoring capital controls to boost economic development. He was a forthright advocate in the Kremlin of using state power to direct growth in Russia’s economy, in opposition to rivals such as former Finance Minister Alexei Kudrin who favored more market-led approaches.“Glazyev’s role in the Kremlin was to make sure there’s a vocal alternative to the liberals, so they don’t feel like they’re the masters of the financial-economic bloc,” said Andrei Kolesnikov, a political analyst at the Carnegie Moscow Center. Glazyev “firmly believes in the effectiveness of massive government spending,” he said.Two advisers to Glazyev declined to comment on his move. Kremlin spokesman Dmitry Peskov also declined to comment.As a member of Putin’s economic council in 2016, Glazyev developed an “alternative” program to the econonic plan then being developed by Kudrin, that called for a defense of the ruble to ensure a more stable exchange rate and using domestic sources of investment including refinancing instruments to pump up to 5 trillion rubles into modernizing the economy.‘Colossal Damage’He argued the same year that the central bank’s shift in 2014 to a free-floating exchange rate, a move hailed by the International Monetary Fund and investors, had dealt “colossal damage” to Russia. Glazyev has also suggested in the past that Russia should liquidate its dollar reserves.Glazyev, 58, is under U.S. and European Union sanctions for his role in the 2014 annexation of Crimea from Ukraine. He suggested in 2017 that cryptocurrencies could be a way for Russian banks to avoid international sanctions as well as a method that the state could use to buy “sensitive” services around the world.Glazyev has past experience of working on economic coordination with the bloc of former Soviet republics. When Putin named him as an adviser in 2012, Glazyev’s brief was to develop the customs union between Russia, Belarus and Kazakhstan that later evolved into the Eurasian Union that took effect as a single market in 2015.A former minister in the late President Boris Yeltsin’s 1992-93 government that administered “shock therapy” to the collapsing Soviet economy under Yegor Gaidar’s reforms, Glazyev broke with his pro-market allies and went on to become a leader of the nationalist Rodina party. He ran against Putin for the presidency in 2004, coming third with 4.1%.To contact the reporters on this story: Evgenia Pismennaya in Moscow at [email protected];Stepan Kravchenko in Moscow at [email protected] contact the editors responsible for this story: Gregory L. White at [email protected], Tony HalpinFor more articles like this, please visit us at©2019 Bloomberg L.P.

