Monthly: May 2018

Trump to Impose Tariffs on $50B of China’s Tech Goods

The White House says it plans to impose 25 percent tariffs on $50 billion of Chinese goods that contain “industrially-significant technology” as trade talks between United States and China continue.

The White House said Tuesday the proposed tariffs are in response to China’s practices with respect to technology transfer, intellectual property, and innovation.  It will announce the final list of covered imports by June 15, 2018, and the tariffs will be imposed shortly thereafter.

The Trump administration made the announcement in a statement called “Steps to Protect Domestic Technology and Intellectual Property from China’s Discriminatory and Burdensome Trade Practices.”

Other punitive steps include implementing stronger investment restrictions and enhanced export controls for Chinese citizens and companies related to the acquisition of industrially significant technology to protect national security. 

The proposed investment restrictions and export controls will be announced by June 30, 2018 and adopted shortly thereafter, according to the White House.

Trade barriers

In addition, the Trump administration said trade talks with China will continue and it will request China remove all of its many trade barriers, including non-monetary trade barriers, and that tariffs and taxes between the two countries be “reciprocal in nature and value.” 

In response to the latest threat of tariffs from the White House, the Chinese Ministry of Commerce said in a short statement it is “surprised” by the announcement but added it “also expects it.”

The Chinese ministry’s statement claimed the White House move “was apparently contrary to the consensus both sides reached recently.”

“China has the confidence, ability, and experience to safeguard its core interests, China urged the United Sates to act in accordance to the spirit of their recent joint statement,” it said.

In April, Trump announced he planned to impose tariffs on $150 billion worth of Chinese goods, and Beijing responded by declaring it will retaliate by imposing similar amount of tariffs of imported American goods.

China in violation

The Trump administration’s decision to take action is a result of an investigation conducted by the U.S. Trade Representative under Section 301 of the Trade Act of 1974 to determine whether Beijing’s trade practices may be “unreasonable or discriminatory” and may be “harming American intellectual property rights, innovation or technology development.”

After a seven-month investigation, the USTR found the policies were in violation.

The United States and China subsequently conducted two rounds of trade talks aimed at avoiding a full-blown trade war. The last round of trade talks was concluded on May 19 after both sides reached a deal for Beijing to buy more American goods to “substantially reduce” the huge trade deficit with the United States. But there was no mention of any specific import and export targets in the statement agreed to by the two countries.

Following the trade talks in Washington, U.S. Treasury Secretary Steven Mnuchin announced the world’s two biggest economic powers have agreed to back away from imposing tough new tariffs on each other’s exports.

Trump initially touted the agreement, but later contended he was neither pleased nor satisfied with the result.

U.S. Commerce Secretary Wilbur Ross is set to go to Beijing this week to negotiate on how China might buy more American goods to reduce the huge U.S. trade deficit with Beijing, which last year totaled $375 billion.
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Starbucks to Close Stores for Anti-Bias Training

In an effort to stem the outcry over the arrest of two black men at one of its stores, Starbucks will close 8,000 U.S. stores Tuesday afternoon for anti-bias training for its employees. 

On April 12, two black men went to a Philadelphia store and did not buy anything; instead, they told the store manager they were waiting for a friend to join them. They were asked to leave and an employee called police, which led to their arrest, prompting protests and accusations of racism. 

A video of the incident that was posted on social media became a major embarrassment for the coffee chain.

Soon after, Starbucks announced a policy change, welcoming anyone to sit in its cafes or use its restrooms, even if they don’t buy anything.

Previously, it was left to individual store managers to decide whether people could access Starbucks premises without making a purchase. 

“We are committed to creating a culture of warmth and belonging where everyone is welcome,” Starbucks said in a statement. 

The company has asked employees to follow established procedure when dealing with “disruptive behaviors,” and are still asked to call 911 in case of “immediate threat or danger” to customers or employees. 

The men who were arrested in April, settled with Starbucks earlier this month for an undisclosed sum and an offer of a free college education for each of them. 

They also reached a deal with the city of Philadelphia for a symbolic $1 each and a promise from city officials to set up a $200,000 program for young entrepreneurs.

