As Merkel exits, Germans debate famed budget discipline

Political leaders Annalena Baerbock, Armin Laschet and Olaf Scholz join a televised debate of the candidates to succeed Angela Merkel as German chancellor on Sept. 12, 2021. (REUTERS/pool)
Political leaders Annalena Baerbock, Armin Laschet and Olaf Scholz join a televised debate of the candidates to succeed Angela Merkel as German chancellor on Sept. 12, 2021. (REUTERS/pool)
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Updated 16 September 2021

As Merkel exits, Germans debate famed budget discipline

As Merkel exits, Germans debate famed budget discipline
  • European member states watching the election and hoping for a transformation of German debt attitudes may be disappointed

FRANKFURT: When Chancellor Angela Merkel’s government smashed its debt taboo and opened the money taps to help the German economy weather the pandemic crisis, it vowed to return to fiscal rigour as soon as possible.
But as the post-Merkel era beckons, voters may have other ideas.
In the closing stretch before September 26 polls that will see Merkel bow out after 16 years, surveys show her CDU-CSU alliance trailing the center-left Social Democrats (SPD).
Hoping to turn the tide, the conservatives have returned to their favored attack lines.
The SPD’s candidate for the top job, Finance Minister Olaf Scholz, would be a “debt chancellor,” warned CSU leader Markus Soeder.
Conservative millionaire Friedrich Merz, the CDU’s economic policy spokesperson, said taxpayers would end up footing the bill for an SPD-led government’s “free beer” policies.
Scholz himself has said he wants higher taxes for top earners and the reintroduction of a wealth tax to help fund much-needed investments in Europe’s biggest economy.
Whoever wins, any future German government will be presented with a “difficult choice” between “changing budgetary rules” to match the economic reality, or “sharply reducing the public deficit,” says Patrick Artus, chief economist at Natixis.
Germany’s cherished balanced finances have been turned upside down during the pandemic, with Merkel’s government taking on 370 billion euros ($438 billion) of new debt in 2020 and 2021.
Total public debt is expected to exceed 70 percent of gross domestic product (GDP) this year, up from 59.7 percent before the pandemic.

Merkel’s Germany is well-known for its budgetary discipline — and at times for enforcing it on fellow Europeans — but the pandemic spending forced it to suspend the “debt brake” written into the constitution in 2009.
The rule forbids the government from borrowing more than 0.35 percent of its GDP, other than in “exceptional circumstances” approved by parliament.
Between January and March this year, the public deficit exceeded 80 billion euros, equivalent to 4.7 percent of GDP.
It’s a long way from Germany’s vaunted “black zero” budget — the shorthand name given to the achievement of balancing the books and a target the country consistently met between 2014 and 2019.
The crisis also saw Merkel spearhead the European Union’s 800-billion-euro coronavirus recovery fund, which will be financed through joint borrowing for the first time — crossing a German red line on EU debt pooling.
But European member states watching the election and hoping for a transformation of German debt attitudes may be disappointed.
As a battle looms on whether to loosen the EU’s strict budget rules, Scholz ruled out any changes at a recent meeting of EU finance ministers.
The pandemic had shown that the bloc’s fiscal rules already had enough flexibility, he said.

By Merkel’s own admission, Germany will have to “spend gigantic sums of money in the coming years.”
The country’s biggest challenges — energy transition, climate protection and digital infrastructure — mean that “40 to 50 billion euros of public investment a year, between 1 and 1.5 percent of GDP, will be needed for the next 10 years,” said Marcel Fratzscher president of the economics think-tank DIW.
To solve this budgetary equation, it will be necessary to “reform” the debt brake to reflect EU norms, which tolerate deficits of up to three percent of GDP, Fratzscher said.
The catch: any change to the debt rule would have to be approved by a two-thirds super majority in the German parliament.

“The ruling parties will have to find another way to get around the rule,” Fratzscher said.
Much will depend on the balance of power between the parties in Germany’s next coalition.
Sticking to the debt brake will be “impossible without tax rises,” Fratzscher said — something the conservatives have ruled out.
The left-wing Greens, who fancy their chances of being part of the next government, want to adapt the debt brake to allow 50 billion euros of borrowing for investment annually until 2030.
The SPD are open to more public spending, but within the limited scope allowed by the constitutional brake.
 


