TIME Hungary

The Government of Hungary Is Going to Pay Its Young People Just to Live There

Revellers attend a concert by Hungarian metal band "Tankcsapda" during Budapest's one-week, round-the-clock Sziget ('Island') music festival
© Laszlo Balogh / Reuters—REUTERS Revellers attend a concert by Hungarian metal band "Tankcsapda" during Budapest's one-week, round-the-clock Sziget ('Island') music festival on an island in the Danube river August 10, 2009.

It's a bid to stem a brain drain that saw 31,500 Hungarians leave the country last year

The Hungarian government is so concerned about the number of young Hungarians leaving the country that it is offering to fly them home and pay them to stay.

“Come home, young person!” is a new program aimed at persuading Hungarians living abroad to return to their home country. A Hungarian government event in London on June 28 to promote the program touted its promise of a free return flight, a 100,000 forint monthly allowance (about $350) for a year, and the possibility of a job close to family, Hungary Today reports.

Szabolcs Pakozdi, managing director of Hungary’s job placement office, stressed to the audience that participants were not obligated to work in the country for a specific period of time.

The Hungarian Central Statistics Office estimates that 31,500 Hungarians left the country in 2014, a 46% increase over 2013, Reuters reports. In total, there are thought to be 350,000 Hungarians working abroad, most of them young singles. Many profess to be uncomfortable with the country’s abrupt political shift to the right under Prime Minister Viktor Orban.

In response, former street artist Gergo Kovacs ran a successful crowdfunding campaign the first week of July to put up enormous posters around the country. “If you come to Hungary,” read one, “Could you please bring a sane Prime Minister?”

TIME Greece

Greeks Fear a ‘Haircut’ on Their Savings As Bailout Deal Expires

A Greek national flag flutters atop a building as dark clouds fill the sky in Athens on June 30, 2015.
Alkis Konstantinidis—Reuters A Greek national flag flutters atop a building as dark clouds fill the sky in Athens on June 30, 2015.

A Cyprus-style tax on deposits is one of the dwindling options the Greek government has left

The phones at Tax Solutions, an accounting firm in the south of Athens, began ringing non-stop early on Monday. On orders from the Greek government, the banks did not open that morning as harsh restrictions were imposed on the amount of money their clients could withdraw.

The accounting firm’s CEO, Vassilis Bagourdis, had been up since dawn, nervously puffing at cigarillos and trying to figure out what the capital controls could mean: Had Greek banks at last run out of money? How long would they stay solvent? And could the government now levy a tax on deposits like the one Cyprus imposed two years ago?

This scenario, which amounts to the seizure of money from private accounts, would be the latest in a fast succession of financial nightmares for Greece, but at this point, Bagourdis says, “There is no telling what tomorrow will bring.” As of midnight on Tuesday, the bailout program that has kept the Greek economy afloat officially expired, and Greece missed a $1.6 billion payment to the International Monetary Fund, meaning it has essentially defaulted on its debts. As a condition of any more assistance, Greece’s creditors have demanded more reforms and austerity measures, including tax hikes and pension cuts, which Greek Prime Minister Alexis Tsipras has repeatedly rejected.

His government is clearly getting desperate. As the midnight deadline approached, Tsipras appealed for another bailout from the 18 other European countries that use the euro as their currency. It would be the third bailout Greece has received in five years. The first two were worth a combined 240 billion euros, and the third one that Tsipras requested would need to extend at least another 30 billion euros over the next two years just so Greece can make payments on existing debts. After an emergency conference call on Tuesday, however, European finance ministers denied his request.

That pushed Greek banks closer to the brink. Over the weekend they had already been cut off from emergency cash injections from European Central Bank, prompting the government to limit withdrawals from each account to a mere 60 euros per day, barely enough for a family to go grocery shopping in Athens. On top of those restrictions, the banks will also remain closed for a “holiday” at least through July 5, which is the next day of reckoning on the Greek financial calendar.

