The ominous consequences of the Greek debt crisis continued to reverberate throughout the Eurozone Monday, as a meeting of EU finance ministers focused entirely on Greece’s mounting fiscal debt. While Greece continues to insist on its ability to stabilize its own economy and slash its budget deficit—which bloated this year to three times the permitted level under EU rules—others worry about Greece’s effect on the euro, which fell to a nine-month low against the dollar on Friday. In an effort to shore up confidence Monday, Greece’s finance minister, George Papaconstantinou, assured his EU counterparts that “We are trying to change the course of the Titanic, [but] it cannot be done in a day. … We are beginning to show that step by step, we are following words with action. If additional fiscal measures are needed, we will take them.” The chief economist at the European Central Bank, Jurgen Stark, concurred with this sentiment, announcing this past Friday that “the country must and will make it.” In related news, much ink has been spilled over the past week about the role of Wall Street banks as facilitators of the crisis in Greece, at least insofar as they devised creative accounting mechanisms and currency swaps that allowed Greece to conceal its liabilities from the European Union’s statistics agency. Once Greece shrinks its budget deficit, the country has a second high hurdle to clear: a debt-to-GDP ratio of 113 percent—a number made all the more ominous in light of the deals the government cut with Goldman Sacks that pledged large amounts of the country’s future revenue to the bank, in exchange for loans that financed previous budget shortfalls.
The coalition government that brought stability to Kenya in the aftermath of the 2007 post-election riots revealed additional fissures this past week, as a series of ministerial level suspensions caused the country’s president and prime minister to lock horns in a heated political war of pronouncements. On Sunday, Kenya’s prime minister, Raila Odinga, suspended the country’s ministers of agriculture and education for three months after a report suggested the possible involvement of both ministers in two corruption scandals whose investigations are ongoing. (The minister of agriculture belongs to Odinga’s political party, while the minister of education belongs to President Mwai Kibaki’s.) Less than two hours after the prime minister announced the suspensions, however, President Kabaki reversed Odinga decision, claiming that the prime minister had no authority to suspend cabinet-level positions. “The legal provisions on which the prime minister acted do not confer him the authority to cause a minister to vacate his or her office,” Kibaki said on Monday. In response to Kabaki’s reversal, the political party to which Odinga belongs, the Orange Democratic Movement (ODM), called on the African Union and the former secretary general of the United Nations, Kofi Annan, to help mediate the political stalemate. On Monday, the ODM released a statement saying, “the Prime Minister as the leader of ODM has declared a dispute between the coalition partners and seeks the immediate intervention of the African union, in particular the Office of the Eminent African Personalities chaired by His Excellency Dr Kofi Annan, to convene a meeting to discuss the current crisis….” After Kenya’s disputed 2007 elections, in which both Kabaki and Odinga declared victory, Kofi Annan was part of a mediation team that devised the government’s current power sharing agreement. Odinga’s attempts to suspend the country’s agriculture and education ministers came after Kibaki announced a string of lower level suspensions this past Saturday evening, which included the permanent secretary in Odinga’s office, and the Odinga’s chief of staff.
The U.S. Department of Transportation signaled its willingness to grant American Airlines and British Airways immunity from U.S. antitrust legislation this Saturday, clearing the way for the two carriers to share revenue and coordinate flight marketing and route scheduling. While previous attempts to tighten the alliance between the two airlines were thwarted by U.S. regulators, this current proposal passed DOT muster by convincing the U.S. government that such an agreement would be a boon to passengers in the form of lower airfare costs. Not everyone agrees, however. Virgin Atlantic founder, Sir Richard Branson, had this to say: “The U.S. Department of Justice, who are the experts in competition issues, called for strict remedies to protect the public interest, because the alliance will blatantly harm competition and the consumer. The Department of Transportation has chosen to stick two fingers up at them. Millions of transatlantic travellers will be adversely affected if the alliance receives final approval. In my personal opinion, this draft decision is a real kick in the teeth for consumers and they will be paying the price for it for years to come.”