Sunday, May 29, 2005

Some Economic Commentary

Haven't posted about the economic situation for a while, so here's an excerpt from the late May edition of a newsletter I subscribe to called The Privateer:
The EU And Russia:
Russia and the European Union announced a breakthrough agreement on political and economic relations on May 10, aimed at defusing years of tension that accompanied the bloc's expansion to Russian frontiers. A statement from the Russian Foreign Ministry said that the two sides had reached agreement on recasting their trade and political ties in a treaty covering four areas, ranging from their economies to their external security. They also agreed to hold consultations on easing all visa regulations and eventually allowing visa-free travel between the two blocs. With this historic agreement, the European Union and Russia are well on the road to having free personal travel, once the visa problem is solved, from Gibraltar to Vladivostok. The Russian/China treaties from last year permanently fixed the vexatious border problems between those two nations. The EU has made its own trade and political agreements with China. The sum of all this is that a simply colossal, more or less free trade region is being born. The US was neither seen nor heard from in any or all these EU/China, Russia/China, or EU/Russia agreements.

Adios - Gringo!:
The Heads of State and ministers from 33 South American and Arab League states gathered in Brasilia, the Brazilian capital, on May 10 for the first ever Arab South American summit. The US officially requested observer status at the summit. The Brazilians politely declined, saying: "It's a public meeting, you can watch it on TV." [Ouch! - Whippy] The South American leaders who attended the summit were from Argentina, Brazil, Bolivia, Chile, Colombia, French Guiana, Paraguay, Peru, Uruguay and Venezuela. The many Arab leaders who attended were from Algeria, Saudi Arabia, the United Arab Emirates, Bahrain, Comoros, Djibouti, Egypt, Yemen, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Mauritania, Oman, the Palestinian territories, Qatar, Syria, Sudan, Somalia and Tunisia. There has been barely a word about this massive summit in the US media, apart from wire service reports on the fact that it took place.

The "Declaration of Brasilia" calls for close political and economic ties between South America and the Arab world. It demands that Israel disband its settlements in the West Bank, including "those in East Jerusalem", and retreat to its pre-1967 war borders. It criticizes US "unilateral economic sanctions against Syria" as violating principles of international law. It condemns terrorism. Israel is also implicitly criticized for holding an undeclared nuclear arsenal. Apart from the condemnation of terrorism, the other political items cut straight across all of President Bush's Middle East projects and policies.

The global sum of all these recent diplomatic and political moves is that the rest of the world is forming their own linkages around the USA, without even seeing it as being necessary to inform the USA at all.

From Politics - To Diplomacy - To Economics:
What is being observed here is a well known sequence in world history which has happened many times in the past. A nation stands forward and openly declares itself to be an "empire", or in today's language, a "superpower". After a while, and with all other nations watching with care, a flurry of international politics takes place. The other nations bury past animosities, followed by the travels of the diplomats as they anchor what has now been politically agreed in new binding agreements and treaties. [..]

Message From South Korea:
The Governor of the Bank of Korea stated on May 18 that South Korea's Central Bank will not intervene any further in foreign exchange markets. "I believe that we now have sufficient reserves to secure our sovereign credibility, so I do not anticipate increasing the amount of foreign reserves further", Mr Park Seung has told the Financial Times. What this means, if action follows words, is that South Korea will buy no more US Treasuries. South Korea's foreign currency reserves now stands at $US 206 Billion, the fourth largest in the world.

©2005 - The Privateer
(reproduced with permission)
Well, it seems the rest of the World is tired of giving the USA a free ride. More than that, they're tired of the US dictating the terms of global trade and so have been making discreet (or not-so-discreet) movements to establish new trade blocs and agreements, bypassing the need for US currency as the middleman. The next few months will prove interesting to watch.


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