Trump was questioned about the historic summit as he left Singapore and interviewer Bret Baier put it to the President that Kim was ‘a killer’ who was ‘executing people’.
However, Trump dismissed the concerns, praising Kim as a ‘tough guy’.
He said: ‘Hey, when you take over a country, tough country, with tough people, and you take it over from your father, I don’t care who you are, what you are, how much of an advantage you have – if you can do that at 27 years old, that’s one in 10,000 could do that…
‘So he’s a very smart guy, he’s a great negotiator and I think we understand each other.’
After the historic summit in Singapore between the leaders of the United States and the Democratic People’s Republic of Korea, President Donald Trump made concessions to Kim Jong-un in return for denuclearization of the Korean Peninsula.
Many worry Trump conceded too much for too little. But the biggest concession wasn’t offering to halt military exercises. It was in legitimizing Kim’s abysmal human-rights abuses on his own citizens.
“This regime has the worst human-rights record on Earth. This man runs concentration camps, deliberately starves people for control and assassinates members of his own family.” North Korean defector and author Park Yeon-mi reminded Trump in a video op-ed in The New York Times Monday.
Kim “is using this moment to sanitize his global image and prove how supreme he is at home,” Park warned. “As the leader of the free world, you must hold the world’s worst dictator accountable.”
In an interview of Trump on Tuesday by Voice of America, it became clear that human rights weren’t a big topic during the summit, and that he had played right into that trap.
While Trump did say human rights came up during the summit, despite talking “denuclearization 90% of the time,” his comments to VOA’s Greta Van Susteren were more approving than condemning.
“Really, [Kim’s] got a great personality. He’s a funny guy, he’s very smart, he’s a great negotiator,” Trump said.
And that was just the start. For five minutes, Trump showered Kim in praises. He repeated four times that Kim loves his people and his country.
In an interview with Fox News’ Bret Baier, Trump doubled down on his praise of Kim. When Baier mentioned Kim’s human-rights abuses, Trump brushed them off. He said that Kim had to be “tough” and “smart” to take over a country at 27 years old.
“But I think we understand each other,” Trump said.
“Well, he still has done some really bad things,” Baier pressed him.
“Yeah, but so have a lot of other people.”
Murdering his own uncle and brother to consolidate power? Detaining dissidents in brutal political prisons? Starving his own citizens?
“Loves his people,” Trump told Van Susteren. “Loves his country. He wants a lot of good things and that’s why he’s doing this [summit].”
It’s hard to see what good will come from such a drastic change in tone, though any attempts at de-escalation can be seen as an improvement when compared with the threat of nuclear war just a few short months ago, but the initial escalation can also be considered Trump’s own doing.
North Korea has a history of tit-for-tat military escalation, including during former South Korean president Park Geun-hye’s administration.
Kim Jong-un was drawn to negotiations by Moon Jae-in’s campaign promises to engage in dialogue with North Korea after the hardline conservative president Park was impeached in December of 2016.
I was in Seoul during the presidential election last year and recall an air of surprise at Kim’s willingness to negotiate with the liberal Democratic Party of Korea, which then set into motion Kim’s New Year address, in which he labeled former president Park’s party as a “conservative regime” and “fascist” and struck a cooperative chord with the South’s new government.
The Korean Peninsula’s subsequent cooperation led to unified teams in the 2018 Winter Olympics and the Panmunjom peace summit between Kim and Moon.
Meanwhile, the Trump administration was sending mixed signals, especially in the appointment of John Bolton as national security adviser. Bolton has long been an advocate of regime change in Pyongyang, called for the “Libya model” for North Korea’s nuclear disarmament, and was a part of the George W Bush administration’s decision to walk away from Bill Clinton’s Joint Framework Agreement of 1994.
That agreement had halted North Korea’s nuclear program for eight years until Bush famously called North Korea the “axis of evil” during his 2002 State of the Union address. Relations quickly plummeted.
So it’s clear that hawkish tactics and name-calling don’t work. But praising Kim Jong-un isn’t the right course of action, either. It trivializes millions of North Koreans’ suffering under Kim’s rule and feeds Pyongyang’s propaganda machine.
To end the VOA segment, Van Susteren asked,“What do you want to say directly to the citizens of North Korea?”
Trump replied: “Well, I think you have someone who has great feelings for them and he wants to do right by them.”
Showing the impact of the European Convention on Human Rights: Council of Europe launches new information resource.
Strasbourg, 14.06.2018 – The Council of Europe has launched a new interactive website highlighting the positive impact of the European Convention on Human Rights across the continent.
