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Government and people of Pakistan extend the heartiest congratulations to the European Union



The Government and people of Pakistan extend the heartiest congratulations to the European Union, its member states and European citizens on the occasion of the 71st anniversary of Europe Day. Prime Minister Imran Khan has addressed a letter of felicitation to the President of the European Commission Ursula von der Leyen.

Appreciating the vision of Foreign Minister Robert Schuman and the leaders from Belgium, Italy, Luxembourg, the Netherlands and West Germany, Prime Minister Khan underscored that Schuman Declaration became the harbinger of peace, prosperity and European integration. Europe Day is an occasion to celebrate peace and unity in Europe.

The Prime Minister further emphasized that incorporation of economic interest and creating commercial interdependence among the European countries led to a peaceful, united and prosperous Europe. Peace, prosperity and stability in Europe also contributed to the prosperity in other regions of the world and the Union has, today, become a model of cooperation and solidarity.

Pakistan enjoys excellent relations with the EU and all its member states, which are based on mutual understanding, respect and common values of democracy and pluralism. The Pakistan-EU Strategic Engagement Plan provides the institutional framework for cooperation in diverse fields, including political, economic, security, climate change, green energy, and migration and mobility. Pakistan would continue to work towards further strengthening its multi-dimensional ties with the EU and its member states.

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European Bond Market Hit by Italy’s Plans for Higher Borrowing




The European bond market, a cornerstone of the global financial system, has faced its fair share of challenges over the years. From the Eurozone crisis to Brexit uncertainties, it has weathered storms that threatened to undermine its stability. However, in recent times, a new threat has emerged that has sent shockwaves through the financial world – Italy’s plans for higher borrowing.

Italy, the third-largest economy in the Eurozone, has always been a focal point for investors and policymakers alike. Its massive debt burden, political instability, and fiscal policies have often been a cause for concern. Now, as Italy announces ambitious plans for increased borrowing, the European bond market finds itself in uncharted waters. In this in-depth analysis, we will explore the reasons behind Italy’s decision, the potential consequences for the European bond market, and the broader implications for the global economy.

I. Italy’s Debt Dilemma

To understand why Italy is contemplating higher borrowing, we must first delve into the country’s debt dilemma. Italy has one of the highest debt-to-GDP ratios in the world, standing at around 160% before the pandemic. This staggering level of debt has long been a source of concern for both domestic and international investors.

  1. Historical Debt Burden

Italy’s debt problem is not new. It has been grappling with high levels of public debt for decades. A combination of factors, including high government spending, an inefficient public sector, and slow economic growth, has contributed to this persistent issue. Despite efforts to rein in spending and enact structural reforms, progress has been slow.

  1. Impact of the Pandemic

The COVID-19 pandemic exacerbated Italy’s fiscal challenges. To combat the economic fallout from the virus, the government implemented massive stimulus packages and healthcare spending increases. While necessary, these measures pushed the country’s debt levels even higher. Italy’s economy contracted by a historic 8.9% in 2020, adding further strain to its fiscal situation.

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  1. Political Instability

Italy’s political landscape has been marked by instability, with frequent changes in government leadership. This volatility has hindered the implementation of long-term fiscal reforms, as different administrations have pursued varying economic policies. Investors crave stability, and Italy’s political turmoil has not inspired confidence in its ability to address its debt issues.

II. Italy’s Ambitious Plans for Higher Borrowing

In light of these ongoing challenges, Italy’s government has decided to take a bold step – increasing its borrowing to fund an ambitious agenda. The plan involves a substantial injection of funds into various sectors, with a focus on infrastructure, healthcare, and education. While these investments may be necessary for Italy’s long-term economic health, they come with significant risks and potential consequences.

  1. The “Next Generation EU” Recovery Fund

Italy is set to receive a substantial portion of the European Union’s “Next Generation EU” recovery fund, designed to help member states recover from the pandemic’s economic impact. Italy’s allocation is expected to be around €209 billion in grants and loans, with the condition that the funds are used for reforms and investments aimed at enhancing the country’s economic resilience.