 
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Starbucks Training a First Step, Experts Say, in Facing Bias

Starbucks will close more than 8,000 stores nationwide Tuesday to conduct anti-bias training, the next of many steps the company is taking in an effort to restore its tarnished diversity-friendly image.

The coffee chain’s leaders reached out to bias training experts after the arrest of two black men at a Philadelphia Starbucks last month.

The plan has brought attention to the little-known world of “unconscious bias training” used by corporations, police departments and other organizations. It’s designed to get people to open up about implicit biases and stereotypes in encountering people of color, gender or other identities.

A video previewing the training says it will include recorded remarks from Starbucks executives as well as rapper and activist Common. From there, the company says, employees will “move into a real and honest exploration of bias.”

 
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China Rejects US Charge of "Forced Technology Transfer’ at WTO

China told the World Trade Organization’s dispute settlement body on Monday that U.S. accusations that Beijing forced companies to hand over technology as a cost of doing business in China were groundless.

U.S. President Donald Trump has accused China of stealing American ideas and announced a plan for a $50 billion tariff penalty against Chinese goods.

Both sides launched legal complaints at the WTO over the issue earlier this year.

“There is no forced technology transfer in China,” Chinese Ambassador Zhang Xiangchen told the meeting, according to a copy of his remarks provided to Reuters.

“According to the U.S.’s view, China forces the U.S. companies to transfer technologies by imposing joint venture requirements, foreign equity limitations and administrative licensing procedures,” Zhang said.

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

Zhang said the U.S. argument involved a “presumption of guilt.” The U.S. Trade Representative believed U.S. firms in China faced an obligation to hand over technology, while failing to produce a single piece of evidence.

Some of its claims were “pure speculation,” he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

‘Diligence and entrepreneurship’

Technology transfer was a normal commercial activity that benefited the United States most of all, he said, while Chinese innovation was driven by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that takes years to settle.

The United States, which launched its complaint on March 23, could have used the dispute meeting on Monday to take that step. China could do so at next month’s meeting.

But since the dispute erupted, U.S.-China trade policy has been the subject of high-level bilateral talks. Trump tweeted cryptically that “our trade deal with China is moving along nicely” but that it probably needed a “different structure.”

The United States put China’s technology transfer policies on the agenda of Monday’s meeting, without elaborating. A copy of the U.S. remarks was not immediately available.
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New Zealand Begins Mass Cull to Eradicate Cow Disease

New Zealand will slaughter more than 100,000 cows in an effort to eradicate a bacterial disease.

The government and agricultural leaders announced Monday that it will spend over $600 million over the next decade to rid the country of Mycoplasma bovis, which causes udder infections, pneumonia, arthritis and other illnesses. The bacteria is not a threat to humans, but can cause production delays on farms.

“This is a tough call,” said Prime Minister Jacinda Ardern. “But the alternative is to risk the spread of the disease across our national herd.”

Mycoplasma bovis has been detected on more than three dozen farms since it was first detected in New Zealand last year, leading to the slaughter of about 26,000 cattle. The country is the world’s largest exporter of milk and dairy products.

 
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Vietnam Is Following China in its Economic Development

Vietnam is imitating China in its efforts to grow economically and lags its larger neighbor only by about a decade, experts say.

The two communist countries, though political rivals, have built up their state-controlled economies on job creation through factory work for export. 

China opened that effort to foreign investment in 1978 and Vietnam got started 10 years later. Now Vietnam is grappling with corruption, traffic gridlock and the sinking performance of state-run companies as its middle class grows, all hallmarks of China’s development.

In the latest sign of similarity, Vietnam’s National Assembly is examining a bill to let the country run three special economic zones. It has a chance of passing next month. The zones would offer foreign factory investors tariff exemptions and long land leases, Vietnamese news website VnExpress International says. China created its first four zones in 1979 to attract foreign investment. It now has 32.

“I don’t know whether it’s deliberate or otherwise, but it seems there is that hint of taking that page from the CPC playbook — Chinese Communist Party,” said Song Seng Wun, economist in the private banking unit of CIMB.

“Vietnam has a Communist Party, so I suppose there is that kind of ‘if China is doing it, we can also perhaps adapt it to Vietnamese conditions.’”

Controlled economy and factory work

Governments in both countries turned to factory work to employ large, uneducated populations, said Ralf Matthaes, founder of the Infocus Mekong Research consultancy in Ho Chi Minh City.