That morning polls are scheduled to open for a national referendum on whether or not to accept the conditions of more assistance from the country’s creditors. It is a bizarre choice to put on a ballot, not least because the creditors formally withdrew their offer as of midnight on Tuesday, when Greece’s bailout program expired. So if the referendum goes ahead – and that is still a big “if” – the Greeks will be asked to vote on a deal that is no longer on the table. Still, the outcome of the vote would mark another step toward the dreaded deposit tax, sometimes called a “haircut” on deposits.

Innocuous as the euphemism seems, this measure would amount to the government seizing the money it needs from regular people’s accounts. “Depending on how the referendum goes, I’d say there is a 60-70% chance of a haircut,” says Bagourdis, whose clients include businesses that would be devastated by such a move.

Some opposition lawmakers put the odds even higher. If voters reject the terms of continued aid from Greece’s creditors on July 5, “the chances of a haircut would be certain,” says Haris Theoharis, a parliamentarian who until late last year was Greece’s top tax collector.

It would in some ways be a repeat of the 2013 crisis in Cyprus. In March of that year, the European Central Bank also stopped providing cash injections – known as emergency liquidity assistance (ELA) – to struggling Cypriot banks, much as it did to Greek banks over the weekend. The government in Cyprus complained that this was a form of blackmail from its European creditors, but in the end it was still forced limit cash withdrawals and impose a tax on deposits, shaving 10% off the value of uninsured accounts that were worth more than 100,000 euros.

In part because many of those accounts belonged to wealthy foreigners – primarily Russians who were using Cyprus as a tax haven – the country did not see any mass unrest after its haircut on deposits. “But here it would be different,” says Bagourdis, who also serves as a senior adviser to the opposition New Democracy party in Greece. “Here it would be regular families and businesses that suffer from this measure.”

Though the current government denied that it was considering such a move earlier this year, the possibility of such a stopgap measure has made many Greeks nervous. In May, the Guardian newspaper quoted an official from the Greek central bank warning that this could cause a violent public backlash. “We would see the revolt that this crisis has not yet produced,” the official was quoted as saying. “There would be blood in the streets. The Greeks are not like the Cypriots.”

It would then be very hard for Tsipras to maintain his base of support – and to stay in power – especially considering that he was elected in January on a promise to end austerity and reduce the tax burden on workaday Greeks. But the dramatic collapse of his negotiations with Greece’s creditors since then has left Tsipras with fewer and fewer options. As part of a new bailout deal, European financial institutions could even insist on a haircut on deposits, much as they did during the Cypriot crisis of 2013.

So even if Greeks vote on July 5 to accept the harsh terms of their country’s creditors – as European leaders have urged them to do – they would still not take the prospect of a deposit tax off the table. “We would still be moving in that direction,” says Bagourdis. As its options for emergency financing are whittled down, the Greek government could be left with no other choice.

TIME Greece

Greece Defaults on Debt After Five Years of Bailouts

A Greek national flag flutters atop a building as dark clouds fill the sky in Athens on June 30, 2015.
Alkis Konstantinidis—Reuters A Greek national flag flutters atop a building as dark clouds fill the sky in Athens on June 30, 2015.

The first developed country to fall into arrears on payments to the IMF since 2001

Greece slipped deeper into its financial abyss after the bailout program it has relied on for five years expired at midnight Tuesday and the country failed to repay a loan due to the International Monetary Fund.

With its failure to repay the roughly 1.6 billion euros ($1.8 billion) to the IMF, Greece became the first developed country to fall into arrears on payments to the fund. The last country to do so was Zimbabwe in 2001.

After Greece made a last-ditch effort to extend its bailout, eurozone finance ministers decided in a teleconference late Tuesday that there was no way they could reach a deal before the deadline.

“It would be crazy to extend the program,” said Dutch Finance Minister Jeroen Dijsselbleom, who heads the eurozone finance ministers’ body known as the eurogroup. “So that cannot happen and will not happen.”

“The program expires tonight,” Dijsselbleom said.

The brinkmanship that has characterized Greece’s bailout negotiations with its European creditors and the IMF rose several notches over the weekend, when Prime Minister Alexis Tsipras announced he would put a deal proposal by creditors to a referendum on Sunday and urged a “No” vote.