  1. Infrastructure Investments

A significant portion of Italy’s increased borrowing is earmarked for infrastructure projects. These investments are seen as essential for improving the country’s long-term competitiveness and productivity. However, they also come with a hefty price tag. Italy’s infrastructure projects are expected to cost billions of euros, potentially pushing the country’s debt levels even higher.

  1. Healthcare and Education

The COVID-19 pandemic exposed weaknesses in Italy’s healthcare system, prompting the government to allocate additional funds to the sector. Similarly, investments in education are intended to address structural issues and enhance the country’s human capital. While these initiatives have merit, they further strain Italy’s already precarious fiscal position.

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III. Implications for the European Bond Market

Italy’s plans for higher borrowing have sent shockwaves through the European bond market, raising concerns about the stability of the Eurozone and the broader financial system. Here, we explore the potential implications for bond markets within Europe.

  1. Rising Yields

One immediate consequence of Italy’s increased borrowing is the rise in government bond yields. As Italy issues more debt, investors demand higher yields to compensate for the increased risk associated with holding Italian bonds. This rise in yields has a domino effect, impacting yields across the Eurozone and even globally.

  1. Spillover Effects

The European bond market is highly interconnected, with yields in one country affecting those in others. Italy’s higher borrowing costs can lead to increased borrowing costs for other Eurozone nations, particularly those with weaker fiscal positions. This can exacerbate existing debt problems and create a vicious cycle of rising yields.

  1. ECB’s Role

The European Central Bank (ECB) plays a crucial role in stabilizing bond markets within the Eurozone. In response to Italy’s higher borrowing, the ECB may need to intervene by purchasing more bonds through its asset purchase programs. This could lead to tensions between the ECB’s commitment to maintaining price stability and its role in supporting member states’ finances.

  1. Eurozone Stability

The stability of the Eurozone itself is at stake. Italy’s high debt levels and fiscal challenges have the potential to trigger a new round of Eurozone crises, similar to what was experienced during the sovereign debt crisis a decade ago. This could undermine confidence in the euro and raise questions about the viability of the currency union.

IV. Broader Implications for the Global Economy

The impact of Italy’s plans for higher borrowing extends far beyond European borders. The global economy is interconnected, and developments in one region can have far-reaching consequences. Here, we explore the broader implications of Italy’s decision.

  1. Global Financial Markets
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Financial markets around the world are closely monitoring the situation in Europe. Italy’s higher borrowing costs and the potential for increased market volatility could spill over into global financial markets. Investors may become more risk-averse, leading to fluctuations in asset prices and currency exchange rates.

  1. International Investors

International investors, including sovereign wealth funds and pension funds, hold significant amounts of European bonds, including Italian debt. Any turmoil in European bond markets could impact the portfolios of these investors, potentially affecting their ability to meet long-term financial obligations.

  1. Global Economic Recovery

The global economy is still recovering from the COVID-19 pandemic. Italy’s fiscal challenges and the potential for instability in the Eurozone could hinder the global economic recovery. Slower growth in Europe would have ripple effects on trade, investment, and economic prospects worldwide.


Italy’s plans for higher borrowing have ignited a new chapter in the ongoing saga of European bond markets. The country’s persistent debt burden, coupled with the economic fallout from the pandemic, has pushed its government to seek substantial funds for much-needed investments. However, this decision comes with significant risks, both for Italy and the broader European bond market.

The rise in bond yields, potential spillover effects, and the role of the ECB are immediate concerns for European bond investors. The stability of the Eurozone itself hangs in the balance, with the potential for a renewed crisis that could test the resilience of the currency union.

Beyond Europe’s borders, the global economy watches closely. Italy’s fiscal challenges and their impact on European markets could have far-reaching consequences for international investors, financial markets, and the ongoing global economic recovery.


As Italy proceeds with its plans for higher borrowing, policymakers, investors, and observers must remain vigilant. The future of the European bond market and, by extension, the stability of the global financial system, may well depend on the decisions made in the coming months and years. Italy’s debt dilemma is a stark reminder of the delicate balance between economic growth, fiscal responsibility, and financial stability in an interconnected world.

