This morning’s key headlines from GenerationalDynamics.com:
- International Criminal Court opens probe into Israel’s war crimes
- Moody’s lowers Russia’s bonds to near-junk status
- Fearing bank runs, Greece’s banks make emergency aid request
International Criminal Court opens probe into Israel’s war crimes
Masked Hamas members carry a model of a rocket in a Gaza rally in December (Flash90)
In a move that some are describing as purely symbolic, the International Criminal Court (ICC) has opened a preliminary investigation into war crimes committed by Israel during the summer 2014 Gaza war.
Once Mahmoud Abbas, representing the State of Palestine, made the request to the ICC, the prosecutor Fatou Bensouda is required by ICC policy to conduct a preliminary investigation, to determine whether she should launch a complete formal investigation. She has two options, in that she can decide to launch the formal investigation, or decide not to. However, there’s no timeline or deadline. In fact, according to one analyst, there are already pending preliminary investigations for Afghanistan, Colombia, Georgia, Guinea, Honduras, Iraq, Nigeria and Ukraine, so Israel would just be another one. If she does launch a formal investigation, there could be war crimes charges against both Israeli leaders and Hamas leaders.
It’s far from clear whether the ICC has the jurisdiction to take on this case. The U.N. General Assembly voted in November 2012 to create a State of Palestine, but it’s not a member of the U.N., and only has observer status. There is no precedent for a non-member (like the Holy See) to join the ICC. For the ICC to have full jurisdiction in this case, there would have to be an affirmative vote of the Security Council, and the U.S. has already indicated that it would veto such a resolution. (Sources: Al Jazeera and LA Times and Washington Post)
Moody’s lowers Russia’s bonds to near-junk status
Moody’s Investors Service cut its rating on Russia’s government bond to Baa3 from Baa2. This puts the bonds just one notch above the non-investment grade, or “junk status.”
Moody’s lowered the bond grade to Baa2 in October, just three months ago. According to Moody’s today:
Moody’s one-notch downgrade to Baa2 in October 2014 balanced an increasingly subdued growth outlook — in part reflecting Russia’s weak institutional strength and the challenging geopolitical environment — against the government’s still extremely strong balance sheet.
The negative outlook reflected the fragile nature of that balance, with both the growth outlook and the government’s fiscal position exposed to further shocks that could more profoundly undermine consumer and investor confidence, hastening the erosion of fiscal and foreign currency buffers.
As evidenced by the recent further steep falls in oil prices and the exchange rate, these shocks have materialized. According to Moody’s, the severe — and likely to be sustained — oil price shock, alongside Russian borrowers’ highly restricted international market access due to ongoing sanctions, is undermining economic fundamentals and increasing financial stresses on both the public and private sectors. In its updated growth outlook for Russia, Moody’s now expects real GDP contractions of around 5.5% in 2015 and 3% in 2016, bringing real growth over the 10 years through 2018 to virtually zero.
Last week, Fitch Ratings downgraded Russia’s credit rating to BBB- from BBB, which is also just one step away from junk level. In December, Standard & Poor’s revised Russia’s rating to BBB-, saying there is a 50 percent possibility it will drop Russia to junk level in mid-January 2015. (Sources: Moody’s Investors Service and Russia Today)
Fearing bank runs, Greece’s banks make emergency aid request
Two of Greece’s banks have requested an emergency credit line under the Emergency Liquidity Assistance program, or ELA. Neither bank plans to use the money at this stage, but it requested out of concern over a possible bank run following the January 25 election. The radical far left Syriza party is leading in the polls and is expected to win. The party’s leader, Alexis Tspiras has said that he will renege on Greece’s austerity commitments that it made in return for its 240 billion euro bailout paid so far. There is a possible “Grexit” scenario with Greece will leave the eurozone and start printing drachma currency again, which would substantially devalue existing Greek bank accounts.
Fearing this scenario Greek bank account holders have been withdrawing money from Greek banks and depositing the money foreign banks, where it would be safe from Grexit. Bank deposits fell by 3 billion euros in December, and have been accelerating since then.
Tspiras has said that Greece will not leave the eurozone because the eurozone needs Greece more than Greece needs the eurozone. He may be right. There are new reports that Eurogroup members are considering offering Greece a six-month bailout extension, and possibly renegotiating a new bailout package. A Eurogroup meeting of eurozone finance ministers will take place one day after the elections to decide what to do next. (Sources: Bloomberg and Kathimerini)
KEYS: Generational Dynamics, Israel, State of Palestine, International Criminal Court, ICC, Fatou Bensouda, Afghanistan, Colombia, Georgia, Guinea, Honduras, Iraq, Nigeria, Ukraine, Russia, Moody’s Investors Service, Greece, Emergency liquidity Assistance, ELA, Syriza, Alexis Tspiras
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