Brazil-Argentina Ties Sour as Bolsonaro Fumes Over Primary Vote

14.08.2019 4:00

(Bloomberg) -- A sudden chill threatens the warm relationship between the two largest economies in South America, as Brazil’s far-right president warned of dire consequences in the event of a leftwing populist victory in Argentina’s elections.Sunday’s surprise primary result in Argentina means that President Mauricio Macri is on course to lose October’s vote to Alberto Fernandez, the leftwinger running on a ticket with former president Cristina Kirchner. Brazil’s President Jair Bolsonaro has made no secret of his desire to see Macri remain in office, while Fernandez has publicly welcomed criticism from a man he described as “racist, violent and misogynistic”.With the election of Bolsonaro last year, the historically protectionist economies of Brazil and Argentina both have ideologically aligned presidents in office simultaneously. While Macri’s suave, businesslike persona may have clashed stylistically with Bolsonaro’s abrasive ex-army rhetoric, the two men shared similar economic goals, as demonstrated by the recent trade deal between the European Union and Mercosur, the South American customs union. Deteriorating relations between the two most powerful economies in the bloc risks undermining that agreement’s ratification, as well as billions of dollars in bilateral trade.To Macri’s Shock Setback in Argentina Deals Blow to Re-Election BidBrazil and Argentina make up almost two thirds of the $4 trillion of economic output in South America. Argentina is Brazil’s biggest trade partner in the region, accounting for nearly $30 billion in commerce each year. Brazil is Argentina’s biggest export buyer globally, according to data from the International Monetary Fund.‘Brothers Fleeing’In his first comments after the vote, Bolsonaro claimed that the return of “lefties” to power in Argentina could spark a wave of migration to Brazil, mirroring the situation in northern parts of the country where tens of thousands of Venezuelans have flooded in as their economy implodes.“We don’t want our Argentine brothers fleeing to Brazil,” Bolsonaro said in Rio Grande do Sul state, which borders Argentina.At present this seems improbable. Around 4 million Venezuelans have fled the country over the past few years and around 90 percent those remaining live in poverty, according to the United Nations Economic Commission for Latin America and the Caribbean. By comparison, 27 percent of Argentinians live in poverty, according to the Organization of Economic Cooperation and Development.In June, Bolsonaro had enthusiastically backed Macri during a visit to Buenos Aires. In the wake of that trip, Fernandez headed to Brazil to meet former president Luiz Inacio Lula da Silva in his jail cell in the southern city of Curitiba where he is imprisoned on corruption charges. On Monday night he described the ex-president as a “political prisoner”. Lula and Kirchner are longstanding allies.Bolsonaro’s comments “show that people are worried about what they remember from when Cristina was president,” said Earl Anthony Wayne, a former U.S. ambassador to Argentina under Presidents George W. Bush and Barack Obama. “Right now there’s a lot of concern.”During her time in office, Kirchner nationalized pension funds, imposed currency controls and tampered with economic statistics. Meanwhile, Fernandez has stoked investor fears by pledging to change the terms of a $56 billion dollar agreement between Argentina and the International Monetary Fund.Fernandez has also criticized the free-trade deal signed in June between the Mercosur trading bloc and the EU. He said it offered “nothing to celebrate, but rather a lot of reasons to worry.”Damage ControlWith so much trade potentially in the crosshairs, Brazil’s Economy Minister Paulo Guedes will likely step in to temper Bolsonaro’s harsh words, according to Oliver Stuenkel, an international relations professor at the Fundacao Getulio Vargas. A champion of free markets, Guedes is the president’s top economic adviser and one of the most influential cabinet members.“Guedes keeps his eyes on what really matters to him, and this will matter,” Stuenkel said. “Guedes will try to save things in the next couple of weeks, saying ’we’ll have good relationship with whomever gets elected, we’re not worried.’ Then it’s anybody’s guess whether they will succeed in stopping Bolsonaro from saying things.”’Blown Up’In a Monday meeting at Brazil’s economy ministry, there was concern over Bolsonaro’s remarks on Argentina. Undersecretaries urged Guedes to speak with Bolsonaro and ask him to distance himself from Macri, according to a person present at the gathering who requested anonymity because it was private.To date, Fernandez has made little attempt to either allay investor concerns or downplay his disagreements with Bolsonaro.However, some market analysts believe that he would be more pragmatic in power. Tony Volpon, a former Brazil central bank director who’s now chief economist at UBS Brasil, said that despite current financial market fears, Fernandez will likely follow the precedent of leftist Latin American leaders including Lula and follow an orthodox policy set upon taking power. That means Argentina and Brazil could still do business, he said.With Argentina mired in recession, it is more dependent than usual on ties with Brazil to ensure trade and foreign investment, according to Mauricio Santoro, an international relations professor at Rio de Janeiro’s state university.“It’s strategic, so they will put some effort into building this relationship. But, as our friends in Argentina know, it takes two to tango,” Santoro said.--With assistance from Murilo Fagundes and Rachel Gamarski.To contact the reporters on this story: David Biller in Rio de Janeiro at [email protected];Eric Martin in Mexico City at [email protected] contact the editors responsible for this story: Juan Pablo Spinetto at [email protected], ;Walter Brandimarte at [email protected], Matthew Malinowski, Bruce DouglasFor more articles like this, please visit us at©2019 Bloomberg L.P.

