Weekend Box: Slovenia elects, Fed Reserve & more
Welcome to The Weekend Box, Audley’s weekly round-up of interesting or obscure political, business, and cultural news from around the world
EUR-OKAY?
The prospect of a rapid pace in Federal Reserve rate rises sent the dollar skyrocketing to its highest point since 2017.
The DYX index, a gauge of the dollar’s strength against other developing world currencies, rose by 0.9% to just under 104; its strongest level since 2002. The dollar has strengthened due to investors' gamble that the Federal Reserve will assume a more aggressively hawkish stance than the European Central Bank and the Bank of England. It is expected that the US Central Bank will increase its interest rates in May, June, and July by 50 points to ease soaring inflation.
Simultaneously the dollar has been bolstered by the recent devaluation of the Yuan as China battles with its latest Covid resurgence. The decline of the Yuan has, according to the FT, “cast a shadow over the outlook for global growth.” This has further strengthened the dollar which tends to reap the rewards when traders decide to steer clear of risky assets.
Meanwhile, the euro plummeted to its weakest point since April 2017 on Wednesday at $1.0534 after Russia’s Gazprom suspended its gas supplies to Russia and Bulgaria. This was the icing on the cake for what has been a turbulent time for the euro.
The euro has fallen by more than 4.6% in April and is speedily heading towards its worst monthly loss in more than seven years. This is due to investors' mounting concern that the European Central Bank will not be able to increase interest rates due to the bloc’s energy-importing economy being rocked by high energy prices and the fallout from Putin’s war in Ukraine.
Foreign exchange strategist at Nomura Jordan Rochester said that the ECB is facing a period of stagflation and will find it hard to keep up with the Federal Reserve’s high-interest rates. “With lower exposure to China, and lower exposure to Ukraine,” Rochester said, " [the] US stands resilient.” For the first time in two decades, it looks increasingly likely that the dollar may soon reach parity with the euro.
BY UN-POPULIST DEMAND
It is fair to say that on Sunday, attention in the European political sphere was predominately focused on France and the nail-biting climactic battle between President Emmanuel Macron and his rival Marine Le Pen.
Meanwhile, a few hundred miles away there was another electoral battle going on in Slovenia between liberalism and the far right. After three terms, Slovenian Prime Minister Janez Janša, a far-right populist, has finally been toppled by the green-liberal Freedom Movement party and their leader Robert Golob, signalling a new era in politics for the central European country.
While Golob has experience as a politician in numerous lower-level roles, he is seen as a relative newcomer due to the hiatus he took from national politics in 2014. He decided to enter the race as a challenger to Janša after stepping away from the state-owned company GEN-I, which he co-founded and for which he had previously served as chairman. Under Golob’s leadership, Freedom Movement captured 34.53% of the vote, compared with the 23.52% obtained by Janez Janša’s Slovenian Democratic Party, winning 41 seats out of the 90 in the country’s National Assembly. It is predicted that Golob will now form a coalition with the centre-left Social Democrats and eco-socialist and democratic The Left party, which obtained 7 and 5 seats respectively, to create a 53-seat centre-left, broadly pro-European government.
Slovenians remain hopeful that the country’s new government will mark a period of transition, a return to a 'pre-Janša' state. A recent Freedom House report indicated that since Janša became the prime minister, Slovenia has faced the steepest democratic decline of all 29 countries that it monitors, predicated on factors including corruption, censorship, and the legislative process. From questionable arrangements with state-owned businesses to his infamous habit of attacking all voices in the press that disagree with him (much like Trump, who he’s professed to admiring) Janša’s government was frequently compared with Viktor Orbán’s in terms of democratic backsliding.
Addressing a crowd of jubilant supporters, Golob proclaimed that “Our objective has been reached: a victory that will enable us to take the country back to freedom.” If Golob remains true to his word to restore “normality”, effectively wiping the slate clean of Janša’s rule, the horizon looks indeed brighter and, indeed, more democratic.
FIGHTING BACK AGAINST FEMICIDE
The investigation into the disappearance and death of Debhani Escobar, an 18-year-old law student whose body was found in the Mexican city of Monterrey, has sparked nationwide outrage and protests over a phenomenon that is now chillingly customary: the abduction and murder of women and girls across Mexico.
