Aurelia Butler

ROME (Reuters) – Weak economic growth and high interest on the country’s huge debt are the main problems facing Italian Prime Minister Giorgia Meloni after her first year in power, an anniversary marked by an abrupt announcement she was leaving her long-time partner.Meloni’s coalition, the first led by a woman in Italy’s history, was sworn in a year ago after a sweeping election victory and will soon cruise past the 14-month average postwar term life for Italian governments.It was seen on taking power as the country’s most right-wing since wartime dictator Benito Mussolini, as Meloni’s Brothers of Italy party traces its roots to the post-fascist Italian Social Movement (MSI).Yet Meloni, 46, set about quelling foreign concerns of possible extremism, forging good ties with allies by adopting a strongly pro-Western, EU-friendly stance and pledging staunch support to Ukraine in its war with Russia.At home she pleased her rightist grassroots through measures to defend the traditional family, protect Italy’s cultural heritage and try to stem migrant arrivals.”We have worked tirelessly to repay the trust and to demonstrate with facts that it was possible to build a different Italy,” she said in a video message this week.However, an economic rebound from the COVID-19 pandemic has ground to a halt, with gross domestic product contracting by 0.4% in the second quarter, and analysts forecast Italian growth will be among the lowest in the euro zone next year.That makes it harder for Meloni to keep her tax-cutting promises and makes Italy’s debt, equal to 140% of national output, vulnerable to market sell-offs.”The economy is probably the toughest subject. The government has low margins in which to operate,” said Valentina Meliciani, an economics professor at LUISS university in Rome.Last week Meloni weathered the first of several reviews on Italy’s debt when S&P Global Ratings confirmed the country’s BBB rating with a stable outlook.However, the prevailing view among analysts is that the rating agencies will worsen Rome’s outlook while avoiding outright downgrades.Meloni also has personal problems to deal with. She announced on Friday she was separating from her long-time partner, TV presenter Andrea Giambruno, after he repeatedly sparked outrage for sexist comments made on and off-air.TAX CUTSThis month the government approved a 2024 budget with around 24 billion euros ($25.3 billion) of tax cuts and increased spending, despite a public debt that is proportionally the second highest in the euro zone after Greece’s.The budget has not impressed investors, and exacerbated a long-running rise in Italian bond spreads. The gap between yields on Italian 10-year bonds and the German equivalent is hovering around 2 percentage points (200 basis points), far higher than for any other euro zone country.Meliciani said Italy’s hopes of reviving its economy and cutting debt were strongly dependent on effective implementation of investment plans financed through EU post-COVID funds.So far Rome has struggled to meet Brussels’ policy conditions and to spend the money it has received.On the international front, as well as her backing for Ukraine Meloni has largely avoided confrontation with Brussels despite her eurosceptic past.She has also dropped the calls she used to make in opposition for a naval blockade to prevent boats leaving north Africa, despite her inability to halt the influx of migrants.Arrivals on Italy’s coasts have surged to more than 140,000 so far in 2023, nearly double the same period last year.”We expected Italy to be very tough (on immigration) at the EU level but we have seen a conciliatory attitude overall, they are working to find a common line,” said Enzo Moavero Milanesi, a former foreign affairs minister.COMMANDING POSITIONAt home Meloni has so far avoided the domestic political chaos that dogged so many of her predecessors.A divided opposition has helped her tighten her grip on power and keep her party at the top of the polls, with nearly 30% of voter support, against around 18.5% for the centre-left Democratic Party (PD) and 17% for the maverick 5-Star Movement.Her party dominates its coalition allies, the League and Forza Italia, whose combined score remains below 20%.Analysts believe a slice of centre-right voters switched to Meloni from the other two parties and are unlikely to shake the balance of power within the coalition by changing back again.”Meloni came after a decade of political instability and voters floating across the party spectrum. The country looks now tired of this,” said historian and politics expert Giovanni Orsina. ($1 = 0.9476 euros) More

