MacroScope

Erdogan on the move

By Mike Peacock
July 1, 2014

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.

If he wins he is expected to exercise far more power than his presidential predecessor. Aides have said he would rule with a “council of wise men” made up partly of close allies and would oversee top government business, effectively sidelining some ministries and ministers.

One of the few potential checks on Erdogan’s leadership is the presidency’s power to throw out legislation, though that has largely been left unexercised by incumbent Abdullah Gul. As president with an iron grip on government, Erdogan would presumably look to rule supreme.

If they are true to their word, EU member states should be deciding today, or if not today very soon, whether to impose tougher sanctions on Russia. Kiev’s ceasefire expired overnight and Ukrainian President Petro Poroshenko said government forces would renew offensive operations against pro-Russian rebels in the east who he blamed for failing to keep a truce.

That followed a telephone conversation between German Chancellor Angela Merkel, Russia’s Vladimir Putin, Poroshenko and French President Francois Hollande – the second in successive days.

At a summit last week, EU leaders said they were ready to meet again at any time to adopt new sanctions against Russia and could target new people and companies with asset freezes this week. But, given its energy reliance on Russia, the bloc is much more hesitant than Washington about deploying the sweeping trade embargoes that would really hurt.

Putin speaks to a gathering of Russian ambassadors in Moscow, an event which is held once every two years.
Iraqi lawmakers convene today, under pressure to name a unity government to keep the country from splitting apart after Sunni Islamists who have seized much of the north and west of the country declared a “caliphate”.

The meeting of the new legislature could spell the end of the eight-year rule of Shi’ite Islamist Prime Minister Nuri al-Maliki, some of whose allies are now saying he needs to be replaced by a less polarising figure.

Italy takes over the revolving EU presidency for the second half of the year with its premier, Matteo Renzi demanding a renewed focus on growth rather than austerity manifested in a more relaxed interpretation of the bloc’s debt rules and having a strong showing in May’s EU elections in his pocket to give him some clout.

EU leaders signalled at their summit that they were ready to give member states extra time to consolidate their budgets as long as they pressed ahead with economic reforms though there is no question of actually changing the Stability Pact rules which already allow for some wiggle room. As before, the attitude to all this depends on which country’s ministers you are talking about.

Today we get to hear from European Council President Herman Van Rompuy and German Finance Minister Wolfgang Schaeuble among others.

Monthly manufacturing PMI surveys around the euro zone and from Britain will pack their usual punch. Flash readings just over a week ago showed the euro zone’s private sector expansion unexpectedly slowed last month with companies continuing to cut prices to drum up business. Germany expanded robustly, although a little more slowly while France’s private sector shrank at the fastest rate in four months.

South Africa’s new finance minister, Nhlanhla Nene, speaks at the annual Thomson Reuters Economist of the Year event. The backdrop is not auspicious with more than 220,000 engineering and metalworkers downing tools in another blow to an economy which contracted in the first quarter and was already reeling from a five-month platinum mining strike which only ended last week.

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