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1. Trapped in debt: China’s role in Laos’ economic crisis

Author:
Keith Barney, Roland Rajah, and Mariza Cooray
Publication Date:
04-2025
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Laos is trapped in a severe debt crisis with no resolution in sight, threatening a decade of economic and social malaise. Recent global shocks were key triggers. Yet a crisis was almost inevitable, driven by poor planning and over-investment in the domestic energy sector, financed mostly by Chinese loans and exacerbated by broader fiscal and governance problems. Exiting the crisis will require China to provide substantial debt relief. However, the politics appear unfavourable, as neither side wants to admit failure and accept the consequences. Whether by design or neglect, China has created a debt trap in Laos. The crisis illustrates some of the most troubling pathologies of Chinese lending under the Belt and Road Initiative, and its unwillingness to provide sufficient debt relief, despite the clear-cut need.
Topic:
Debt, Belt and Road Initiative (BRI), Economic Crisis, and Energy Sector
Political Geography:
China, Asia, and Laos

2. What’s next for Pakistan after election shock?

Author:
Tamkinet Karim, Syed Mohammed Ali, and Alistair Taylor
Publication Date:
02-2024
Content Type:
Video
Institution:
Middle East Institute (MEI)
Abstract:
On this week's episode Tamkinet Karim, Syed Mohammad Ali, and Alistair Taylor discuss the results of Pakistan’s Feb. 8 elections and where things might be headed moving forward. Over the past two years, Pakistan has gone through a particularly turbulent period, following the removal of Imran Khan’s government in a no-confidence vote in April 2022 — a time marked by political instability, intense polarization, a worsening economic crisis, and growing threats to internal security.
Topic:
Security, Politics, Elections, Polarization, Economic Crisis, and Instability
Political Geography:
Pakistan and South Asia

3. The Buildup to a Crisis: Current Tensions and Future Scenarios for Tunisia

Author:
Ishac Diwan, Hachemi Alaya, and Hamza Meddeb
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Tunisia has been living beyond its means since 2011. External support and credit flowed into the country after the 2010–2011 uprising to support its nascent democracy, but this funding ended up largely financing a consumption boom that is unsustainable. To make matters worse, macroeconomic and political instability have begun to deeply harm the country’s productive capacity. The risk of a serious financial crisis has risen and corrective action is needed to ward it off. Tunisia’s political system should be able to avoid such catastrophic outcomes. Most reasonable people agree that the risks are rising and that something needs to be done. However, the disagreement is over magnitude, timing, and the type of program required to address the country’s problems. A hard economic adjustment risks unleashing a sociopolitical crisis. Not engaging in a correction, however, may well engender a future economic meltdown. Buying time is easiest politically, but it often means only postponing the crisis, leading to an even larger explosion. The challenge is to find the narrow path to escape a crisis by generating confidence in a national program that is politically acceptable and that can lead to a brighter future. Faced with these negative dynamics—the lack of sustainability and economic regression—economic agents might not merely adjust to the new normal. Instead, they might try to push the burden elsewhere in the economy and by so doing unleash more destructive forces. Think of society, with its networked organizations, as a hydraulic system. As pressure mounts, weaker parts of the network are at risk. Pushing pressure out from one part, instead of addressing the root cause of the problem, only leads to more pressure on other parts. Ultimately, the system will burst at its most vulnerable point. Typically, deterioration is not linear. Pressure builds up in invisible ways until the system explodes in a generalized crisis. There are several ways in which this can happen: foreign exchange reserves are used up slowly until a run takes place and the currency collapses; financing the state’s losses drains the private sector, reducing investment, until there is a collapse in growth; taxes are raised or services reduced, or both, leading to a social explosion; fiscal losses are financed with new loans (or arrears) until creditors dry up, and printing money remains the only solution, leading to hyperinflation; or banks keep lending to the state until depositors lose confidence in the banking sector and there is a bank run. What is destroyed will have to be rebuilt from scratch at great cost. It is in this context that Carnegie’s new Tunisia Sustainability Lab is beginning its work. The objective is twofold. First, the lab will monitor the risks ahead and alert the public about developments. It will do so by preparing a regular scorecard of Tunisia’s economic, financial, fiscal, external, and sociopolitical domains. Second, the lab will track proposals advanced by national and international parties on possible pathways to progress, reporting on and analyzing initiatives to avoid the worst of them. So far, several International Monetary Fund (IMF) proposals have been rejected by the Tunisian authorities. There are alternative proposals, some outlined by civil society actors, but they have not materialized. To support social dialogue, we will highlight the various initiatives and try to evaluate their impact. We will also develop scenarios to assess macroeconomic trends, which we will update over time.
Topic:
Crisis Management, Macroeconomics, IMF, and Economic Crisis
Political Geography:
North Africa and Tunisia

