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tv   Counting the Cost 2018 Ep 22  Al Jazeera  June 2, 2018 12:33pm-1:01pm +03

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hello and has i'm seeking this is counting the cost on al-jazeera your weekly look at the world of business and economics how the year long blockade on qatar is impacting gulf economies. techie's high stakes battle to tame its currency cool its economy and soothe investor nerves. plus pressing reset on oil find out why the world's largest producers of crude could be rethinking their strategy. a year ago before arab states saudi arabia the united arab emirates bahrain and
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egypt imposed a full land sea and air blockade on qatar the richest country in the world per person was forced to tap into its sovereign wealth fund and do everything it could to shore up its economy banking system and currency and those efforts have been paying off earlier this year it raised twelve billion dollars in a bond issue it showed that despite the rift with its gulf neighbors international investors still feel confident betting on its future growth of qatar is reshaping supply lines and developing domestic goods it's pushing ahead with its two hundred billion dollar infrastructure plan and the world's largest export liquefied natural gas is also busy forging new long term supply deals. now the i.m.f. projects the cutter's growth will come in a two point six percent in two thousand and eighteen it says the saudi economy will expand by one point seven percent the u.a.e.
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will have two percent growth but heinz outlook is for three percent growth and the international lender predicts egypt's economic growth will hit five point two percent this year well joining us now from london is a ham head of middle east and north africa at the global risk consultancy you raise a group thanks very much for being with us so what's your assessment of how qatar has weathered this blockade twelve months on. well i think qatar is in a much better position right now it seems that the economic cost of the blockade or the crisis has been limited the government has managed to intervene in certain sectors it has managed to provide some guarantees from the central bank has provided much needed liquidity so it is contained it's far from ideal obviously because of the position of qatar its geography its trade links so this is far far from a preference but i think one year after the beginning of the qatar crisis with the
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other g.c.c. members they call me is not crushing and qatar seems to have adjusted to what is a very challenging situation talk a little bit more then about the ways that qatar has adjusted to this because they are they obviously had a lot of money in terms of foreign currency reserves they had a lot of kind of ammunition so to speak with which to to weather this at the beginning didn't they absolutely i think that the sovereign wealth fund reserves were absolutely important in providing not only stability but a measure of. credibility to the financial sector that qatar has significant reserves to intervene in the market and help the government manage the crisis obviously the qatari gas exports did help the country manage its relationships with a lot of countries and make sure that the trade links and those exports are maintained l.n.g. exports but i think most importantly on the diplomatic front we've seen an effort
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to engage with alternative powers not only the u.s. but broadly to establish new trade lanes try to cement those so you have qatar not really in an isolated position internationally and that's a function of both the importance of the gas or service and gas exports but also the financial cushion that qatar has through its sovereign. a lot fun the qatar investment authority a much better situation today i would say so what's been the regional impact of the broader regional impact of this blockade so i think that perhaps the impact on the saudi economy is quite limited but it is certainly very their exports that used to go from saudi arabia to qatar industrial sector certainly agree culture goods as well that has gone down but given the size of the saudi economy that it's a very limited impact on saudi arabia i think you will see that when it comes to
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the u.a.e. and perhaps dubai in specific some of the repercussions have been more serious or more tangible be it financial transactions been shifted from dubai to new to london or new york where qatar is involved so a loss of some business volumes there and certainly when it comes to job al-ali and the exports through jalali which have now been rerouted to online and through that to to qatar so we we've seen bit of a more of an impact there i think for the g.c.c. countries at large this is not an ideal situation ican economically certainly in terms of pure economic cost the m. pact on qatar is heavier than anywhere else but given the financial reserves we haven't seen really the qatari economy crack we haven't seen a crisis develop in a way that creates panic in doha or that forces the government to spend much more
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significant amounts of for our foreign reserves to prop up the economy and one of the implications of all of this for qatar is main export main source of income which is of course l.n.g. liquefied natural gas i think the liquid of l.n.g. exports have been stable i think that global demand has been healthy and qatar's in relationship with. it's energy partners has not been damaged as a result of the gulf crisis unless there is an actual destruction in the persian gulf which is unlikely i think unless we see a confrontation with iran or a military effort against iran then. that ellen g. exports will continue it will continue to provide qatar with much needed revenue is unlikely to change any time in the future. the positive element is qatar is also
