BRUSSELS – It was the scenario never to be named, a prospect so terrible that the mere mention of it would conjure up doom and destruction for the eurozone.
In the last few days, however, the risk that Greece could be forced out of the currency bloc has become too real to be ignored. The once-taboo subject has become an unavoidable topic of conversation among Europe’s financial leadership.
“The price would be very high if they decided to leave the euro,” warned German Finance Minister Wolfgang Schauble, before talks Monday with his eurozone partners.
Governors of three central banks have openly raised the option of a Greek exit.
“Technically it could be managed,” said Patrick Honohan, the Irish governor. “It is not necessarily fatal, but it is not attractive.”
Even Jose Manuel Barroso, the usually cautious president of the European Commission, had a stark warning for the Greeks: “If a member of a club does not respect the rules of the club, it’s better not to remain in the club,” he told Italy’s Tg24 TV last week.
In the corridors of the European Union’s headquarters the fear now is not only that Greece could be forced out, but that the resultant chaos would spread quickly to Portugal, Ireland, Spain and beyond, causing a collapse of the euro currency and a generalized economic meltdown.
The prospect has more than just Europe worried. For all its problems, the eurozone’s $13.6 trillion economy remains the world’s second largest. Its collapse would risk a global economic earthquake making Lehman Brothers look like a mild tremor.
“This is not just about Europe, there is a possibility that it may spread to the global economy,” Japanese Prime Minister Yoshihiko Noda told Dow Jones Newswires over the weekend. “This is the biggest downside risk factor for the Japanese economy.”
The doomsday scenario is not yet inevitable, but unless European leaders get their response right, the dominoes could start to fall very quickly.
Greece could be forced into a rerun of its inconclusive May 6 election in mid-June. Polls predict an even stronger showing for the mishmash of Trotskyites, neo-Nazis and other anti-austerity groups who surged in support triggered the current impasse.
They want Greece to renege on commitments to cut its huge budget deficit in exchange for the 130 billion euro bailout. Germany and other creditors have warned that would lead to a freezing of bailout payments. A bankrupt Greece would then be forced to drop out of the eurozone.
As that prospect draws near, savers facing the threat of exchanging their euros for a much weaker new national currency could spark a run on the banks and send their money to Germany or some other safe haven. Some reports suggest Greeks have already transferred 250 billion euro out of the country.
Renewed fears over Greece are already having a major impact on other at-risk countries. Portugal’s stock index hit its lowest level since 1996 on Monday and Italy and Spain both saw rates on their bonds rise to the highest levels this year.
If Greece heads toward a euro exit, creditors would send those rates soaring, casting doubt on the nations’ ability to pay their debts. Savers in Portugal, Ireland and Spain could also take fright and move their money abroad. Shaky banks would implode. G-8 economies Italy and France would come under threat.
Saving the euro, at that point, would need a massive intervention by the European Central Bank, backed by increased firewall funding from Germany and other more stable northern European nations to prop up the southerners. An agreement to share debt burdens or devalue the euro may also be required.
It is by no means certain, however, that skeptical voters in Germany, the Netherlands and Austria would go along with that. The incoming Socialist administration in France and restless political parties in Italy could also rebel against austerity measures which the northerners are likely to insist upon as part of a new financing deal.
Ireland could rule itself out of any future EU bailouts, if its austerity weary voters reject the EU’s fiscal discipline treaty in a May 31 referendum.
As eurozone finance ministers gathered in Brussels on Monday evening, officials in Brussels were acknowledging that the risk of a Greek exit — they are calling it the “grexit” — is now as great as at any time since the crisis erupted in late 2009.
Jean Claude Juncker, the Luxembourg Prime Minister who chaired Monday’s meeting of eurozone finance ministers, insisted, however, that other EU members were not seeking to push Greece out.
“Nobody was mentioning an exit of Greece from the euro area (in the ministerial meeting). I am strongly against,” Juncker told a news conference. “I don’t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda.”
Given that most Greeks say they want to keep the euro, European leaders are hoping they will return to mainstream politicians if there is a second election in June.
For that to happen, leaders in other European countries may have to take a gamble and intervene directly in the election campaign by making clear the vote will be in effect a referendum on staying in the eurozone.