The move increased fears the country could soon fall out of the euro currency bloc and Greeks rushed to pull money out of ATMs, leading the government to shutter its banks and impose restrictions on banking transactions on Monday for at least a week.

But in a surprise move Tuesday night, Deputy Prime Minister Yannis Dragasakis hinted that the government might be open to calling off the popular vote, saying it was a political decision.

The government decided on the referendum, he said on state television, “and it can make a decision on something else.”

It was unclear, however, how that would be possible legally as Parliament has already voted for it to go ahead.

Greece’s international bailout expires at midnight central European time, after which the country loses access to billions of euros in funds. At the same time, Greece has said it will not be able to make a payment of 1.6 billion euros ($1.8 billion) to the IMF.

With its economy teetering on the brink, Greece suffered its second sovereign downgrade in as many days when the Fitch ratings agency lowered it further into junk status, to just one notch above the level where it considers default inevitable.

The agency said the breakdown of negotiations “has significantly increased the risk that Greece will not be able to honor its debt obligations in the coming months, including bonds held by the private sector.”

Fitch said it now considered a default on privately-held debt “probable.”

Hopes for an 11th-hour deal were raised when the Greek side announced it had submitted a new proposal Tuesday afternoon, and the eurozone’s 19 finance ministers held a teleconference to discuss it.

But those hopes were quickly dashed.

German Chancellor Angela Merkel said she ruled out further negotiations with Greece before Sunday’s popular vote on whether to accept creditors’ demands for budget reforms.

“Before the planned referendum is carried out, we will not negotiate over anything new,” the dpa news agency quoted Merkel as saying.

Greece’s latest offer involves a proposal to tap Europe’s bailout fund — the so-called European Stability Mechanism, a pot of money set up after Greece’s rescue programs to help countries in need.

Tsipras’ office said the proposal was “for the full coverage of (Greece’s) financing needs with the simultaneous restructuring of the debt.”

Dijsselbloem said the finance ministers would “study that request as we should” and that they would hold another conference call Wednesday, as they had also received a second letter from Athens that they had not had time to read.

Dragasakis said the new letter “narrows the differences further.”

“We are making an additional effort. There are six points where this effort can be made. I don’t want to get into specifics. But it includes pensions and labor issues,” he said.

European officials and Greek opposition parties have been adamant that a “No” vote on Sunday will mean Greece will leave the euro and possibly even the EU.

The government says this is scaremongering, and that a rejection of creditor demands will mean the country is in a better negotiating position.

In Athens, more than 10,000 “Yes” vote supporters gathered outside parliament despite a thunderstorm, chanting “Europe! Europe!”

Most huddled under umbrellas, including Athens resident Sofia Matthaiou.

“I don’t know if we’ll get a deal. But we have to press them to see reason,” she said, referring to the government. “The creditors need to water down their positions, too.”

The protest came a day after thousands of government supporters advocating a “No” vote held a similar demonstration.

On Monday, European Commission President Jean-Claude Juncker made a new offer to Greece. Under that proposal, Tsipras would need to accept the creditors’ proposal that was on the table last weekend. He would also have to change his position on Sunday’s referendum.

Commission spokesman Margaritis Schinas said the offer would also involve unspecified discussions on Athens’s massive debt load of over 300 billion euros, or around 180 percent of GDP. The Greek side has long called for debt relief, saying its mountainous debt is unsustainable.

A Greek government official said Tsipras had spoken earlier in the day with Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz.

Meanwhile, missing the IMF payment will cut Greece off from new loans from the organization.

And with its bailout program expiring, Greece will lose access to more than 16 billion euros ($18 billion) in financial support it has not yet tapped, officials said. They spoke on condition of anonymity because talks about the program were still ongoing.

On the streets of Athens, long lines formed again at ATM machines as Greeks struggled with the new restrictions on banking transactions. Under credit controls imposed Monday, Greeks are now limited to ATM withdrawals of 60 euros ($67) a day and cannot send money abroad or make international payments without special permission.

The elderly have been hit particularly hard, with tens of thousands of pensions unpaid as of Tuesday afternoon. Many also found themselves completely cut off from any cash as they do not have bank cards.

