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‘Super Mario’ saved the euro. Fixing Italy’s economy may be a bigger challenge

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Analysis by Julia Horowitz, CNN Business
Updated 1:34 PM ET, Mon February 15, 2021

London (CNN Business) — Mario Draghi, Italy’s new prime minister, is no stranger to high-stakes jobs.

In 2012, the former European Central Bank chief won international acclaim after pledging to do “whatever it takes” to save the euro from collapse, a promise that served as a turning point in the continent’s sovereign debt crisis.
Now, Draghi faces a different, if equally daunting challenge: steering Italy’s recovery from the coronavirus pandemic.
With support from a broad political coalition and permission to spend an estimated €200 billion ($242 billion) in grants and loans procured by the European Commission, Draghi enters the role in a position of strength. But transforming Italy’s economic prospects after years of malaise will be no easy task — even for a man nicknamed “Super Mario.”

    What Draghi inherits

    Draghi takes the reins of an economy that was still struggling to recover from the 2008 global financial crisis when the pandemic hit. In 2019, economic output grew by just 0.3% over the previous year, compared to 1.6% for the European Union as a whole.
    “Italy’s most important, fundamental problem is they haven’t grown enough for so many years,” said Erik Nielsen, chief economist at the Italian bank UniCredit.
    Covid-19 has made matters much worse. Italy’s economy shrank by 8.8% last year. While activity is expected to rebound in 2021, helping the economy expand 3.4%, the European Commission is worried that Italy could continue to lag behind for years.
    “While some Member States are expected to see the distance to their pre-crisis output levels close by the end of 2021, others are forecast to take longer,” the Commission said in a forecast released last week. “This is particularly the case for Spain and Italy, which are not expected to reach those levels by the end of [2022].”
    Yet Draghi has one advantage many of his predecessors lacked: a mandate to spend big. EU fiscal rules have been relaxed, richer member states are handing over money and Brussels is borrowing on Italy’s behalf.
    Italy’s debt-to-GDP ratio stands at 154%, second in Europe only to Greece, and debt servicing costs a big chunk of the country’s budget. But the European Central Bank has made debt extremely cheap by pushing interest rates into negative territory and launching a massive bond-buying program, Nielsen noted. That gives Draghi significant leeway.
    “He won’t have to implement draconian austerity programs,” Federico Santi, a senior analyst at Eurasia Group, said in a research note last week. “Rather, the new government will benefit from record-low borrowing costs and large-scale EU financing, while the EU remains supportive of fiscal stimulus for now.”

    An ‘extraordinary’ opportunity

    Just how Draghi chooses to spend on Italy’s recovery could define his tenure and the country’s future for years to come.
    Nielsen said it’s crucial that Draghi immediately push for another round of spending and tax cuts to get the country’s economy back on track.
    Embedded in this effort should be policies to address problems such as low participation in the labor force, which weighs on productivity, he emphasized. The government could encourage more people to seek employment by discounting taxes on second incomes, subsidizing child care and providing incentives for companies to offer part-time work.
    “This is really low-hanging fruit for the Draghi government to pursue because it has been tested and implemented in virtually all other European countries,” Nielsen said in a note to clients on Sunday.
    Draghi also needs to finalize a plan for how to spend hundreds of billions of dollars earmarked by the Europe Union for its recovery. Italy is among the biggest beneficiaries of the program, which will fund investments in sustainability and digitization.
    “We have at our disposition the extraordinary resources of the European Union,” Draghi said last week. “We have the opportunity to do a lot for our country, with a careful eye on the future generation.”

    Managing messy politics

    More details are expected in the coming days ahead of Draghi’s first speech to Italy’s parliament. Already, though, there are fears that fractious politics could undermine the initial groundswell of support for the former central banker.
    All of Italy’s political parties, apart from the right-wing Brothers of Italy, have said they will back the new government, and observers were heartened that Draghi’s cabinet includes a healthy mix of technocrats and politicians from across the spectrum.
    But the specter of dissent still looms — especially when it comes to spending money from the EU recovery fund. Disagreement on this front contributed to the downfall of Draghi’s predecessor, Giuseppe Conte, in January.
    “Even with broad support for Mr. Draghi’s reported list of priorities — health, jobs, business, schools and the environment — we don’t yet know many details, and there is plenty of scope for government infighting about what needs to be done about each of them,” Jack Allen-Reynolds, senior Europe economist at Capital Economics, said in a research note.
      Paola Subacchi, professor of international economics at the Queen Mary University of London, said the best thing Draghi can do is commit to serving as prime minister for two years at most, forcing others to step up and craft sustainable policy.
      “There is no recipe for remedying Italy’s political crisis, and no one should expect Draghi to provide one,” she wrote in a column for Project Syndicate last week. “A technocratic government needs to be effective and short-lived, allowing its legacy to be defined by the work of its successors.”

