Atlantic Update 6/28/2011


The IMF announced Christine Lagarde as its next managing director, becoming the first female to lead one of the world’s largest lending organization. Strikes in Greece turn into violent clashes as Greece continues to deal with its financial crisis. Greece also faces a parliamentary vote on Wednesday to approve a third austerity package in order to avoid a default. On the other hand, Iceland started EU accession negotiations on Monday. 


Lagarde chosen to lead IMF (The Washington Post)

The International Monetary Fund on Tuesday chose French finance minister Christine Lagarde to be its next managing director, maintaining Europe’s long-standing hold on the agency’s top job and appointing the first woman to take over the global financial powerhouse. In a release, the fund’s 24-member executive board said it had chosen Lagarde “by consensus” over Mexican central bank governor Agustin Carstens.

The Greek Mental-Health Crisis: As Economy Imploes, Depression and Suicide Rates Soar (Time)

While the rest of Europe may be tormented by the thought of having to cough up ever more money to bail out Athens, the once carefree Greeks are getting more depressed by the day. Psychiatrists say that the economic crisis has triggered a 25% to 30% increase in the number of patients seeking their help.
"There is an increase in the number of patients suffering from minor psychiatric conditions: anxiety, panic attacks and depression," says Dimitris Ploumidis, head of a mental-health center in eastern Athens. "In September 2010, people had to wait two weeks for a consultation, now it’s more like two and a half months."

Germany pledges to dramatically boost trade with China (Deutsche Welle)

As Chinese Premier Wen Jiabao wrapped up his European visit in Berlin on Tuesday, Chancellor Angela Merkel said Germany intended to boost trade with China to at least 200 billion euros ($283.8 billion) in the next five years. "We want to encourage [Chinese companies] to invest even more in Germany," Merkel announced at a Berlin business forum attended by Premier Wen. "What’s already pretty good can get even better." Trade between the world’s number two economy, China, and Germany, at number four, currently stands at 130 billion euros annually.

European bankers mull French plan for Greek rollover (EUObserver)

European lenders are considering the ‘first draft’ of a plan put forward by French banks for a rollover of some 70 percent of the banks’ holdings of Greek debt. Unveiled by French President Nicholas Sarkozy on Monday (27 June), the plan would involve private bondholders agreeing to re-invest back in Greece half the amount of their holdings as they matured, swapping the debts for new longer-dated bonds.

Europe Anxiously Awaits Greek Vote (Der Spiegel)

Investors around the world watched renewed protests in Greece warily on Tuesday, just one day ahead of the critical parliamentary vote on a third austerity package. The bill, worth €28 billion ($40 billion), must be passed in order for the country to receive the next €12 billion tranche of the €110 billion bailout package approved by the European Union and the International Monetary Fund last summer. Without this money, default would be imminent.

Financial crisis saw massive drop in EU investment (EUObserver)

The worldwide financial crisis, which erupted in late 2008, saw foreign investors massively cut their flow of money to the EU. The European Commission put out the figures, covering 2010, on Monday (27 June), on the eve of a vote by Greek MPs on further austerity cuts designed to win credibility among institutional lenders like the International Monetary Fund, and the private sector. The numbers show that foreign direct investment (FDI) to the EU, which includes investment in foreign businesses but not purchases of sovereign debt, fell from €216 billion in 2009 to €54 billion in 2010.

Greek premier pleads for austerity approval as protests get violent’ (Deutsche Welle)

Demonstrations in the Greek capital, Athens, turned violent on Tuesday as police fired teargas at protesters marching against government austerity proposals currently being debated in parliament. As thousands rallied in Syntagma Square near the parliament building, hooded youths threw stones and bottles at police, who had beefed up their numbers in the center of the city to around 4,000. The protesters had been marching through the city chanting slogans, banging drums and carrying banners. The march coincides with a 48-hour general strike called by Greek unions opposed to the planned austerity measures, including ADEDY, the public sector union representing half a million civil servants, and GSEE, which represents 2 million private sector workers.

