As Merkel exits, Germans debate famed budget discipline

Political leaders Annalena Baerbock, Armin Laschet and Olaf Scholz join a televised debate of the candidates to succeed Angela Merkel as German chancellor on Sept. 12, 2021. (REUTERS/pool)
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Updated 16 September 2021
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As Merkel exits, Germans debate famed budget discipline

  • European member states watching the election and hoping for a transformation of German debt attitudes may be disappointed

FRANKFURT: When Chancellor Angela Merkel’s government smashed its debt taboo and opened the money taps to help the German economy weather the pandemic crisis, it vowed to return to fiscal rigour as soon as possible.
But as the post-Merkel era beckons, voters may have other ideas.
In the closing stretch before September 26 polls that will see Merkel bow out after 16 years, surveys show her CDU-CSU alliance trailing the center-left Social Democrats (SPD).
Hoping to turn the tide, the conservatives have returned to their favored attack lines.
The SPD’s candidate for the top job, Finance Minister Olaf Scholz, would be a “debt chancellor,” warned CSU leader Markus Soeder.
Conservative millionaire Friedrich Merz, the CDU’s economic policy spokesperson, said taxpayers would end up footing the bill for an SPD-led government’s “free beer” policies.
Scholz himself has said he wants higher taxes for top earners and the reintroduction of a wealth tax to help fund much-needed investments in Europe’s biggest economy.
Whoever wins, any future German government will be presented with a “difficult choice” between “changing budgetary rules” to match the economic reality, or “sharply reducing the public deficit,” says Patrick Artus, chief economist at Natixis.
Germany’s cherished balanced finances have been turned upside down during the pandemic, with Merkel’s government taking on 370 billion euros ($438 billion) of new debt in 2020 and 2021.
Total public debt is expected to exceed 70 percent of gross domestic product (GDP) this year, up from 59.7 percent before the pandemic.

Merkel’s Germany is well-known for its budgetary discipline — and at times for enforcing it on fellow Europeans — but the pandemic spending forced it to suspend the “debt brake” written into the constitution in 2009.
The rule forbids the government from borrowing more than 0.35 percent of its GDP, other than in “exceptional circumstances” approved by parliament.
Between January and March this year, the public deficit exceeded 80 billion euros, equivalent to 4.7 percent of GDP.
It’s a long way from Germany’s vaunted “black zero” budget — the shorthand name given to the achievement of balancing the books and a target the country consistently met between 2014 and 2019.
The crisis also saw Merkel spearhead the European Union’s 800-billion-euro coronavirus recovery fund, which will be financed through joint borrowing for the first time — crossing a German red line on EU debt pooling.
But European member states watching the election and hoping for a transformation of German debt attitudes may be disappointed.
As a battle looms on whether to loosen the EU’s strict budget rules, Scholz ruled out any changes at a recent meeting of EU finance ministers.
The pandemic had shown that the bloc’s fiscal rules already had enough flexibility, he said.

By Merkel’s own admission, Germany will have to “spend gigantic sums of money in the coming years.”
The country’s biggest challenges — energy transition, climate protection and digital infrastructure — mean that “40 to 50 billion euros of public investment a year, between 1 and 1.5 percent of GDP, will be needed for the next 10 years,” said Marcel Fratzscher president of the economics think-tank DIW.
To solve this budgetary equation, it will be necessary to “reform” the debt brake to reflect EU norms, which tolerate deficits of up to three percent of GDP, Fratzscher said.
The catch: any change to the debt rule would have to be approved by a two-thirds super majority in the German parliament.

“The ruling parties will have to find another way to get around the rule,” Fratzscher said.
Much will depend on the balance of power between the parties in Germany’s next coalition.
Sticking to the debt brake will be “impossible without tax rises,” Fratzscher said — something the conservatives have ruled out.
The left-wing Greens, who fancy their chances of being part of the next government, want to adapt the debt brake to allow 50 billion euros of borrowing for investment annually until 2030.
The SPD are open to more public spending, but within the limited scope allowed by the constitutional brake.
 


