Insight: As Ukraine looks west to Europe, Russia’s shadow looms
But it is the expression of a deeper problem of failed checks and balances that will impact American ties with Europe, says Josef Braml, a transatlantic expert at the German Council on Foreign Relations in Berlin. If the superpower has no room to maneuver, it will have to shift burdens to foes and friends, he says, which will then create a wedge. “We already see it in security policy, Dr. Braml says, especially the waning US commitment to NATO and its focus on Asia. Europe and especially Germans have to think of how they take care of their own security . It’s not that Europe is a stranger to political crisis. Governments from Greece to Italy to Portugal have fallen since the start of the continent’s sovereign debt crisis. And as Europe has been clawing out of its recession, the US has pointed fingers at Brussels and Germany, which powers Europe, for focusing too much on austerity and not enough on growth. As a presidential candidate, Mitt Romney singled out Spain in presidential debates, saying he didn’t want to go down the path to Spain. But now Europe is on the other side, looking at the US as a political system it would not want to emulate. The French daily Le Monde on Tuesday ran the headline : Jefferson, Wake Up. They Have Become Fools! “It is incomprehension, says Arun Kapil, a political science professor at the Catholic University of Paris. And while he says the shutdown is an internal American affair, the tenor of Le Monde sums up the dominant mood. Italian parallels And yet, in some corners of Europe, there might be more understanding.
Greek bonds: Europe’s hidden gem?
By Mark Thompson @MarkThompsonCNN October 3, 2013: 8:27 AM ET Greek Prime Minister Antonis Samaras has stuck to the task of painful economic reforms. LONDON (CNNMoney) Investors are scouring Europe for ways to make money from its tentative recovery, and one U.S. firm thinks it has found the answer — buy Greek government bonds. Japonica Partners said it believed Greek debt was “massively undervalued” and should be rated several notches above the junk status assigned by the big credit rating agencies. Greece has been shut out of international bond markets since 2010, when its government borrowing spiraled out of control. It has been rescued twice by the European Union and International Monetary Fund and was forced to restructure its debt in March 2012, imposing losses of more than 100 billion euros on private bondholders. Related: Europe’s recovery is weak, warns ECB But hedge funds — such as Dan Loeb’s Third Point — and other niche investors who bought into Greek debt since the restructuring have made a killing. Yields on Greek 10-year debt in the secondary market have plunged from around 44% in March 2012 to 9%. Japonica’s statement was greeted with derision by some investors Thursday, but the firm that made its name restructuring bankrupt Allegheny International in the early 1990s believes it has spotted an opportunity others may have missed. It claims to have become one of the larger, if not the largest, holder of Greek government bonds, and has hired a former senior executive from Norway’s oil fund — one of the world’s biggest investors — to help manage Online Casino the portfolio. Related: Investors embrace European stocks “Greece is one of history’s most extraordinary sovereign rejuvenations hidden in plain sight by pervasive systemic misperceptions,” Japonica said, adding it expected yields should break below 5% in 2014.
Stocks Decline European stocks sank today as the U.S. faced the first government shutdown in 17 years and Italian Prime Minister Enrico Letta fought to save his administration. The Stoxx Europe 600 Index fell 0.8 percent to 309.76 at 4:11 p.m. in Frankfurt . The euro was little changed at $1.3530. Italys Letta said hell request a confidence vote for Oct. 2 to try to save his five-month-old administration after Silvio Berlusconi withdrew his support from the ruling coalition and pulled his ministers from cabinet. The Organisation for Economic Cooperation and Development sees Italian unemployment at 12.5 percent next year. Data released at 10 a.m. in Rome tomorrow will show whether joblessness still is near a May all-time high of 12.2 percent. It stood at 12 percent in July.
But Europe cannot afford to compromise on justice and human rights solely to pull one country closer into its orbit, no matter how strategically important it may be. Ukraine has to carry out a range of judicial, electoral and business reforms to secure the association agreement, as well as finding a solution to the case of Yulia Tymoshenko, the former prime minister now imprisoned for abuse of power following a 2011 trial the EU said was based on selective justice. EU officials are satisfied with the progress made on reforms, and expect all of the ‘benchmarks’ to have been met by the Vilnius summit on November 28-29. But Tymoshenko is a much more intractable problem with no clear solution. Germany has said it wants the former prime minister, who is receiving treatment for back problems while under guard in hospital, released or at least allowed to travel abroad for treatment before it can back the association agreement. That position is broadly supported by Britain, France, the Netherlands and the Nordic countries, while several east European member states are more flexible on what the terms of any deal on Tymoshenko should be. For Ukrainian President Viktor Yanukovich it is a deeply emotive issue. There is an ingrained animosity between him and his former political rival and a fear, analysts say, of retaliation by her against him if she is set free. What’s more, Ukraine says it is not possible to release Tymoshenko unconditionally as it would violate the law, an argument officials in Brussels acknowledge has some truth. The hope was an agreement could be reached by October 21, when EU foreign ministers hold a regular monthly meeting. But EU officials are not convinced the date will hold. They are also not sure a deal can be clinched by the meeting after that on November 18 – just 10 days before the eastern partnership summit. “If you ask me, I think this will go right down to the wire, or at least very close to it,” said a senior EU official directly involved in the negotiations. Asked if Tymoshenko might still be in custody in Ukraine on November 29, when Kiev should be signing the association agreement, two EU officials involved in trying to resolve the dispute acknowledged that might be the case.