Thursday, October 19
NO SHORTAGE OF CHALLENGES
European Council faces migration challenges
The heads of 27 EU member states (minus Britain) meet today to discuss a number of pressing internal and external challenges.
Migration fits both domains. After the EU increased its cooperation with countries like Libya, Chad, and Niger to stop the flow of migrants, reforming the Central European Asylum System will feature prominently in today’s meeting. The current rules stipulate that countries like Italy, where the majority of asylum seekers arrive, are responsible for them.
A 2015 attempt to distribute refugees more evenly throughout the EU failed miserably, with several Eastern European countries refusing to accept their allocated share.
But with crucial elections to be held in 2018 in Italy and Sweden, both of which have been strongly affected by the ongoing migration crisis, Europe’s leaders are likely to step up their efforts quickly or risk further rifts within the bloc.
MAKE OR BREAK
Tax reform on the line as Senate votes on budget resolution
Today, US senators are expected to vote on a 2018 budget resolution that will pave the way for an overhaul of America’s tax system.
The key pillars of Trump’s tax reform include a cut to the corporate tax rates from 35% to 20% and tax break for middle-income earners, providing tax relief in excess of $1 trillion.
Experts have criticised the plan for overstating the tax cuts for middle-income earners and concentrating benefits around the wealthiest 1%.
The passage of today’s resolution would open the door for Congress to pass a tax reform bill in December with 51 votes instead of the usual 60. Support from within the party isn’t guaranteed. Republicans are primarily concerned that the plan will involve effective tax hikes at the state and local level or add to the current US deficit.
With only a one-vote margin of error, Trump has already indicated a willingness to modify the framework and vote again next year.
TRAWLING FOR TERRORISTS
Turkey extends emergency powers and squabbles with the US
In place since July 2016, Turkey’s state of emergency was due to expire today, but has been extended for an additional 90 days; this is the state of emergency’s fifth extension.
The move was justified as necessary to fight terror organisations. The focus of an unrelenting crackdown, the Gulen movement, referred to by Ankara as Fethullah Terrorist Organization (FETO), is accused of orchestrating last years failed coup attempt.
Two US consulate employees have been caught up in the latest round of arrests. Both are Turkish nationals and stand accused of liaising with FETO leadership. The US has rebuked the claims and suspended the processing of visa applications. A US envoy arrived in Ankara this week to resolve the dispute, but it has yet to make any headway.
A US deal to supply weapons to Syria’s Kurds and the refusal to extradite FETO leader Fethullah Gulen has frustrated Ankara. The current spat has added to Turkey’s antipathy towards the West and will only complicate future cooperation in Syria and Iraq.
Delve deeper: Trump, Erdogan and US arms sales to the Kurdish YPG
REFORMS, BUT NOT YET
China releases third-quarter growth figures
China will report its GDP figures for the third quarter today.
The data is expected to show 6.8% economic growth this quarter, which is down slightly from the 6.9% of the previous period. The ease in growth is mostly due to a cooling in property and infrastructure investment. Despite the slight decrease in economic growth, China remains well on track to meet its annual target of 6.5%.
The data release comes at an important time for Beijing, with the National Congress having kicked off yesterday. In a speech to the Party Congress, President Xi Jinping noted the need for economic reform in China. In particular, China needs to deleverage its debt–corporate debt was 166.3% of GDP in 2016.
China’s impressive GDP figures and Xi’s inevitable re-election have raised hopes that the president will implement structural reforms of its economy. Expect reforms to be delayed, however, as Beijing is wholly committed to doubling its 2010 GDP by 2020.
Delve deeper: Structurally unsound? China’s slowing economy
HAPPENING ELSEWHERE…
New Zealand’s government, Fed choice, white nationalists in Florida
Almost a month after New Zealand’s election, kingmaker Winston Peters is expected to announce who he’ll support to form a government.
Donald Trump will hold talks with Fed Chair Janet Yellen. Mr Trump is expected to announce his choice to head the central bank on Friday. While the outcome is still unclear, Jerome Powell—a former investment banker and current Federal Reserve Governor—is the favorite of Secretary of the Treasury Steve Mnunchin, possibly giving the current Fed governor a slight edge over Yellen, although the incumbent comes in a close second.
White nationalist Richard Spencer will deliver a speech at the University of Florida. Earlier this week, Governor Rick Scott declared a state of emergency in the neighbourhood in a bid to give law enforcement the resources needed to deal with any violence. Anti-fascist demonstrations are expected at the university.