Travel curbs aimed at COVID variant tighten across the world

Travel curbs aimed at COVID variant tighten across the world
Updated 6 sec ago

Travel curbs aimed at COVID variant tighten across the world

Travel curbs aimed at COVID variant tighten across the world
HONG KONG: Australian officials were racing Sunday to conduct further tests on passengers arriving from southern Africa who tested positive for COVID-19 to determine if they were carrying the omicron variant as nations around the world tightened controls against the worrying new strain.
Neighboring New Zealand announced it was restricting travel from nine southern African countries because of the threat posed by the variant, and Japan widened its border controls to include more countries from the region. Tourist-dependent Thailand, which only recently began loosening its tight border restrictions to leisure travelers from certain countries, announced a ban of its own on visitors from eight African counties. Similar restrictions took effect in the business hub of Singapore, which is barring entry and transit to anyone with a recent history of travel to seven southern African nations.
The tighter restrictions in the Asia-Pacific region echoed steps rapidly taken by countries around the world to limit the spread of the omicron variant just days after it was identified by researchers in South Africa. The act first, ask questions later approach reflected growing alarm about the emergence of a potentially more contagious variant nearly two years into a pandemic that has killed more than 5 million people, upended lives and disrupted economies across the globe.
While much remains to be learned about the new variant, researchers are concerned that it may be more resistant to the protection provided by vaccines and could mean that the pandemic lasts for longer than anticipated.
Cases involving the omicron variant have already been confirmed on multiple continents, with Germany, Italy, Belgium, Israel and Hong Kong all reporting cases in recent days.
The United States’ top infectious diseases expert, Dr. Anthony Fauci, said he would not be surprised if the omicron variant was already in the US, too.
“We have not detected it yet, but when you have a virus that is showing this degree of transmissibility ... it almost invariably is ultimately going to go essentially all over,” Fauci said on NBC television.
In Australia, the New South Wales health department said Sunday that urgent genomic testing was being done on samples taken from two passengers who arrived in Sydney from southern Africa the day before and tested positive on arrival.
The department said the travelers were from one of nine African countries that are now required to quarantine in a hotel upon arrival in Sydney. The countries are South Africa, Lesotho, Botswana, Zimbabwe, Mozambique, Namibia, Eswatini, Malawi and the Seychelles.
New Zealand’s COVID-19 Response Minister Chris Hipkins said the island nation was taking a precautionary approach. From late Sunday, only New Zealand citizens from nine African countries will be allowed entry to New Zealand, and they will be required to spend two weeks in a quarantine hotel run by the military.
Hipkins said officials were confident the variant hadn’t entered New Zealand and they were well placed to keep it out.
Many countries have slapped restrictions on various southern African countries over the past couple of days, including Brazil, Canada, the European Union, Iran and the US, in response to warnings over the transmissibility of the new variant. This goes against the advice of the World Health Organization, which has warned against any overreaction before the variant was thoroughly studied.

Omicron variant likely to be circulating in France — health minister

Omicron variant likely to be circulating in France — health minister
Updated 57 min 38 sec ago

Omicron variant likely to be circulating in France — health minister

Omicron variant likely to be circulating in France — health minister
  • The government was tightening restrictions to contain the spread of the virus

PARIS: The Omicron variant of the coronavirus is probably already circulating in France, its health minister said on Sunday, adding that the government was tightening restrictions to contain its spread.
“There is no identification yet, but it’s a matter of hours,” Olivier Veran told reporters at a vaccination center in Paris.


Solomon Islands PM says riots ‘orchestrated’ to remove him

Solomon Islands PM says riots ‘orchestrated’ to remove him
Updated 28 November 2021

Solomon Islands PM says riots ‘orchestrated’ to remove him

Solomon Islands PM says riots ‘orchestrated’ to remove him
  • The prime minister said violence that swept the capital had been orchestrated by a few people to topple him