The finance ministry said it would open about 1,000 bank branches across the country for three days beginning Wednesday to allow pensioners without bank cards to make withdrawals. But the limit would be set at 120 euros for the whole week.

TIME Money

This Is What It’s Like to Be a Rich Man in Greece Who Can Not Legally Pay His Debt

People stand in a queue to use an ATM outside a closed bank in Athens on June 30, 2015.
Thanassis Stavrakis—AP People stand in a queue to use an ATM outside a closed bank in Athens on June 30, 2015.

The cautionary tale shares a number of lessons on currency control

The Greek government shut all banks in the country on June 29 after the European Central Bank capped emergency funding to the lenders.

Cash withdrawals from ATMs are now limited to €60 a day (about U.S. $67) for Greek citizens. Foreigners who can find an ATM with cash are exempt from the limit, but cash-poor tourists are finding it very hard to find ATMs with money.

More important, Greece has made the first step down the road to capital controls by prohibiting the transfer of money to destinations outside Greece unless approved by the Ministry of Finance.

No one knows what the impact will be on Greece and the rest of the world. However, history can shed some light on the situation. Before joining the euro, the Greek government had previously implemented strict capital controls and foreign transaction limitations. My personal experience suggests these temporary measures will hurt the economy in the long term.

What do countries gain by currency controls?

I visited Greece in the mid-1980s, a time when the country had very strict currency controls. It was illegal to exchange foreign money in the country except at a bank.

Countries often implement these kinds of policies because it gives them a chance to impose a hidden tax on all foreign exchange transactions. The tax is hidden because the official rate is very different from the free market rate.

Argentina is a country where the official, or “blanco dollar,” rate is very different than the black market, or “blue dollar,” rate.

For example, today going to a bank and exchanging one US dollar will get you about 9,000 pesos at the “blanco dollar” official exchange rate. However, the “blue dollar” rate is about 13,500 pesos, which gets you 50% more for your money. If exchanging US$20 at the official rate gets enough money for dinner in Argentina, using the “blue” rate will get enough money for lunch plus dinner.

Other reasons why countries implement controls are found in a very readable overview of the topic published by the Federal Reserve Bank of St Louis (see table 1 here).

My experience with Greek currency controls

I arrived in Greece in the mid-1980s for a 10-day trip and exchanged U.S. dollars without a problem into Greek drachmas, the currency prior to the euro.

I had a wonderful time seeing famous ruins such as the Parthenon, cycling through picturesque towns and eating great food. My last day in Greece was in the middle of the week. I was staying in Athens and had already purchased a boat ticket to another country. I woke up, paid my hotel bill — which emptied my wallet of Greek drachmas — and planned on stopping by a bank to get some money to pay for laundering the clothes I had dropped off two days earlier at a nearby cleaners and then heading down to the port for a leisurely lunch before departure.

I was surprised to find the streets empty, many shops closed and not a single bank open, all in the middle of the week. It was May 1, International Workers’ Day, which is commonly called May Day. The streets were soon filled with tens of thousands of Greeks marching and chanting slogans.

Luckily, the cleaners that had my neatly pressed clothes was still open. However, while I had lots of US dollars, and even an American Express credit card, I had no Greek money. The owner explained to me that if she took dollars in payment, she could be arrested for violating the currency controls. She took pity on me and gave my clothes back cleaned for free and even handed me a subway token to get me down to the port.

I was rich man who could not legally pay my debt. To this day I am confused on the right thing to do. Paying her in dollars was a crime. Not paying her was stealing. Before leaving the shop I surreptitiously slipped roughly how much I owed in U.S. dollars under a vase near the cash register when the shop owner wasn’t looking. Hopefully, the currency police didn’t catch her.

Currency controls made it difficult for me to spend money and greatly dampened my desire to visit Greece again. The important question Greek politicians face is whether implementing currency controls will help save Greece’s banks.

Economists have not reached a unified consensus on the answer. Some research suggests controls are economically good, some research finds it economically bad and some finds it not important. The business press, however, often cheers the removal of currency controls, with examples like Bloomberg attributing the economic resurgence of Poland to policy changes, such as the elimination of capital and currency controls.

