Eliot Morss writes:  Greece is getting all the attention, but there are other countries whose economies are in deep trouble.

Countries with populations of less than 500,000 were dropped. Then, the 30 countries with the worst 2014 performance on each of these indicators were selected. That narrowed the list to 74 countries. The list was paired further by choosing countries that performed worst on at least 3 of these 5 indicators. That left 12 countries. Those countries along with three others facing somewhat unique problems – Ecuador, Ukraine and Venezuela – are analyzed below. Libya and Syria are not included. Their serious economic problems are primarily attributable to wars. But at least for now, Libya is still pumping oil and Syria receives substantial economic assistance from Iran.  Troubled Countries Across the Globe

Tulay Cetingulec writes:   Ahead of every election in Turkey, political parties make myriad promises to the jobless and the poor, pledging social benefits for low-income families and retirees and housing projects for the homeless. The promises are typically forgotten after a government is formed and then everything goes about as usual. Ahead of the June 7 parliamentary elections, however, issues appear bound to persist and keep fueling debate:

The CHP made a “profiling” of the population that drew up Turkey’s poverty map. The report, penned by a team led by CHP parliament member Umut Oran, detailed the economic woes of the impoverished masses and urged the government to struggle against poverty instead of busying itself with profiling.

The report is based on current data by the Turkish Statistics Institute (TUIK), which represent the state’s official figures that the government cannot dispute or deny. According to the report, 22 million Turks have an average monthly income of only 835 Turkish lira ($320), and 49 million are struggling with debt. It says 34 million cannot afford meat, chicken or fish once every two days, 56.2 million lack the means to renew worn-out furniture and 26 million are unable to buy new clothes. A one-week vacation per year is beyond the means of 58 million people.

While even the window glass of the new presidential palace was imported from abroad, 30.5 million Turks live in homes with leaking roofs, moisture-prone walls or decayed window frames. About 19 million people, or one in every four citizens, reside in dark homes deprived of sunlight. Accommodations without a bathroom, a toilet or a kitchen are home, respectively, to 2 million, 6.6 million and 2.1 million people. Another 12.1 million live in homes that lack warm water and 1.3 million in homes that lack water altogether. The report indicates that 22 million shiver during winter, unable to afford heating.
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With respect to unemployment, the report said, “Over the past 12 years, the AKP [Justice and Development Party] has failed to resolve problems of employment and livelihood. TUIK’s monthly unemployment data reflect only the tip of the iceberg. According to official definitions, 3,145,000 people are jobless and the unemployment rate is 10.9%”

What difference a social-democrat government can make? “If the CHP comes to power, it will focus on alleviating poverty,” said Oran, who is also the vice president of the Socialist International.

Jean Pisani Ferry writes:  In recent years, topics about which most people had never heard or cared – for example, securitization, credit default swaps, and the European payment system known as Target 2 – have imposed themselves on public debate, forcing ordinary people to grapple with their intricacies.

The same has started to happen with the notion of “potential output growth.” Originally a concept created by economists for economists, its use for determining when, and by how much, a public deficit must be corrected is becoming a matter for wider discussion. Indeed, its unreliability is seriously weakening the EU’s fiscal pact.

The aim of the concept of potential – as opposed to actual – GDP is to take into account that an economy often operates below or above potential. In a demand-driven recession, actual output falls below potential, which results in a rise in unemployment. Similarly, a credit-fueled construction boom drives output above potential, resulting in inflation.

The gap between actual and potential GDP is thus a gauge of an economy’s spare capacity. Ppotential GDP can be only estimated, not observed. Estimates are based on the amount of labor and capital available for production and an assessment of their joint productivity. And, because estimates differ, depending on the data and methods used, the concept is clear whereas its value is imprecise.

Moreover, the global financial crisis has created new puzzles. GDP in nearly all advanced economies is currently far below pre-crisis projections, yet few expect the gap ever to be bridged.

The European Union has an additional problem: in response to the sovereign crisis, most of its members agreed in 2011 to a “fiscal compact” requiring them to keep their structural budget deficit – the one they would record were output equal to potential – below 0.5% of GDP.   The virtue of such a framework is to take into account the impact of temporarily weaker output on fiscal outcomes. Thus, a deficit is acceptable when it results from abnormally low tax revenues, but not when revenues are at their normal level.