Reliance on factory work, especially for export, drove Chinese economic growth of about 10 percent per year over the decade to 2010. Vietnam’s economy has expanded at more than 6 percent annually since 2015.

Vietnam, like China a decade ago, depends largely on production of low-tech exports such as garments, furniture and car parts. China is moving up the value chain into high tech, and leaning more on services.

Companies from Japan, Singapore, South Korea and the West often offshore factory work to China as well as Vietnam to save on labor costs. China has been dubbed the “world’s factory” and Vietnam a “China+1” destination for investors looking to expand production to a cheaper country.

“How do you employ a bunch of unskilled workers?” Matthaes said. “Obviously mass manufacturing is one way. I think even though Vietnam holds Singapore in high regards in terms of ‘Singapore’s our greatest model,’ it’s China.”

Five years ago Vietnam’s ambassador to Singapore called relations with the fellow Southeast Asian country a model as trade links were growing then. Vietnam, though dependent on China for trade, regards China as a political rival. They fought a border war in the 1970s and now dispute sovereignty over parts of the South China Sea.

Managing outcomes of fast growth

Outcomes of factory-driven economic growth that China saw a decade ago are showing now in Vietnam, analysts note.

The number of Vietnamese who are middle class and higher will double between 2014 and 2020 to about one-third of the country’s population of 93 million, the Boston Consulting Group says. China says just 3.1 of its 1.38 billion people lived in poverty last year.

In other signs of following China, Vietnamese workers are known for job hopping within a few months for higher pay and showing it off with expensive smartphones, new cars and meals at expensive restaurants. Traffic is starting to thicken in the financial center Ho Chi Minh City as it has in China’s major cities such as Beijing and Shanghai since 2000.

Vietnam’s crackdown on corruption that went public in 2017 also followed the Chinese anti-graft campaign that experts say became more rigorous in 2012.

It’s Vietnam’s turn now to make its state-owned firms perform well or be sold off, analysts say. State-owned enterprises, another feature of communist countries, dominated the Vietnamese stock exchange from its inception in 2000 through 2005 as those assets were sold, said Kevin Snowball, chief executive officer with PXP Vietnam Asset Management in Ho Chi Minh City.

Thousands of Vietnam’s state firms have been all or partly privatized. China began reforming its state firms about 20 years ago and is still pressing them to change following a decline in profits in 2015 due to issues with corporate governance and labor productivity.

“Vietnam established the stock market in order to sell state assets basically, because when it started, essentially everything that was listed was state owned up until the end of 2005,” Snowball said. 

“The government needs to spend probably 25 billion dollars a year on infrastructure development in order to keep encouraging (foreign direct investment) to come in, and sale of state assets is partially funding that,” he said.
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New York Clothing Store Sells Gender Neutral Lifestyle

New shops appear in New York City every day, but Phluid Project, which recently opened its doors on Broadway, is different. One of the first gender-fluid boutiques in the world, Phluid Project sells clothing for men, women and everyone in between. Both the clothes and the mannequins here are gender-neutral, and as an added selling point, its store owners say the prices are more than affordable. Elena Wolf visited the one-of-a-kind store, where no one feels out of place.
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Russia, Turkey OK Pipeline Deal, End Gas Dispute

Russian state gas giant Gazprom said Saturday it had signed a protocol with the Turkish government on a planned gas pipeline and agreed with Turkish firm Botas to end an arbitration dispute over the terms of gas supplies. 

The protocol concerned the land-based part of the transit leg of the TurkStream gas pipeline, which Gazprom said meant that work to implement it could now begin.

Turkey had delayed issuing a permit for the Russian company to start building the land-based parts of the pipeline, which, if completed, would allow Moscow to reduce its reliance on Ukraine as a transit route for its gas supplies to Europe.

A source said in February the permit problem might be related to talks between Gazprom and Botas about a possible discount for Russian gas.

Turkish President Tayyip Erdogan said earlier Saturday that Turkey and Russia had reached a retroactive agreement for a 10.25 percent discount on the natural gas Ankara buys from Moscow.

Gazprom said in the Saturday statement, without elaborating, that the dispute with Botas would be settled out of court.