The site illustrates how judgments from the European Court of Human Rights, and their implementation by national authorities, have affected people’s lives in many different ways across all 47 Council of Europe member states.
“The European Convention on Human Rights protects the basic rights of some 830 million people across the whole of Europe,” said Council of Europe Secretary General Thorbjørn Jagland.
“Focussing on a small proportion of the cases decided by the Strasbourg court, this new website clearly demonstrates what the convention system has achieved so far and the positive impact it continues to have on many people’s lives. I encourage all those who support human rights, democracy and the rule of law to make good use of it.”
The interactive website uses textual summaries, infographics and audiovisual materials to show how judgments from the European Court of Human Rights have helped to change policies and practices in Council of Europe member states and to improve the situation of individual applicants.
101 different case studies are presented by country and by topic, with separate sections explaining how the system works and the state of implementation of other key Council of Europe conventions.
The site is currently available in English, French and Turkish. A Russian-language version will be launched shortly.
The site will be updated and further developed on an on-going basis, depending on the funds available. The initial development and launch of the site cost €92,000, funded through voluntary contributions from the governments of Finland, Ireland and Norway.
As Japan’s population ages and the birth rate is too low to sustain growth, the country is no stranger to coping with a limited number of working age people.
As shown in our Chart of the Week, which we also feature in the latest issue of Finance and Development, Japan is still a leader in robot production and industrial use. The country exported some $1.6 billion worth of industrial robots in 2016—more than the next five biggest exporters (Germany, France, Italy, United States, South Korea) combined. Japan is also one of the most robot-integrated economies in the world in terms of “robot density”—measured as the number of robots relative to humans in manufacturing and industry. Japan led the world in this measure until 2009, when Korea’s use of industrial robots surged and Japan’s industrial production increasingly moved abroad.
Automation and robotics, either to replace or enhance people in the workforce, are familiar concepts in Japanese society. Japanese companies have traditionally been at the forefront in robotic technology. Firms such as FANUC, Kawasaki Heavy Industries, Sony, and the Yaskawa Electric Corporation led the way in robotic development during Japan’s economic rise. Automation and the integration of robotic technology into industrial production have also been an integral part of Japan’s postwar economic success. Kawasaki Robotics started commercial production of industrial robots over 40 years ago. About 700,000 industrial robots were used worldwide in 1995, 500,000 of them in Japan.
Japan is also one of the most robot-integrated economies in the world.
For policymakers, the first hurdle is to accept that change is coming. The steam engine was likely just as disconcerting, but it came nonetheless—putting an end to some jobs but generating many new ones as well. Artificial intelligence, robotics, and automation have the potential to make just as big a change, and the second hurdle may be to find ways to help the public prepare for and leverage this transformation to make lives better and incomes higher. Strong and effective social safety nets will be crucial, since disruption of some traditional labor and social contracts seems inevitable. But education and skills development will also be necessary to enable more people to take advantage of jobs in a high-tech world. And in Japan’s case, this also means a stronger effort to bring greater equality into the labor force—between men and women, between regular and nonregular employees, and even across regions—so that the benefits and risks of automation can be more equally shared.
An International Monetary Fund (IMF) team led by Ana Lucía Coronel visited South Africa in May 28-June 11, 2018 to conduct its regular Article IV surveillance activities. Discussions focused on measures and reforms to reignite growth and reduce poverty and inequality ~ Crimson Tazvinzwa
A challenging outlook
South Africa’s potential is significant, yet growth over the past five years has not benefitted from the global recovery. The economy is globally positioned, sophisticated, and diversified, and several sectors—agribusiness, mining, manufacturing, and services—have capacity for expansion. Combined with strong institutions and a young workforce, opportunities are vast. However, several constraints have held growth back. Policy uncertainty and a regulatory environment not conducive to private investment have resulted in GDP growth rates that have not kept up with those of population growth, reducing income per capita, and hurting disproportionately the poor.
This year, growth is projected to be somewhat higher —at 1.5 percent—but still insufficient to make a meaningful dent in unemployment, poverty, and inequality. South Africa is one of the most unequal economies in the world. More than half of the population lives in poverty and 27 percent of the labor force is unemployed. Absent reform implementation, growth is unlikely to exceed 2 percent over the medium term.