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      Nigeria crashed aircraft was on rescue mission for kidnapped schoolchildren

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      By Nimi Princewill, CNN
      Updated 10:13 AM ET, Mon February 22, 2021

      Lagos, Nigeria (CNN) — Nigeria’s airforce has said its plane, which crashed shortly after take-off from Abuja airport on Sunday morning — killing everyone on board — was on a mission to rescue the schoolchildren kidnapped last week.

      A spokesman told CNN the aircraft was on surveillance operations in Niger State as part of efforts to rescue at least 42 schoolchildren and staff members taken by gunmen from the Government Science School Kagara last Wednesday. One student died during the attack.
      Air Vice-Marshal Ibikunle Daramola told CNN on Monday afternoon that the air force had donated the military plane to a joint task force coordinating the rescue operation in Kagara.
      “The rescue effort is being coordinated by a multi-agency team… the crashed aircraft was part of the air force’s contribution to the rescue mission,” he added.
        Daramola told CNN that the airforce would continue to support the rescue operation.
          He added that all families of the personnel have been informed, and an investigation launched.
          The ongoing rescue efforts followed a directive by President Muhammadu Buhari to the armed forces and police to ensure all captives are rescued.

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          Protests in Haiti as political standoff continues

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          By Caitlin Hu and Etant Dupain, CNN
          Updated 7:44 PM ET, Sun February 21, 2021

          (CNN) — Large crowds of Haitians took to the streets again on Sunday, as a standoff between President Jovenel Moise and the country’s opposition movement stretched into its third week.

          “Those of us fighting, who want another Haiti, a Haiti pearl of the Antilles, say no to the dictatorship,” one protester told Reuters in capital city Port-au-Prince, where Haitian opposition and civil society groups had called the demonstration. Another criticized the United States and international organizations for supporting the President.
          At the heart of protests is a dispute over the President’s term limit: Moise has served only four years of the usual five, and says his term ends in 2022 — a stance backed by the United States, United Nations and Organization of American States.
          Protesters, however, say he should have stepped down February 7, citing a constitutional provision that starts the clock once a president is elected, rather than when he takes office.
            “We want the international community (to) understand that the Haiti people won’t back down on their demands. Jovenel Moise must leave the national palace for a peaceful transition that can lead us to the elections,” opposition leader André Michel told CNN on Sunday.
            This month’s protests also reflect years of increasing bitterness in Haiti over the country’s economic pain and violent crime. Killings and a wave of hundreds of kidnappings in particular have driven public outrage, according to a recent United Nations report, which recorded a monthly average of 84 demonstrations in the second half of 2020.
            Moise has blamed his administration’s poor record in dealing with such fundamental issues on the country’s system of governance, and on complications and lack of clarity in the constitution itself. “Since the beginning of my term, the country has never known stability,” he acknowledged in a February 12 tweet.
            With an eye toward empowering the office of the president for the future, he has vowed to hold a referendum on changes to the constitution in April. This will be his legacy project, Haiti’s ambassador to the United States, Bocchit Edmond, told CNN.
            However, critics are skeptical of the legitimacy of any constitutional changes made in the current political climate and without institutional checks and balances in place. General elections are expected to follow in the fall.
              In a speech last Sunday, amid celebrations for Carnival, which he celebrated with large crowds of supporters and revelers, Moise expressed his determination to see the country through another year.
              “Haiti is for me, for my kids, for the people here dancing. The people who don’t want me to do the people’s work will stop, or I will make them stop. I was elected to do a job, and I will do it,” he said.

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              Oil spill leads Israel to close beaches as it faces ‘severe ecological disaster’

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              By Sharif Paget
              Updated 1:41 PM ET, Mon February 22, 2021

              (CNN) — Israeli authorities are trying to locate the source of a suspected oil spill that has been described as one of the most severe ecological disasters to hit the country, threatening wildlife, forcing beaches to close and prompting a mass cleanup.

              Blobs of sticky tar started washing up on the country’s Mediterranean shores last week. Images posted on official government accounts showed sea birds and turtles covered in tar and sticky oil.
              “The enormous amounts of tar emitted in recent days to the shores of Israel from south to north caused one of the most severe ecological disasters to hit Israel,” the country’s Nature and Parks Authority said Sunday.
              The extent of the pollution is so bad, Israel’s Ministry of Interior issued an advisory Sunday urging people to stay away from the country’s beaches.
                A massive cleanup is underway but the Nature and Parks Authority said it would take a long time to make the marine area safe again. It has established a registration and information center for volunteers who wish to help.
                “I was very impressed by the exemplary voluntarism of the citizens who came to clean up the beaches. We must maintain our beaches, our country and the environment,” Netanyahu said in a statement issued by the Prime Minister’s office.
                “I have just spoken with the Egyptian Petroleum and Mineral Resources Minister who has come to us, and we proposed that every ship that you see here be powered by natural gas instead of polluting fuel, as happened here,” he continued.
                Gamliel said it was their “moral obligation to the public is to locate those responsible for the event,” according to the statement.
                  “We have the possibility of suing the insurance company of the ship that is responsible for the pollution and we will do everything to locate it,” she said.
                  In a separate statement posted to her Twitter account, Gamliel said, “We are making every effort to find those responsible for the disaster, and we will bring to the government’s approval tomorrow a proposal for resolutions to rehabilitate the environment.”

