Serbia and Kosovo – Balkan breakthrough

from The Economist..

April 27, 2013

THE deal struck between Serbia and Kosovo on April 19th was nothing short of historic. It was a big success for Catherine Ashton, the European Union’s foreign-policy chief, who mediated ten gruelling rounds of talks between the leaders of the two sides. And it demonstrates that the lure of EU enlargement is still sufficiently strong to get people and countries to do things that they would otherwise resist.

The agreement was negotiated by men whose backgrounds hardly suggest they were cut out for compromise. Ivica Dacic, Serbia’s prime minister, was the spokesman for Slobodan Milosevic, the Serbian leader who went to war in Kosovo in 1998 and fought against NATO there in 1999. His partner was Aleksandar Vucic, Serbia’s deputy prime minister, once an extreme nationalist. On the other side was Hashim Thaci, Kosovo’s prime minister and a former guerrilla leader against the Serbs.


It may be hard to make the deal stick, especially if the northern Serbs mount a determined resistance. But they will be told by the Serbian government to comply; and may even come to see advantages as well. Elections will be held in the four northern municipalities. Once constituted, they will continue to get money from the Serbian authorities for education and health and other public services, but will receive other subsidies from both the Kosovo government and the EU.

In the end Lady Ashton managed to get the deal only because she had something to offer. Three days after the agreement was initialled, the European Commission recommended to EU national governments that Serbia should in June be given a date to open membership talks. This could happen on the anniversary of the Battle of Kosovo in 1389. Implementation will be critical, however: the German Bundestag has to agree to the opening of negotiations. The commission also recommended formal talks on a Stabilisation and Association Agreement for Kosovo, a preliminary stage in the accession process.

The deal comes as a feeling of stagnation has set in across much of the Balkans. In terms of EU accession, a good measure of the state of reforms inside each country, Bosnia and Albania seem to be stuck. Burdened by the continuing dispute over its name with Greece, Macedonia has got only a little further. Yet Croatia will join the EU on July 1st and Montenegro is at least still making some progress. Lady Ashton’s success should now help to lift the gloomy Balkan atmosphere.

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Power in Argentina – Now for the courts

from The Economist..

April 27, 2013 | Buenos Aires

Cristina Fernández tries to tame an independent corner of government

SINCE taking office in 2007, Cristina Fernández has pushed her power well beyond the pink walls of the presidential Casa Rosada. She has raided central-bank deposits to fund spending and nationalised the country’s private pension funds. The national statistics agency has obligingly fiddled inflation statistics. Selective state advertising has brought local media to heel, while critical news organisations are in line to be broken up.

Stubbornly, the judiciary has remained a bit more independent. In December a federal court renewed an injunction that had stymied Ms Fernández’s attempts to dismantle Clarín, the country’s largest media company and her most strident critic, using a contentious media law passed in 2009. When later that week a separate ruling led to the controversial release of 13 suspected human-traffickers, the president pounced, calling for a “democratisation” of the judiciary. “I don’t have proof,” she raged, “but I have no doubt that when there is money involved, no matter what you do, [the judges] don’t care.”


The opposition took to the streets of the capital on April 16th to protest in front of the courts. The same day the judicial workers’ union began a three-day strike. On April 18th more than 1m Argentines crammed the streets of Buenos Aires and other cities around the world carrying signs decrying the judicial reforms. The Episcopal Conference of Argentina warned that the reforms “ran the risk of weakening democracy”.

Ms Fernández seems undeterred. On April 18th an appeals court ruled part of her media law unconstitutional and argued that Clarín should be able to keep its television licences. Ms Fernández said she was left “speechless” and accused the judiciary of being an “aristocratic sector that operates like a ghetto”. She then called for “equal justice for everyone”—everyone, it seems, except her critics.

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The Caribbean: A darkening debt storm

from the Financial Times..

April 28, 2013, By Robin Wigglesworth and Benedict Mander

The region is beset by economic fragility that is exacerbating the dangers posed by organised crime

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When Hurricane Ivan pummelled Grenada in 2004, fierce gales snapped telephone masts like twigs. With the lines down, it took days before the outside world learnt the scale of destruction the tropical storm had wreaked in the Caribbean state.


Grenada is not alone. Many of the smaller countries in and around the Caribbean basin are economically and financially stricken. International Monetary Fund officials say the region is on a “knife’s edge” as it faces years of painful adjustments. This economic fragility has critical implications for regional security. The Caribbean has become an increasingly violent nexus for trafficking drugs, guns and people – and fears are growing that piracy is returning as a strategic threat.


…officials inside and outside the region say the Caribbean is entering a crucial period that it will struggle to navigate unscathed. “The Caribbean is at a crossroads,” says Arnold McIntyre, the Grenadan head of the IMF’s regional technical assistance centre. “It faces its most formidable economic challenge since independence.”


Most countries in the region have come to depend on Venezuela’s subsidised oil through the Petrocaribe agreement for the smooth functioning of their economies.


Jamaica has said that if its Petrocaribe agreement were to end, it would need to find another $500m a year to pay for oil imports.

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Zambia cracks down on miners over tax

from the Financial Times..

April 28, 2013, By Andrew England in Lusaka

Copper Exports

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Zambia plans to force companies to repatriate foreign currency earned from exports back to the southern African nation as part of an effort to crack down on tax avoidance, particularly in mining.

The country is Africa’s biggest copper producer. Miles Sampa, deputy finance minister, told the Financial Times he expected details of the legislation, which will apply to all exports valued at more than $10,000, to be released in the next few days.