Argentina Can’t Shake Its Turmoil Without End

12.08.2019 6:03

(Bloomberg) -- Want to receive this post in your inbox every day? Sign up for the Balance of Power newsletter, and follow Bloomberg Politics on Twitter and Facebook for more.Mauricio Macri is waking up with an almighty political hangover.The scale of the Argentine leader’s defeat in yesterday’s primary vote took pollsters and investors by surprise: Markets rose on Friday in expectation that he’d emerge with enough momentum to have a good shot at winning a second term in October’s presidential election.Now a market sell-off looms, and Macri’s presidential ambitions are hanging by a thread.The result is testament to Argentina’s near-permanent state of economic crisis and a revolving door of political fixes.Macri came to office in 2015 pledging a turnaround from the years of Cristina Kirchner, who presided over default and capital controls that made Argentina an international pariah.Four years on, Argentina is still in recession and saddled with rampant inflation, with bolted-on austerity following a record International Monetary Fund bailout Macri was forced to request last year.Voters used the primary — essentially a poll of national sentiment — to signal their dissatisfaction with Macri’s course. What is most worrying for investors is that the electorate instead opted for Alberto Fernandez, who has Kirchner as his running mate. Fernandez tried to reassure markets yesterday. But it’s unlikely to stop the rout today.Investors are clear they want Macri in power. Argentina’s voters seem to have other ideas.Global HeadlinesJust in: Five scientists killed in an explosion last week during a missile test on Russia’s White Sea had been working on developing a small-scale nuclear reactor, a top official said.Airport shutdown | Hong Kong airport authorities canceled remaining flights today after thousands of black-clad protesters swarmed the main terminal building for a fourth day — the biggest disruption yet to the city’s economy since demonstrations against Beijing’s increasing grip over the financial hub began in early June. Shares of Cathay Pacific, Hong Kong’s main airline, tumbled to a 10-year low. The unrest is the strongest challenge to Chinese control since the U.K. relinquished its former colony in 1997.Narrowing the field | The Iowa State Fair is a rite of passage for presidential contenders. But for the lowest polling candidates in the record-size Democratic field, the event took on an extra level of urgency this weekend. It was perhaps their final attempt to break through as they seek to qualify for the September debate in Houston. Those who fail to make the cut — and only nine have so far — might start bowing out.One top-tier candidate — Kamala Harris — portrayed herself as a pragmatist in an interview yesterday with Tyler Pager. Democratic candidates aren’t necessarily all on board with the tactics being used to oppose Trump and other Republicans.  Billy House outlines the political risks inherent in House Speaker Nancy Pelosi’s strategy of slow-walking moves to impeach Trump. Cash promises | U.K. Prime Minister Boris Johnson has rolled out spending pledges of about 2 billion pounds ($2.4 billion) a week since coming to power last month promising to deliver Brexit on Oct. 31. That’s fueled speculation he’s preparing for a general election to change the balance in Parliament, where his Conservatives hold a wafer-thin majority of one.Crime fighter | A former director of prisons handily won Guatemala’s presidential election yesterday after pledging to crack down on crime and pursue market-friendly policies. A 63-year-old surgeon, Alejandro Giammattei has been critical of his nation's safe-third country agreement with the U.S. to stem the flow of migrants.What to Watch This WeekParliament leaders in Rome meet today to set a date for the no-confidence vote that will most likely set Italy on track for a snap election in the fall. Political fallout from Jeffrey Epstein’s ties to Trump, former president Bill Clinton and others could continue following the indicted financier’s apparent suicide. Former White House counsel Gregory Craig — a rare Democrat caught up in Special Counsel Robert Mueller’s investigation into Russian election meddling — faces a jury today over criminal charges that could send him to prison for five years. The National Rifle Association is set to square off against the city of Los Angeles as the gun-rights group seeks to overturn a law requiring contractors to disclose all business ties to the organization. Large parts of Kashmir remain cut off from the rest of the world as a communications blackout entered its eighth day, although India said it would soon begin easing restrictions.And finally ... Deputy Prime Minister Matteo Salvini has taken his campaign for fresh elections to the beaches where millions of Italians are trying to escape a summer heat wave. In a bid to counter opposition to a new vote that could hand his League party an outright parliamentary majority, Salvini posed for bare-chested selfies, chatted with holidaymakers in Sicily and even enjoyed a short dip in front of the cameras. --With assistance from Kathleen Hunter, Karen Leigh, Alex Morales, Ben Sills and Michael Winfrey.To contact the author of this story: Alan Crawford in Berlin at [email protected] contact the editor responsible for this story: Karl Maier at [email protected] more articles like this, please visit us at©2019 Bloomberg L.P.