My opinion is that implementing currency controls now will stifle tourism, which makes up directly and indirectly about 16% of the Greek total gross domestic product (GDP). It will also not help weak Greek banks very much, because people have lost faith that they can access their savings.

Reducing tourism and not rebuilding people’s faith in Greek banks ensures Greece’s economic revival will take even longer after the debt crisis is finally resolved. Capital controls look to me like a short-term bandage that only allows a long-term wound to get more seriously infected.

This article originally appeared on The ConversationThe Conversation

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Economy

Global Stocks Stumble As Greece Debt Troubles Escalate

Spain Greece Bailout
Andres Kudacki — AP A broker speaks on the phone as he looks at a screen at the Stock Exchange in Madrid, June 29, 2015.

The Dow Jones industrial average fell 213 points Monday amid Greece's deepening debt troubles

(NEW YORK) — Global stock markets are stumbling as investors worry about fallout from Greece’s deepening debt troubles as talks between the country and its creditors broke down over the weekend.

Greece has shuttered its banks to prevent nervous depositors from pulling their money out, and the country faces a deadline Tuesday to may a big debt payment.

The Dow Jones industrial average fell 213 points, or 1.2 percent, to 17,733 as of 11:45 a.m. Eastern time Monday.

The Standard & Poor’s 500 gave up 24 points, or 1.2 percent, to 2,076.

The Nasdaq fell 71 points, or 1.4 percent, to 5,009.

The declines were steeper in Europe. Indexes fell 3.5 percent in Germany and 3.7 percent in France.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.36 percent.

TIME

Joseph Stiglitz to Greece’s Creditors: Abandon Austerity Or Face Global Fallout

Nobel laureate tells TIME that the institutions and countries that have enforced cost-cutting on Greece "have criminal responsibility"

A few years ago, when Greece was still at the start of its slide into an economic depression, the Nobel prize-winning economist Joseph Stiglitz remembers discussing the crisis with Greek officials. What they wanted was a stimulus package to boost growth and create jobs, and Stiglitz, who had just produced an influential report for the United Nations on how to deal with the global financial crisis, agreed that this would be the best way forward. Instead, Greece’s foreign creditors imposed a strict program of austerity. The Greek economy has shrunk by about 25% since 2010. The cost-cutting was an enormous mistake, Stiglitz says, and it’s time for the creditors to admit it.

“They have criminal responsibility,” he says of the so-called troika of financial institutions that bailed out the Greek economy in 2010, namely the International Monetary Fund, the European Commission and the European Central Bank. “It’s a kind of criminal responsibility for causing a major recession,” Stiglitz tells TIME in a phone interview.

Along with a growing number of the world’s most influential economists, Stiglitz has begun to urge the troika to forgive Greece’s debt – estimated to be worth close to $300 billion in bailouts – and to offer the stimulus money that two successive Greek governments have been requesting.

Failure to do so, Stiglitz argues, would not only worsen the recession in Greece – already deeper and more prolonged than the Great Depression in the U.S. – it would also wreck the credibility of Europe’s common currency, the euro, and put the global economy at risk of contagion.

So far Greece’s creditors have downplayed those risks. In recent years they have repeatedly insisted that European banks and global markets do not face any serious fallout from Greece abandoning the euro, as they have had plenty of time to insulate themselves from such an outcome. But Stiglitz, who served as the chief economist of the World Bank from 1997 to 2000, says no such firewall of protection can exist in a globalized economy, where the connections between events and institutions are often impossible to predict. “We don’t know all the linkings,” he says.

Many countries in Eastern Europe, for instance, are still heavily reliant on Greek banks, and if those banks collapse the European Union faces the risk of a chain reaction of financial turmoil that could easily spread to the rest of the global economy. “There is a lack of transparency in financial markets that makes it impossible to know exactly what the consequences are,” says Stiglitz. “Anybody who says they do obviously doesn’t know what they’re talking about.”

