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from The Great Debate:

A NATO ally stays on sidelines of fight against Islamic State

U.S. President Barack Obama listens as he hosts a bilateral meeting with Turkey's President Tayyip Erdogan during the NATO Summit at the Celtic Manor Resort in Newport, Wales, in the United Kingdom

Few countries are in a better position than Turkey to help the United States fight Islamic State. The moderate Islamic country shares a 750 mile border with Syria, is a NATO member and a long-time ally of America. But don’t hold your breath for Turkey’s support.

For a long time, Turks have resented the “curse of strategic significance” related to its forming NATO’s southern flank. They felt it enabled the military to keep a watchful eye over their politicians. Likewise, it fueled the politicians’  sense of impunity that shielded them from the need for reform.

This was part of the reason why, at the time of the 2003 invasion of Iraq, Turkey refused to provide logistic support for the U.S.-led invasion to bring down Saddam Hussein. The chaos into which Iraq then descended after 2003 only reinforced the ruling AK party’s supporters of the validity of Turkey’s bid to go its own way.

The government calls this policy “zero problems with neighbors.” This self-explanatory catchphrase was introduced by Ahmet Davutoglu, the Turkish premier and former foreign minister. It signaled the beginning of a new era in Turkish foreign policy, and troubles for Western allies that relied on it.

from MacroScope:

End game in east Ukraine?

A Ukrainian serviceman sits on a military armoured vehicle near Donetsk

Ukrainian government forces say they are preparing for the final stage of recapturing the city of Donetsk from pro-Russian separatist rebels after shelling its outskirts and making significant gains over the weekend.

The city faces increasing shortages of food, water and electricity. Vladimir Putin must now decide whether to leave the rebels to their fate or step up his support.  Kiev said on Saturday it had headed off an attempt by Russia to send troops into Ukraine under the guise of peacekeepers accompanying a humanitarian convoy sanctioned by the Red Cross. Moscow dismissed the allegation as a "fairy tale".

from The Great Debate:

Iraq airstrikes: You read the news, now get the context

Relatives mourn the death of a Kurdish People's Protection Units (YPG) fighter, killed during clashes with Islamic State fighters in the Iraqi city of Rabia on the Iraqi-Syrian border, during his funeral in Ras al-Ain

Once you read the latest news about the U.S. airstrikes and humanitarian drops in Iraq, turn to commentary for the context you need to fully understand what is happening and how we got here. Here is a quick tour:

You can start with incisive background from Spencer Ackerman, national security editor at the Guardian. He provides additional framework for the Obama administration’s decision to use air power. It’s about far more than protecting U.S. advisers in Irbil, Ackerman says. He lays out why the White House felt compelled to protect the pro-U.S. Kurds against the Islamic State of Iraq and the Levant (ISIL, also known as ISIS). Ackerman then looks at the possible military hardware involved. His reporting continues today with Dan Roberts here.

from MacroScope:

When Mario met Jean-Claude

European Central Bank President Draghi and Eurogroup President -Juncker talk during a news conference in Nicosia, Cyprus

A day before the European Central Bank’s monthly policy meeting, ECB President Mario Draghi will travel to Luxembourg for talks with incoming European Commission president Jean-Claude Juncker. Oh to be a fly on the wall.

Some in the ECB are concerned that ultra-low sovereign borrowing costs and Draghi’s “whatever it takes” promise has relieved pressure on euro zone governments to carry on with structural economic reforms.
Juncker has signalled he is comfortable with a Franco-Italian drive to focus on growth and job creation rather than cutting debt.

from MacroScope:

Sanctions tighten

Britain's PM Cameron, Portugal's PM Passos Coelho, Germany's Chancellor Merkel and Finland's PM Stubb attend an EU leaders summit in Brussels

EU leaders failed to get anywhere on sharing out the top jobs in Brussels last night but did manage another round of sanctions against Russia.

This time they will target Russian companies that help destabilize Ukraine and will ask the EU's bank, the European Investment Bank, to suspend new lending for Russia and seek a halt to new lending to Russia by the European Bank for Reconstruction and Development.

from MacroScope:

Erdogan on the move

Turkey's PM Erdogan walks to his plane at Esenboga Airport in AnkaraTurkey’s ruling AK party is due to announce its presidential election candidate. Prime Minister Tayyip Erdogan is widely expected to announce his presidential bid, and then emerge victorious in the polls after a 40-day election campaign. Polls give Erdogan around 55 percent of the vote and a 20 point lead.

Under Erdogan, Turkey has made great strides economically and diplomatically but some if not much of that progress has been tarnished by a crackdown over the past year on anti-government protests and a purge of the judiciary and police in response to corruption charges against his acolytes which the premier says represent a plot by shadowy forces to oust him.

from MacroScope:

The Mark and George show

The Mansion House dinner in the City of London is one of Britain’s big set-pieces of the year featuring speeches by Bank of England Governor Mark Carney and finance minister George Osborne.

Carney will be speaking a week before the Bank’s Financial Policy Committee meets and is expected to road test its new tools to calm the housing market. Among other measures, the BoE could recommend caps on the size of home loans granted in relation to a property’s value or a borrower’s salary.

from MacroScope:

PMIs next signpost for ECB

Following a mixed bag of euro zone GDP data last week which showed Germany charging on and Spain holding its own but France stagnating and Italy, Portugal and the Netherlands slipping back into contraction, flash PMI surveys for the euro zone, Germany and France certainly have the power to jolt the markets today.

As things stand, there seems little to dissuade the European Central Bank from loosening policy next month. Five senior sources told us it was  preparing a package of policy options for its early June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms.

from MacroScope:

Smoke signals from the Bank of England

Given the silence that attends Bank of England policy meetings which result in no change of course, today’s quarterly inflation report is the main chance to hear the latest thinking. Governor Mark Carney will talk to the media for an hour or so after its release.

The ongoing strength of economic data means the odds of a first interest rate rise this year are narrowing and one could certainly come before May 2015 elections, an unwelcome prospect for the government.

from MacroScope:

Talking the talk

European Central Bank President Mario Draghi delivers a speech in Amsterdam which will fixate the markets following his recent statement that a stronger euro would prompt an easing of monetary policy.

Most notably via his Clint Eastwood-style “whatever it takes” declaration the best part of two years ago, Draghi has proved to be peerless in the art of verbal intervention. But even for him there is a law of diminishing returns which may require words to be backed up with action before long. 

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