Trump Is Making Xi's Superpower 2050 Plan Tougher by the Day

10.08.2019 20:00

(Bloomberg) -- Even before the trade war, Xi Jinping’s plan to turn China into one of the world’s most advanced economies by 2050 was ambitious.His grand vision is now looking more aspirational by the day. As mounting pressure from Donald Trump adds to a slew of structural challenges facing China’s $14 trillion economy -- including record debt levels, rampant pollution, and an aging population -- the risk is that the country gets stuck in a “middle-income trap,’’ stagnating before it reaches rich-world levels of development.Economists say Xi’s government can avoid that fate by boosting domestic consumption, liberalizing markets and increasing the country’s technological prowess. But it won’t be easy. Only five developing countries have made the transition to advanced-nation status while maintaining high levels of growth since 1960, according to Nobel laureate Michael Spence, a professor at New York University’s Stern School of Business.“China trying to do this with active opposition from the U.S. makes the hurdle that much higher to jump over,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “But the U.S. has clearly lit a fire under China. If it ultimately does succeed we may look back at this moment as the catalyst that really kicked their efforts into high gear.”The International Monetary Fund highlighted President Xi’s challenge on Friday, saying in its annual report on China’s economy that if a comprehensive trade agreement isn’t reached, it would damage the nation’s long-term outlook. “China’s access to foreign markets and technology may be significantly reduced,” the IMF said.Odds of a near-term trade deal appear low. After President Trump issued a surprise threat to apply new tariffs on $300 billion of Chinese goods two weeks ago, Beijing responded by halting purchases of U.S. crops and allowing the yuan to fall to the weakest level since 2008 on Aug. 5.Trump’s administration fired back within hours, formally labeling China a currency manipulator. The White House is also holding off on a decision about granting exemptions to U.S. companies that want to do business with Huawei Technologies Co., the Chinese tech giant that Trump placed on a blacklist in May, people familiar with the matter said. Trump Says It’s ‘Fine’ If September China Talks Are CanceledAny concessions from China are unlikely until October at the earliest, said Jeff Moon, a former assistant U.S. trade representative for China affairs. Xi faces growing internal pressure to project strength as anti-government protests in Hong Kong intensify and China prepares to celebrate the 70th anniversary of the founding of the People’s Republic on Oct. 1.“Any sign of weakness is unacceptable to Chinese leaders,’’ Moon said. U.S. Calls China ‘Thuggish Regime’ as Hong Kong Feud EscalatesIn one sign of how rapidly the Sino-U.S. relationship has deteriorated, some state media in China have raised the prospect that Beijing may consider cutting off engagement on trade entirely. Communist Party-run publications have stoked nationalism in recent weeks while exuding confidence in China’s economic system and its flexibility to cope with external challenges.“Chinese enterprises are speeding up adjustment, creating new export markets,” Hu Xijin, the editor-in-chief of China’s state-run Global Times, tweeted on Thursday, after data showing overseas shipments beat expectations in July.In the short run, China’s government has ample firepower to prevent economic growth from falling below the 6% lower bound of its annual target range. Bloomberg Economics predicts the central bank will cut interest rates this year, while Standard Chartered Plc expects fiscal stimulus to drive a moderate recovery in the second half of 2019.Xi has also made some progress in tackling China’s long-term challenges. A more than two-year deleveraging campaign has helped wring some of the worst excesses out of the country’s debt markets, while regulators have taken a much harder line on high-polluting industries in recent years. The services sector now accounts for more than half of gross domestic product.China has also poured billions into developing a homegrown high-tech industry, going head-to-head with the West in areas like artificial intelligence and electric vehicles. In an October 2017 speech that laid out his long-term vision for the Chinese economy, Xi vowed to join the most innovative countries by 2035 on the way to great-power status by 2050. A QuickTake on China’s economyYet the trade war has laid bare just how far China remains from some of Xi’s targets. The most striking example: America’s blacklisting of Huawei, which threatens to cripple the Chinese national champion because local chip designs aren’t yet sophisticated enough to replace those from the U.S.“For China it will be harder to access state-of-the-art technology,” said Bert Hofman, director of the East Asian Institute at the National University of Singapore. “This will make it harder for China to catch up, but at the same time it will set stronger incentives to develop their own technology ecosystem. How China does this will determine how fast they will grow.”Debt and demographics are two other big challenges. China’s debt burden has continued to rise despite the deleveraging campaign, climbing to about 303% of GDP in the first quarter, one of the highest ratios among developing nations, according to the Institute of International Finance. The country’s working-age population is forecast to shrink by more than 20% to 718 million by 2050, according to data compiled by the United Nations.While China’s per-capita GDP has jumped tenfold since 2000 to an estimated $10,000 this year, it’s still far below readings of about $65,000 in the U.S. and Singapore -- one of the five economies highlighted by Spence as having achieved advanced-country status since 1960.China’s economy is still expanding faster than its rich-world counterparts for now, but its advantage is shrinking.Growth slowed to 6.2% in the second quarter, the weakest pace in at least 27 years, and Standard Chartered estimates that if Trump’s threatened tariffs come into effect on Sept. 1, they could slice 0.3 percentage point off China’s annual rate of expansion. Xi has tried to diversify the country’s stable of overseas customers via his signature Belt & Road initiative and other trading pacts, but the U.S. still accounts for about 20% of China’s exports.“The U.S.-China trade tensions certainly make the transition harder,” said Michelle Lam, greater China economist at Societe Generale SA in Hong Kong. “China will lose some export market share and the technology spillover from the U.S. to China will slow. But the current tensions also provide the opportunity for policy makers to press harder with reform.”--With assistance from Chloe Whiteaker, Hannah Dormido and Daniel Ten Kate.To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at [email protected];Peter Martin in Beijing at [email protected] contact the editors responsible for this story: Jeffrey Black at [email protected], Michael Patterson, Christopher AnsteyFor more articles like this, please visit us at©2019 Bloomberg L.P.