SYDNEY: The prime minister of the Solomon Islands defied pressure to resign Sunday, saying violent rioting that swept the capital had been orchestrated by a few people with “evil intention” to topple him.
“It is very clear that the recent events were well planned and orchestrated to remove me as the prime minister for unsubstantiated reasons,” Prime Minister Manasseh Sogavare said in an address broadcast to the Pacific island nation.
“I want to show the nation that the government is fully intent and nothing will move us. We must and will never bow down to the evil intention of a few people,” Sogavare said.
Many residents of the Pacific island nation of 800,000 people believe their government is corrupt and beholden to Beijing and other foreign interests.
Protesters have channelled their anger directly at Sogavare and his government, with mobs attempting to torch parliament and the prime minister’s private residence as police fired tear gas and warning shots.
Sogavare has previously blamed the three days of violence — during which rioters incinerated swathes of the capital before the unrest died down at the weekend — on an unscrupulous few leading others astray with false information.
“We must and will never bow down to the evil intention of a few people. We must stand up to intimidation, bullying and violence. We owe this to our children and the majority of our people who cannot defend themselves,” the Solomon Islands leader said.
He said the violence, centered on the capital’s Chinatown, had caused 200 million Solomon Islander dollars ($25 million) in damage and destroyed 1,000 jobs in an economy already squeezed by the impact of the pandemic.
Sogavare said the government was working on a recovery package to help damaged businesses recover.
The prime minister repeated a promise to hold the unidentified “instigators” responsible.
“Rest assured that they will face the full brunt of the law and arrests are already being made as investigations continue, with more arrests to follow,” he said.


Iranian, Chinese and Russian diplomats meet ahead of nuclear talks

Iranian, Chinese and Russian diplomats meet ahead of nuclear talks
Updated 28 November 2021

Iranian, Chinese and Russian diplomats meet ahead of nuclear talks

Iranian, Chinese and Russian diplomats meet ahead of nuclear talks
  • Bilateral and trilateral meetings were held in Vienna ahead of a resumption in nuclear talks to revive a 2015 agreement between Iran and major powers

DUBAI: Iran’s negotiating team, led by Ali Bagheri Kani, held bilateral and trilateral meetings in Vienna on Sunday, the semi-official ISNA news agency reported, ahead of a resumption in nuclear talks to revive a 2015 agreement between Iran and major powers.
“The Iranian team arrived on Saturday in Vienna and started meetings which continued on Sunday at an expert level with the heads of the Russian and Chinese negotiating teams, as well as the EU Coordinator Enrique Mora,” Iranian diplomat Mohammadreza Ghaebi told ISNA.


Australia confirms two cases of COVID-19 Omicron variant

Australia confirms two cases of COVID-19 Omicron variant
Updated 28 November 2021

Australia confirms two cases of COVID-19 Omicron variant

Australia confirms two cases of COVID-19 Omicron variant
  • Both passengers came from southern Africa and arrived in Australia
  • Another 12 passengers from southern Africa in the same flight did not test positive for COVID-19 but have been placed in quarantine

SYDNEY: Australia confirmed on Sunday that two people arriving from southern Africa over the weekend had tested positive for the Omicron coronavirus variant, adding to a growing number of countries fighting the highly infectious strain.
Health officials in New South Wales, the most populous state, said both passengers had arrived in the state capital, Sydney, on Saturday evening and tested positive for COVID-19 late that night, before genome sequencing confirmed the Omicron variant on Sunday.
Australia joins Britain, Germany and Italy in detecting Omicron cases over the weekend as more nations imposed restrictions on travel from southern Africa.
Both people were asymptomatic, fully vaccinated and in quarantine, said NSW Health. Another 12 passengers from southern Africa were also in 14 days of hotel quarantine, while around 260 other passengers and aircrew have been directed to isolate.
“Close contacts will be contacted regularly, and compliance checks will be undertaken,” the health department said in a statement.
Australia imposed new restrictions https://www.reuters.com/world/asia-pacific/australia-declare-new-travel-curbs-due-new-virus-strain-media-2021-11-27 on Saturday on people who have been to nine southern African countries, as the highly infectious variant raises concerns about another wave of the pandemic.
The countries are South Africa, Namibia, Zimbabwe, Botswana, Lesotho, Eswatini, the Seychelles, Malawi and Mozambique.
New Zealand announced fresh measures from Sunday evening.
COVID-19 Response Minister Chris Hipkins said late on Saturday that only New Zealand citizens will be allowed to travel into the country from the nine southern African nations.
Citizens would be required to stay in managed isolation for a full 14 days, as well as undergo testing, he said in a statement.
Australia early this month eased its international border restrictions for the first time during the pandemic, allowing fully vaccinated residents to return to the country without quarantine after higher vaccination levels.
Australia had largely stamped out infections for most of this year until an outbreak of the highly infectious Delta variant in late June spread rapidly across its east. About 205,000 cases and 1,985 deaths have been recorded so far, lower than many other countries in the developed world.