Companies would be given 60 days to deposit the funds in a commercial bank in Zambia and would have to provide evidence to the bank, through supporting documents, of the reasons for transferring funds offshore, such as for dividend payments or for the import of equipment, he said.


Action Aid, a pressure group, released a report in February in which it alleged that Associated British Foods, the London-listed group, had avoided paying millions of dollars in taxes to Zambia on its sugar operations in the country by exploiting loopholes in the tax regime.

The report estimated that Zambia had lost tax revenues of $17.7m since ABF took a majority stake in Illovo Sugar, which owns Zambia Sugar. ABF said: “Illovo denies emphatically that it is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government.”

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Investing in Africa – opportunities and challenges: Video

from Reuters..

September 18, 2012

Sub-Saharan Africa will be home to 7 of the world’s 10 fastest growing economies in the next five years. U.S. Sen. Christopher Coons joins top African investment managers and business leaders before a live audience to identify key opportunities and ways to address risks, in a panel moderated by Editor-at-Large Sir Harold Evans.


Ghana Said to Boost Planned Dollar Debt Sale to $1 Billion

from Bloomberg..

April 26, 2013, By Moses Mozart Dzawu

Ghana, the first sub-Saharan African country outside of South Africa to sell Eurobonds, plans to seek at least $1 billion in a second offer this year, according to two people with knowledge of the plans.

The West African nation is inviting bids for advisers on the transaction, the people said, who asked not to be identified because the information isn’t public yet.

Ghana sold its debut $750 million Eurobond in September 2007 at 8.5 percent. Finance Minister Seth Terkper said on Dec. 15 Ghana was planning to seek the same amount in the second sale to replace existing debt. “We are getting advice on it,” he said by phone from Washington today, declining to give details.

The government plans to use the money for infrastructure projects, Albert Kofi Asamoa-Baah, financial sector adviser at the ministry, said by phone today, declining to confirm the amount.

“We expect the pricing on this one to be more competitive than the first,” he said “The one on the market is doing well so we expect the yield on this one to be lower.”

The yields on the debt that matures in October 2017 fell for a third day, declining less than one basis point to 4.71 percent by 3:39 p.m. in the capital, Accra.

Ghana’s $35 billion economy is forecast by the Finance Ministry to grow 8 percent this year, faster than the sub- Saharan African average of 5.6 percent, according to the International Monetary Fund. The country, which began producing oil for export in December 2010, has a budget deficit forecast to narrow to 9 percent of gross domestic product this year from 12.1 percent in 2012, according to the ministry.

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Investors Like What They See in Rwanda

from BloombergBusinessWeek..

April 25, 2013,  By 


March 8 (Bloomberg) — Rwanda President Paul Kagame talks about his country’s economic outlook and plan to sell its first international bond by the end of July. Kagame, speaking yesterday with Bloomberg’s Bill Faries in Miami, also discussed Rwanda’s political climate. (Source: Bloomberg)

Rwanda, the East African nation known for a 1994 genocide that killed 800,000 people, made its international bond market debut today. Investors seemed to like what they saw.

As my Bloomberg News colleagues Lyubov Pronina and Chris Kay reported today, the yield demanded by buyers of the $400 million, 10-year Eurobond offering was 6.875 percent. That reflects Rwanda’s junk-grade investment rating, but it’s still pretty remarkable when you consider that yields on Spanish debt were well above 7 percent just last summer.

Even more remarkable are the comments of Charles Robertson, chief economist for Africa at Renaissance Capital in London, who returned from a trip to Rwanda earlier this month calling the country “an African inspiration.” The government wants Rwanda to become “a Singapore of Africa,” he writes in a research note. “In our view, it is succeeding.”

That may be a bit too exuberant. Rwanda’s economy is based on subsistence farming, with coffee and tea the dominant exports. Donors of foreign aid—which in recent years has accounted for about 40 percent of the government’s budget—have recently scaled back or frozen payments after United Nations experts accused President Paul Kagame’s regime of aiding rebel fighters in neighboring eastern Congo. Kagame has denied any involvement.

Still, Rwanda stacks up pretty well against other small sub-Saharan economies that have started moving into international bond markets. Namibia and Zambia have issued their first eurobonds in recent months. Others, including Kenya and Tanzania, are preparing to join them.

Rwanda has the third-best score in Africa, behind Mauritius and South Africa, on the World Bank’s global ranking of the ease of doing business (pdf). Singapore is No. 1 on that list; Rwanda ranks 52nd, ahead of such countries as Poland and Hungary.

Similarly, Rwanda got Africa’s third-best ranking in Transparency International’s annual index of the perception of corruption. It’s No. 50 out of 174 countries, which are ranked from least to most corrupt.

The economy has averaged 8 percent annual growth over the past five years, with a 7.5 percent increase forecast for this year.

In Robertson’s view, the keys to Rwanda’s strong performance are political stability, a tough anticorruption policy, and smart investment in infrastructure and broadband technology under the government headed by Kagame, in office since 2000. Singapore, he says, used much the same recipe, starting in the 1960s, to transform itself from a poor, aid-dependent nation to a regional economic powerhouse.

Rwanda has been privatizing government stakes in some state-owned businesses to raise funds for investment. Proceeds from the $400 million Eurobond issue will help retire debt from construction of a convention center in the capital of Kigali and pay for development of the national airline, RwandAir. “The government intends to turn Rwanda into a service economy and a conference hub,” Robertson says.

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