IMF says Beijing hasn't manipulated the yuan

10.08.2019 17:00

August 11, 2019 5:00 AM
WASHINGTON • The International Monetary Fund (IMF) sees little evidence that China's central bank has deliberately reduced the value of the nation's currency - a position at odds with the Trump administration's decision last week to accuse Beijing of manipulating the yuan.


Two Armies Face Off Online as Kashmir Wakes to a New Reality

10.08.2019 9:22

(Bloomberg) -- India and Pakistan’s military are in open conflict on Twitter, trading accusations and threats over the disputed state of Kashmir.For now, the conflict is staying online. But the possibility of it spilling across the defacto border that divides the Indian- and Pakistan-controlled parts of Jammu and Kashmir, or erupting on the streets of the summer capital, Srinagar, remains a dangerous prospect.The rival nations have been at loggerheads for the past week after India scrapped a measure that granted autonomy to the restive Kashmir region. Islamabad has downgraded diplomatic ties and cut trade relations."Lately Pakistan has been openly threatening about certain incidents in Kashmir," India’s Chinar Corps, stationed in Srinagar, tweeted Friday. "Notwithstanding we’ll take care of all of them; let anyone come & try & disrupt the peace in valley, we will have him eliminated!"Pakistan responded. "Usual blatant lies," tweeted Pakistan Armed Forces spokesman Major General Asif Ghafoor. "Should there be an attempt by Indian Army to undertake any misadventure, Pakistan’s response shall be even stronger than that of 27 Feb 2019," he said referring to a recent military conflict between the two countries.Meanwhile, the hashtag SaveKashmirFromModi was trending in India on Friday.But behind the online posturing are nuclear-armed adversaries who’ve fought three wars since the British left the subcontinent in 1947 -- two of them over Kashmir -- which is claimed in full and ruled in part by both. Artillery and small-weapons fire are exchanged often and cross-border infiltrations are reported regularly but so far, the threat of a nuclear conflict has prevented the situation from spiraling out of control.Increased ThreatsPrime Minister Narendra Modi shocked the nation on Monday when his government took just a few hours to end seven-decades of autonomy in Kashmir by diluting Article 370 of the constitution. Since then, India’s paramilitary troops have locked down the region, which for the last five days has been under an Internet and phone blackout and a strict curfew, its citizens shut out from the world and the fierce debate over Modi’s decision.“A new era has been started in Jammu, Kashmir and Ladakh,” Modi said on Thursday night in an address to the nation, referring to the Himalayan regions in northern India. “Article 370 did not give the people anything apart from separatism and terrorism and kept them from progress -- it was being used as a weapon by Pakistan.”At the same time, Pakistan Prime Minister Imran Khan warned of violence when the now five-day long curfew is lifted. “I am saying it today, they will blame us," Khan told a special sitting of his parliament. "They will do one more thing, I fear they will do ethnic cleansing in Kashmir.”Observers say Modi’s actions have increased the risk of conflict.Kashmiris have been placed in a very difficult situation, said Mahmud Durrani, former Pakistan general, national security adviser and ambassador to the U.S."This is like cutting their jugular vein," Durrani said. "There is going to be a very obvious reaction in the valley. They may be able to suppress it for a month, two months or four months but there will be definite reaction to it."Still, he said Pakistan’s options were very limited, with diplomatic protests unlikely to have any impact on India. In the meantime, Durrani warned, "we must be careful about the boost that these jihadis will get all over India, Afghanistan and Pakistan. Terrorists and religious fanatics will draw mileage from this and they will become stronger."Analysts shared similar concerns."We expect more decisions driven by Modi’s Hindu nationalist policy platform during his second term, risking intensified sectarian violence and civil unrest in the country," Marthe Hinojales, Asia politics analyst at Verisk Maplecroft said in note. "This dynamic suggests a continuing fragile bilateral relationship."This is the second time the neighbors have clashed on Kashmir this year. After an attack killed 40 Indian security personnel, India responded with its first airstrikes on Pakistani soil since 1971, which led to an aerial dogfight. Khan said in an Aug. 6 parliament session called to discuss India’s move that any possible violence in response would be again blamed on Pakistan. The South Asian nation has denied involvement in the February attacks as well as accusations it harbors militants who engage in cross-border attacks.Economic PressuresBeyond long-standing territorial disputes, Pakistan is facing a whole other set of pressures.It just took a $6 billion International Monetary Fund loan to avert an economic crisis and it’s seeking China’s help to avoiding tough financial sanctions, amid signs it is running out of time to meet global anti-money laundering and counter-terrorism financing standards.Pakistan has been on the Paris-based Financial Action Task Force “grey” monitoring list since last year, after a campaign by the U.S. and European nations to get the country to do more to combat militancy and close financing loopholes to terrorist groups.Given Islamabad’s financial challenges, it’s unlikely to opt for a war over Kashmir, said Ajai Sahni, executive director of the Institute for Conflict Management in New Delhi."There is no immediate intent on part of Pakistan to escalate to that level," said Sahni, adding it may intensify the efforts of militant groups to infiltrate India. "In terms of a credible calculus of risks this does not seems to be one of the options the Pakistanis are currently considering."Within the Indian side of Kashmir, there will be protests and efforts to engineer terrorist attacks, said Sahni. "But with the kind of saturation of India’s security forces, I don’t think this is going to grow into anything large scale.’’--With assistance from Ismail Dilawar.To contact the reporters on this story: Faseeh Mangi in Karachi at [email protected];Bibhudatta Pradhan in New Delhi at [email protected] contact the editors responsible for this story: Ruth Pollard at [email protected], Unni KrishnanFor more articles like this, please visit us at©2019 Bloomberg L.P.

