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1 Ireland is first to exit bailout ( Henry MacDonald in The Guardian) Three years after being saved from bankruptcy by a trio of international lenders with a €67.5bn loan, Ireland has become the first stricken eurozone state to exit its rescue programme. Describing the crisis as the country’s worst period since the potato famine, Ireland’s finance minister said there must be no repeat of the debt-fuelled property spree that brought the Celtic Tiger boom to a disastrous end. “We can’t go mad again,” said Michael Noonan.
Ireland’s announcement that it will not seek more funds from the International Monetary Fund, European commission and European Central Bank was seized upon by the EC president, José Manuel Barroso, as evidence that the eurozone can stage a full recovery. Greece, Cyprus and Portugal are still working through rescue programmes, which include external scrutiny of government budgets, while Spain has received funds to recapitalise its banks.
Ireland’s bailout was comprised of €22.5bn from each of the co-called “troika” members over three years, topped up to a total of €85bn with the country’s cash reserves. Having implemented the spending cuts, asset sales and reforms required under the bailout, Ireland has been embraced again by the debt markets that shut out the country at the turn of the decade. It has raised enough debt independently to fund itself into 2015 and has more than €20bn in the bank.
However relief that Ireland will officially exit the rescue programme on Sunday was tempered with warnings from Irish ministers that the policy of austerity must continue, in order to drive down the country’s mountain of debt. Noonan said: “This isn’t the end of the road. This is a very significant milestone on the road. Noonan added: “The real heroes and heroines are the Irish people.”
2 More purges may follow in North Korea (Straits Times) The execution of North Korean leader Kim Jong Un’s uncle brought a swift and violent end to a man long considered the country’s second-most powerful. But while Jang Song Thaek is now gone, the fallout from his bloody purge is not over. In a stunning reversal of the popular image of Jang as a mentor and father figure guiding young Kim Jong Un as he consolidated power, North Korea’s state-run media on Friday announced he had been executed and portrayed him as a morally corrupt traitor who saw the death of Kim’s father, Kim Jong Il, in December 2011 as an opportunity to make his own power play.
Experts who study the authoritarian country, which closely guards its internal workings from both outsiders and citizens, were divided on whether the sudden turn of events reflected turmoil within the highest levels of power or signalled that Kim Jong Un was consolidating his power in a decisive show of strength. Either way, the purge is an unsettling development for a world that is already wary of Kim’s unpredictability amid North Korea’s attempts to develop nuclear weapons.
“If he has to go as high as purging and then executing Jang, it tells you that everything’s not normal,” said Victor Cha, a former senior White House adviser on Asia. The purge also could spread and bring down more people, Cha said. “When you take out Jang, you’re not taking out just one person – you’re taking out scores if not hundreds of other people in the system. It’s got to have some ripple effect.” South Korean intelligence officials say two of Jang’s closest aides have already been executed last month. Jang’s death could herald a “reign of terror,” including more purges, said Lim Eul Chul, a North Korea expert at South Korea’s Kyungnam University.
One question mark is how the purge will impact North Korea’s relationship with its only major ally, China. Jang had been seen as the leading supporter of Chinese-style economic reforms and an important link between Pyongyang and Beijing. China has called Jang’s execution a domestic issue and has avoided further public comment.
3 India leaks $344bn in dirty money (Eric Bellman in The Wall Street Journal) While India has never been your standard Asian export powerhouse, it is one of the world’s largest exporters of one commodity: Dirty money. The total amount of dirty money India exported in the decade ended in 2011, came to a whopping $344 billion, making the South Asian country the world’s fifth largest developing country exporter of illicit cash after China, Russia, Mexico and Malaysia, according to a report this week by Global Financial Integrity, a Washington DC-based research and advocacy organization.
The illicit outflows from crime, corruption and tax evasion grew more than 10-fold during those 10 years to reach $85 billion in 2011, the report said, as corruption in India grew at a faster pace than even the impressive expansion of the economy. For comparison, India’s exports for 2011 came to about $300 billion.
“Markets cannot be left to themselves,” to correct corruption, Dev Kar, chief economist at Global Financial Integrity and one of the authors of the report said. “As long as human beings are involved, there is no inherent or automatic mechanism to regulate behavior and ensure that everyone plays by the book. This is more so the case in developing countries with typically weaker governance,” Mr. Kar said.
India and other developing countries need to create new policies and better monitor trade and financial flows to keep this black money at home, Global Finance Integrity said. Worldwide, the amount of illicit funds flowing out of emerging economies reached almost $1 trillion in 2011, far exceeding the amount of development aid given to them every year.