“Without a Greek commitment this (bailout fund) won’t work, and this is the responsibility of Greek politicians,” Olli Rehn, the EU’s economics commissioner, said after the eurozone ministers’ meeting. “The future of Greece and the welfare of its citizens lie more than ever on the shoulders of Greek politicians.”
There is a risk that more foreign lecturing to the Greeks could backfire if voters rebel against yet more outside interference, but the EU is rapidly running out of options if it wants to keep the eurozone together.
Angela Merkel, Europe’s master schoolmarm, scolds her neighbors that they have “no alternative to austerity.” François Hollande, the new French president, preaches the need for growth, challenging Merkel’s leadership with a social democratic alternative. The two meet in Berlin tomorrow, for the first time since Hollande ousted Merkel’s pal, Nicolas Sarkozy. And the tension will be on display later this week, as they head to the United States for the G-8 and NATO Summit. No matter how diplomatically conducted, their conflict will determine the direction of Hollande’s presidency and the very future of Europe.
The debate can be confusing, especially for Americans. Even as Merkel insists on cost cutting, her economic team rushes to explain that Germany has always been pro-growth. Well, maybe, but Merkel’s “growth” more likely means wasting Greece, Ireland, Portugal, Spain and France. Hollande, a one-time professor of political economy, understands this as he preps for the grip of Madame Merkel’s open arms. He knows that she will try to smother him with her much-loved Treaty on Stability, Coordination and Governance, which would press thorny sanctions on any country that fails to hold its deficits below 3 percent of gross domestic product. This fiscal compact, drawn up by Merkel and Hollande’s defeated predecessor Nicolas Sarkozy, mandates harsh spending cuts that would further deflate the continent’s already weak economies, boost unemployment, agitate unrest, reduce GDP and thereby increase everyone’s debts and deficits — including very likely her own.
Before the treaty becomes binding, though, it still has to be ratified by at least nine more nations, including Germany, where Merkel needs the support of the opposition Social Democrats to get the measure through parliament. Hollande, who is closely allied with them, has promised to block ratification unless Merkel agrees to more growth.
To date, she’s said OK to €10 billion in new funding for the European Investment Bank, greater pro-growth flexibility for the European Central Bank, possible delays for Spain, if not for Greece, on deficit reduction, maybe some Europe-wide money for infrastructure projects like roads and rails, and boosting wages for German workers even at the risk of slightly increasing domestic inflation. However, politically, Merkel’s “growth agenda” appears much too late. Right-wing extremists are already showing new muscle across Europe. Anti-austerity protesters have taken to the streets in Spain and walked out on strike in Britain. Her Christian Democratic Union took a routing in a second state election on Sunday, which gravely weakens Merkel in the run-up to next year’s national elections. Her political kindred lost elections in France and Greece. The latest polls from Athens predict that the left-wing anti-bailout Syriza coalition will win new elections in June if, as widely predicted, the pro-bailout politicians fail to form a governing coalition.
Economically, the German growth talk sounds far too limited and is simply wrong-headed. Taken all together, Merkel’s concessions would barely touch the anti-growth impact of the fiscal compact’s prescribed spending cuts. Does the lady really believe that suicide, personal or collective, is painless?
Growing Irish, Greek and Spanish rebellion has also thrown light on two of Europe’s dirty little secrets. Back in the 1990s, Germany was suffering badly from the huge costs of unifying East and West. The novel solution came with the invention of the European Union and the creation of the euro. German and other northern European banks began flooding the European periphery with low-interest loans. These paid for massive imports, mostly from German industry and much of it from the low-wage factories in the newly liberated Eastern Europe. (In Ireland, farmers chuckled over all the new EU sheep that so crowded the pastures that they fell into the sea.) The late British economist John Maynard Keynes, the bête noire of austerity mongers, could hardly have devised a better application of deficit spending.
Then came the downer. Much like U.S. mortgage creditors, the German and EU lenders knew that many of their borrowers could never pay back the loans without government intervention. They knew that the Greeks and others were hiding the extent of their indebtedness, often with help from U.S. investment banks and their deadly credit default swaps. Far worse, German industrialists – like Siemens and Ferrostaal – paid bribes by the millions to highly receptive Greek officials. So much for German self-righteousness and Greek corruption.