4. Is Hugo Chávez to Blame for Venezuela’s Collapse?

Author:
Gabriel Hetland
Publication Date:
03-2024
Content Type:
Commentary and Analysis
Institution:
The North American Congress on Latin America (NACLA)
Abstract:
The country’s current economic and democratic crisis should not be used to erase Chávez’s impressive accomplishments in working to build 21st-century socialism.
Topic:
Socialism, Economic Crisis, Hugo Chavez, and Democratic Crisis
Political Geography:
South America, Latin America, and Venezuela

5. False Dawn: Lebanon’s Economic Crisis Amidst Improved Saudi-Iranian Relations

Author:
David Wood
Publication Date:
03-2024
Content Type:
Journal Article
Journal:
Brown Journal of World Affairs
Institution:
Brown Journal of World Affairs
Abstract:
On 17 October 2019, furious protests erupted across Lebanon as citizens came to a shocking realization: the country’s leaders had destroyed the economy. Decades of corruption and mismanagement had emptied the state’s coffers, trig- gering a domestic banking collapse and frittering away many Lebanese residents’ life savings. Now, almost five years later, the situation has only grown worse. The Lebanese lira (LBP) has been devalued to the point of irrelevance, crashing from 1,507.5 LBP for 1 USD to over 140,000 LBP in March 2023. House- holds give up essentials like health insurance to pay for diesel power generators and solar panels, as public electricity provisions—along with many other key state services—barely function.1 Meanwhile, the country’s leaders stubbornly resist implementing much-needed economic reforms, blaming the economic crisis on a wide range of factors, from Syrian refugees to general instability in the Middle East. A regularly proffered excuse emphasizes the role of competition between Iran and Saudi Arabia, whose rivalry has periodically played out on Lebanese soil. This theory argues that Lebanon is a “penetrated society,” inextricably tied to and paralyzed by geopolitical competition, including the Saudi–Iranian con- frontation.2 Thus, Lebanese leaders cannot resolve their disputes until these two regional heavyweights, amongst other foreign powers, reconcile their conflicting interests in Lebanon. Regional competition overlays a domestic political structure already prone to deadlock, which rigidly apportions power between Lebanon’s frequently feuding sectarian communities. Accordingly, various Lebanese politicians hoped that improved Iranian-Saudi relations—facilitated in March 2023 by Chinese mediation—would lead to a breakthrough in their ability to tackle Lebanon’s economic meltdown. Yet, this optimistic reading overestimates the extent of Tehran and Riyadh’s cautious détente, which is unlikely to translate into constructive engagement in Lebanon any time soon. It also downplays the true obstacle to Lebanon’s economic reform process: corruption in the country’s own political and financial elite.
Topic:
Corruption, Diplomacy, Economic Crisis, and Regional Politics
Political Geography:
Iran, Middle East, Saudi Arabia, and Lebanon

6. African Sovereign Defaults and the Common Framework: Divergent Chinese Interests Grant Western Countries a “Consumer Surplus”