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                  Seven dead in Nigerian military plane crash

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                  Lagos, Nigeria (CNN) Seven people were killed when a Nigerian military plane crashed on approach to Abuja airport on Sunday, a spokesman for Nigeria’s Air Force said.

                  “All 7 personnel on board died in the crash,” Air Vice Marshal Ibikunle Daramola said on Twitter.
                  He added that the Chief of the Air Staff has ordered an immediate investigation into the incident.
                  “A military aircraft King Air 350 has just crashed short of our Abuja runway after reporting engine failure enroute [to] Minna. It appears to be fatal,” said the country’s aviation minister, Hadi Sirika, confirming the incident in a statement.
                   

                  AIRCRAFT ACCIDENT

                  This is to confirm that a Nigerian Air Force (NAF) Beechcraft KingAir B350i aircraft crashed while returning to the Abuja Airport after reporting engine failure enroute Minna. First responders are at the scene. Sadly, all 7 personnel on board died in the crash

                  — Air Vice Marshal Ibikunle Daramola (@KunleDaramola3) February 21, 2021

                   
                  In a follow-up communication Sunday afternoon, a spokesman at the Ministry of Aviation, James Odaudu, said the “aircraft reported engine failure at time 10:39 and crashed landed on the final approach path of Abuja Runway 22 at time 10:48UTC.”
                  Odaudu said fire fighters have been deployed to the scene to put out a raging blaze that had engulfed the airplane.
                  An aviation worker who asked not to be named — citing lack of official clearance to talk to the press — told CNN that he witnessed the crash.
                  “The crash occurred not very far from the runway. The pilot had tried returning to the runway after taking off,” he said.
                  The worker said the pilot swerved the plane to its crash site which is in a desolate area. He said the aircraft narrowly avoided warehouses and makeshift settlements around the Nnamdi Azikwe International airport.

                   

                   
                   
                   
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                  Why Britain’s anti-immigration politicians are opening the doors to thousands of Hong Kongers

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                  By Tara John, CNN
                  Updated 7:29 PM ET, Sat February 20, 2021

                  (CNN) — Eighteen months ago, Malcolm was at the vanguard of Hong Kong’s pro-democracy movement.

                  Full of bravado and often clad in black, the 21-year-old oversaw a group of 60 combative front-liners who embraced confrontational tactics against the police while demanding greater democracy in the former British colony.
                  Today, he is applying for asylum in the United Kingdom, and separated from his family in Hong Kong where he feels he can longer visit. Malcom believes if he returns to the Chinese city he could be arrested under a sweeping national security law imposed by Beijing on Hong Kong last June, which scaled up penalties against dissent to include punishments as severe as life imprisonment.
                  Since then, nearly 100 activists have been arrested under the new law. When Hong Kong police apprehended a protester friend of Malcolm’s in October, he booked a red-eye flight to London. Malcolm asked CNN not to use his real name, for fear that his family — who remain in Hong Kong — could face repercussions.
                    The British government has called the security law a clear violation of the “one country, two systems” policy meant to ensure Hong Kong’s autonomy from Beijing until 2047. In its wake, the UK has opened a six-year pathway to British citizenship for holders of British National (Overseas) passports (BN(O)), a special visa category created for Hong Kong nationals before the 1997 transfer of power.
                    Sze has settled into London life: She already has strong opinions on the snail’s pace of London buses and is counting the days to when lockdown ends and she can go shopping on Oxford Street.
                    While it can be hard to find the authentic Cantonese cuisine she grew up eating in Hong Kong, Sze marvels at how much cheaper food is at British supermarkets.
                    “The food quality is better, the price is cheaper and the rent is cheaper,” she told CNN.
                    Sze cannot get a job until her BN(O) visa is approved, but she is optimistic that the UK’s coronavirus-induced economic slump will not get in the way of her finding work. “I am open to any [job] option — it really depends on how much savings I have,” she said.
                      But her biggest concern is the fate of fellow dissidents going through the asylum process, and whether her compatriots who move to the UK will give up the fight for independence back home.
                      “Hong Kongers should never give up, no matter if they’ve left Hong Kong or not,” she said.

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