Tag Archives: global economy

Romania – China strategic partnership: from an agenda of good intentions to concrete results ?

At the beginning of midsummer agenda of Romanian Prime Minister Victor Ponta included an Asian tour, during which he had several bilateral meetings among the most significant being the counterpart Chinese Li Keqiang, the head of government in Hong Kong Leung Chun-ying and even the new president of China, Xi Jinping.

And after returning to the motherland, a european country in official document but “balkan” in behavior and attitude within its essential institutional cell, media agenda divided between presidential &government team – with a multitude of accusations, without apology but with more emphasis and explanations that went down to the proletarian propaganda (a sign that to the government level, communication remained somewhere in the century past). Much, less ? With warrant or without warrant from the Cotroceni Palace ? With or without businessmen delegation ? With or without a detailed plan previously established by the diplomatic steps? The truth, as usual, seems to be somewhere in the middle. And the answers to these questions do not alter the existing reality.

We havea partnership.How will manage it?

From all these issues surface about which nobody will remember after five or ten years, we have one thing certain, and positive: the opening (or re-opening) a diplomatic landing, systematically neglected the last twenty years – Asia, with overlooking to the main global player in the Asia-Pacific and the second in the world economy (even if in serious crisis and creaking from its all joints): China. Romania, through its fleeting executive leader, has achieved a very important goal for Romania, which is the first in East-European area that won a meeting with Chinese President and Prime Minister, quickly after they took their office“, and now has an affirmative agenda with the economic giant that seems to make the rules of the geopolitical games of the XXI century. Is thissomethingto be condemned ?

Rather I think we should see how we can to materialize all these statements of good intent. How many of the investments of the Secretariat China Eastern Europe (program initiated by former Chinese Premier Wen Jiabao, in which Romania has become one of the countries that aimed at access resources from the $ 10 billion budget provided by the Chinese side) will focus on Romania and how many will also bear fruit? Do we have laws that provide a business climate if not attractive at least normal? How do we solve institutionalized corruption that makes to the most stoic investor to run out? But the frauds of fiscal field? How many of the current ministers are actually able to manage the country’s interest in such projects? There are some questions to which the Prime Minister should think a little more than to the superficial discord generated by oversized egos (his own and of the President, of course).

We have strengths. How will use them?

Moreover, we have a well thought and strategic plan, rooted in economic reality of the country concerning targeted partnerships? Or will usually accept any crumb that they offer, because we are unable to use our own strengths? Latter option seems unfortunately very likely.

And to convince me that I’m wrong, the Ponta cabinet ministers (headed even with him) should explain to the public what kind of approach strategy they have. The fact that we have projects and opportunities is important and nothing. We are not only ones who have. Right, we are now outside the euro zone turmoil. But to claim thatwe will open the gates of Europe for China” is a PM`s teenage arrogance“, as funny as that of jumping over the linein diplomatic meetings. And it’s not enough a partnership, even beautifully packaged and labeled “strategic.” Romania has also other strategic partnerships with leading global players. But concrete results of these partnerships are still awaited, for a long time.

China CNOOCIn the book “China’s Choice” Hugh White reiterates the main economic partnership XXI century relationship between the U.S. and China, suggesting the need for a new vision and approach and arguing with figures why is necessary to waive the existing status quo practiced by the United States and to avoid strategic rivalry could prove harmful to United States interests, and by extension to the entire world economy. Regarding Romania, there is no question of rivalry, but that of necessity. Not just ours (as was the case with U.S. partnership, which combined with the incompetence of our government gave a logical result – we are rather “with losses” than with significant gains! I remember about because it are clamed intensive the infrastructure projects led by Minister Sova).  And if we talk about investments in energy, I suppose that the Minister Nita`s experts fully understand that the growth pattern of China’s planned investments aimed strictly needs to compensate their shortcomings. Specifically, Chinese energy companies are obliged to seek profits overseas to compensate their lamentable businesses at home.