Over the weekend the prospect of Greece abandoning the euro drew closer than ever, as talks between the Greek government and its creditors broke down. Prime Minister Alexis Tsipras, who was elected in January on a promise to end austerity, announced on Saturday that he could not accept the troika’s “insulting” demands for more tax hikes and pension cuts, and he called a referendum for July 5 to let voters decide how the government should handle the negotiations going forward. If a majority of Greeks vote to reject the troika’s terms for continued assistance, Greece could be forced to default on its debt and pull out of the currency union.

Stiglitz sees two possible outcomes to that scenario – neither of them pleasant for the European Union. If the Greek economy recovers after abandoning the euro, it would “certainly increase the impetus for anti-euro politics,” encouraging other struggling economies to drop the common currency and go it alone. If the Greek economy collapses without the euro, “you have on the edge of Europe a failed state,” Stiglitz says. “That’s when the geopolitics become very ugly.”

By providing financial aid, Russia and China would then be able to undermine Greece’s allegiance to the E.U. and its foreign policy decisions, creating what Stiglitz calls “an enemy within.” There is no way to predict the long-term consequences of such a break in the E.U.’s political cohesion, but it would likely be more costly than offering Greece a break on its loans, he says.

“The creditors should admit that the policies that they put forward over the last five years are flawed,” says Stiglitz, a professor at Columbia University.What they asked for caused a deep depression with long-standing effects, and I don’t think there is any way that Europe’s and Germany’s hands are clean. My own view is that they ought to recognize their complicity and say, ‘Look, the past is the past. We made mistakes. How do we go on from here?’”

The most reasonable solution Stiglitz sees is a write-off of Greece’s debt, or at least a deal that would not require any payments for the next ten or 15 years. In that time, Greece should be given additional aid to jumpstart its economy and return to growth. But the first step would be for the troika to make a painful yet obvious admission: “Austerity hasn’t worked,” Stiglitz says.

TIME movies

11 Real-Life Harry Potter Destinations You Can Visit

Your long-waited-for letter from Hogwarts may never actually come, but a visit to each of these destinations will get the fans pretty close

This article originally appeared on People.com

TIME europe

European Union Comes Up With a Plan to Ease Migrant Crisis

Member states will take in 40,000 migrants currently in Italy and Greece

European Union member states will take in 40,000 migrants from the Middle East and Africa currently in Italy and Greece, according to a leaked plan that emerged Thursday.

According to a draft communiqué seen by Reuters, European leaders will enact a two-year plan for volunteer EU countries to temporarily spread a total of 40,000 migrants across multiple nations. The final statement will propose creating criteria to determine which countries will participate and how many refugees each will accept. The document stops short of creating national quotas for each country.

The agreement is intended to alleviate pressure on asylum infrastructures in Greece and Italy that are buckling under the record high volume of migration across the Mediterranean Sea. At least 153,000 people have sought refugee in Europe this year, and almost 2,000 have died making the dangerous trip.

[Reuters]

TIME

Why Europe Can’t Leave Greece Adrift

greece-crisis-euro-bailout
Aris Messinis—AFP/Getty Images A protester at a pro-European demonstration in Athens.

Even though the country got itself into its huge debt mess

It’s easy to condemn the posturing of Greece’s Syriza-led government in its battle with its European creditors. Greece ran up a major debt and must pay. If Greece can walk away from its commitments, it will only need more bailouts in the future. Its creditors offer bitter medicine, but medicine is what’s required, and Athens must swallow it.

But look beyond Syriza’s amateurish posturing and see the ordeal the Greek people have already endured. Spain, Portugal and Ireland have lost less than 7% of GDP since the euro-zone crisis began. Greece has lost 26%. Nearly 1 in 5 Greeks can’t meet daily food expenses. Homelessness is rising. Rates of HIV infection have doubled since 2011 as unemployment pushes more young people toward drug use and treatment funding is sharply cut. In Norway, the child-poverty rate is 5.3%. In Greece, it’s 40.5%. The British Medical Journal has found a “significant, sharp and sustained increase” in suicides.

Greece has taken extraordinary steps to meet the demands of its creditors. Over the past five years, it has cut spending and raised taxes on a scale equivalent to 30% of GDP. No other euro-zone government has done nearly so much. Pension benefits have been cut and the retirement age raised to 67. And for every euro in bailout funds, the Greek government receives less than 20%. The rest goes to bankers and bondholders.

