The Arab Spring of 2011, as we all know, is still with us as there is some blatant unfinished business. Some may take the opportunity here to bring up Bahrain, or even Jordan or Morocco, but I’m referring instead to the country now catching the vast majority of the world’s attention. That was supercharged yesterday with the reported deaths there of an American and a French journalist, so I mean Syria, of course, where anti-government agitation has now been going on at least since last March, and where the government apparently is now carrying out its ambition to blast one of its major cities, Homs, to the ground.

Governments everywhere gnash their teeth in reaction, asking what can be done in the face of Russia’s and China’s refusal to allow the passage of any UN Security Council Resolution which, under international law, is necessary for any active intervention. Still, there is some good news, brought to us today in Le Monde:

Au bord de l’asphyxie financière, le régime syrien poursuit la répression http://t.co/wBFsN8LD

February 23, 2012 1:12 pm via dlvr.itReplyRetweetFavorite

@lemondefr

Le Monde

L’asphyxie financière: financial asphyxiation – it seems that at least the economic sanctions that Europe, America, and the Arab League imposed on the Damascus regime some time back are finally starting to have an affect. Simply put, Syria is being starved of foreign exchange, since it can hardly earn any – no one will buy its oil. There are maybe “three or four months” worth of foreign currency left, is what is now estimated within diplomatic circles. After that, the Syrian pound “will crumble”; even if they can find importers for what they need in the midst of all the official sanctions, they’ll have nothing to pay them with.

Of course, this will likely make life equally uncomfortable for the rebels as well as the Syrian government. But perhaps of greater relevance is the question whether those rebels can hold out another three or four months.

Need I even say it? Despite fantastic economic figures just out from China (exports up 46% in February year-on-year, 8.7% economic growth in 2009), the world-wide financial/economic crisis is far from over. An ever-expanding list of governments (Greece, Spain, Ireland, the UK – yes, also including the US) have adopted the strategy of grabbing back desperately-needed economic growth through success in increasing exports. A corollary to that is that a weak currency is an awfully handy thing.

Except that it simply isn’t possible, from a mathematic point-of-view, for everyone to weaken their currencies at the same time. Someone’s money – preferably some country with a huge presence in international trade – has to go up in value, relatively. And this gets back to recent Chinese economic performance: China seems to be doing rather well, but it is also suffering from a notable bout of price-inflation. Furthermore, the Middle Kingdom’s currency, the Renminbi, is clearly undervalued – infamously so, even, due to the Chinese government’s explicit policy to protect it with various currency restrictions to be sure to keep it that way. So wouldn’t we find some nice economic solution for everyone by heeding the calls that have been issuing from US officials for some time now and convincing the Chinese government to cut that stuff out and allow the Renminbi to appreciate in value?

Not according to Tobias Bayer, in his opinion piece for the Financial Times Deutschland (Exchange rate policy: Dangerous game with the Renminbi). (more…)