In the latest in a series of demonstrations demanding justice for Ms. Debhani, protesters congregated outside the location where her body was found, the Nueva Castilla motel. Protesters' anger was heightened by the fact that it took nearly a fortnight for her body to be found, despite authorities searching the scene of the crime four times.
The case of Ms. Escobar is just the latest string of gender-related killings and disappearances of women this year. Citing federal crime statistics, Reuters reported that in the first two months of this year 155 women have been murdered and 748 have disappeared. Nationwide, over 25,000 women are missing.
Security experts and human rights groups have blamed pervasive impunity for the crisis in a country where over 90% of all crimes go unsolved. Activist Frida Guerrera stated that the quotidian terror against women is due to the failure of state authorities: “When a woman is killed nothing happens [...]. Police will find the body sometimes, and then the investigation just stops, so the predators are never brought to justice, and by the next day, they’ve taken another girl.” Guerra’s attribution of the emergency with the increasing lawless state of the nation was bolstered by a report released by the United Nations Committee on Enforced Disappearances last week that called for immediate actions in Mexico to combat widespread impunity in cases of enforced disappearances and death.
In response to the Committee’s report, President Andrés Manuel López Obrador (Amlo) said that their recommendations were being addressed and he vowed that the federal government is committed to reaching “zero impunity.” The president’s rhetorical pledge to dismantle the country’s deep-rooted structure of impunity projected an image of himself as a leader who is committed to protecting the country’s female citizens. However, this illusion was quickly shattered.
Following the discovery of Escobar’s body, Amlo claimed that Mexican women have no reason to be fearful because the murder and/or disappearance of women “happens everywhere.” Amlo’s dismissive and out-of-touch comment prompted a wave of criticism. The executive director of Amnesty International Mexico Olivares Ferreto voiced her fury at what she called his attempts to downplay women's fear and the government’s reluctance to accept the “legitimate struggle of Mexican women.” Stating what should be the bare minimum, Ferreto said, that all women want is for the “state to do its job” so that they can feel safe.
SWEET AND SOUR
Whilst the UK government’s tough new rules on nutrition to combat child obesity will be music to Jamie Oliver’s ears, it has received a frosty reception from the cereal behemoth, Kellogg’s.
The cereal-maker will face the full force of the government’s rules restricting the in-store promotion and advertising of foods high in sugar, salt, and fat. Under the new guidelines Kellogg’s sugar-laden cereals, such as Coco Pops and Crunchy Nut, will be banned from being featured in key locations including checkouts, aisle ends, and their online equivalents. This is a part of a series of measures to tackle the problem of obesity in the UK, which the Department of Health and Social Care (DHSC) estimates costs the NHS £6bn a year.
After failed attempts to have “reasonable conversations” with the DHSC, Kellogg’s said it had been left with no other option than to take the DHSC to court. The cereal maker, which has a history of challenging regulations against the promotion of junk food, will next week try to fight its way out of the rule changes.
In the hearing before Justice Linden next Wednesday, Kellogg’s will argue that its products have been unfairly penalised by the government’s new formula which measures a food's nutritional balance as supplied, not with the milk or yoghurt which typically accompanies them. Kellogg’s contests that the addition of dairy products changes the calculation markedly by reducing the proportion of sugar content relative to the weight of the serving. For the cereal maker, the sugar-eliminating qualities of dairy products means that its cereals should not by any stretch of the imagination be classified as junk food.
Kellogg’s belief in the magical qualities of milk or yoghurt has not convinced the DHSC. It is expected they will argue that regardless of what is added to the cereal, the regulations are proportional to the damage the breakfast cereal can do to children's health. On Wednesday, a DHSC spokesperson said: “Breakfast cereals contribute 7 per cent — a significant amount — to the average daily free sugar intakes of children [...]. Restricting the promotion and advertising of less healthy foods is an important part of the cross-government strategy to halve childhood obesity by 2030.”
The case marks the first test of the government's new rules. However, it is understood that the DHSC are determined to fight Kellogg’s legal battle to prevent a precedent being set that could allow other food companies to circumvent the new regulations.
And that’s it for this week. I hope you found something of interest that you might want to delve into further. If so, please get in touch at cwilkins@audley.uk.com.
For now, that’s the weekend box officially closed.