Authorities’ recent reform efforts
The authorities’ stated priorities of strengthening governance and promoting employment present an opportunity to accelerate the growth momentum. Measures adopted to tackle corruption, such as changes in boards and/or management of major state-owned enterprises (SOEs), an inquiry into tax administration, actions to strengthen procurement, the signing of contracts with independent power producers, and in general, the intention to eliminate wasteful expenditure are welcome. However, to durably improve growth and lift people out of poverty, these actions need to be followed by strict enforcement of good regulations, such as the Public Financial Management Act, and the implementation of a broad set of reforms.
Structural reforms to create jobs and improve welfare for all South Africans
Materially turning the economy around toward strong and inclusive growth will require swift implementation of a bold reform agenda. Reforms in product and labor markets must span all sectors of the economy, and implementation carried out expeditiously.
Reforms with a potential for quick payoffs should be implemented right away. These include maximizing the benefits of social grants for the poor by reducing intermediation costs; clarifying mining regulation to foster private investment in the sector; and allocating broadband spectrum to the private sector to increase competition, improve the quality of service, and reduce user charges. Other possible quick wins include mitigating skill shortages by addressing onerous visa requirements for hiring skilled workers.
While more wide-reaching reforms may take longer to implement, these should also be promptly initiated. Increasing private-sector participation would support cost-effective energy distribution and transportation. Improving efficiency of SOEs would lower the costs to businesses and consumers, and reduce fiscal risks. Reducing red tape would lower entry barriers for businesses and strengthen competition. Enhancing flexibility in the labor market, improving basic education, and aligning training with business needs would help increase employment over time, particularly that of the youth.
The introduction of the national minimum wage has the potential to benefit workers, but its impact should be carefully monitored, and complementary measures envisaged if undue effects on youth employment and small- and medium-sized enterprises ensue.
Clearly articulating policy and regulatory decisions related to land reform in a fair, transparent, and market-friendly manner would help remove uncertainty, which is currently weighing on investor sentiment.
Role of fiscal, monetary, and financial sector policies to complement reforms
Fiscal policy to rebuild policy buffers
Public debt has risen, depleting buffers, and leaving little room for fiscal policy to support growth. On the back of high expenditure levels, public debt as a share of GDP has doubled during the last decade, reaching 53 percent of GDP in 2017, and pushing up public-sector gross financing needs. In the past fiscal year, the fiscal deficit was more than 1 percentage point of GDP above the budget target, as revenues underperformed, affected by low growth, and expenditures were pushed up by bailout costs from loss-making SOEs.
Fiscal consolidation is needed to strengthen public finances. The moderate fiscal consolidation envisaged in the 2018 budget is a step in the right direction. However, using IMF staff’s more conservative growth projections, debt would continue to rise in the medium term. To ensure that debt remains contained at comfortable levels and policy buffers are replenished, staff recommends taking additional measures—yielding ¾–1 percent of GDP—over the next three years. This proposal reasonably balances the trade-off between adjustment and growth. Subjecting macroeconomic assumptions to independent scrutiny to set realistic expenditure ceilings, or alternatively adding a debt ceiling to the fiscal framework could also help achieve the debt objective.
Measures to contain spending and enhance tax collection are needed. A large public-sector wage bill relative to the size of the economy and to that in many peer emerging markets (EMs), is at the center of the fiscal expansion. Therefore, rationalizing the public-sector wage bill becomes a priority. Other adjustment measures, which will also enhance the ability of fiscal policy to address inequality, include boosting the efficiency of spending, such as education subsidies and transfers to public entities, and eliminating irregular and wasteful expenditure. Forcefully strengthening tax administration will complement these efforts.
Monetary policy to anchor inflation expectations at a lower level
Should fiscal consolidation stabilize debt, the monetary policy stance appears appropriate. However, monetary policy should be cautious given fiscal risks and the need to build buffers. While inflation expectations are well anchored, they remain close to the upper end of the inflation targeting band. Staff welcomes the authorities’ increased focus on lowering inflation expectations toward the mid-point of the band, which could be complemented by explicitly adopting a mid-point within a range at an opportune time. Lower inflation will be better aligned with that of partners, avoid erosion of competitiveness, and benefit the poor. Staff welcomes enhancements in central bank communication, and encourages continued efforts to increase transparency. The floating rand cushions the economy against shocks, but opportunistically building international reserves would strengthen resilience.
Financial sector policy to maintain a sound financial system
Preserving financial sector stability is a priority. The authorities’ introduction of the Twin Peaks regime provides a welcome overhaul of the regulatory framework. While the overall banking sector is well capitalized and profitable, monitoring pockets of vulnerabilities in small, non-systemic banks is essential. Devoting increased resources to regularly conduct top-down stress tests will be helpful. The planned entry of new banks can boost competition, reduce user charges, and improve access to credit for SMEs. Combined with the increased focus on the role of Fintech, greater competition can also help promote financial inclusion.