 
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Italy’s President Pressured to Accept Euroskeptic Minister

Italy’s would-be coalition parties turned up the pressure on President Sergio Mattarella on Saturday to endorse their euroskeptic pick as economy minister, saying the only other option might be a new election.

Mattarella has held up formation of a government, which would end more than 80 days of political deadlock, over concern about the desire of the far-right League and anti-establishment 5-Star Movement to make economist Paolo Savona, 81, economy minister.

Savona has been a vocal critic of the euro and the European Union, but he has distinguished credentials, including in a former role as an industry minister.

Formally, Prime Minister-designate Giuseppe Conte presents his cabinet to the president, who must endorse it. Conte, a little-known law professor with no political experience, met the president on Friday without resolving the

deadlock.

“I hope no one has already decided ‘no,’ ” League leader Matteo Salvini shouted to supporters in northern Italy. “Either the government gets off the ground and starts working in the coming hours, or we might as well go back to elections.”

Later, 5-Star leader Luigi Di Maio said he expected there to be a decision on whether the president would back the government within 24 hours.

5-Star also defended Savona’s nomination. “It is a political choice. … Blocking a ministerial choice is beyond [the president’s] role,” Alessandro Di Battista, a top 5-Star politician, said.

Mattarella has not spoken publicly about Savona, but through his aides he has made it clear he does not want an anti-euro economy minister and that he would not accept the “diktat” of the parties.

Jittery markets

Savona’s criticism of the euro and German economic policy has further spooked markets already concerned about the future government’s willingness to rein in the massive debt, worth 1.3 times the country’s annual output.

The League and 5-Star have said Savona should not be judged on his opinions, but on his credentials. Savona has had high-level experience at the Bank of Italy, in government as industry minister in 1993-94, and with employers lobby Confindustria.

On his new Facebook page, Conte said he had received best wishes for his government in a phone call with French President Emmanuel Macron.

European Commissioner for Economic Affairs Pierre Moscovici was not hostile when asked about Savona in an interview with France’s Europe1 radio, saying he would work with whomever Italy named.

“Italians decide their own government,” Moscovici said. “Italy is and should remain a country at the heart of the eurozone. … What worries me is the debt, which must be contained.”

The prospect of Italy’s government going on a spending spree on promised tax cuts and welfare benefits roiled markets last week.

On Friday, the closely watched gap between the Italian and German 10-year bond yields, seen as a measure of political risk for the eurozone, was at its widest in four years at 215 basis points.

The chance that the new government will weaken public finances and roll back a 2011 pension reform prompted Moody’s to say — after markets had closed Friday — that it might downgrade the country’s sovereign debt rating.

Moody’s has a Baa2 long-term rating with a negative outlook on Italy. A downgrade to Baa3 would take the country’s debt to just one notch above junk.

Despite the recent surge, Italian yields are well below the peaks they reached during the eurozone crisis of 2011-12, thanks mainly to the shield provided by the European Central Bank’s bond-buying program.
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Kenya Moves to Regulate Digital-Fueled Lending Craze

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.

Now, a proliferation of lenders are using the same technology to extend credit to the banked and unbanked alike, saddling borrowers with high interest rates and leaving regulators scrambling to keep up.

This week, the finance ministry published a draft bill on financial regulation that covers digital lenders for the first time. A key aim is to ensure that providers treat retail customers fairly, it said.

“We have a lot of predatory lending out here, which we want to regulate,” Geoffrey Mwau, director general of budget, fiscal and economic affairs at the treasury, told reporters Thursday.

Test case for lending

As it was for mobile cash, Kenya is something of a test case for the new lending platforms. Several of the companies involved, including U.S. fintech startups, have plans to expand in other frontier markets, meaning Kenya’s regulation will be closely watched.

From having had little or no access to credit, many Kenyans now find they can get loans in minutes.

George Ombelli, a salesman for a company importing bicycles who also owns a hair salon and cosmetics shop with his wife, has borrowed simultaneously from four providers over the past year.

He took small loans from two Silicon Valley-backed U.S. fintech firms, Branch and Tala, to see what rates he would get, as well as from a new mobile app launched by Barclays Kenya in March and a business loan from Kenya’s Equity Bank.