Recently, in an analysis, published by Quartz, expert Steve LeVine noted that “China is nowhere near self-sufficient in energy, so companies like PetroChina and Sinopec must import much of the country’s oil. They’re also highly vulnerable to fluctuations in world energy prices, unable to pass on increases to consumers because of government price caps, as such losses will be transferred elsewhere”. Meanwhile, energy companies from China also want to gain financially by the sale of oil and gas (that they produce abroad) on world markets, competing with giants like BP, Chevron or ExxonMobil. I think we should know where Romania stand in this amalgam of giant interests. And what are the practical and pragmatic criteria by which we choose our partners, apart from the traditional “bribecharged by various politicians?

When also a strategic partnership with Romania?

And there’s something else to think about: will have someday the wisdom to not bury every viable projects of predecessors just because they belong to the opposite camp? Because that’s exactly what all governments have done in the last two decades with a fervor  worthy of a better cause.

We will learn to be flexible and open-minded, more attached to the fund and not the form, if the fund aims to benefit others – more to the detriment of unique and personal interest? I watch to the Romanian political scene and if tomorrow someone should replace the Prime Minister Ponta, I’m unable to nominate someone who fulfills those criteria. Basic criteria.

I think before to fight on statements about who and how many strategic partnerships (which, I reiterate, it’s not a bad thing!) have signed with world heavyweights, Romania’s top politicians, with direct reference to the prime minister and president, would be good to think a strategic partnership with their country. Because, although it’s not a monument of intelligence in its entirety, Romanian people understand that the huge wealth of politicians, is not collected of wages paid by the Romanian taxpayer, but from the other “benefits” of their statute that would not had access without its vote. As such is entitled to priority as a strategic partner.

Published by Cadran Politic, July 2013. Romanian version here.

Outrageous Predictions 2013 from Saxo Bank

The Danish investment Saxo Bank has published its annual ten wild predictions for 2013. The purpose of the predictions is to provoke investors to think out of the box, and be prepared for major events that can shape the markets of 2013.

Saxo Bank report“This year’s outrageous  predictions are once again a selection of mainly negative events, any of which can change the financial landscape and in some cases even the political  status quo. It is always tempting when making predictions to call for radical changes to the market landscape, but having
produced this publication now for over 10 years, we hope the real value on offer to readers is to identify major events and risks that seem out of the box and “outrageous”, but are actually far more probable than appreciated and could have significant (mostly very negative) consequences on  investment returns in the New Year.
Our  biggest  concern  here  on  the  cusp  of  2013  is  the  current  odd  combination  of  extreme  complacency  about  the  risks  presented  by  extend-and-pretend  macro  policy  making  and  rapidly  accelerating social tensions that could threaten political and eventually financial market stability. Our recent calls for a forest fire-style crisis that would be short and scary, but also establish healthy conditions for moving forward, have been met with the historically correct response: Any real change has only come about as a
result of the exigencies of war” said Chief analyst of Saxo Bank, Steen Jakobsen. “Current major political tendencies are empty”, Jakobsen said, quoted by Russia Today. He adds that “Occupy Wall Street” movement was just the beginning of the process. More, the authors of the report predict, next year society will move toward radical movements as both the ultra-right and ultra-left find supporters appealing to feelings of desperate voters who have nothing to lose.  So, let take a look …

1. DAX plunges 33% to 5.000 (Peter Garnry)

  • Germany accepts debt mutualisation – Germany’s debt downgraded
  • Export volume continues to drop, and domestic demand too small
  • Recession by Q2-2013 – Merkel loses election in September

2. Nationalization of major Japanese electronic companies (Peter Garnry)

  • Japan outmatched by South Korea on foreign market and no domestic demand
  • Junk status for many Japanese companies is near and multi decade lows in growth leads to desperate measures
  • Japan launches Rising Sun Trouble Asset Relief Program (TARP)

3. WTI crude hits 50 (Ole S. Hansen)

  • US Crude Oil production rises strongly and with inventory at 30-year highs and limited export
  • options, the price falls
  • Global consumption of oil and the price of Brent Crude(benchmark) drops and supply side OPEC and Russia react too late (due to monetary reasons)
  • Shale gas takes even bigger role – and forces discussion on linkage of crude and NatGas

