The World That Was

Adrian Olivier,

Sunday 11 June – Sunday 18 June:

On Monday, Italian media tycoon, politician, and billionaire, Silvio Berlusconi, who served as prime minister in 4 governments between 1994 and 2011 died in hospital. He was the longest-serving prime minister. He was admitted to the San Raffaele Hospital in Milan on Friday 9 June for what aides said were preplanned tests related to his leukaemia. A state funeral was held for Berlusconi on Wednesday in the Milan Cathedral and was officiated by the Archbishop of Milan. Nicknamed Il Cavaliere –“The Knight” – for his Order of Merit for Labour (an order of chivalry), the billionaire businessman transformed Italy’s political landscape while being plagued by scandals. He rose into the ranks of the Italian financial elite in the late 1960s beginning as a construction magnate, before pivoting into media and founding the first private television channel in Italy. This was the beginning of his media empire Mediaset, which is today the largest commercial broadcaster in the country. He was also owner of Italian football club AC Milan from 1986 to 2017. Once ranked, the 12th most powerful man in the world, and the 190th wealthiest, Berlusconi’s reign as leader of the centre-right in Italy will surely be remembered by history. 

Also on Monday, Swiss banking giant UBS completed the takeover of long-time rival Credit Suisse, about three months after it was announced. The $3.25 billion deal, brokered by the Swiss regulators, prevented Credit Suisse from a collapse that could have likely sparked another global financial crisis. As part of the deal, Credit Suisse shareholders will receive one share in UBS for every 22.48 in stock. The two banks will be managed separately by parent company UBS Group AG and each institution will continue to have its own subsidiaries and branches and serve its clients. The merger of the two global banks has created a behemoth in Switzerland, with $1.7 trillion in total assets and a nearly 40% market share of the country’s loans and deposits. Now that the merger is complete, UBS will restructure and cut jobs to save billions of dollars. The two banks employ 37,000 people, about 18% of the Swiss financial sector’s workforce. UBS said full integration of Credit Suisse could take three to five years.

On Tuesday, NATO began its Air Defender 23’ air force exercises, led by the German Air Force. The exercises will continue until Friday, June 23. Some 250 aircraft from 25 NATO and partner countries (Japan and Sweden – which has not yet been admitted) are involved as well as 10,000 military personnel. This is the largest ever air force deployment exercise in NATO’s history and aims to display unity amongst the bloc’s members in the face of Russia’s invasion of Ukraine. Air Defender 23’ follows the Arctic Challenge Exercise in Norway, Sweden and Finland from 29 May to 9 June and involved around 150 aircraft, including F-35 Lightning II, and 2,700 military personnel. German Defence Minister Boris Pistorius said on Monday that the exercise has “the goal of making it clear that NATO and the German Air Force are ready to defend themselves”, in the event of an attack on any member of the alliance. The week before NATO exercises began, fighter jets were scrambled 15 times to intercept unidentified military aircraft over the Baltic Sea. General Michael Loh, the director of the US Air National Guard said the exercises were about “establishing what it means to go against a great power in a great power competition.” and that NATO was at in “inflexion point”. The air force exercises overlapped with the annual BALTOPS NATO maritime-focused exercises, which ended on Friday. Baltic Operations 2023 (BALTOPS) featured 50 ships and 45 aircraft led by U.S. Naval Forces Europe-AFrica and the U.S. 6th Fleet, and began in Estonia on June 4. Over the following two weeks the navies of 20 NATO countries simulated maritime and amphibious combat scenarios in and around the Baltic Sea. More than 6,000 personnel, including about 1,500 U.S. sailors, Marines and airmen, took part in the exercise, more than twice as many as in 2020.

Also on Tuesday, Donald Trump pleaded not guilty to all 37 counts in his indictment in a Miami courtroom. The former president was fingerprinted and arraigned at the Wilkie D. Ferguson Jr. U.S. Courthouse in downtown Miami. A defiant Trump sat scowling with crossed arms. He spoke only when whispering to his lawyer. Trump who turned 77 the next day, went to a Cuban restaurant, where he was heard saying “Some birthday, we got a government that is out of control”. 

Belarusian President Alexander Lukashenko declared on Tuesday that his country had already received some of Russia’s tactical nuclear weapons and warned that he wouldn’t hesitate to order their use if Belarus faced an act of aggression – contradicting Vladimir Putin’s earlier statements that Belarus would receive the weapons in July. On Saturday, Putin confirmed the first transfer and that all the promised warheads would be delivered by the end of the summer, though he emphasised that the weapons would be under Russia’s exclusive control. 