Balance of risks
Downside risks to the outlook are prominent. On the upside, quick and comprehensive reform implementation would boost business and consumer confidence and in turn productivity, investment, and growth. On the downside, however, spending pressures —arising for example from weak SOEs or increasing public sector compensation—would heighten financing costs and weigh on growth. Externally, tighter global financial conditions and capital flow volatility recently experienced by EMs bring to the fore a risk of sudden reversals in investor sentiment. Structurally weak growth in key advanced markets, or a disruption in trade due to growing protectionism could widen the fiscal and current account deficits, and dampen growth. Weakening growth in South Africa could have negative and lasting spillover effects on neighboring countries.
Action is needed now
The time is now to put the South African economy on a trajectory toward strong and inclusive growth. Removing policy and regulatory uncertainty, combined with forceful implementation of an ambitious reform agenda would further strengthen confidence, attract private investment durably, support job creation, and distinguish South Africa further from other EMs at a time sentiment towards EMs is weakening. Growth would then rise above the current level, and support better living standards for all South Africans.
The current economic environment remains favorable, but short-term risks to global financial stability have increased in the past six months, as a result of a spike in stock-market volatility in February and continuing investor concerns about rising geopolitical and trade tensions. Looking ahead, the odds of a downturn remain elevated, and there’s even a small chance of a global economic contraction over the medium-term.
Policy makers should take advantage of this favorable environment to take steps that will reduce the risks. For emerging-market economies, this means strengthening economic fundamentals and buffers against external shocks; for advanced economies, it means deploying and developing their regulatory and financial policy tools and following through on plans to strengthen financial institutions.
The global financial stability assessment contained in the latest Global Financial Stability Report (GFSR) is based on the new “Growth-at-Risk” approach that links financial conditions to the distribution of future economic growth. Given current financial conditions, risks to financial stability and growth are high over the medium-term. This reflects the fact that recent years of low interest rates—needed to support economic growth—have provided an environment in which vulnerabilities have been building. These vulnerabilities could exacerbate the next economic downturn and could also make the road ahead bumpy.
How could today’s financial vulnerabilities make the road bumpy? Larger imbalances mean that any shock to the economic or financial system would trigger a more painful adjustment. For example, a faster-than-anticipated increase in US inflation could cause the Federal Reserve and other central banks to withdraw monetary accommodation more quickly than is currently expected, and that could shake financial markets. Another risk is a wider escalation of protectionist measures, which would take a toll on financial markets as well as growth. In either case, a sudden decline in asset prices could expose vulnerabilities in the financial system.
The report identifies three areas of vulnerability: weakening credit quality; external debt-related vulnerabilities in emerging markets and low-income countries; and dollar liquidity mismatches among banks outside the United States. Let’s consider each in turn.
Weaker credit quality. Increasingly, less creditworthy companies are able to borrow in financial markets. Global issuance of so-called leveraged loans—made to riskier companies and those with high debt loads—rose to a record $788 billion last year. There are similar trends in corporate bond markets, where lower rated US and euro-area companies account for a growing proportion of bonds.
External debt in emerging-market and low-income countries. Foreign capital flows have remained robust in recent years, with more emerging and low-income economies benefitting from favorable external financing conditions. But as the global liquidity tide recedes, flows to emerging markets could decline by as much as $60 billion a year, equal to about a quarter of annual totals in 2010-17. In such a scenario, less creditworthy borrowers may experience relatively larger outflows. Low-income countries may be affected, because more than 40 percent of them are at a high risk of debt distress.
US dollar liquidity mismatches among non-US banks. Overall, banks are more resilient than before the global financial crisis. But internationally active non-US banks rely on short-term or wholesale sources for about 70 percent of their dollar funding. Moreover, these dollar liabilities are not always evenly matched with dollar assets in terms of size or maturity. This could leave banks exposed to dollar funding problems in the event of a sudden tightening in financial conditions and strains in markets.
Separately, the GFSR looked at the rise of crypto assets. Some of the technologies behind these assets could make financial market infrastructures, such as payment systems, more efficient. But they have also been afflicted by fraud, security breaches, and operational failures—and have been associated with illicit activities. While the limited size of crypto assets suggests they currently pose little risk to financial stability, risks could grow if their use became more widespread without appropriate safeguards.
Policymakers should take advantage of today’s favorable environment to adopt safeguards against looming financial risks.