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planning to develop or further expand production over the long term so we will see additional reserves not in the next few years probably but perhaps or over a much more longer time horizon certainly given all of these dynamics i think that the leadership in qatar has options at least to strengthen its position over the long term him coming out thanks very much for being with us a pleasure and don't forget to catch al-jazeera special coverage of the qatar blockade one year on will bring you the interviews and insights from around the globe find out how everyday life has changed in qatar and where the political situation stands right now that's at eight hundred g.m.t. tuesday to fifty june on al-jazeera. a still to come on counting the cost made in rwanda vs america first how relations are souring over second hand clothes. for first turkey's currency the nearest strengthen this week after
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a major selloff which saw it hit an all time low versus the dollar it's still down around fifteen percent so far this year for ordinary turks and president tired early when it's a big source of worry he's been battling to stop the currency crisis ahead of elections next month in the past week there's been a steep interest rate hike the central bank governor has also tried to reassure foreign investors that capital controls which would block money leaving the country won't be needed although in the short term the strategy seems to have worked challenges remain on wednesday credit ratings agency moody's cut turkey's economic growth forecasts well joining us now from london is charles robertson global chief economist with renaissance capital thanks so much for being with us so what's going on with turkey's economy particularly these big swings in the currency it's taken a while but there's been a massive build up of debt private sector debt and turkey over the last ten fifteen
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years and we've been concerned for the last two to three is that at some point in the medium term like now you're going to see lending stop growth stop and then people flee turkish assets because people have been buying into turkey on the assumption it would grow five percent forever and the risk is it's going to slump into recession and why's that. because they've they've is that boring of too much is not particular the stuff the size of the boring now private sector debts about seventy percent of g.d.p. china's double up it's the scale of the increase over ten years usually coincides with excess borrowing bad borrowing decisions perhaps into real estate or or something similar and that tips over what we saw a lot in the global financial crisis a lot of eastern europe at that problem some extent the u.s. at that problem with the global financial crisis questions being raised as well though about president richard type hands leadership here and he stewed ship of the
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economy there would have the comments that he made earlier describing high interest rates as the mother of all evil and that was that that kind of took a few people by surprise didn't even raise questions about how independent. the central bankers are in turkey the difficulty here is that everyone was the markets darling for a good decade or so. and there was always local concern particularly one kind of middle class stumble electorate that he was encroaching his powers getting too great he's now been in power for so long that there is very little constraint upon him and he's appointed numerous central bank governors now he's in charge of the army he's. done a lot of changes to the judiciary but it's the central bank which i think is concerned people the most because turkey relies on foreign capital to fund its current account deficit it always runs
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a big trade deficit so it needs foreign capital so to say we don't want to pay the interest rates required to attract that capital has frightened the markets and one of our concerns over the last few weeks is if you go back to malaysia or in one thousand nine hundred eight in the asian crisis malaysia said you know what welcome sight foreign capital we're going to introduce capital controls we're going to not allow foreign ports. it is to leave and that did let them cut interest rates and it did help malaysia's economy recover perhaps quicker than other asian countries that have gone to the i.m.f. and done orthodox things like the interest rate hike which eventually turkey did choose to do a few days ago yeah and staying on this issue the interest rates the did deliver did rally further this week after the central bank announced this streamlining of interest rate tools to to focus on having one one single main rate has that done anything to reassure investors it's done say has helped us out so that the three
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hundred basis point rate hike has helped having interest rates up at around sixteen percent has helped but also for a number of years now the central bank has been trying to raise rates but not tell the electorate in turkey that they're raising rates to try and keep the president happy and this repo rate which was sitting at around eight percent and is now being raised to sixteen half a star that's is a sign that finally orthodoxy seems to have won and in the long run that will work it worked for russia when they did similar things a few years ago russian interests are some much lower now than russian inflation much lower now than turkey so orthodoxy does win in the end and it looks like iran has as given up these back to way the central banks being allowed to do what orthodox people would suggest and what the market wanted to see what does that mean for turks though when they when they're getting paid continue to get paid in lira
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and their currency is seemingly losing value on the international markets it's i mean it's tough i mean it's interesting that a couple of years ago or once suggested the turks should save in lira or gold and gold has actually been a relatively good store of value for turkish people real estate quite a good way to try and protect your savings. but but the lira self hasn't been great so you going to see inflation rise that's going to hurt people usually hurts the poorest we think we're going to see growth slowed best suit to three percent this year and the population is growing one to two so per capita that's really not much of a game these are these are tough times for turks now good to speak with you charles robinson joining us there in london thanks so much to our trade relations between the u.s. in key allies have taken a giant step backwards the trumpet ministration is putting tariffs on steel and