Indeed, a major flaw in the initial European Stability and Growth Pact was that it did not include such corrections. An unobservable and imprecise variable – whose estimates are too inexact and volatile to provide more than a rough roadmap for a country’s journey toward fiscal rectitude – has become part of an international treaty and the national rules (sometimes of constitutional status) through which it is implemented.

Estimates of short-term or current potential output are also constantly reworked, implying continuous change in the assessment of the underlying fiscal situation.

For actual GDP, such frequent and large forecast revisions are inevitable. Potential GDP, however, is supposed to be more stable, as it does not depend on demand-side developments.

Furthermore, instability confuses the policymaking process. Even a downward revision by 0.2% of GDP is meaningful: it implies a deterioration of the structural deficit by about 0.1% of GDP – not a trivial number in a fiscally constrained environment.

The purpose of the European fiscal framework is to lengthen the time horizon of policy and to make decision-makers more aware of the debt-sustainability challenges that they face. This requires consistency. Yet volatility in the assessment of potential growth prevents politicians from “owning” the already abstruse structural deficit and causes volatility in the policies based on this assessment, paradoxically resulting in a shortening of decision-makers’ time horizon. The focus of policy discussions should not be the latest potential GDP revision, but whether a country is on track to ensure public finance sustainability.

Too often, the European fiscal pact is perceived by national policymakers as an external constraint, not as a framework conducive to better decisions. A greater degree of stability in the assessment of an economy’s potential would strengthen decision-makers’ awareness and appreciation of longer-term challenges, thereby putting policymaking on a sounder footing.

Nouriel Roubini writes:  The latest economic data from the eurozone suggest that recovery may be at hand. What is driving the upturn? What obstacles does it face? And what can be done to sustain it?

The immediate causes of recovery are not difficult to discern. Last year, the eurozone was on the verge of a double-dip recession. When it recently fell into technical deflation, the European Central Bank finally pulled the trigger on aggressive easing and launched a combination of quantitative easing (including sovereign-bond purchases) and negative policy rates.

The financial impact was immediate: in anticipation of monetary easing, and after it began, the euro fell sharply, bond yields in the eurozone’s core and periphery fell to very low levels, and stock markets started to rally robustly. This, together with the sharp fall in oil prices, boosted economic growth.

Other factors are helping, too. The ECB’s easing of credit is effectively subsidizing bank lending.

Eurozone growth has resumed, and eurozone equities have recently outperformed US equities. The weakening of the euro and the ECB’s aggressive measures may even stop the deflationary pressure later this year.

But a more robust and sustained recovery still faces many challenges. Podemos, a leftist party in the Syriza mold, could come to power in Spain. Populist anti-euro parties of the right and the left are challenging Italian Prime Minister Matteo Renzi. And Marine Le Pen of the far-right National Front is polling well ahead of the 2017 French presidential election.

Slow job creation and income growth may continue to fuel the populist backlash against austerity and reform.

A second obstacle to sustained recovery is the eurozone’s bad neighborhood. Russia is becoming more assertive and aggressive in Ukraine, the Baltics, and even the Balkans. The Middle East is burning just next door.

While ECB policies keep borrowing costs lower, private and public debt in the periphery countries, as a share of GDP, is high and still rising, because the denominator of the debt ratio – nominal GDP – is barely increasing.

Fscal policy remains contractionary, because Germany continues to reject a growing chorus of advice that it should undertake a short-term stimulus.

Structural reforms are still occurring at a snail’s pace, holding back potential growth. Europe’s monetary union remains incomplete. Its long-term viability requires the development over time of a full banking union, fiscal union, economic union, and eventually political union. But the process of further European integration has stalled.

If the eurozone unemployment rate is still too high by the end of 2016, annual inflation remains well below the ECB’s 2% target, and fiscal policies and structural reforms exert a short-term drag on economic growth, the only game in town may be continued quantitative easing.

As the euro weakens, the periphery countries’ external accounts have swung from deficit to balance and, increasingly, to surplus. Germany and the eurozone core were already running large surpluses.

