ESADEgeo Daily Digest, 10/06/2019

Al-Monitor – Ahmad Abu Amer / Is Russia replacing the US in the peace process?

  • Russian efforts to promote ties with the Palestinian Authority (PA) continue, as it seeks to fill the void caused by the rupture of PA-US ties. Russia is now examining a draft convention that would exempt holders of Palestinian diplomatic passports from having to obtain a visa to enter Russia.
  • Most notably, Russia has expressed its willingness to host an Israeli-Palestinian meeting, in an attempt to have the two sides resume peace talks. Moreover, Russia has sought to end the intra-Palestinian split, as it has hosted Palestinian official and factional delegations. So far, these efforts have failed.
  • Palestinian President Mahmoud Abbas is expected to visit Moscow following the Eid al-Fitr holiday. He will discuss with Russian President Vladimir Putin and other Russian officials the political developments relating to the Palestinian cause as well as joint political moves to follow the US presentation of its peace plan.

Financial Times – Martin Sandbu / Italy can no longer afford to play games with Brussels

  • On Wednesday, Brussels issued a formal warning that sets Italy on the path towards the so-called excessive deficit procedure (EDP). In extremis, this could lead to fines or suspended transfers from the EU budget. Although this scenario was avoided last September, now there is less room for compromise.
  • Politically, it seems impossible for Rome to satisfy the European Commission without giving up on its most vocal policy promises, such as cancelling a scheduled value added tax increase, let alone big tax cuts.
  • Investors have come to read Italian defiance of the rules as a signal of lack of fiscal responsibility, reinforced by the outside possibility that some close to or even in power actually want to leave the euro.
  • Last year, any stimulus effect of fiscal loosening was probably offset by the higher cost of borrowing bonds that markets demanded, according to Olivier Blanchard and Jeromin Zettelmeyer of the Peterson Institute for International Economics.

Project Syndicate – Daren Acemoglu / Why Universal Basic Income is a bad idea

  • Universal Basic Income (UBI) is a flawed idea, not least because it would be prohibitively expensive unless accompanied by deep cuts to the rest of the safety net. A more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.”
  • Rather than giving everyone $1,000 per month (which in the US would cost around $4 trillion per year – close to the entire 2018 federal budget), a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000.
  • Instead of building a system where a large fraction of the population receives handouts, we should be adopting measures to encourage the creation of “middle-class” jobs with good pay, while strengthening our ailing social safety net. UBI does none of this.
  • Many current social problems are rooted in our neglect of the democratic process. The solution isn’t to dribble out enough crumbs to keep people at home, distracted, and otherwise pacified. Rather, we need to rejuvenate democratic politics, boost civic involvement, and seek collective solutions.

Vox – Riley Beggin & Eric Kleefeld / The US-Mexico agreement to avoid tariffs is actually months old

  • Officials from the US and Mexico told the New York Times that the concessions made by Mexico (which President Trump used to justify the reversal of his planned tariffs) were not actually new, and had actually been agreed to by the neighbors in March.
  • In talks that took place in Miami weeks ago, Mexico agreed to send members of its newly formed National Guard to its border with Guatemala to help reduce the flow of migrants from South America. That part of the Miami deal was framed as a new development.
  • The only new development that came out of last week’s bilateral talks was that Mexico agreed to send more troops than it had originally pledged, and will now station 6,000 members of the National Guard around the country, with the majority being stationed at the Mexico-Guatemala border.
  • When he announced the tariffs in late May, Trump said they would encourage companies who have left the US for Mexico to return. But economists told Vox the tariffs would have actually sent those companies packing to another country instead of to the US, and that they could have sped up manufacturers’ pivot to automation.

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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