ESADEgeo Daily Digest, 11/10/2018

Money, China, Rmb, Yuan, Asia, Bank Note, Chinese

South China Morning Post – Xie Yu / IMF chief Lagarde dismisses idea Beijing is manipulating the yuan as Washington turns up the heat

  • International Monetary Fund chief Christine Lagarde has dismissed the idea that China is manipulating its currency to gain a competitive advantage, as the Trump administration is accusing Beijing of doing.
  • “If you compare the position of the renminbi relative to the US dollar, it has a lot to do with the strength of the dollar,” the IMF’s managing director said. “If you compare [other currencies] to the renminbi, there is a bit of depreciation, but certainly not that much.”
  • The debate over the cause of the yuan’s weakness comes a few days before the US Treasury is due to release its semi-annual exchange rate report. There is growing speculation that it could formally name China as a currency manipulator for the first time.
  • The Treasury’s currency report will be released just a few weeks after the US currency manipulation guidelines were included in the new United States-Mexico-Canada Agreement. Even though exchange rates are not an issue between the three countries, the move was interpreted as the first step in a US effort to include such language in all new trade deals.

The New York Times – Carlotta Gall / Syrian rebels withdraw heavy weapons to spare Idlib from assault

  • Syrian rebel fighters have pulled heavy weapons from front-line positions in Idlib Province, meeting the deadline for a truce negotiated by Russia and Turkey. However, the Syrian Observatory for Human Rights reported that some of the rebels were hiding these heavy weapons rather than withdrawing them fully.
  • Syrian President Bashar al-Assad appears to have accepted the agreement, although in comments Monday he said it was only a “temporary measure.” Idlib and other territory under rebel control will eventually fall again under government authority, he insisted.
  • Turkish officials feared a humanitarian disaster in Idlib and warned that they would not be able to stop millions of Syrians trying to escape the carnage from flooding into Turkey. That raised concerns across Europe about a new wave of refugees, similar to that of 2015.
  • The civilian population in Idlib has been surviving on humanitarian aid, but that is dwindling, not least because the US recently cut its assistance to the rebel areas of Syria. In the absence of American support, Syrians in Idlib, rebels and civilians alike, are placing their trust in Turkey.

Foreign Policy – Colin P. Clarke / ISIS’s new plans to get rich and wreak havoc

  • Although the Islamic State has lost nearly 98 percent of the territory it once controlled, the group is ripe for a comeback in Sunni-majority areas of Iraq and Syria. The main reason is its existing war chest, coupled with its skill at developing new streams of revenue.
  • Without access to territory, and thus a significantly reduced revenue stream from taxation, extortion, and the sale of oil, the Islamic State’s funding has already decreased precipitously. The group, however, no longer relies on territory for its economic survival, and the group’s expenses are now minimal.
  • The Islamic State’s surviving leadership may have smuggled as much as $400 million out of Iraq and Syria. The group’s extended network will seek to launder this money through front companies in the region, especially in Turkey.
  • After having collected critical information about the population for years, the group has acquired leverage in intimidating and extorting civilians. In addition, reconstruction aid to war-torn parts of Iraq and Syria, while well intentioned, could provide an attractive target for the Islamic State and potentially help fund its comeback.

The Guardian – Larry Elliott / Climate change will make the next global crash the worst

  • On the day when the IMF issued a warning about trouble ahead for the global economy, the latest report from the UN’s intergovernmental panel on climate change said the world had only a dozen years left to take the steps necessary to prevent a global warming catastrophe. The message is clear: get ready for a time when economic failure combines with ecological breakdown to create the perfect storm.
  • Every big recession in the global economy has been prefigured by a jump in the cost of crude. Traditionally, stock markets anticipate trouble, but the mood currently is to dismiss higher interest rates, rising oil prices, Italy and trade wars as somehow unimportant.
  • The threat posed by global warming means the current crisis of capitalism is more acute than that of the 1930s. In their pursuit of growth at all costs, countries may self-immolate, as the US and Australia seem prepared to do.
  • One of the winners of this year’s Nobel prize for economics – William Nordhaus – says a speedy transition to renewables can be achieved, if policymakers get serious about a carbon tax set high enough to price oil, coal and gas out of the market. Here, though, the breakdown in international cooperation and trust becomes really damaging.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces. 

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