Author:
Eckhardt Bode
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• China has become a major player in sovereign lending towards Africa during the past two decades but has recently been faced with increasing defaults. A new African debt crisis is looming. • Differences in the motives of sovereign lending between China and Western creditor countries contribute to preventing effective global sovereign debt management under the “Common Framework for Debt Treatment” in this looming African debt crisis. Chi-nese lending during the past two decades was motivated primarily by its own economic interests while most of the Western countries’ lending appears to be at odds with their self-interests but is not yet well-understood. • Debt settlements under the Common Framework that involve China are less generous than past settlements with the Paris Club alone. This is an obstacle to a rapid and sus-tainable economic recovery of financially distressed African countries. • Western countries derive a kind of “consumer surplus” from the agreements under the Common Framework because they are prepared to make greater concessions than Chi-na. They could transfer this hypothetical surplus as additional (conditional) Official De-velopment Assistance to the defaulted African countries to alleviate social hardship.
Topic:
Emerging Markets, International Trade and Finance, Financial Markets, Lending, Economic Crisis, Sovereign Debt, Consumer Behavior, and Geoeconomics
Political Geography:
Africa and China

7. Egypt’s Economy Amidst Regional Conflicts

Author:
Sahar Albazar
Publication Date:
10-2024
Content Type:
Commentary and Analysis
Institution:
The Washington Institute for Near East Policy
Abstract:
Egypt, strategically positioned in the heart of the Middle East and North Africa, is grappling with significant economic pressures exacerbated by regional conflicts and geopolitical instability. The multifaceted crises stemming from the Israeli-Palestinian war, the Sudanese civil war, Libya’s political disarray, and the Russia-Ukraine war have collectively intensified the economic strains on Cairo. These challenges not only impact Egypt's economy but also threaten regional stability. Given the challenges facing Egypt and the region, Cairo is expecting from the United States to play a supportive role towards its strategic partner in the region. The international perception of regional instability is affecting Egypt’s domestic economy; tourism accounted for over 24% of GDP and employing over 2.5 million. However, the perception of insecurity in neighboring countries has deterred international visitors. Tourist arrivals declined by an estimated 25-30% between 2010-2022 compared to pre-conflicts levels. The resulting drop in tourism revenue has placed an additional strain on Egypt's foreign exchange reserves and employment relies heavily on this sector for foreign exchange earnings and employment.
Topic:
Geopolitics, Economy, Crisis Management, Economic Crisis, and Regional Stability
Political Geography:
Middle East, North Africa, and Egypt

8. Sri Lanka’s Bailout Blues: Elections in the Aftermath of Economic Collapse

Author:
International Crisis Group
Publication Date:
09-2024
Content Type:
Special Report
Institution:
International Crisis Group
Abstract:
The economy is central in Sri Lanka’s presidential race, with many voters unhappy with austerity measures the incumbent has taken following International Monetary Fund recommendations. In the interest of stability, the winner should ensure that the belt tightening’s effects are more fairly distributed in society.
Topic:
Elections, Austerity, IMF, and Economic Crisis
Political Geography:
South Asia and Sri Lanka

9. Argentina's President Milei Aims for Economy "Shock Therapy"

Author:
Bartłomiej Znojek
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Dealing with the deepening economic crisis is the top priority for the government of ultraliberal President Javier Milei, who took over in Argentina on 10 December 2023. The scale of the challenge and the lack of a parliamentary majority will complicate the implementation of his plans, which include the dollarisation of the economy and the elimination of the central bank. In foreign policy, Milei promises to prioritise relations with the U.S. and Israel, among other goals. Although he cancelled the previous government’s decision to join BRICS, it is doubtful whether he will limit relations with key partners such as China.
Topic:
Foreign Policy, Economy, BRICS, Economic Crisis, and Javier Milei
Political Geography:
Argentina

10. The Greek Economy a Decade Later – Constantinos Michalopoulos

Author:
Constantine Michalopoulos
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The Greek economy has made a remarkable comeback from a decade ago, to the point that the Economist rated it to have performed the best in the OECD in 2023. This paper reviews Greek economic performance over the last ten years and identifies a number of major challenges that remain, despite the progress made. The last part presents an action plan for the next decade in four priority areas: the labor market, social services, migration and savings-investment. In these areas, reforms are urgently needed, if Greece is to achieve sustainable and equitable growth. The analysis concludes that, because of the continued debt burden, successful reforms will require the Greek government to maintain a delicate and difficult balance between fiscal sustainability and taking the necessary measures to support green and inclusive growth.
Topic:
Reform, Economy, Fiscal Policy, Labor Market, and Economic Crisis
Political Geography:
Europe and Greece