IMF stands by yuan view; says China could need stimulus if trade war worsens

09.08.2019 18:48

The International Monetary Fund on Friday stood by its assessment that China's yuan valuation was largely in line with economic fundamentals, but an IMF official said the fund was encouraging China to pursue a more flexible exchange rate with less intervention.


Trump freezes all Venezuelan government assets in US ahead of Lima Group conference

06.08.2019 8:15

Delegates from some 60 countries will meet Tuesday in Lima to discuss the political crisis in Venezuela, as Washington steps up pressure for President Nicolas Maduro to step down. The conference comes a day after President Donald Trump ordered a freeze on all Venezuelan government assets in the United States and barred transactions with its authorities "in light of the continued usurpation of power" by the socialist leader. The meeting has been convened by the Lima Group, which includes a dozen Latin American countries and Canada and is helping to mediate in the crisis. Mr Trump’s National Security Advisor John Bolton and Commerce Secretary Wilbur Ross are in the US delegation, which is expected to announce further punitive measures against Mr Maduro at the meeting in the Peruvian capital. The "sweeping steps" will have "a lot of potential consequences", Mr Bolton said, stressing that Mr Trump is committed to a transition of power in Venezuela. John Bolton is attending the conference where further punitive measures will be announced Credit: Rex The oil-rich South American nation, already struggling with widespread economic woes, was plunged into a political crisis when National Assembly head Juan Guaido declared himself interim president in January, accusing Mr Maduro of usurping power. Mr Guaido was recognised by dozens of nations, including the United States, but the efforts to oust Mr Maduro have stalled despite the international support and widespread discontent with the president, who has been able to cling to power with the backing of the military and support from Russia and China. Delegates from the government and the opposition camps have held talks, but Mr Bolton said Mr Maduro was "not serious." "We’re at a point where we need to see less talk and more action," he said, adding that it is Washington’s "intention that the transfer (of power) be peaceful." Venezuela has been in deep recession for five years. Shortages of food and medicine are widespread, and public services are progressively failing. Around a quarter of the country’s 30 million people need aid, according to United Nations, while 3.3 million have fled the country since the start of 2016. The International Monetary Fund says inflation will hit a staggering one million percent this year while the economy will shrink by 35 percent.

U.S. designates China as currency manipulator for first time in decades

05.08.2019 18:42

The U.S. government has determined that China is manipulating its currency and will engage with the International Monetary Fund to eliminate unfair competition from Beijing, U.S. Treasury Secretary Steven Mnuchin said in a statement on Monday.


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