Indonesia’s Mount Ibu erupts as disaster agency warns of possible floods, cold lava flow

Updated 2 sec ago
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Indonesia’s Mount Ibu erupts as disaster agency warns of possible floods, cold lava flow

  • Mount Ibu’s recent activity follows a series of eruptions of other volcanoes in Indonesia
  • Archipelagic country sits on the Pacific ‘Ring of Fire’ and has 127 active volcanoes
JAKARTA: A volcano in Indonesia’s eastern island of Halmahera erupted on Saturday spewing a five-kilometer high ash cloud, the country’s volcanology agency (PVMBG) said, while its disaster agency warned of potential flash floods and cold lava flow.
The eruption of Mount Ibu at 11:03 a.m. (0203 GMT) follows a series of eruptions in May, after authorities noticed an uptick of volcanic activity starting in April, leading to the evacuation of seven nearby villages.
“The ash column is grey with thick intensity and leaning toward the southwest,” the agency said, adding that residents and tourists should maintain a distance of at least 7 km from the active crater.
Footage shared by the agency showed the volcano spewing ash that grew thicker and eventually dispersed.
Indonesia’s disaster management agency BNPB told local authorities to anticipate secondary disasters such as flash floods and cold lava flow. Analysis by the nation’s meteorology agency shows the region has the potential for moderate to heavy rain, although it did not say when.
“If there is a buildup of material left over from the eruption, it should be cleaned up immediately because it is dangerous. If there is heavy rain, flash floods could occur, cause damage and many fatalities,” Suharyanto, the BNPB chief, had said in a statement on Friday.
The volcano has been on PVMBG’s highest alert level since May 16. Mount Ibu’s recent activity follows a series of eruptions of other volcanoes in Indonesia, which sits on the Pacific “Ring of Fire” and has 127 active volcanoes.
Flash floods and cold lava flow from Mount Marapi, one of the most active volcanoes in West Sumatra province, covered several nearby districts following torrential rain on May 11, killing at least 67 people with 20 people still missing.

Voting begins in the last round of India’s election, a referendum on Modi’s decade in power

Updated 01 June 2024
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Voting begins in the last round of India’s election, a referendum on Modi’s decade in power

  • The seventh round of voting across seven states and one union territory will complete polling for all 543 seats in the powerful lower house of parliament
  • If Modi wins, he’ll be only the second Indian leader to retain power for a third term after Jawaharlal Nehru, the country’s first prime minister

NEW DELHI: Indians began voting Saturday in the last round of a six-week-long national election that is a referendum on Hindu nationalist Prime Minister Narendra Modi’s decade in power.

The election is considered one of the most consequential in India’s history. If Modi wins, he’ll be only the second Indian leader to retain power for a third term after Jawaharlal Nehru, the country’s first prime minister.
The seventh round of voting in 57 constituencies across seven states and one union territory will complete polling for all 543 seats in the powerful lower house of parliament. Nearly 970 million voters — more than 10 percent of the world’s population — were eligible to elect a new parliament for five years. More than 8,300 candidates ran for the office.
Most polls show Modi and his Bharatiya Janata Party leading over the broad opposition alliance that’s challenging them, led by the Congress party. The votes will be counted Tuesday, with results expected by the end of the day.

India's Prime Minister Narendra Modi addresses supporters during an election campaign rally in New Delhi on May 22, 2024. (REUTERS)