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alum in imports from the european union canada and mexico they're threatening to retaliate with tariffs of their own as fears grow over global trade war kimberly how could reports from washington. u.s. commerce secretary wilbur ross made the announcement from paris where he was attending an annual trade forum. tariffs of twenty five percent on steel and ten percent on aluminum imports into the united states from canada mexico and the european union all go into effect friday the move potentially sets in motion a trade war with some of the united states' most important allies a claim the u.s. commerce secretary brushed off everybody has every now and again very firmly every country with others whose loathing weird about. it will get over this in due course in brussels the head of the european commission called it
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a bad day for world trade promising counter measures that could include retaliatory tariffs u.s. goods into the e.u. on everything from blue jeans to motorcycles what they can do we are able to do exactly. the same it's totally. that it come to be. three measures when it comes to its. credit france's junior trade minister promised a similar response suggesting the u.s. president may be misinformed. the comes a point when one needs to look at the figures and i'm surprised that maybe president trump stuff haven't shown him how much those european companies have invested in the united states created jobs that to assemble and produce that now those u.s. jobs could be at risk just as president donald trump seeks to fulfill one of his top campaign promises to protect the jobs of his supporters in america's steel and
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aluminum manufacturing sectors it's not just international partners criticizing donald trump's decision to oppose steel and aluminum tariffs on top of. u.s. allies domestically members of president trans own republican party are also criticizing him fear of the effects of a global trade war despite white house efforts to downplay those concerns the traceback has also broken out between the world's biggest economy and a landlocked east african country over hand me downs a multi-million dollar business has grown up around selling clothes donated in charity shops in the u.s. thousands of miles to africa critics say africa cannot hope to develop a domestic textile industry when it's flooded with cheap imports so rwanda has imposed tariffs and wants to phase out imports of the secondhand clothes the u.s. is responding with a threat to pull rwanda's judy free access to some of its products and one is
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president paul kagame may is not backing down at a concert you is a nairobi based investment adviser and chief executive of rich management he says africa has become a dumping ground for cheap goods from other countries. this is an attempt by africa to get leverage on the value chain it's an attempt to develop industry it's an attempt to industrialize and essential ie you know we've seen all our industries hollowed out one of the classic examples is actually textile manufacturing which is now being addressed in east africa and i think it's important that we look at things holistically and if we're going to look at it holistically we can't talk about the industrialization of africa on one hand and then be dumping africa with all kinds of of goods and in this case in the case of used clothes our prices have been falling this week with the world's biggest producers looking at a change in strategy reports say saudi arabia and russia may increase oil
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production last year was about reducing the amount of oil in the world's energy market so now any proposal to boost output would mean a major reset that's going to affect crude prices and investors will be waiting until june twenty second when opec members meet in vienna to see what happens with joining us now from zurich is cornelia my economist and independent energy analyst good to speak with you again a cornea so we're looking at a major rethink then in the strategy of oil producers. well i don't think we're looking at a major rethink but we're looking at them addressing the issue that we have over to last year lost about a million barrels out of fairness where we're going to lose a few hundred thousand out of iran thanks to sanctions so i think they're looking at it they say compliance of the opec non-o. pick agreement is at one hundred eighty three percent which russian and the chin
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minister alexander morvak sort of equate it with being at about one million barrels so did going to say ok there is some headroom and they're going to put some in but it's not going to be that easy because within opec you know when one country production and others might feel slighted because you know you have a very delicate balance of production quotas so what's behind all of this then do you think i mean is it is it part of that part of it just that they were too good at. wanting to raise prices before and now we're seeing the effects of that now i think what i've done is staff saying it was not a price thing it was getting rid of that overhang that was if it was just a glass of oil in the market that wasn't an overhang. of inventor reese and the agreement of corporation was the design to take out that overhang and put it back to a five year average for o.e.c.d. countries they have
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a chieftainess mission accomplished now what's happened in the meantime is steady the obviously the sanctions against iran it's venezuela falling off a cliff it's also nigeria and libya having their own internal problem so a lot of countries actually are producing less than they were expected to produce are exploiting less and we're expected to produce them and i expect it to produce even less so so so now that's sort of over achieved and now they need to address overachievement and how does the united states figure into all of this. and particularly the shale oil producers there well actually it figures same quite a lot because the us is set to overtake a secular target take russia the world's largest produce a this this year. russia is currently the largest producer so on one hand we will see more exports of of the oil from of the oil from the us especially