4. Gold corrects to USD 1200 per ounce (Ole S. Hansen)

  • Growth in the US surprises to the upside and interest rates spike
  • Physical demand from China and India falls as capital markets are opened
  • The Fed is caught in crossfire over its threshold mandates as the natural unemployment rate is recalculated to 7.5% from 6.5%

5. Soybeans rise by 50 percent (Ole S. Hansen)

  • Stock at nine year low – extreme vulnerability to weather
  • All years ending in 3 – (1983,1993, 2003, 2013?) have been big up years for Soybeans
  • China stockpiles beans for food security and to raise income for its farmers

6. USDJPY heads to 60.00 (John J. Hardy)

  • The big push for inflation and monetary printing fails as both parliament and BoJ resist
  • Deflation remains the main issue and it explains most of the move in JPY during the last 10 years
  • Japan’s economy goes into a tail-spin. Negative exports and demographics see Japan repatriating some of the USD 7 trillion they have sent overseas during the last three decades

7. Spain takes one step closer to default – rate 10%+ (John J. Hardy)

  • Social tension takes over political agenda – Catalonia/Basque votes for independence
  • Spain gets downgraded to junk. No institutional investors can hold Spanish Government bonds
  • Spain caught in domino effect from Grexit

8. EURCHF breaks the peg – touches 0.9500 (John J. Hardy)

  • EU Crisis re-emerges – perhaps around Italian election? This forces Greek exit and contagion fears of domino effect on Spain and Portugal
  • SNB fails to balance growth and deflation and reserves move toward 100% of GDP, forcing a move to abandon peg before it becomes too costly
  • End result is capital controls which stop the CHF from flying even higher

9. 30-year US yield doubles in 2013 (Steen Jakobsen)

  • 30-year expected return 0.4 percent before fees! Leads to exodus from bonds to equity
  • US downgraded on weak reform element in fiscal cliff compromise
  • FED’s new threshold makes monetary policy mechanical – market sees inflation sooner

10. HKD unpegs from USD (Steen Jakobsen)

  • China deepens its political commitment to turn away from its managed peg to the US Dollar
  • China initiates talks on major Asian trading zone leading to new currency ASEAN
  • US Dollar rises forcing China to weaken its link and currency

Read the whole report about the outrageous predictions here:

Saxo Bank outrageous predictions 2013

Source: Saxo Bank

SPIEF 2011, St. Petersburg International Economic Forum, Russia

Under the special patronage of the President of the Russian Federation, the annual edition of St. Petersburg International Economic Forum (June 16 – 18) brings together over 5000 political and business leaders from around the world, joined by leading voices from academia, civil society and the media to discuss and deliberate the key issues facing Russia and the world.

This year’s meeting will convene under the theme “Emerging Leadership for a New Era”. The SPIEF 2011 sessions will be structured around three major subthemes: Securing Global Growth, Building Russia’s Creative Capital, Expanding Technology Horizons.

Originally suggested by the Western press, and then picked up the Russian media, the «Russian Davos» – attribute associated to the Economic Forum in St. Petersburg has become longer than a term of comparison. It became an important issue of the Kremlin steps on the new Russia’s economic position in the world. According the Russian President, Dmitry Medvedev’s message: Over the years, it has grown into a leading world discussion forum bringing together prominent politicians, corporate executives and experts to deliberate on key issues of the global economy. This year, SPIEF agenda includes relevant topics, such as securing balanced growth, prospects for technology progress and bringing up a new generation of leaders. Focus is also made on the modernization of Russian economy and improving the investment climate in our country. In this year at SPIEF works are presented, according to organizers, more than five thousand guests, including Staff members of important corporations and banks from Europe, USA and Asia. And if the leaders of key countries of the European Union, faced with the inevitable failure of Greece and with serious problems regard to the Eurozone stability, will not be present at St. Petersburg, however, the SPIEF guests will include also: Hu JinTao, President of the People’s Republic of China, Jose Luis Rodriguez Zapatero, Prime Minister of Spain, Tarja Halonen, President of Finland, Nursultan Nazarbayev, President of the Republic of Kazakhstan.

