Plus: Russia and Turkey work to normalise their trade relationship.
50 YEARS ON
THE ASIAN DEVELOPMENT BANK
5,000 bankers and leaders will gather in Yokohama, Japan on Saturday for the Asian Development Bank’s annual summit.
With some $17 billion worth of loans made in 2016 alone, the Japanese-led development bank is by far the region’s largest. By leveraging capital from richer countries, the ADB aims to alleviate poverty and spur economic growth. But its pre-eminence may be under threat.
In 2013, China announced it would form its own development bank—the Asian Infrastructure Investment Bank—and collected signatures from more than 50 founding countries. Japan and the US refused to sign the charter and urged allies to do likewise. Nonetheless, a raft of US allies, including South Korea, Australia and the UK, became founding members in 2015.
As the newcomer, the AIIB faces massive hurdles. It will only lend some $2 billion in 2017, much of which will be in partnership with the established ADB. Indeed, ADB President Takehiko Nakao insists there is enough need for regional development that the two organisations “can compliment each other”.
To establish a way forward, the finance ministers of Japan and China will meet on the sidelines of Saturday’s summit.
WORKING OUT THEIR DIFFERENCES
RUSSIA AND TURKEY
On Saturday, Russian Deputy Prime Minister Arkady Dvorkovich will travel to Turkey to finalise talks on normalising economic relations.
Ties between the two countries were strained to breaking point when Turkey shot down a Russian jet near the Syrian border in November 2015. After the incident, Moscow and Ankara hit each other with a variety of economic sanctions. While some of these have since been lifted, some of the most potent remain in place.
As Turkey’s second largest trade partner, Russia’s economic measures hit Turkey hard. Between 2015 and 2016 the number of Russian tourists visiting Turkey declined by three-quarters, further damaging a sector that has already been battered by terrorist attacks and broader security concerns. Meanwhile, a Russian ban on Turkish fruits and vegetables left farmers reeling, particularly tomato growers, which saw their $250 million Russian market shrink to almost nothing overnight.
Despite a thaw in relations after President Erdogan’s apology last June, Moscow has refused to lift sanctions completely. Turkish authorities hope to address this on Sunday.
BRINKMANSHIP IN WASHINGTON
FUNDING IMPASSE RESOLVED (FOR NOW)
On Saturday, the clock will start running on a $1.1 trillion spending bill designed to keep the US government afloat until September 30. The bipartisan bill was approved by the House of Representatives on Wednesday after a series of concessions by Republican lawmakers.
The compromise was welcomed by Democratic lawmakers, with leaders in both the Senate and House praising the deal, perhaps in part because funding for some of President Trump’s controversial policies, including his border wall with Mexico, was omitted.
With the threat of government shutdown averted until September, lawmakers must now turn their minds to a more permanent deal. With Mr Trump seeking a massive increase in defence spending and deep cuts to social programs, it’s only a matter of time before a new clash between Republicans and Democrats threatens the federal government once more.