Shorn of the shoddiness, European institutions today could easily provide a similar flow of life-saving funds to the faltering economies through a combination of printing money, borrowing, and raising taxes, which could include a Tobin tax on financial transactions. Given the low level of demand, any inflation would be minimal and could even prove beneficial. All of Europe would then grow, and the beneficiaries could pay down their deficits when times get better. Lord Keynes taught that as well, though it’s a lesson that too many of his would-be followers forget to follow.
As the Nobel Prize winning economist Joseph Stiglitz has explained too many times to count, “If Europe – particularly the European Central Bank – were to borrow, and relend the proceeds, the cost of servicing Europe’s debt would fall, creating room for the kinds of expenditure that would promote growth and employment.”
The Germans had no problem following the Keynesian path when it served their own interests, but now Madame Merkel insists: “Growth on credit would throw us back to the start of the crisis and therefore we will not do that.” Do as we say, not as we did.
Compare Germany’s earlier credit-driven success to the bailout deal that Merkel, the IMF and the European Union imposed on the Greeks and you’ll discover the second dirty secret. No one – neither economists nor policy-makers – ever imagined that the required cuts, privatizations and fire sales of public treasures would allow the Greeks to dig themselves out of their ever-deepening hole. The bailout was never meant to help Greece. Its goal was primarily to buy time: first for the banks and other financial institutions that lent Greece money or hedged the loans; and then for the EU to gather funds to preempt a run on Italian, Spanish, Portuguese – and even French – banks should the Greeks finally abandon the euro (which many German officials now want them to do).
All this prickly platter comes along with Madame Merkel’s “open arms” when she welcomes Monsieur Hollande first on Tuesday in Berlin, and then again in the United States for G-8 and NATO summits later in the week, and it will bubble up at an informal EU summit in Brussels next week on May 23. Merkel hopes that Hollande will accept her concessions as sufficient and have France ratify the austerity-minded fiscal pact. Never a dunce, the French president is more likely to hold off on any firm commitment until next month’s French legislative elections, which his party expects to win.
What will he do then? Will he put his stamp of approval to Madame Merkel’s pro-growth talk? Or will “the red Socialist” as Americans like to characterize him, hold out for a serious growth pact that could bring Europe back into the black? That will be the big test of what François Hollande is made of.
The sight of the Neo Nazi “Golden Dawn” political party scoring better-than-expected results in the recently concluded Greek elections underscores just how desperate the situation is in Athens right now. Many Greeks blame German-imposed austerity for creating 20 percent unemployment and the most dysfunctional economy in Europe. Historically speaking, Greece has also always prided itself on its resistance to the original Nazis during World War II. But as has been noted by numerous observers, economic depressions tend to nurture extreme political reactions. And suddenly, there are Greeks looking to Hitler for inspiration, while moderates are on the run. With the hard left and the hard right surging, and Germany’s Angela Merkel continuing to stress a hard line on austerity, it’s almost impossible to see any kind of reasonable solution to Greece’s woes emerging from the current political situation.
The contrast with the U.S. is instructive. Back in the 1930s, Roosevelt saw the New Deal as an alternative to the socialist and fascist responses to the Great Depression in Europe. It worked. Today, as we watch two moderates fight it out for the presidency, it is worth wondering whether Barack Obama’s pallid version of the New Deal — the American Recovery and Reinvestment Act — might have played a similar role in steering the nation away from a more extreme political climate.
The comparison is complicated by the fact that the stimulus (along with healthcare reform) itself encouraged its own extreme reaction: the rise of the Tea Party and the landslide GOP victory in the midterm elections. But it could have been worse! The latest economic number crunching from a study conducted by Fitch Ratings and Oxford Economics declares that Obama’s stimulus added 4 percentage points to GDP growth. Absent the stimulus, the recession might never have ended and the 2 million new jobs that the economy has added over the past 18 months might never have happened. The opposite is more likely. If the U.S. has followed the example of Greece or Spain and responded to its recession with severe budget cuts, perhaps we too would be facing 15 or 20 percent unemployment. There’s no telling exactly how that would have played out politically, but it wouldn’t be pretty.
Of course, it isn’t pretty now. The U.S. is technically out of a recession, but the recovery is fragile, unemployment is high, millions of Americans have given up looking for jobs, and the pressure to carve away at what remains of the safety net continues to intensify. What’s so astounding about the current situation is that politicians don’t have to look back 80 years to learn from history — they just have to look across the ocean.
Europe is in recession.
