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Populism and partition? Europe's bleak forecast for the year ahead
GZERO’s Tony Maciulis joins Mujtaba Rahman, Eurasia Group's Managing Director for Europe, on the sidelines of the Munich Security Conference to discuss the pressing political and economic situation in Europe. Rahman looks ahead to the EU Parliament's upcoming elections, highlighting concerns over populist party performance. “[Populists] will certainly be better represented” Rahman tells Maciulis, “but that being said, the impacts on policy will be marginal at best.”
Rahman also delves into Europe’s economic challenges, citing bleak growth forecasts and Germany's fiscal constraints. “The overall picture is an economy really in the doldrums, not performing…basically flat." Discussing Ukraine, Rahman underscores the risk of partition and stresses the importance of Western integration for Ukraine's ultimate failure or success against Russia. Rahman also raises concerns over the potential impact of a Trump presidency on transatlantic relations. “Is Trump signaling an invitation to Russia and others to probe and to test? That's really where the concern lies."
Join Ian Bremmer and a panel of experts this Saturday, February 17, at 12 pm ET/9 am PT/6 pm CET for our Global Stage discussion at the Munich Security Conference: Protecting Elections in the Ageof AI.
Keep up with GZERO's Global Stage coverage of MSC 2024 for more.
Medieval Italy, the Peruzzis & the world's first bank run
Bank runs. Market volatility. Panic in the streets. When I say we’ve been here before, I don’t just mean 2008 or 1929. One of the earliest recorded bank runs dates back to the 14th century. Italian city-states like Florence and Venice sat at the crossroads of trade routes between Asia and Europe and were financial hubs. In the early 1300s, the “Peruzzi” family quickly became one of the most powerful and wealthy in Florence, through a highly profitable textile trade that focused on imported English wool.
As their wealth grew, so did their banking network, extending throughout Europe and even to England’s King Edward the Third. King Edward at the time was embroiled in a series of expensive wars with France, which the Peruzzi's increasingly bankrolled. Unfortunately, King Edward’s appetite for battle and glory was bigger than his purse, and when he failed to pay his debts in 1345, the Peruzzi bank took a massive financial hit.
Word soon got back to Florence about the deadbeat English king. Depositors panicked, rushing to withdraw their florins before the Bank of Peruzzi ran out of funds. A bank-run ensued and, soon after, the House of Peruzzi was ruined.
The reason you’ve probably never heard of the Peruzzi's until now has quite a bit to do with the Florentine family that rose to power soon after their fall. The House of Medici [meh·duh·chee] became one of the wealthiest and most powerful families in Renaissance Europe in part by learning from the Peruzzi’s mistakes. Where the Peruzzi's focused heavily on speculative investments and individual clients (ahem, Edward the Third, ahem), the Medicis diversified their portfolio across a range of industries and regions, which protected them from risk and market volatility.
Fast-forward to today and the same pitfalls that the Peruzzi’s faced exist for modern banks that rely on overextended credit and speculation. I mean, what is crypto if not today’s version of English wool? And whether you’re the House of Peruzzi or Silicon Valley Bank, one thing is clear. Stay the heck away from the King of England.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
A shopper pays with a euro bank note in a market in Nice, France, amid sky-high inflation.
Hard Numbers: Eurozone inflation record, Saudi woman sentenced for tweeting, US life expectancy drops, Russia cuts off gas to EU … again
9.1: Year-on-year inflation in the Eurozone’s 19 countries rose to 9.1% in August, up from 8.9% last month. It’s the highest rate on record since the group began recording in 1997, and will put pressure on the European Central Bank to again raise interest rates, raising the likelihood of a recession in some EU countries.
45: A Saudi woman has been sentenced to 45 years in prison after a court convicted her of using the internet to "tear the kingdom’s social fabric.” Though Saudi officials have not released many details on the case, a human rights NGO said the woman used a pseudonym to tweet her political opinions.
76: Average life expectancy in the US dropped to 76 in 2021, down three years from 2019. The dip was more pronounced among white Americans and is partly attributable to the pandemic.
745: Russia has again completely halted natural gas deliveries to the European Union via the 745-mile-long Nord Stream 1 pipeline under the Baltic Sea. The pipeline was already operating at just 20% capacity after Russia slashed supply because the EU hit Moscow with sanctions over Ukraine. For now, this move has not impacted global gas prices.
European small biz owners impacted by Ukraine war and COVID, says head of industry group
What's the outlook for European small businesses these days?
Not as good as SME owners would like, according to Véronique Willems, secretary general of SMEUnited, an organization representing some 22.5 million European small businesses that employ almost 82.4 million people across 30 European countries.
In recent months, European SMEs have been hit by the double whammy of COVID spikes due to the omicron variant and now higher energy prices due to Russia's war in Ukraine, Willems explains during a livestream conversation on small businesses and pandemic recovery hosted by GZERO Media in partnership with Visa.
"I hear entrepreneurs who have tripled or more of their energy costs," she says.
"So the sentiment, let's say, is a big uncertainty at the moment." What about the EU's COVID stimulus program for SMEs? Willem points out that a lot of the funds have already been used for things like digitalization and green transition, which has been a big success, but complains that not all the money has gone to small firms.