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The Real Reasons for the West’s Protectionism: Unraveling the Complex Web




Protectionism, the practice of imposing restrictions on international trade to protect domestic industries, has been a recurring topic of debate and contention on the global stage. In recent years, it seems to have experienced a resurgence, especially in Western countries. This resurgence has sparked numerous discussions about the real motivations behind the West’s adoption of protectionist measures. In this comprehensive blog post, we will delve into the intricacies of protectionism and explore the multifaceted reasons driving Western nations to embrace this controversial economic strategy.

Understanding Protectionism

Before we dive into the reasons behind the West’s protectionism, it’s essential to establish a clear understanding of what protectionism entails. Protectionist policies can manifest in various forms, including tariffs, quotas, subsidies, and non-tariff barriers like regulatory requirements and standards. These policies are designed to shield domestic industries from foreign competition, safeguard jobs, and nurture strategic industries deemed critical to national security.

Historical Perspective on Western Protectionism

Protectionism isn’t a new phenomenon in Western economies. In fact, it played a crucial role in shaping the industrialization of countries like the United States, the United Kingdom, and Germany during the 19th and early 20th centuries. Tariffs protected emerging industries from foreign competition, allowing them to grow and become internationally competitive. However, as the global economy evolved, the consensus shifted towards freer trade, resulting in the formation of organizations like the World Trade Organization (WTO) and the proliferation of trade agreements.

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Reason 1: Economic Vulnerability

One of the most prominent reasons for the West’s protectionism in recent times is the perceived vulnerability of domestic industries. While globalization has brought numerous benefits, it has also exposed Western economies to increased competition from low-cost producers in emerging markets. This competition has led to job losses and wage stagnation in certain sectors, creating discontent among segments of the population.

Western governments, facing pressure to address these issues, have resorted to protectionist measures as a way to mitigate the adverse effects of globalization. By imposing tariffs or quotas on specific imports, they hope to safeguard industries, protect jobs, and reduce economic vulnerability.


Reason 2: National Security Concerns

National security has become an increasingly cited rationale for protectionism in the West. The argument here is that certain industries, particularly those related to defence and critical infrastructure, must be preserved domestically to ensure self-reliance in times of crisis.

For example, the United States has invoked national security concerns to justify tariffs on steel and aluminium imports. The logic behind such actions is to maintain a domestic industrial base capable of meeting the country’s defence needs. This demonstrates that protectionism isn’t solely about economics; it’s also intertwined with broader strategic considerations.

Reason 3: Political Populism

The rise of political populism in Western democracies has significantly contributed to the resurgence of protectionist policies. Populist leaders often champion protectionism as a means of appeasing their voter base, which may consist of individuals who feel left behind by globalization. By promising to protect domestic industries and jobs, these leaders gain electoral support.

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Brexit, for instance, can be seen as a manifestation of political populism in the UK. The “Leave” campaign cited regaining control over trade policy as a key benefit of leaving the European Union, tapping into sentiments of economic nationalism.

Reason 4: Trade Imbalances

Persistent trade imbalances have also driven the West towards protectionism. Countries like the United States have incurred substantial trade deficits, particularly with China. Concerns about unfair trade practices, currency manipulation, and intellectual property theft have led to the imposition of tariffs and other trade restrictions.


In 2018, the United States initiated a trade war with China, imposing tariffs on a wide range of Chinese goods. The aim was not only to address trade imbalances but also to pressure China into making structural changes to its economy, such as intellectual property protection and market access reforms.

Reason 5: Technological Competition

In the 21st century, technological competition has emerged as a significant driver of protectionist measures. Western nations, particularly the United States, see themselves as leaders in cutting-edge industries like artificial intelligence, biotechnology, and semiconductors. To maintain their technological edge, they are increasingly concerned about the theft of intellectual property by foreign actors.

The U.S.-China tech rivalry is a prime example of this dynamic. The U.S. government has imposed restrictions on the export of certain technologies to China and scrutinized Chinese tech investments in the United States, citing concerns about national security and technological competition.

Reason 6: Environmental and Labor Standards

Another dimension of protectionism in the West relates to concerns about disparities in environmental and labour standards. Western countries often have more stringent regulations in these areas compared to some of their trading partners. This can create an uneven playing field, where imported goods produced with lower environmental and labour standards enjoy a cost advantage.