On Wednesday, the Federal Reserve concluded its two day Federal Open Market Committee (FOMC) meeting. The Committee voted unanimously to hold the the federal funds rate at the existing target range of between 5% and 5.25% in what is the first reprieve since aggressive tightening began in March 2022. Federal Reserve Chairman Jerome Powell noted that there would be future rate hikes “Nearly all committee participants view it as likely that some further rate increases will be appropriate this year”. Powell also noted that he expected next months’s meeting (July 25-26) would be a “live” one, in an indication that the Federal Reserve will raise rates on July 26. Expectations are for two more 25-basis points increases this year that will lift the federal funds rate to between 5.5% and 5.75%. The Fed needs “credible evidence that inflation is topping out and then beginning to come down” before it can end the rate hikes – which is expected to occur next year. Most officials forecast the federal funds rate will be down to 4.6% in 2024 and 3.4% in 2025. The announcement led to stocks declining before recovering. The latest consumer price index report, released on Tuesday, showed a deceleration in annual inflation despite persistent price pressures across many segments of the economy. Though the labour market has lost some of its momentum, it remains strong and consumers continue spending. Core inflation (goods and services, excluding food and energy) is projected to decline to 3.9% by the end of this year, slowing to 2.6% next year and 2.2% in 2025. Inflation is currently at 4.7% and the U.S. economy is expected to grow 1% this year.

On Friday, Bill Gates met with his “friend”, Chinese leader Xi Jinping in Beijing. Gates last met with Xi in 2015 and this is Xi’s first meeting with a foreign business figure in years – Xi stopped travelling abroad in 2020 as China closed its borders. It is the latest trip by senior American business figures to China this year. Apple’s Tim Cook, JP Morgan’s Jamie Dimon and Tesla’s Elon Musk have all travelled to China this year in anticipation of its economic re-opening, however none of these figures met directly with Xi. Gates was in Beijing in his role as co-chairman of The Bill and Melinda Gates Foundation – he stepped down from his role as Microsoft chairman nearly a decade ago, and left the board in 2020. Despite not being directly involved in the company any longer, it is still remarkable since Microsoft last month warned that Chinese state-backed hackers were pursuing capabilities to “disrupt critical communications” between the U.S. and the Asia Pacific region in the event of conflict or crisis. Last month also saw the departure of LinkedIn (owned by Microsoft) from China. It was the last major Western social media platform still in operation in mainland China. 

On Friday, a group of African leaders and officials from seven countries arrived in Ukraine to begin talks with Ukrainian President Volodymyr Zelensky in Kiev. South Africa was represented by President Cyril Ramaphosa and the delegation also included Senegal’s Macky Sall, Zambia’s Hakainde Hichilema as well as Comoros’ Azali Assoumani, who heads the African Union. South Africa and Uganda are seen as leaning towards Russia, while Zambia and Comoros are closer to the West. Egypt, Senegal and Congo-Brazzaville have remained largely neutral. The leaders first visited the town of Bucha near Kiev, the scene of a massacre while occupied by Russian forces. During the visit, air raid sirens across the country warned of incoming Russian missiles and the African dignitaries were rushed to shelter. Afterwards, Ramaphosa told journalists”Today as we were here, we heard of missile strikes and those types of hostilities are not good for fostering peace…We argue that there must be de-escalation on both sides.” Zelensky said on social media that he and the African leaders discussed ways to “achieve a true and just peace without any Russian blackmail and deception”. Zelensky ruled out any talks with Russia, saying “I clearly said several times at our meeting that to allow any negotiations with Russia now that the occupier is on our land is to freeze the war, to freeze pain and suffering,” Zelensky told reporters.

On Saturday the African delegation travelled to St. Petersburg to meet with President Putin, where they called for an end to the war and the return of Ukrainian children that are now in Russia. As Ramaphosa called for the return of children, he was interrupted by Vladimir Putin, who said “Children are sacred. We moved them out of the conflict zone, saving their lives and health”. It seems the delegation has achieved little. 

On Sunday, U.S. Secretary of State Antony Blinken arrived in Beijing to meet with China’s Foreign Minister Qin Gang at the start of two days of talks with Chinese officials. The visit is the first by an American diplomat to China in almost five years – U.S. officials say the main goal of the talks is to stabilise a relationship that has become extremely tense. It comes nearly five months after an earlier Blinken visit was postponed, following the flight of a suspected Chinese spy balloon in US airspace. Later he said he hoped to meet President Xi in the next few months.