Britain’s Office for National Statistics confirmed on Wednesday that in the first quarter of this year Britain’s economy shrank .2 percent, after having contracted .3 percent in the fourth quarter of 2011. (Officially, two quarters of shrinkage equal a recession.) On Monday, Spain officially fell into recession for the second time in three years. Portugal, Italy and Greece are already basket cases, and it seems highly likely France and Germany are also contracting.
Why should we care? Because a recession in the world’s third-largest economy (Britain), combined with the current slowdown in the world’s second-largest (China), spells trouble for the world’s largest.
Remember – it’s a global economy. Money moves across borders at the speed of an electronic impulse. Wall Street banks are enmeshed in a global capital network extending from Frankfurt to Beijing. That means that, notwithstanding their efforts to dress up balance sheets, the biggest U.S. banks are more fragile than they’ve been at any time since 2007.
Meanwhile, goods and services slosh across the globe. If there’s not enough demand for them coming from the second- and third-largest economies in the world, demand in the U.S. can’t possibly make up the difference. That could mean higher unemployment here as well as elsewhere.
What’s the problem with Europe? Don’t blame it on the so-called “debt crisis.” There was no debt crisis in Britain, for example, which is now experiencing its first double-dip recession since the 1970s.
Blame it on austerity economics – the bizarre view that economic slowdowns are the products of excessive debt, and so government should cut spending in a slowdown. Germany’s insistence on cutting public budgets has led Europe into a recession swamp.
German Chancellor Angela Merkel, who has led the austerity charge, and the other European policymakers who have followed her have forgotten two critical lessons.
First, that the real issue isn’t debt per se, but rather the ratio of the debt to the size of the economy.
In their haste to cut the public debt, Europeans have overlooked the denominator of the equation. By reducing public budgets, they’ve removed a critical source of demand — at a time when consumers and the private sector are still in the gravitational pull of the Great Recession and can’t make up the difference. The obvious result is a massive slowdown that has worsened the ratio of Europe’s debt to its total GDP and is plunging the continent into recession.
A large debt with faster growth is preferable to a smaller debt sitting atop no growth at all. And it’s infinitely better than a smaller debt on top of a contracting economy.
The second lesson Merkel and others have overlooked is that the social costs of austerity economics can be huge. It’s one thing to cut a government budget when unemployment is low and wages are rising. But if you cut spending during a time of high unemployment and stagnant or declining wages, you’re not only causing unemployment to rise even further. You’re also removing the public services and safety nets people depend on, especially when times are tough.
And with high social costs comes political upheaval. On Monday, Netherlands Prime Minister Mark Rutte was forced to resign. U.K. Prime Minister David Cameron is on the ropes. The upcoming election in France is now a toss-up; incumbent Nicolas Sarkozy might well be unseated by François Hollande, a Socialist. European fringe parties on the left and the right are gaining ground. Across Europe, record numbers of young people are unemployed – including many recent college graduates – and their anger and frustration is adding to the upheaval.
Social and political instability is itself a drag on growth, generating even more uncertainty about the future.
What European policymakers should do is set a target for growth and unemployment — and continue to increase government spending until those targets are met. Only then should they adopt austerity.
What are the chances that Merkel et al. will see the light before Europe plunges into an even deeper recession? Approximately zero.
The danger here for the United States is clear, but there’s also a clear lesson. Republicans have become the U.S. party of Angela Merkel, demanding and getting spending cuts at the worst possible time – and ignoring the economic and social consequences.
Even if the U.S. economy (as well as President Obama’s reelection campaign) survives the global slowdown, we’re heading for a big dose of austerity economics next January – when drastic spending cuts are scheduled to kick in along with tax increases on the middle class. But the U.S. economy isn’t nearly healthy enough to bear this burden.
If nothing is done to reverse course in the interim, we’ll be following Europe into a double dip.
BRUSSELS, Belgium — The words “Spain” and “contagion” have already made history together.
Spanish flu spread around the world in the early 1900s. The pandemic didn’t begin in Spain, but it was there that the world realized how serious — and unstoppable — the outbreak had become.
Now, as Spain takes up a central position in Europe’s economic crisis, the analogy is clear.
Sickly economies in Greece, Portugal and Ireland may yet respond to the European Union’s limited array of economic remedies.
But if Spain’s attempt to heal itself with a shock-treatment of austerity fails, the EU may not be strong enough to prevent the infection from spreading to Italy, France and beyond.