Citing a slowdown in his business because of elections-related political turmoil last year, Ombelli said he has fallen behind on some of his payments. He fears he will be reported to one of Kenya’s three credit bureaus, jeopardizing his chances of being able to borrow more to grow his business.

​‘Too many loans is a problem’

“I’ve realized having too many loans is a problem,” the 38-year-old father of three said in an interview in a coffee shop in Nairobi’s business district.

He is not alone. In the last three years, 2.7 million people out of a population of around 45 million have been negatively listed on Kenya’s Credit Reference Bureaux, according to a study by Microsave, which advises lenders on sustainable financial services.

For 400,000 of them, it was for an amount less than $2.

Global implications

Some of the fintech lenders are expanding into other African countries and into Latin America and Asia, saying their aim is to help some of the billions of people who lack bank accounts, assets or formal employment climb the economic ladder.

Tala says it has granted more than 6 million loans worth more than $300 million, mainly in Kenya, since it launched in Kenya in 2014. It is expanding its newer businesses in Mexico, Tanzania and the Philippines and is piloting in India.

Tala and Branch argue that their technology, which relies on an algorithm that builds a financial profile of customers, minimizes the risk of default. They say they strive to play a helpful role in planning for tighter regulation.

“We believe that credit bubbles and over-indebtedness will be a challenge over the next decade. (Credit Reference) Bureaus and regulation will be a big part of the solution,” said Erin Renzas, a Branch spokeswoman.

Branch says it expects to grant about 10 million loans worth a total of $250 million this year in Kenya and its other markets, Nigeria and Tanzania.

High interest rates

The current status of the sector, outside the direct remit of the central bank, allows providers, both banks and others, to skirt a government cap on interest of four points above the central bank’s benchmark interest rate, which now stands at 9.5 percent.

Market leader M-Shwari, Kenya’s first savings and loans product introduced by Safaricom and Commercial Bank of Africa in 2012, charges a “facilitation fee” of 7.5 percent on credit regardless of its duration.

On a loan with a month’s term, this equates to an annualized interest rate of 90 percent. The shortest loan repayment period is one week. A Safaricom spokesman referred Reuters to the CBA for comment. Calls to their switchboard and an email were not answered on Thursday.

Tala and Branch, number four and six in a ranking based on usage data by FSD Kenya, offer varying rates depending on the repayment period.

Their apps, downloaded by Reuters, each offered a month’s loan at 15 percent, equating to 180 percent over a year. Both companies say rates drop dramatically as people pay back successive loans.

Barclays Kenya launched an app in March offering 30-day loans with an interest rate of just less than 7 percent, still a hefty 84 percent annual equivalent rate. Reuters was unable to reach their spokespeople by telephone.

The new draft bill says digital lenders will be licensed by a new Financial Markets Conduct Authority and that lenders will be bound by any interest rate caps the Authority sets. But it is not clear if digital lenders are subject to such caps and the current government cap on banks’ interest rates is under review.

Introduced in 2016 to stop banks charging high interest rates, the cap has stifled traditional bank lending and the International Monetary Fund has conditioned Kenya’s continued access to balance of payments support on its removal.

But members of parliament say the public has had enough of high interest rates and the draft does not say the cap will be lifted. The finance ministry will come up with a final version of the bill in the next few weeks before sending it to parliament.
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Markets Disrupted as Italy’s Populists Negotiate Cabinet

Italy’s prime minister-designate, Giuseppe Conte, a political novice and obscure law professor accused of padding his resume, put the finishing touches to his cabinet lineup Friday. And initial reaction from financial markets was far from approving.

Italian government bond prices slumped and the country’s ailing banks saw their stock prices hit an 11-month low. Italy’s outgoing economy minister, Pier Carlo Padoan, warned the incoming coalition government of the anti-establishment Five Star Movement (M5S) and far-right League not to underestimate the power of the markets.

“The most worrying aspect of the program, which this government is working on, is its underestimation of the consequences of certain choices,” Padoan told the Il Sole 24 Ore newspaper.

M5S and the League unveiled their government agreement a week ago, after more than 70 days of tortuous talks, following the country’s inconclusive parliamentary elections in March. The polls saw establishment parties trounced.