Both must be paid back, but Greece must eventually grow its economy as well. Today that’s more of an aspiration than a plan, but if the medicine used to cure this country’s profligate political culture leaves a generation of citizens flat on their backs, how can Greeks apply lessons learned and get back to work?

For Europe, the biggest risk is not that Greece will escape its responsibilities, encouraging other countries to try the same trick. It’s that this polarizing crisis could further fuel anti-E.U. sentiment across the continent. Anger at European institutions has boosted old and new parties of both the left and right: Syriza and Golden Dawn in Greece, Podemos in Spain, the U.K. Independence Party in Britain, the National Front in France, Alternative for Deutschland in Germany, the Five Star Movement in Italy and others.

It is the growth of these parties, and the public anger they represent, that poses the biggest threat to further European reform and the entire European project.

Tensions rise between the U.S. and Russia

The Pentagon has announced that it is sending tanks, artillery and other military supplies to U.S. allies in Eastern Europe. The total amount of equipment is equivalent to a brigade’s worth, or as a senior U.S. military official put it, not quite enough to “fill up the parking lot of your average high school.”

Still, the move is provocative, aimed as much at Vladimir Putin as it is at Washington’s wobbly European allies. On June 22, E.U. Foreign Ministers decided to extend sanctions against Moscow over the Ukraine crisis. Imposing those sanctions, and bearing the brunt of Russia’s countersanctions, is taking a toll. But Washington needs a united front against the Kremlin. Positioning the equipment is enough to ramp up tensions but not nearly enough to convince Russia to back off. Bottom line? We’re heading for escalation with Russia.

How Pope Francis filled a global leadership vacuum

Amid the din in Europe, one voice has risen above the rest: that of Pope Francis. The substance of his encyclical on the environment wasn’t particularly groundbreaking; that it was received with such surprised fanfare speaks to how little we expect from religious figures when they weigh in on science.

The real takeaway is that there’s an obvious gap in global leadership. The Pope stepped into that role admirably, but it’s remarkable how much we now depend on a person who rose through the ranks of a conservative institution like the Catholic Church. Would it have been better if the same message came from someone like the Secretary-General of the U.N.? Maybe so, but it would have fallen on deaf ears.

Foreign-affairs columnist Bremmer is the president of Eurasia Group, a political-risk consultancy

TIME M&A

These Two Supermarket Chains Just Entered a $29 Billion Marriage

Shoppers Inside A Delhaize Group SA Supermarket As Merger With Royal Ahold NV Looms
Bloomberg—Bloomberg via Getty Images Shopping carts sit in a trolley bay outside a Delhaize Group SA supermarket in Wezembeek, Belgium.

It will be one of the largest grocery corporations in the U.S.

Dutch grocery chain Royal Ahold and Belgian grocery chain Delhaize have agreed to a merger. Based on the companies’ stock prices from closing time Tuesday, the combined corporation would have a market capitalization of $29.1 billion.

The two European retailers confirmed merger talks back in May, but now it is official. And this merger is an effort to be stronger in the States, where competition has been stiff. Hans D’Haese, an analyst with Degroof, told The Wall Street Journal the deal is a “defensive move.”

Ahold and Delhaize may not be household names to all American shoppers, but both of them make more than half their revenues in the U.S. Ahold, based in the Netherlands, operates the Stop & Shop and Giant chains, and online grocery store Peapod, while Belgium’s Delhaize owns the Food Lion and Hannaford banners, the Journal said.

The new company will be one of the top five biggest food chains in the U.S.

Ahold is the larger company, with some $33 billion in annual revenue to Delhaize’s $21 billion, and so Ahold is the de facto lead in the deal. It gets first billing in the new name, Ahold Delhaize, and it is Ahold’s CEO, Dick Boer, who will stay on as CEO of the new corporation.

The new entity, Ahold-Delhaize, is reminiscent of other food mega-mergers in the last decade, such as Anheuser-Busch InBev, Kraft Heinz, or MillerCoors.

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