The World This Week: September 10th, 2018

Migration

The nationalist Swedish Democrats gained over 18% of the vote in Swedish parliamentary elections held Sunday, which is up from their share of 12% in 2014. The gains mark a continuance of the populist wave sweeping across Europe in response to the 2015 mass influx of refugees fleeing the civil war in Syria.

The Trump administration has announced its intention to pull out of the 1997 Flores Settlement, which imposes a limit of 20 days of detention for undocumented immigrant minors. The administration stated that the current agreement poses a significant hindrance to the Department of Homeland Security’s ability to detain and remove immigrant families residing here illegally. The change is almost certain to face a legal challenge in US District Court.

Trade

Attempts are being made this week to prevent the US and EU from descending into a full-fledged trade war in response to President Trump’s threat to levy 25% tariffs on all car imports from the EU. Global markets await anxiously for trade representatives from both sides to meet in Brussel this week to lay the groundwork for an agreement. Meanwhile, tensions are rising in China following Trump’s announcement last week that he would soon impose an additional $200 billion in tariffs on Chinese goods. It became clear this morning that his comments had caused a sense of dread as China’s markets were generally down, while other markets (including Japan) have continued to fair better despite the uncertainty.

Development

Following his return from the China-Africa Summit, Botswana President Masisi announced that China has agreed to cancel about $7.2 million in debt, awarded Botswana a $31 million grant, along with a new loan of an undisclosed amount. The finance ministry last week announced it was seeking a loan from China of $1.09 billion to finance Botswana’s Mosetse-Kazungula railway line project, which will connect Central Botswana with centers of tourism in the northwest and will deepen regional trade ties with Zambia.

Between 2000 and 2016, China has issued $125 billion in infrastructure loans to countries located on the African continent. On the opening day of the 2018 China-Africa Summit, President Xi announced an additional $60 billion in financial assistance to African countries over the next three years as well as loan forgiveness programs for the most impoverished nations on the continent. China’s renewed financial commitment to Africa comes as critics raise concerns that Chinese financing for infrastructure projects are imposing an unsustainable debt burden on some countries.

The Pakistani government is considering radical steps to avoid yet another IMF financed bailout. Falling exports and an increase in imports have reduced Pakistan’s foreign currency reserves. Pakistan’s current account deficit had grown by 43% by the end of June, forcing the central bank to devalue the Rupee and hike interest rates. To reduce Pakistan’s trade deficit, some members of Pakistan’s economic advisory council have proposed a one-year ban on imports of cheese, cars, fruits, and cellphones, which would save about $4 billion.

Pakistan tried similar protectionist measures last year, imposing a 50% tariff on 240 imported products, including cheese and cars. The extremity of the trade measures now under consideration highlights Pakistan’s desperation to avoid its 22nd IMF loan since 1958.

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