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shale oil we had china for instance is never important wouldn't there slated to import despond from the us but. mind you dress another thing also if you're russian and if you're saudi arabia you know the two really big producers in saudi arabia really the only real swing producer and then obviously you want that agreement of corporation because you need to get a counterbalance to this new emerging american. powerhouse of exporting crude could speak of your cornea my joining us there from zurich thank you has them have finally greece is preparing to exit its third international bailout this summer the country signed up for the largest sovereign loan in history to prevent bankruptcy greece's latest bailout ends in august but the austerity measures will continue for at least two more years and workers in greece are unhappy they've seen their incomes for by fifteen percent during this
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eight year economic crisis is johnson hapless reports now from athens. then. several times a week a leg some of those mini might be these things for his son he earns about twenty dollars an hour four times as much as in his regular part time job as a shoe salesman with two sources of income he helps support the household he grew up in but he cannot invest in his own future five years ago he unrolled in a robotics degree course at kalki the polytechnic two hours' drive from athens but he can't afford to rent an apartment there so his studies are progressing slowly. or at the present rate it'll take me another ten years to graduate i'll be thirty five and at that age it'll be really difficult to find a job in my area of expertise he's one of the many victims of salary cuts averaging fifteen percent during the economic crisis creditors demanded cuts to make the economy more competitive the official minimum wage is now six hundred ninety
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dollars a month before tax but experts say the salary cuts went affective in the absence of other reforms. while salary cuts should have led to a cut in the prices of products and services they didn't because part of markets are to a great extent monopolies are all examples we have a large number of multinationals operating in this country which didn't lower the cost of their products they benefited from the salary cuts but they didn't become more competitive. half of all new jobs are part time or seasonal and that still leaves twenty percent of workers unemployed around a million greeks and there is so much under employment the labor institute greece's leading employment think tank says the real jobless total is closer to twenty seven percent but the worst effect of the crisis is loss of income the dramatic drop in incomes has created a class of working poor the risk of poverty has doubled during the crisis to thirty five percent of the population that's
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a rate unmatched anywhere in western europe and it is twice as high among working age adults and the children who depend on them as it is. pensioners many greeks such as me marty this no longer see the point in learning skills or higher education greeks are forced to accept jobs they're overqualified for which leads many to go broad the labor institute says government leaders need new policies to encourage entrepreneurship and employment entice companies to lower their prices and for the cost of labor to fall without serious reforms like these many greeks fear for all their education they'll likely remain the buskers of europe and that's our show for this week remember get in touch with us by tweeting me at. and use the hash tag a.j.c. t c when you do or drop us an e-mail kept in the cost at al-jazeera dot net is our address is more for you online as well as you know dot com slash. i'll take you straight to our page has individual sports links and entire episodes for you to
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catch up on. that's it for this edition of counting the cost and has of sega from the whole team here thanks for joining us the news on al jazeera is next. eleven years on and gaza is still under israeli blockade. now as the pressure grows we find out what life is like under occupation. the people of gaza talk to al-jazeera. we do not and we will not tolerate with people hope on terrorism really is necessary we need to achieve one year into the gulf crisis al-jazeera examines its political economic and human impacts join us for special coverage on june the fifth. once welcome now fear. dividing
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a nation. al-jazeera explores germany's long term economic strategy of pursuing immigrants from the arab world i feel more gentleman and syrian the. a much money does a richer get those people you would think that. one german and american the new germans on al-jazeera. this is a really fabulous news for one of the best i've ever worked in there is a unique sense of bonding where everybody teams in that something i feel every time i get on the chair every time i interview someone we're often working around the clock to make sure that we bring events as i currently as possible to the viewer that's what people expect of us and that's what i think we really do well.
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this is al-jazeera. and i'm adrian for again and this is the news hour live from doha coming up in the next sixty minutes south korea welcomes u.s. president donald trump's u. turn on hold again summit with north korea's leader buss there's more cautious optimism from other south pacific nations. as spain's new prime minister is sworn in we'll take a look at the challenges that both he and his country face. emotional goodbye the rising death toll of anti-government protesters killed in nicaragua. and.

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