“When you give roses to others, their fragrance lingers on your hand,” Xi Jinping told guests at the 10th anniversary celebration of his Belt and Road Initiative in Beijing last week. “Helping others is also helping oneself.” Even as China’s president played the exuberant host, welcoming world leaders from Russia’s Vladimir Putin to Indonesia’s Joko Widodo at the Great Hall of the People, an undercurrent of geopolitical animosity directed at the US was evident. He did not mention Washington by name, but when he said that “ideological confrontation, geopolitical rivalry and bloc politics are not a choice for us”, the target of his comment was clear.  For Xi, the two-day forum to celebrate the flagship $1tn global infrastructure initiative — the biggest multilateral development programme ever undertaken by a single country — was a chance to further embed China’s influence across the developing world. Dignitaries from countries that have received investment under the programme also lavished praise upon it. “The Americans spent $6tn on the so-called war on terror and the Chinese in the last 10 years spent $1tn on 3,000 projects all over the world,” says Mushahid Hussain Sayed, chair of Pakistan’s senate defence committee. “So that’s the difference,” he adds. “They [the Americans] were security-centric, military-oriented. The Chinese are economic centric, development-oriented.”Wang Yi, China’s foreign minister, also threw down the gauntlet to the west. Namechecking supposed alternatives to the BRI, the US “Partnership for Global Infrastructure” and the EU’s Global Gateway programme, Wang said he was confident in Beijing’s abilities.“Some say that these . . . initiatives can compete,” he told reporters. “Maybe we could have a competition globally about who can build more roads, railways and bridges for developing countries, who can build more schools, hospitals and sports stadiums for the ordinary people in low-income countries,” Wang said.“We have the confidence that we are able to deliver,” he added.Yet over the course of a decade, China’s initiative to finance and build infrastructure in mostly poorer countries has attracted a chorus of criticism. Many projects have been mothballed, others have resulted in developing countries building up unsustainable debts and corruption has besmirched the programme’s image.China’s capacity to deliver large infrastructure projects has never been in doubt. But the questions that critics of the BRI, who are mostly outside China, are asking is whether the project has been worth the tremendous cost and whether it can continue to operate as it has in years to come.The BRI scorecardFor China, the BRI has won valuable overseas business for its large state-owned enterprises and strengthened diplomatic ties with the countries in the so-called global south. Those links have in turn increased China’s influence within other international organisations such as the UN and allowed it to advance Xi’s political vision for the world.Recipient countries such as Pakistan find themselves able to finance projects they could never have dreamt of under old-style foreign bilateral or multilateral aid programmes, from power plants to high-speed data networks. But critics say the projects can become a debt trap and increase the economic dependency of many states on Beijing. Xi Jinping and Vladimir Putin wave with other leaders as they take part in an international forum on China’s Belt and Road Initiative at the Great Hall of the People in Beijing last week More

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Reforms that the government has put in place such as on pensions and unemployment “will bear fruit and help (…) with the budgetary situation in France, but it needs a bit more unfortunately,” Pierre-Olivier Gourinchas told France Inter. In its 2024 budget, the French government is aiming to reduce debt and to make 16 billion euros in savings. On Wednesday, the government pushed revenue legislation in the 2024 budget bill through the lower house of parliament using special constitutional powers to bypass a lawmakers’ vote, after failing to gain enough support.The spending side of the budget bill, which is to be examined by lawmakers starting next week, includes plans for 16 billion euros in savings, with 10 billion coming from the end of gas and power price caps.Finance minister Bruno Le Maire said that the decision by Moody’s (NYSE:MCO) Investment Service on Friday to maintain France’s rating “strengthens our will to cut debt and my determination to restore our public finances.” More

The central bank will make its policy more “precise and forceful”, while guiding financial institutions to cut real lending rates and reducing financing costs for firms and individuals, Pan said in the report published on the bank’s website.Efforts will be made to activate the capital markets and boost investor confidence, Pan said in the report that outlined the authorities’ near-term priorities and was delivered to the country’s parliament.Pan pledged to “implement macro policy adjustments in response to the changes in the economic situation, effectively strengthen financial supervision, focus on expanding domestic demand, boosting confidence and preventing risks, and promote a sustained recovery in the economy,” according to the report.China’s economy grew at a faster-than-expected clip in the third quarter, while consumption and industrial activity in September also surprised on the upside, suggesting a recent flurry of policy measures is helping bolster a tentative recovery.Pan also said in the report China would resolve the default risk of bonds of big real estate enterprises, preventing risk contagion in stock, bond and foreign exchange markets, and ensuring the stable operation of financial markets. More