To avoid this outcome, Germany needs to adopt policies – fiscal stimulus, higher spending on infrastructure and public investment, and more rapid wage growth – that would boost domestic spending and reduce the country’s external surplus. Unless, and until, Germany moves in this direction, no one should bet the farm on a more robust and sustained eurozone recovery.

Marlene Laruele writes:  On March 11, 2015, the U.S. Treasury Department placed a new round of sanctions on 14 figures that Washington considers responsible for the conflict in Ukraine. Until now, sanctions had targeted either high-level Russian politicians or those who were part of President Vladimir Putin’s inner circle—his friends and their bankers. The latest list, however, includes mostly secessionist leaders from Donbas, a region in Eastern Ukraine that roughly covers the Donetsk and Luhansk provinces. But it also names individuals that do not belong to the Russian ruling circles, and are connected to the Ukraine conflict only by ideology.

Take for example, Alexander Dugin,, an outspoken Russian thinker who is often noted in Western media for his fascist views and his belief that Ukraine is not a sovereign state but a region that belongs, and therefore is fated to return, to Russia. Dugin has no official status within the Russian government. He is not even a member of the Public Chamber—a consultative institution created by Putin to foster a regime-friendly civil society—although one of Dugin’s close associates, Valery Korovin, was elected by an informal public vote as a member in Spring 2014. Nor is Dugin a part of Putin’s inner circle. The two men might not have ever even met. (Dugin is known to take every opportunity to publicize his personal connections with the Russian political elite, but has never bragged about having met the Russian president.) His supposed links to the State Duma Chairman Sergey Naryshkin are likewise unsubstantiated. Dugin has no known financial interests that could have been secured by an alleged inclusion in Putin’s inner circle, unlike many of the other officials on the sanction list. So why is Washington targeting him?

Jonathan Masters and John B. Bellinger write:  A vigorous debate is underway in Washington regarding what role Congress, and the United Nations Security Council, should play in reviewing and approving any deal between Iran and the so-called P5+1 major powers (the United States, Russia, China, France, the UK, and Germany). President Barack Obama’s administration says any Iran deal, which would likely involve easing extensive U.S. and international sanctions on Iran, would not be legally binding on the United States, and hence Congress should not have a role in approving it. Congress does not agree.

Congress has imposed a complex and overlapping array of sanctions on Iran, including through new sanctions enacted during the last five years, that target Iran’s oil and gas, petrochemical, shipping, and financial sectors. In addition, President Obama has imposed additional sanctions on Iran through a series of executive orders issued pursuant to the International Emergency Economic Powers Act.

Most of the congressional sanctions include waiver authority that permits the president to waive the different sanctions for a period of time if he determines that the waiver would be in the national interest or,  Yet the president may modify the sanctions imposed by executive order at any time, either by suspending them or eliminating them.

The Iran talks are a multilateral negotiation, and U.S. negotiators must coordinate commitments they make to suspend or lift U.S. sanctions on Iran with the commitments made by the other so-called P5+1 countries. The UN Security Council has imposed sanctions on Iran in a series of six resolutions over the last nine years and the P5 countries, who are the five permanent members of the Council, have likely offered to support modification or lifting of these sanctions.

Germany, France, and the UK have likely promised to support modification of sanctions imposed by the European Union.  That said, the current controversy between Congress and the Obama Administration is unusual in several respects.

First, it is certainly unusual for a large bloc of Congress (47 Republican Senators) to write directly to the leadership of another country (especially an adversary) in the midst of a sensitive negotiation being conducted by the president. Second, contrary to the apparent premise of the Republican letter, the Iran agreement would not be a treaty and does not require Senate approval. Moreover, according to the Obama Administration, it would not even be legally binding as a matter of international law (and therefore would not even have to be officially submitted to the Congress under the Case-Zablocki Act, which requires submission to Congress of legally binding international agreements that do not constitute treaties). In this respect, the Obama administration is correct that Congress traditionally has not had a role in reviewing and approving mere political declarations made by the executive branch (which are not legally binding under international law).  Iran Deal, Sanctions and the US Congress