EU to Greece: No more solidarity if you vote No (EUObserver)

On the eve of perhaps the most significant vote in the Greek parliament since the return of democracy to the country in 1974, the European Commission has warned Greek deputies that if they do not vote the right way, then "everything changes" as to whether "EU solidarity continues". The Greek parliament opened debate on Tuesday (28 June) on a draconian package of public spending cuts, structural reforms and a massive €50 billion sell-off of state assets imposed by international lenders. The Greek parliament is due to vote on the mid-term package on Wednesday and hold a second vote on its implementation on Thursday.

Iceland sets record in EU accession talks (EurActiv)

Iceland started EU accession negotiations yesterday (27 June), opening four chapters and immediately closing two of them in a turn of events hailed as "something new" in the EU’s history. All negotiating chapters are expected to be opened within a year, announced the country’s foreign minister, Oessur Skarphedinsson. The chapters opened cover public procurement, information society and media, science and research, and education and culture. As Iceland has already taken on a large proportion of EU legislation as a current member of the European Economic Area, negotiations on two chapters – science and research and education and culture – were closed in view of the country’s advanced state of preparedness.

Sweeping Reforms Proposed at U.K. MoD (Defense News)

Service chiefs are going to be given control of their own budgets and a new Joint Forces Command is to be formed as part of a series of radical changes to the way the British Ministry of Defense is managed and run, if proposals in a report presented June 27 in Parliament are adopted. The report, put together by a team of senior private-sector executives led by former defense procurement chief Lord Levene, has come up with 53 recommendations aimed at improving the way the MoD is run and managed.

Russian military test-fires new missile (Stars and Stripes)

Russia’s navy successfully test-fired an advanced ballistic missile from a new-generation nuclear submarine Tuesday following a string of failed tests that dimmed the deployment of Moscow’s most expensive post-Soviet military project. The Bulava missile was launched from the Yuri Dolgoruky submarine in the White Sea that separates Russia from Scandinavia, Defense Ministry spokesman Col. Igor Konashenkov said. The missile’s warheads reached the Kura testing range on the Pacific Kamchatka Peninsula, some 5,500 kilometers (3,500 miles) away, he said. The Bulava is a three-stage, hypersonic intercontinental missile with highly maneuverable warheads capable of dodging any potential missile defenses. It is designed to have a range of 8,000 kilometers (5,000 miles) and carry six to ten individually targeted nuclear warheads.

Russia ‘proactive’ negotiator on Libya- UN envoy (Ria Novosti)

Russia is not a mediator but a "proactive" negotiator in the Libyan crisis, the country’s UN envoy said on Tuesday. Libya has been rocked by clashes between the opposition and forces loyal to leader Muammar Gaddafi since mid-February. "Russia’s role is proactive, but is not directly linked to Tripoli or Benghazi," Vitaly Churkin said during a televised conference at Ria Novosti.

Germany agrees to supply bomb parts for Libya mission (Deutsche Welle)

Germany is ready to provide military ordnance to the NATO mission in Libya, despite its UN Security Council abstention against the mission. The measure – which means Germany would still not be participating directly in military action – was approved by Defense Minister Thomas de Maiziere, the website of German news magazine Spiegel reported Monday. A spokesman for the Defense Ministry told the news agency Reuters that a request for supplies had come from the NATO Maintenance and Supply Agency.


‘The German Government Will Pay Up’ (Der Spiegel)

In a SPIEGEL interview, leading German economist Stefan Homburg argues that euro-zone members should not bail out Greece, discusses who is making a profit from the crisis and explains why he himself is buying Greek bonds. "I believe in the boundless stupidity of the German government," he says.

The battle for Schengen: More Europe in the next decade (EUObserver)

The European debate on Schengen was so intense and strategic for the common European future that it managed to at times push the story of the financial crisis in Greece, Portugal and Ireland to the inside pages. At first glance, the debate concerned the entry of Bulgaria and Romania into the Schengen area but the debate was actually much deeper; it raised the question of the future protection of European borders in general.

HuiHui Ooi is with the Atlantic Council’s International Security Program.

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