Prime Minister Silvio Berlusconi

Republican presidential candidate John McCain takes this week’s third place following his choice of Alaska Governor Sarah Palin as his vice-presidential running mate.  The selection attracted a media furore following revelations that Palin’s 17 year-old unmarried daughter was pregnant, and suggestions that the governor may have abused her power by pressing for her sister’s ex-husband to be dismissed as a state trooper.  However, despite such mini-scandals, the choice appears to be playing well with the Republican base.  Not only does Palin’s nomination bring average age of McCain's ticket down to a sprightly 58, but his choice of a relatively inexperienced and unknown, female candidate has also confirmed his reputation as a political maverick.  With her impeccable pro-life credentials -- her daughter has decided to keep the baby and she herself has a child with Down’s syndrome -- and a barnstorming convention speech, her nomination is sure to increase McCain’s stock with evangelicals and social conservatives.    

In second place, Argentinean President Cristina Fernandez de Kirchner.  Argentina this week announced that it would use 6.7 billion dollars of Central Bank reserves to repay its entire debt to the Paris Club -- an informal group of 19 creditor nations which provides loans to developing countries.  Argentina’s debt with the group had been in default since its 2001 financial crisis.   This ought to have removed the need for Argentina to submit to International Monetary Fund (IMF) supervision, something that the Paris Club had insisted was a prerequisite for negotiations. It is unsurprising that Argentina is loath to subject itself to such scrutiny.  In 2005, it used 9.5 billion dollars of Central Bank reserves to repay its entire debt to the IMF, and many Argentineans continue to see the IMF as responsible for the 2002 crisis.  As former Deputy Finance Minister Daniel Marx explained, "the Paris Club wanted an understanding with the International Monetary Fund […] the government said, 'we won't bother, we'll just pay them off'." First place is denied to her, though, because of the reaction -- the Paris club announced that Argentina needed to pay even more, and Argentina’s country risk premium actually rose.

 

In first place, Italian Prime Minister Silvio Berlusconi. This week, Berlusconi apologised to Libya for Italy’s 32-year colonial rule and committed some 5 billion dollars in ‘reparations’ over the next 25 years.  The deal -- which also includes a promise that Italy will not be used as a staging post for any future NATO attack against Libya -- is a boost for Libya’s leader Muammar al-Qadhafi, representing another step in his journey back from international isolation.   However, if anything it is Berlusconi who stands to gain more from the deal.   Libya has promised to step-up its efforts against clandestine immigration to Italy -- something that will be extremely popular in Italy given the current salience of immigration issues.  Moreover, the financial burden for Italy is largely illusory.  Most of the reparations actually take the form of Italian foreign direct investment, and the deal will also lead to increased bilateral energy cooperation.