The coalition partners’ program includes massive tax cuts favoring the rich — a League demand — additional spending on welfare for the poor, and job-seekers and a roll-back of pension reforms that helped Italy weather the multi-year-long eurozone debt crisis which bankrupted Greece.

Investors — domestic and foreign — are expressing alarm about what the next few months may hold for an Italy governed by unlikely political partners. Fears include a public sector spending spree that will put Rome not only on a collision course with the European Union over budget rules. It also will weaken the already perilous state finances of Italy, the third largest economy in Europe and the second most indebted.

Some financial analysts say investors are becoming wary about European equities in general, fearing political and economic unpredictability in Italy could trigger contagion, prompting a new eurozone crisis. European markets were on track Friday to record collectively their first weekly decline since March — and investors last week withdrew the most money in nearly two years from western European funds.

“Investors should take caution as far as European equities go,” Boris Schlossberg, managing director of FX Strategy at BK Asset Management, told CNBC’s cable TV show Trading Nation this week.

Immigration

EU officials in Brussels and Italy’s half-a-million migrants are as anxious as investors. They are bracing for confrontations with the incoming populist government, whose two halves agree about very little, except when it comes to euro-skepticism and disapproval of migrants. M5S itself is split sharply between liberals and conservatives.

Earlier this week Italian President Sergio Mattarella approved Giuseppe Conte, aged 54, as the coalition’s nominee for prime minister — despite evidence that the academic had padded his resume with stints at New York University, Girton College, Cambridge and France’s prestigious Sorbonne. None of them had any record of his official attendance, although he was granted a visitor’s library card by NYU.

Conte also claimed in his resume to have founded a prominent Italian law practice, but was only an external contributor, according to the firm.

A figurehead?

Few here in Rome believe Conte, who was born in the southern region of Puglia, will be anything but a figurehead. The mutually antagonistic party leaders, M5S’ Luigi Di Maio and the League’s Matteo Salvini, weren’t prepared to give way to each other and let the other have the job — hence Conte’s nomination, which still has to be approved by parliament.

The Economist magazine suggested he might end up as the fictional valet Truffaldino, a character in an 18th century Italian comedy entitled “Servant of Two Masters.” Whether he will be able to bridge disagreements between Di Maio and Salvini is unclear — and a testimony to that, say analysts, is the party leaders’ decision to set up a “conciliation committee” to adjudicate disputes.

“Nobody knows what will happen, because this is a government without precedent and the two parties are virtually incompatible,” said Sergio Fabbrini, director of the LUISS School of Government in Rome.

Economy

The parties were locked in dispute Friday with no agreement about who should occupy the key position of economy minister. The League has been pushing for 82-year-old economist Paolo Savona, a former industry minister who wants Italy to drop the euro as its currency, which he describes as “a German cage.” Savona opposed Italy signing in 1992 the Maastricht Treaty, a key document that started the process of closer EU political integration.

Even if the League fails in its bid to secure the economic portfolio for Savona, there are plenty of likely policy clashes ahead between the EU and Western Europe’s first all-populist government, despite the fact the League is no longer demanding Italy drop Europe’s single currency and M5S is no longer pushing for a referendum on Italy’s future EU membership.

Both party leaders now talk about reforming the EU from within.

Trouble ahead

Nonetheless, flashpoints are on the near horizon. Salvini, a hardline migrant opponent, is likely to become interior minister and will oversee the coalition’s agreed to anti-immigration plans, many of which are in violation of EU law. They include truncating asylum procedures, the forcible detention of irregular migrants and the repatriation of half-million migrants, most from sub-Saharan Africa, to their countries of origin.

Next month, EU leaders are due to extend the European bloc’s sanctions on Russia, but Italy’s coalition partners are opposed, viewing Moscow as a partner, rather than foe. Both M5S and the League want the sanctions lifted that were imposed on Russia for its 2014 annexation of Crimea.

Some analysts predict the new government’s slim majority — only seven in the Senate — as well as fiscal realities, will constrain the revolutionary fervor of Italy’s populists. But others envision instability and unpredictability in the weeks and months ahead.

On Friday, the European Commission’s vice-president for the euro, Valdis Dombrovskis, issued a stark warning to Italy: “Our message from the European Commission is very clear: that it is important Italy continues to stick with responsible fiscal and macro-economic policies.”
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