DGI Brief - Nov 9, 2016
- USA: Donald J. Trump won 279 of the necessary 270 electoral college votes against Hillary Clinton’s 228, but in terms of popular vote, there was the tiniest margin between the 2 candidates. This signifies a very even division between Americans. The GOP also retained both the House & Senate, basically turning the US into one party system. Why it matters: As a response, the global markets plunged, but stabilized a little. Uncertainty around the world is palpable – will the new president deliver on his campaign rhetoric & sever many significant alliances, undo trade & peace deals… and the Paris Climate Agreement (COP21)? Signatories & world scientists alike decried the results expressing fears that Trump will insist on his May promise to pull out of the agreement as, according to him, climate change is a “hoax”. They worry that even though pulling out would take 4 years (the entire presidential term), he could do harm by simply ignoring America’s pledge to reduce 26-28% of its greenhouse gas emissions by 2025. This would represent 21% of the global reduction goals. Without the US, experts agree the rest of the world would not be able to keep global warming under the necessary 2°C, the consequences of which would be catastrophic.
- INDIA: Prime Minister Modi announced yesterday that the government was pulling all 500- & 1,000-rupee banknotes & as of midnight last night, they had not value. People are instructed to trade in the notes to banks & post offices, but all the financial institutions (including ATMs) will be closed until Friday to prepare for this massive exchange. The move aims to stem nation-wide corruption & money laundering & give the government more control over the economy. Anyone exchanging large amounts of these banknotes will likely be scrutinized. Why it matters: It is true that businesses regularly use large banknote cash to avoid paying taxes – in just the last 2 ½ years, authorities seized 1.25 trillion (USD 18.8 billion) in illegal cash. Counterfeiting & land cash purchases with illicit money are also widespread. That is why the real estate prices began crashing & real estate companies’ stocks plummeted by 20% since Tuesday. But the most affected are India’s poor, majority of whom do not have bank accounts & keep their savings in cash. Their livelihoods come to a screeching halt until Friday as most people do not hold or can break currency other than the now no-value 500/1,000 rupees. Understandable in the long run, but very poorly planned & executed with the most vulnerable once again bearing the biggest brunt.
- EU and TURKEY engaged in a rhetoric challenging each other’s seriousness about the EU-Turkey migrant deal – hinging on Turkey receiving visa-free travel to the EU & the EU speeding up Turkey’s bid for membership that, in turn, hinge on Turkey addressing its terrorism laws, human rights record, the recent purge & dropping the consideration to reintroduce the death penalty – all against EU’s values. Why it matters: relations are clearly deteriorating. EU definitely fears the deal’s collapse would open the floodgates for >3 million Syrian refugees & countless migrants currently in Turkey. Turkey seems to count on this fear, unwilling to fulfill the EU membership requirements & threatening to let the refugees flow into EU unabated once again. The recent improved relations between Turkey & Russia should make us nervous. Couple that with Turkey’s hatred of US-backed (and thus EU supported) Kurdish forces fighting in Syria & Trump’s US presidency win that leaves questions about historic alliances & NATO unanswered & we have a really sticky situation. Stuck in the middle are millions of innocent civilians. And despite the best international intentions, even the Geneva-convention abiding nations will likely turn their back on them to yield to the rising populism within their own borders. Everything seems new, unprecedented & we must thread very carefully now.
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