“The big question is, can Europe ring-fence Spain, can they draw a line to stop this contagion happening? This is their biggest challenge,” says Carsten Brzeski, senior Brussels economist at the Dutch bank ING.
In the eye of the euro-debt storm late last year, Spain enjoyed a reprieve from the markets after Conservative Prime Minister Mariano Rajoy took office in December with a promise to knock the economy into shape and, more important, the European Central Bank’s (ECB) decision to give banks and governments a lifeline by pumping 1 trillion euros of cheap loans into the eurozone economy.
Things started to go sour in March when the effect of the ECB’s liquidity injection began to fade and Rajoy announced he wouldn’t be able meet an EU-agreed budget deficit target of 4.4 percent this year, despite 27 billion euros ($35.5 billion) worth of budget cuts and tax hikes.
“Spain is suffering from a serious loss of confidence again,” blogged economist Luis Garicano. “The perspective of a new reformist government had made our creditors think Spain was on the way up, now after the budget and some strange events, confidence has gone again.”
The rates Spain has to pay on borrowed money have been creeping up steadily.
On Tuesday, there was some relief as the country managed to raise 3.2 billion euros ($4.2 billion) in short-term loans, but at much higher rates. A bigger test will come on Thursday when the Madrid government tries to sell longer-term securities.
The yield on its benchmark 10-year bond has been edging over 6 percent — which is considered unsustainable for more than a short period. That is prompting concern Spain could be forced to seek a bailout from the EU and International Monetary Fund or worse: the risk of a Spanish default has risen to 37 percent, according to the consultancy CMA.
A bad bond auction on Thursday could cap a tough week for Rajoy, who has already seen Argentina’s President Cristana Fernandez feel confident enough of Spain’s weakness to announce she’s seizing a 51-percent share in the YPF oil company from its Spanish owner Repsol.
By eurozone standards, Spain’s public debt does not look so bad. At 66 percent of gross domestic product, it’s less than that of virtuous Germany and way lower than Greece at 150 percent or Italy at 119 percent.
Spain’s problems lie elsewhere. The collapse of a 2000s housing boom plunged families and banks into deep trouble. Household gross debt, which averaged 80 percent of income in the decade up to 2007, is now up at 126 percent.
Spanish unemployment is the highest in the eurozone, at almost a quarter of the workforce, and double that in Spaniards under 25 years of age. The economy is set to shrink this year and the country’s powerful regional governments are resisting Rajoy’s belt-tightening demands.
“We should be worried,” says Brzeski. “That does not mean that they are falling off the cliff or requiring an imminent bailout, but if you look at the combination of weak macro fundamentals, the still falling real estate market, high deficits, it looks increasingly likely that they will at some point in time need European support.”
Based on the bailouts of Ireland and Portugal, a rescue plan for Spain could cost the EU around 300 billion euros ($394 billion) over three years. That just about could be covered by the 800-billion-euro ($1-trillion) firewall that the EU hopes to have in place by the summer, but without leaving enough leftover if Italy gets into trouble.
A cheaper option, and one that would save Madrid the ignominy of handing over the running of its economy to the EU and IMF, could be a loan from the firewall fund to help Spain recapitalize its banks.
Neither solution tackles what many believe to be Spain’s fundamental problem: how to revive growth so that unemployment lines start to come down and home prices rise. Until that happens the risk of Spain’s economic malaise spreading will remain.
BRUSSELS, Belgium – Remember the euro crisis?
In the past two weeks, the seemingly endless prophesies of doom for the European economy have fallen eerily silent.
European stocks climbed to an eight-month high Friday, pressure is easing on Italian bonds, Greece has disappeared from front pages.
“The world economy has stepped back from the brink,” Christine Lagarde, head of the International Monetary Fund, told an audience in Beijing over the weekend. “We have cause to be a little bit more optimistic.”
The immediate risk of catastrophe has receded, but the euro zone is far from finding its way out of the woods — and the big bad wolf of currency collapse is still lurking among the trees.
Behind the cautious optimism lie several worrisome possibilities.
Portugal might still be forced into a Greek-style default. Greece could still backslide after its impending elections. The frontrunner in France’s presidential election wants to pick apart new rules on fiscal discipline.
