Our monthly Inside Spain’s Foreign Policy section reports on Angela Merkel’s trip to Madrid. She arrived shortly after the government, trade unions and employers agreed a social pact and praised the Spanish government’s reforms to shore up the banking system and reform the pensions system. An agreement between the two governments to facilitate the hiring of skilled Spaniards to work in Germany was announced. First on the Domestic Scene, Batasuna, the Basque party outlawed in 2003 for its ties to the terrorist group ETA, launched a new party, Sortu, which it hopes will regain legal status and be able to participate in May’s local elections. Although it is the clearest break yet with ETA, Sortu did not call for its disbanding. Also, due to the lack of jobs and to more effective action by the forces guarding Spain’s coastline, the number of immigrants from non-EU countries who arrived illegally by boat in 2010 dropped to 3,632 from 7,285 in 2009 and 39,180 in 2006. Finally, Spain’s Senate, the upper chamber of the parliament, began to allow debates in four languages other than Castilian Spanish –Catalan, Galician, Valencian and Basque–. Within the Economy, the pact with the main trade unions and employers’ organisation includes an increase in the legal retirement age from 65 to 67, one of the highest in Europe, and raises the number of years from 15 to 25 for calculating state pensions. The reforms sent a clear signal to the international community of the government’s determination to do all within its power to boost confidence in the economy. The improved mood towards Spain is also filtering down to companies: last month Iberdrola and Telefónica issued last month the first bonds by Spanish non-financial companies since October and have reported very strong order books. Andhaving reduced the number of unlisted savings banks from 45 to 17, the government is now threatening to nationalise those cajas, regionally based, which do not reach a minimum level of capital adequacy by September. And following the visit in January to Madrid of Li Keqiang, China’s Deputy Premier, China Unicom, the country’s second-largest telecoms operator, is to have a seat on the board of Telefónica and the Industrial and Commercial Bank of China (ICBC), the world’s biggest lender by market value, opened its first branch in Madrid as part of an expansion in Europe.
Two new analyses on the events in the Arab world open our second Newsletter of the year. Ahmed Driss, in ‘Thoughts on the Tunisian Revolution’ writes that ‘after more than two decades of silence and fear, Tunisians dared and tried the unthinkable’: to topple the regime of President Zine El Abidine Ben Ali. Also on Tunis, Abdennour Benantar examines what could be a historic precedent of great importance for the region, in a country where the regime stressed economic liberalism at the expense of political liberalism, and where the people’s uprising has revealed the failure of its efforts. Our third highlight is an excellent analysis by Juan I. Crespo, in our International Economy and Trade area, under the title ‘The Euro War That Won’t Happen’. ‘The euro’s weakness or threats to its integrity must not be confused with the threat of its extinction’, writes Crespo. He concludes: ‘Unless a miracle occurs, the incorrectly named crisis of the euro might become a blessing that has enabled us to get ready to face more difficult times. In fact, it would have only been the rehearsal of something much more complicated yet to come’.
Also on the European currency, a working paper by Miguel Otero-Iglesias provides a comprehensive and multidisciplinary literature review on the euro vs dollar debate, presenting the euro-optimist and the euro-sceptical hypotheses on the euro’s challenge to the dollar within Economic literature, and explaining the euro’s political flaws.
Within Europe, Mike Beke reviews the recent Belgian Rotating Presidency which, according to the author, performed ‘effectively and pragmatically’. On Asia-Pacific, the prospects for Burma after Aung San Suu Kyi’s release are analysed by Michael W. Charney, who thinks the move will have important implications for the country in 2011 and 2012. Deborah Brautigam tries, on Sub-Saharan Africa, to help our readers understand China’s growing engagement in Africa, in an ARI that dissects seven common myths on China in Africa. Our last analysis this month is by Ekaterina Stepanova, on International Terrorism, who highlights the failure of counterintelligence to prevent and pre-emptively disrupt terrorist plans and networks as the single most critical flaw highlighted by the Domodedovo attack and other recent terrorist incidents in Russia.
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