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Italy’s dysfunctional politics
Italy's economy was already weak before the pandemic, but saw a nearly 9-point decline in GDP over the past year. While unemployment was dropping from a decade high reached in 2014, it was still around 10% in early 2020. And if you don't like Italy's political leaders…just wait a minute. They'll change. In fact, since 1989 the country has had 18 prime ministers. By comparison, Germany has had only three chancellors and France just five presidents. Can Italy's new Prime Minister pull the country out of its political tailspin? Ian Bremmer explains on GZERO World.
Watch the GZERO World episode: Italy in Europe's spotlight: insights from former PM Enrico Letta
Why Italy's third COVID lockdown is different
A year ago, a horrific series of photos of overflowing hospitals in Italy's Lombardy region made many Americans realize that this pandemic was going to have devastating results. And now, over 100,000 deaths later, Italy is entering its third lockdown. But this time is different, says former Prime Minister Enrico Letta, because now a lockdown doesn't mean a total economic shutdown. And there's hope on the horizon, as long as the country can get its act together on the vaccines front.
Letta's conversation with Ian Bremmer is part of a new episode of GZERO World, which began airing on US public television stations nationwide on Friday, March 26. Check local listings.
Watch the episode: Italy in Europe's spotlight: insights from former PM Enrico Letta
AstraZeneca vaccine politics may further damage Europe's economy
Ian Bremmer shares his perspective on the latest news in global politics on World In :60 - that is, :180.
First. What is going on with the AstraZeneca vaccine?
Well, around Europe, we have all of these countries that have suspended giving out AstraZeneca vaccines, because there have been some side effects of people that are taking it. Blood clots, a tiny number of folks, actually fewer side effects for AstraZeneca than we've seen for Pfizer, but it's become this big political show. After a few countries start shutting it down, others do because they can't be left by themselves. I just talked to a major senior official from one country saying, "Yeah, we were under pressure. We want to keep it going." World Health Organization said it's fine. AstraZeneca itself who has done the trials, say it's fine. And this is slowing down an already very slow vaccine rollout in Europe. They were doing a lot of things reasonably well in terms of dealing with the pandemic, but absolutely not this. They're a couple of months behind the United States right now in terms of getting to herd immunity. This is going to slow them down. It's going to hurt their economic growth this year. Okay.
Why are people protesting in Britain?
Well, big demonstrations opposed to the killing of a woman by serving member of the police force. Now there is proposed legislation that would limit demonstrations in the country. The demonstrations have been responded to with fairly aggressive policing, especially in the case of the UK, where police forces not carrying lethal force, the historic idea of the bobbies who are very well behaved and very little violence as a consequence in the UK. Knives are a big problem, but not gun violence. Well, it turns out that this is becoming a much more challenging, and as a consequence, the UK is trying to respond. There were certainly a lot of women that were protesting, were seen pushed down to the ground by police, serving on the same force as the fellow that had killed this woman. It's a challenge in the UK and Boris Johnson who had been doing well the last couple of weeks, has another thing that he's got to deal with.
Okay. And then finally, did you read Jared Kushner's op-ed on the middle East? What is the Biden administration's approach to the region compared to his predecessor?
Yeah, I thought it was a pretty good piece actually. First of all, basically came out and said that he thinks that what Biden is doing in China first and foremost, and in the Middle East, largely speaking, the right thing. They basically agree. Where they disagree is on the Iran deal. Kushner saying it was right of Biden to bring up the JCPOA and then back off, because the Iranians aren't serious. I think the Iranians are serious, but they're posturing because they can't be seen domestically before their own election in just accepting the old JCPOA deal. But I think that by the beginning of next year, that is what they will accept. Kushner doesn't think that's a good idea. He thinks that the US should not accept anything unless it's a broader, tougher deal that includes ballistic missile limitations, includes limiting of funding, for example, for proxies in the region and extremist groups. I think that may be possible over the medium to long-term, but in the near-term, I think both sides will end up accepting almost exactly the old JCPOA, maybe with an extended timeline around it. That means the Iranians will stop with their expanded nuclear capability development and they'll also have about a million more barrels a day of oil being produced, which means prices will go down.
Mario Draghi will become Italy's new PM; EU weighs Myanmar reaction
Carl Bildt, former Prime Minister and Foreign Minister of Sweden, with the view from Europe:
What's happening in Italy and can Mario Draghi fix it?
Mario Draghi will now take over political leadership of Italy as prime minister. That's a very major development. He has a lot of credibility in Europe, certainly, but also in Italy. And I think that he will now have a political momentum for at least a couple of months that I hope that he can use to press through some of these fundamental economic and other reforms that Italy and equally Europe so desperately needs. It's a very major development indeed.
Second question, how is the EU reacting to the coup in Myanmar?
It's still early. I mean, there is the condemnation of the coup. Needless to say, the concerns for the human rights situation. But what is happening is that there is discussion where the sanctions is the best way of going forward and consultation not only with the US naturally, but also, I think with regional partners to see which is the best way forward in this difficult situation.