Central banks should continue to gradually withdraw monetary accommodation, where appropriate, while communicating their decisions clearly.
Regulators should address financial vulnerabilities by deploying and developing regulatory and financial policy tools.
Policymakers should ensure that the post-crisis regulatory reform agenda is completed — and they should resist calls for rolling back reforms.
Emerging markets and low-income countries should build reserves and fiscal buffers against external risks.
The global economic recovery has so far been resilient to the pronounced swings in financial markets—but investors and policy makers shouldn’t take too much comfort from that fact. They should remain attuned to the risks associated with rising interest rates, elevated market volatility, and increasing protectionism. The road ahead may well be bumpy.
For an explanation of the new “Growth at Risk” model, click here .
Banks can’t easily tap the dollars deposited at their US subsidiaries to finance dollar lending outside of the country. IMF’s 2018 Global Financial Stability Report found that they must rely heavily on less-stable funding sources to support their international dollar balance sheets, such as interbank deposits, commercial paper and swaps. The danger is that these sources of funding could dry up quickly in times of financial-market stress ~ Crimson Tazvinzwa
The US Treasury is issuing more T-bills, potentially putting upward pressure on the interest rates non-US banks must pay for short-term dollar funding (photo: Jennifer Hack/KRT/Newscom)
For companies and investors outside the United States, the dollar is often the currency of choice. Surprisingly, though, US banks play only a limited role in lending dollars to international borrowers. Most of the $7 trillion in banks’ dollar lending outside the United States is handled by banks based in Europe, Japan and elsewhere.
This is significant because these banks can’t easily tap the dollars deposited at their US subsidiaries to finance dollar lending outside of the country. Instead, the IMF’s recent Global Financial Stability Report found that they must rely heavily on less-stable funding sources to support their international dollar balance sheets, such as interbank deposits, commercial paper and swaps. The danger is that these sources of funding could dry up quickly in times of financial-market stress.
Global regulators have compelled banks to guard against such a loss of funding by improving their liquidity coverage ratios, a measure of banks’ ability to meet short-term fund outflows from reliable liquid assets.
Some banks may be overly reliant on potentially fragile cross-currency swap markets
These improvements applied to banks’ global consolidated balance sheets, which encompass their aggregate positions in all currencies. But a liquidity coverage ratio based on their international dollar balance sheets, which exclude US subsidiaries, reveals a different picture. This ratio is meaningfully below their consolidated liquidity ratio. An estimated stable funding ratio, a measure of stable funding relative to the level of loans, is similarly much lower for international dollar positions than for their overall balance sheets.
Several forces are set to push up dollar funding costs. The U.S. Departemtn Of The Treasury is issuing more T-bills, potentially putting upward pressure on the interest rates non-US banks must pay for short-term dollar funding. The new tax law is expected to encourage US corporations to repatriate cash and possibly shift cash out of bank funding instruments. And these developments are taking place against the backdrop of the Federal Reserve’s interest-rate increases and the gradual reduction of securities holdings on its balance sheet, which would ultimately lift funding costs for all borrowers. Not all banking systems are equally vulnerable to strains in funding markets. For example, our analysis suggests that dollar liquidity ratios at French and German banks are not as strong as their peers. Another concern is that some banks may be overly reliant on potentially fragile cross-currency swap markets. For example, swaps cover over 30 percent of Japanese banks’ dollar funding needs. While much of their swap borrowing is long-term, banks’ ability to access this type of funding may be compromised under stress conditions.
The combination of this market tightening and the international dollar balance sheet vulnerabilities discussed above could trigger funding problems in the event of market strains. Market turbulence may make it more difficult for banks to manage currency gaps in volatile swap markets, possibly rendering some banks unable to roll over short-term dollar funding.
Banks could then act as an amplifier of market strains if funding pressures were to compel them to sell assets in a turbulent market to pay liabilities that are due. Funding pressure could also induce banks to shrink dollar lending to non-US borrowers, thus reducing credit availability.
Over the past decade, global and national policymakers have strengthened regulatory frameworks governing banks’ consolidated solvency and liquidity positions. However, country-specific liquidity regulations, while helping to strengthen national financial systems, may inadvertently restrict the flow of liquidity within banking groups.
Looking ahead, banks should ensure that currency-specific liquidity risks within individual entities in their banking groups continue to be managed effectively. Regulators should address foreign currency liquidity mismatches through more disclosure, currency-specific liquidity standards, stress tests, and resolution planning. Central banks’ swap lines, which are already in place to provide foreign exchange liquidity in times of stress, should be maintained, as a last resort backstop.