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In response, some Western governments have considered imposing tariffs or trade restrictions on products that do not meet their standards. This move is driven not only by economic considerations but also by a desire to level the global playing field in terms of sustainability and workers’ rights.



Protectionism in the West is a multifaceted phenomenon driven by a combination of economic, political, strategic, and ideological factors. While globalization has brought undeniable benefits, it has also exposed Western economies to various challenges, from job displacement to trade imbalances. National security concerns, political populism, and the quest to maintain technological leadership further complicate the picture.

As Western nations grapple with the complexities of protectionism, finding the right balance between safeguarding domestic interests and participating in the global economy remains a delicate task. The future of protectionism in the West will depend on how governments navigate these intricate dynamics, as well as their ability to address the legitimate concerns of their citizens while fostering international cooperation and trade relations.

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Has the European Central Bank become too powerful?



In the ever-evolving landscape of global finance and economics, the European Central Bank (ECB) has undeniably played a pivotal role in shaping the financial stability and monetary policies of the Eurozone. Its authority, influence, and power have grown significantly since its inception. In this op-ed, we delve into the question that has been on the minds of many economists and policymakers: Has the European Central Bank become too powerful?

A Historical Perspective

To understand the ECB’s current standing, we must first journey back in time to its establishment. The ECB came into existence in 1998, with the primary objective of maintaining price stability within the Eurozone. It was a response to the need for a unified monetary policy in the wake of the introduction of the Euro currency.

Initially, the ECB’s powers were limited, with its primary focus on monetary policy and inflation control. However, over the years, its role has expanded significantly, encompassing a broader range of responsibilities and functions.

The ECB’s Evolving Mandate

One of the key factors contributing to the ECB’s perceived increase in power is its evolving mandate. While price stability remains its primary goal, the ECB now also has responsibilities related to financial stability and supporting the general economic policies of the European Union. This expanded mandate has granted the ECB greater influence over various aspects of the Eurozone’s economic landscape.

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The Eurozone’s Financial Guardian

In times of economic crises, the ECB has stepped up as the Eurozone’s financial guardian. This was evident during the European sovereign debt crisis, where the ECB took unprecedented measures to stabilize the region’s financial markets. Critics argue that these actions exemplify the institution’s growing power, as it effectively became the lender of last resort for struggling Eurozone countries.


The Role of Quantitative Easing

Quantitative easing (QE) is another significant aspect of the ECB’s arsenal. This unconventional monetary policy tool involves the purchase of government and private sector securities to inject liquidity into the economy. While QE has been instrumental in reviving the Eurozone’s economy, it has also raised concerns about the extent of the ECB’s power.

The Independence Factor

The ECB’s independence is a crucial aspect of its perceived power. It operates independently of political interference, allowing it to make monetary policy decisions based solely on economic data and analysis. This independence has garnered praise for the institution’s ability to act swiftly and decisively when necessary.

However, critics argue that this independence can also be a double-edged sword, as it may limit democratic accountability and oversight. Striking the right balance between independence and accountability remains a contentious issue.

The International Influence

The ECB’s influence extends beyond the Eurozone’s borders. It plays a significant role in international financial institutions and cooperates closely with other central banks worldwide. Its policies and decisions have a global impact, making it a formidable player in the international financial arena.

The Checks and Balances

To assess whether the ECB has become too powerful, we must consider the checks and balances in place. The institution is subject to scrutiny by the European Parliament, and its decisions are subject to judicial review. However, some argue that these mechanisms may not be sufficient to keep the ECB’s power in check, especially in times of crisis.



In conclusion, the question of whether the European Central Bank has become too powerful is a complex and multifaceted one. Its expanded mandate, role in financial crises, independence, and international influence all contribute to its perceived power. While it has undeniably played a crucial role in maintaining financial stability within the Eurozone, striking the right balance between its power and accountability remains an ongoing challenge.

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As the global financial landscape continues to evolve, so too will the role and influence of the ECB. It is essential for policymakers, economists, and citizens alike to engage in constructive dialogue and debate to ensure that the European Central Bank remains a force for stability and prosperity in the Eurozone and beyond.

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