Modi’s campaign, vying for a third-straight term, began on a platform of economic progress. He promised to uplift the poor and turn India into a developed nation by 2047. But it has turned increasingly shrill in recent weeks as he escalated polarizing rhetoric in back-to-back incendiary speeches that targeted the country’s Muslim minority, who make up 14 percent of India’s 1.4 billion people.
On Thursday, after finishing his election campaign, Modi went to meditate at a memorial site honoring a famous Hindu saint who is believed to have attained enlightenment there.
When the election kicked off in April, Modi and his BJP were widely expected to clinch another term.
Since first coming to power in 2014, Modi has enjoyed immense popularity. His supporters see him as a self-made, strong leader who has improved India’s standing in the world, and credit his pro-business policies with making the economy the world’s fifth-largest.
At the same time, his rule has seen brazen attacks and hate speech against minorities, particularly Muslims. India’s democracy, his critics say, is faltering and Modi has increasingly blurred the line between religion and state.
But as the campaign ground on, his party has faced stiff resistance from the opposition alliance and its main face, Rahul Gandhi of the Congress party. They have attacked Modi over his Hindu nationalist politics and are hoping to benefit from growing economic discontent.
Pre-poll surveys showed that voters were increasingly worried about unemployment, the rise in food prices and an overall sentiment that only a small portion of Indians have benefitted despite brisk economic growth under Modi, making the contest appear closer than initially anticipated.
In this election, Modi’s BJP — which controls much of India’s Hindi-speaking northern and central parts — sought to expand their influence by making inroads into the country’s eastern and southern states, where regional parties hold greater sway.
The BJP also banked on consolidating votes among the Hindu majority, who make up 80 percent of the population, after Modi opened a long-demanded Hindu temple on the site of a razed mosque in January. Many saw it as the unofficial start of his campaign, but analysts said the excitement over the temple may not be enough to yield votes.
Instead, Modi ramped up anti-Muslim rhetoric after voter turnout dipped slightly below 2019 figures in the first few rounds of the 2024 polls.
This was seen as a tactic to energize his core Hindu voter base. But analysts say it also reflected the lack of any big-ticket national issue to help Modi propel his BJP to electoral victory, as he has done previously.
In 2014, Modi’s status as a political outsider cracking down on deep-rooted corruption won over voters disillusioned with decades of dynastic politics. And in 2019, he swept the polls on a wave of nationalism after his government launched airstrikes into rival Pakistan in response to a suicide bombing in Kashmir that killed 40 Indian soldiers.
But things are different this time, analysts say, giving Modi’s political challengers a potential boost.
“The opposition somehow managed to derail his plan by setting the narrative to local issues, like unemployment and the economy. This election, people are voting keeping various issues in mind,” said Rasheed Kidwai, a political analyst.


US defense secretary says war with China neither imminent nor unavoidable, stressing need for talks

Updated 22 min 25 sec ago
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US defense secretary says war with China neither imminent nor unavoidable, stressing need for talks

SINGAPORE: United States Secretary of Defense Lloyd Austin told a gathering of top security officials Saturday that war with China was neither imminent nor unavoidable, despite rapidly escalating tensions in the Asia-Pacific region, stressing the importance of renewed dialogue between him and his Chinese counterpart in avoiding “miscalculations and misunderstandings.”
Austin’s comments at the Shangri-La defense forum in Singapore came the day after he met for more than an hour on the sidelines with Chinese Defense Minister Dong Jun, the first in-person meeting between the top defense officials since contacts between the American and Chinese militaries broke down in 2022 after then-US House Speaker Nancy Pelosi visited Taiwan, infuriating Beijing.
Neither side budged from their longstanding positions on Taiwan — which China claims as its own and has not ruled out using force to take — and on China’s sweeping claims in the South China Sea, which has led to direct confrontations between China and other nations in the region, most notably the Philippines.
While declining to detail the specifics of their conversation, Austin said the most important thing was that the two were again talking.
“As long as we’re talking, we’re able to identify those issues that are troublesome and that we want to make sure that we have placed guardrails to ensure there are no misperceptions and no miscalculations … that can spiral out of control,” he said.
“You can only do that kind of thing if you are talking.”
Addressing the same forum on Friday night, Philippine President Ferdinand Marcos Jr. bluntly outlined what could be at stake, saying that if a Filipino were killed as China confronts his country’s coast guard and merchant fleet to press its claims in the South China Sea, it would be “very, very close to what we define as an act of war and therefore we will respond accordingly.”
Marcos added that he assumed the Philippines’ treaty partners, which include the US, “hold the same standard.”
In his own speech, Austin lauded how Marcos “spoke so powerfully last night about how the Philippines is standing up for its sovereign rights under international law.” But when pressed later, he would not say how the US might react if a Filipino were killed in a confrontation with China, calling it hypothetical.
He did say the US commitment to the Philippines as a treaty partner is “ironclad,” while again stressing the importance of dialogue with China.
“There are a number of things that can happen at sea or in the air, we recognize that,” he said. “But our goal is to make sure that we don’t allow things to spiral out of control unnecessarily.”
Beijing in recent years has been rapidly expanding its navy and is becoming growingly assertive in pressing its claim to virtually the entire South China Sea.
The US, meantime, has been ramping up military exercises in the region with its allies to underscore its “free and open Indo-Pacific” concept, meant to emphasize freedom of navigation through the contested waters, including the Taiwan Strait.
Expressing the concerns of some in the region, Indonesian academic Dewi Fortuna Anwar said any de-escalation of tensions “would be very welcome to this part of the world,” but wondered whether the US would allow China’s assertive military posture to grow uncontested if Washington’s main emphasis was now dialogue.
“We are also worried if you guys get too cozy, we also get trampled,” she said.
Austin said that many of those issues were best addressed through talks, but also assured that Washington will continue to ensure that the rights of nations in the region were protected and that they continued to have access to their exclusive economic zones.
“War or a fight with China is neither imminent, in my view, or unavoidable,” Austin said.
“Leaders of great power nations need to continue to work together to ensure that we’re doing things to reduce the opportunities for miscalculation and misunderstandings,” he said. “Every conversation is not going to be a happy conversation, but it is important that we continue to talk to each other. And it is important that we continue to support our allies and partners on their interests as well.”