Soaring oil prices may still drag the euro zone recession down to unsustainable levels, and southern Europe’s inability to generate growth could vanquish all efforts to stem those countries’ rising debt.
Lagarde is painfully aware of other false dawns since the euro crisis began three years ago. “Optimism should not give us a sense of comfort or lull us into a false sense of security,” she added.
In the past four months, the euro zone has taken serious action to halt the crisis.
The European Central Bank’s December decision to pump money into the banking sector through 1 trillion euros of cheap loans staved off the threat of a crippling credit crunch and pulled the euro zone back from the abyss.
Meanwhile, new Spanish and Italian governments began to implement market-reassuring economic reforms.
Then, early this month, European Union leaders finally agreed on a second, 130 billion euro bailout for Greece that combined with a 100 billion euro “haircut” for private investors to ease the short-term danger of a Greek meltdown.
French President Nicolas Sarkozy announced the euro zone had turned a corner and the worst of the crisis was over. For once, markets seemed reassured and pressure on the euro zone periphery bonds has eased.
But many fear that the crisis could just be on hold.
“Greece’s debt situation is as unsustainable as ever; so is Portugal’s; so is the European banking sector’s and so is Spain’s,” the influential Financial Times commentator Wolfgang Munchau wrote Monday. “The worst, I fear, is yet to come.”
Southern Europe’s moribund growth is rooted in the long-term decline of competitiveness in countries like Italy, Spain and Portugal. Reforms to free up labor markets, cut business costs and slash red tape could pay off in the long term. But right now, austerity measures to bring budgets down are compounding the no-growth problem.
Greece’s economy is set to contract for the fifth successive year with a 4.4 percent drop in 2012. Portugal’s will drop by 3 percent, Italy’s by 1.3 percent and Spain’s by 1 percent.
U.S. Treasury Secretary Timothy Geithner on Tuesday praised efforts by southern European governments to get their finances in order, but warned they also needed to stimulate growth to prevent a prolonged recession that will keep them mired in debt.
“Reforms will take time and they will not work without financial support,” Geithner told lawmakers in Washington. Without stimulus, he cautioned that Europe could sink into “a self-reinforcing negative spiral of growth-killing austerity.”
Geithner also complained that “in Europe today there is no mechanism for fiscal transfers to help cushion economic shocks.” That means Germany and other rich euro zone nations aren’t spending enough to help the south.
Throughout the crisis, Chancellor Angela Merkel has sought to limit German payouts to the minimum needed to keep the likes of Greece from going under.
More generous ideas such as euro bonds to spread the burden of debt or a Marshall Plan-inspired investment package to spur growth have received a firm “nein.”
There are signs however, that the Germans might be persuaded to take a softer line. Merkel has hinted she may be prepared to drop opposition to increasing the size of the euro zone’s firewall fund to around 700 billion euros.
That could provoke a rift with her government coalition partners — the Free Democratic Party. However, with the FDP slipping in polls, some observers think Merkel may be preparing to ditch them to form a “Grand Coalition” with the opposition Social Democrats, who are more amenable to helping out southerners.
“The Social Democrats know that what Merkel is doing is not correct,” Javier Solana, a former EU foreign policy chief, said recently in London.
“We are beginning to see a change in the German position,” Solana told the European Council on Foreign Relations. “I think we will see a Grand Coalition again in Germany which will put things in a much more different situation than the one we have today.”
Such a change might just convince hard-pressed southern Europeans that the optimism is justified.
A man is reflected in the chart with stock prices at the Greek Stock Exchange in Athens, Monday, May 14, 2012. (AP Photo/Petros Giannakouris) (Credit: AP) 
Francois Hollande (Credit: Reuters/Gonzalo Fuentes) 
Members of the Greek extreme right Golden Dawn party hold an election rally. (Credit: Reuters/Yannis Behrakis) 
German Chancellor Angela Merkel(Credit: AP Photo/Markus Schreiber) 
A worker cleans a shop stormed by demostrators following clashes between police and protesters after a general strike in Barcelona, Spain, Friday, March 30, 2012. The Spanish government prepared to approve on Friday a new austerity budget that hundreds of thousands protested against this week in sometimes violent demonstrations. (AP Photo/Emilio Morenatti) (Credit: AP) 
Managing Director of the International Monetary Fund Christine Lagarde (Credit: AP Photo/Virginia Mayo) 