Also the young generation of business people have been getting together in St. Petersburg to swap ideas at the International Youth Economic Forum (15 – 17 June 2011). YIEF will preface this year’s edition of the “Russian Davos“ – International Economic Forum in St. Petersburg. Overall, this year’s Forum is welcoming 100 participants: 50 young leaders from Russia and 50 international leaders. For more details see the YIEF 2011 Program. As always, St. Petersburg Administration has drawn up an extensive cultural programme. The Palace Square will, as usual, host a free concert given by international stars. This year, Sting will entertain the northern capital’s visitors and residents. St. Petersburg theatres and museums will offer interesting concerts, performances and exhibitions.

Update: 16 June – First day of SPIEF 2011

Although the opening ceremony and plenary session, which will be present Russian President Dmitry Medvedev, were scheduled for the second day of the Forum, the debates on the first day of work weren’t less important.

Thus, the participants could hear an extensive analysis of the gas and oil market presented by Nobuo Tanaka, Executive Director of International Energy Agency. They were concerned how and why movements in oil and gas markets have a major impact on global economy in crisis, to what extent fuel prices due to dollar weakness. “For both oil and gas markets, 2010 was characterised by the sharp recovery of the global economy after the recession in 2009 but the two markets have gone their separate ways in recent months” said Mr Tanaka. There weren’t missed the forecasts about price fluctuations under rebel movements in the Middle East. “Oil markets have seen a surge in demand growth in emerging markets, outstripping growth in supply, pushing prices higher even before the conflict in Libya tightens supplies further”. Also, he said that: “In both oil and gas we see a notable dichotomy between non-OECD and OECD markets with demand driven by China, India and the Middle-East”.

Also, the first day of SPIEF laid ”under microscope“ Russia’s economic relations with key partners – the European Union, USA, CIS, and the vision of partnering with India’s rapidly growing economy. Even if “From the Russian business has developed a strong belief that we are absolutely ready to increase the intensity of our economic cooperation with US”, according Viktor Vekselberg,  President of “Skolkovo” Foundation, it seems that not the same passion characterizes the U.S. investors. “I would also like to say that the “reset” has allowed us to go forward to a much more durable and stable trade relations, trade and economic relations, which, as we all know, should form the basis of a strong relationship” said John Byerly, U.S. Ambassador to the Russian Federation in the round table discussion on the topic RUSSIA – US BUSINESS DIALOGUE MAIN ISSUES IN THE US-RUSSIA STRATEGIC ECONOMIC PARTNERSHIP. Regarding relations with the European Union and building a common economic space, it is worth noting that any assessment adopted should take into account a certain unpredictability that characterizes the economies of both sides. A Europe concerned to ensure their stability and inability to speak with one voice proves to be a little constructive partner, so that on short and medium term Russia will likely prefer the same way verifiable bilateral partnerships.

Throughout the day many agreements were signed. Of meetings with the press have noted two: “Young Leaders of Global Economy”  Press-Briefing,  dedicated to Young International Economic forum results,  Ideas,  united  young  people  today,  practical  recommendations  for  key  innovative projects development and young  leaders’ views on global economy  situation were discussed by the participants of the Press-Briefing:  Arkady Dvorkovich – Organizing Committee member, Aide to the President of the Russian Federation, Yuri Kotler – YIEF 2011 Organizing Committee Chair, Dmitry Zelenin – Tver Region Governor, David Iakobachvili  – Wimm-Bill-Dann, Founder. And Press Briefing on Rebranding of PRIME Agency of Economic Information, its top personnel changes and development prospects, about which spoke: Svetlana Mironiuk – Managing Editor of RIA NEWS and Oleg Ananyev –  PRIME Director.

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