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The Pardee Perspective: March 1st, 2018


Germany: Elections in September were inconclusive in their results, leaving the final makeup of the new government open to negotiation. Angela Merkel’s party, the Christian Democrats (CDU), have been in negotiations for months to form a coalition government that would ensure Merkel’s position as the Chancellor while avoiding the prospect of being a minority governing party or having to allow another election to take place. This week, it was announced that a deal had been reached. The coalition brings together the CDU and the Social Democrats (SPD), who have been granted higher spending on pensions and public services as well as control of the ministries of foreign affairs and finance. The SPD also strongly supports the idea of Germany becoming more active in the European Union. While a deal has been negotiated, the deal must not be approved by the SPD membership which is wary of allowing Merkel another four years in office. The result of the SPD’s vote will be announced on March 2nd.

Romania: On February 7th, the European Parliament debated proposed changes to Romanian judiciary law which had been deemed parts of the proposed laws unconstitutional and are now being redrafted. The proposed laws had raised concerns among Romanian citizens, as well as within international communities such as the European Commission, that they would weaken anti-corruption work, potentially put the judiciary under political control, and keep the ruling party shielded from prosecution. These concerns prompted Romanian citizens to take to the streets in protest in late November 2017. The debate within the European Parliament encouraged the Romanian legislature to work to ensure the laws protect the judiciary and fight corruption. Any failure to do so would potentially be a step back for the country, risking potential inclusion in the Schengen Zone and its position within the European Union.

Germany/France: The German and French finance ministers, along with central bank leaders for their respective countries, have called for joint action concerning bitcoin and other crypto-currencies. The letter points out that virtual currencies and their associated tokens, while representing new opportunities for the future, also present substantial risks as these digital tokens are vulnerable to financial crime, prone to speculation, and are not currently considered a currency by many financial institutions. Recently, Bitcoin, a prominent cryptocurrency, has experienced a long period of growth towards an all-time high of $19,783 in December 2017, followed by a recent fall to around $8,000 with some economists warning the value might drop further before stabilizing. The letter aims to include a discussion of cryptocurrencies on the agenda of the upcoming G20 meeting, focusing on the fact that the cryptocurrencies represent a transnational issue.


Taiwan: On February 6th, a 6.4-magnitude earthquake struck Taiwan just before midnight, destroying buildings in the northeast city of Hualien. According to the Hualien County disaster response center, at least 225 people were injured and seventeen were killed, including four tourists from mainland China. The international community conveyed condolences and offered humanitarian aid to Taiwan in response. Taiwan rejected China’s offer to assist rescue efforts, but accepted Japan’s offer due to heat-sensing technology its response teams do not possess.

Latin America

Brazil: On February 7th, Brazil’s supreme court ruled in favor of privatizing the country’s state-owned utility company, Eletrobras. President Michel Temer, who is running for reelection this year, has been advocating the move as a way to boost economic recovery after Brazil’s recent recession. Given that Eletrobras is the largest power company in Latin America, this decision will have noticeable effects. Proponents note the company’s recent jump in stock value, and say the move will add billions of reals to the economy. However, environmental advocates claim that privatization will lead to increased hydroelectric damming in the Amazon Basin, which will further harm the region’s ecology and the security of its indigenous communities.