Marian Robinson, mother of Michelle Obama, dies at 86

Updated 01 June 2024
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Marian Robinson, mother of Michelle Obama, dies at 86

WASHINGTON: Marian Robinson, mother of former US first lady Michelle Obama, who provided support and stability, especially during the eight years of Barack Obama’s presidency, died on Friday, the Obama and Robinson families said. She was 86.
Fondly called the “first grandma,” Robinson played a pivotal role in helping care for her granddaughters, Malia and Sasha Obama, during their early years at the White House.
“With a healthy nudge, she agreed to move to the White House with Michelle and Barack. We needed her. The girls needed her. And she ended up being our rock through it all,” the family statement read, adding she died “peacefully” on Friday morning.
Born in 1937 on Chicago’s South Side, Robinson was one of seven children. Her parents separated during her teenage years and she witnessed the extreme highs and lows of race relations in the United States.
Her father was not allowed to join a union or work for larger construction firms due to the color of his skin and hence “grew mistrustful of a world that seemed to have little place for him,” the family said its statement. Yet, her daughter and son-in-law made it to the White House when Barack Obama became the first Black US president.
The glamor of the White House was never a great fit for Robinson, according to the family.
Rather than hobnobbing with Oscar winners or Nobel laureates, she preferred spending her time upstairs with a TV tray, in the room outside her bedroom with big windows that looked out at the Washington Monument, the family statement said. It added that she made great friends “with the ushers and butlers, the folks who make the White House a home.”
Robinson got married in 1960 and had two children, including the former first lady. She also worked as a teacher and a secretary, the family said.
During her eight years at the White House, the family said she would often sneak outside the gates to buy greeting cards at nearby stores and sometimes other customers would recognize her saying she resembled the first lady’s mother.
“Oh, I get that a lot,” she would smile and reply.


Canadian police looking for suspect in Vancouver synagogue arson attack

Updated 01 June 2024
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Canadian police looking for suspect in Vancouver synagogue arson attack

  • Attack happened less than a week after two Jewish schools — in Toronto and Montreal — were targeted by gunfire
  • The incidents come as the bloody Israel-Hamas war in Gaza grinds into its eighth month

MONTREAL: Vancouver police searched Friday for an arsonist who set fire to the entrance of a synagogue, while stepping up security at other Jewish facilities following two other anti-Semitic attacks in the country in the span of a few days.

The incidents come as the bloody Israel-Hamas war in Gaza grinds into its eighth month.

The perpetrator poured fuel on the front doors of the Schara Tzedeck synagogue and set them on fire Thursday night, causing minor damage, the Jewish Federation of Greater Vancouver said.
No one was hurt and the blaze was quickly put out by members of the synagogue.
“This fire was intentionally set at a place of worship for the Jewish community,” police Constable Tania Visintin said in a statement.
“While we collect evidence to identify the person responsible, we’re also working closely with faith leaders and community members to ensure everyone’s safety.”
The statement said additional officers were dispatched to Jewish community centers, schools and religious institutions.
“A synagogue in Vancouver was attacked last night in another disgusting act of anti-Semitism,” Prime Minister Justin Trudeau said on X.
“We cannot let this hate or these acts of violence stand. This is not the Canada we want to be.”
The arson came less than a week after two Jewish schools — in Toronto and Montreal — were targeted by gunfire.
In November, a Jewish school in Montreal was hit by gunfire twice in one week.
No one was injured in any of those incidents.
The Gaza war was sparked by Hamas’s October 7 attack on southern Israel, which resulted in the deaths of 1,189 people, mostly civilians, according to an AFP tally based on Israeli official figures.
Militants also took 252 hostages, 121 of whom remain in Gaza, including 37 the army says are dead.
Israel’s retaliatory offensive has killed at least 36,284 people in Gaza, mostly civilians, according to the Hamas-run territory’s health ministry.