Politics

Political Turnover

By, 02/20/2008

Story Highlights:

  • Political developments in Pakistan are noteworthy, as leading opposition parties are now charged with the task of putting aside years of bad blood to work together.
  • In Cuba, Castro's retirement announcement was met with little to no fanfare as Cubans went about their daily lives—signaling they aren't expecting big changes.
  • These political developments, while significant, offer no real impact to the broad global economy and financial markets.

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From Southern Asia to the Caribbean we've seen some notable political developments over the past few days. In Pakistan, President Musharraf is now facing a new government that would prefer he step down. Musharraf is clinging to the presidency despite plummeting approval ratings and impeachment attempts. He says he'll play nice with the new government, but such promises may fall on deaf ears. Of course, additional instability in the region would not be a good thing.

In the Caribbean, Cuba is getting ready for its first political "change" in almost 50 years. On the surface, Fidel Castro stepping down seems to be a big deal. After all, he ruled almost without challenge for nearly 50 years. Yet the news was met with little reaction on the streets of Havana and on a global scale. It seems the Cuban people are fully aware of what many outsiders speculate—Castro's 76 year old brother, Raul, or a member of the "inner circle," will take the lead keeping prospects of major change unlikely. Also, Fidel's letter to the Cuban people alluded he plans to remain in the picture.

Castro May Not Be Exiting the Stage Completely
By Anthony DePalma, The New York Times
http://www.nytimes.com/2008/02/20/world/americas/20cuba.html?_r=1&oref=slogin

There isn't much hope for significant change in the near term. While not surprising, it is a sad realization for the Cuban people who have suffered through years of empty promises. Cuba is a prime example of how much a country can suffer economically if its leaders choose to cut ties with the rest of the world. However, hopes are high among certain US groups democratic change is possible in the not-too-distant future.

U.S. Businesses Are Eager To Jump In
By Marla Dickerson, Los Angeles Times
http://www.latimes.com/business/la-fi-cubaecon20feb20,1,7782700.story?ctrack=1&cset=true

We like free trade. More trade is good, regardless of the direction. However, a completely open trade agreement between the US and Cuba likely won't have a huge impact on the global economy given Cuba's size relative to the rest of the world. Still, we should note Fidel's younger brother and heir-apparent offers hints of hope in his past actions. He championed free enterprise farmer's markets in the wake of the Soviet Union's collapse in an effort to help the failing Cuban economy. He is widely known as being more pragmatic than his brother. Also, when asked about a post-Fidel Cuba, he said he would push towards a "more democratic society." We'll see about that.

Younger Castro Hints At 'More Democratic' Cuba
By Morgan Neill, CNN
http://www.cnn.com/2008/WORLD/americas/02/20/raul.castro/

Cubans Hope for Change and No Turmoil as Castro retires
By Rosa Tania Valdes
http://www.reuters.com/article/topNews/idUSN1930200220080219?pageNumber=1&virtualBrandChannel=10010

Some Cubans think maybe—just maybe—they will soon be able to do crazy capitalistic things such as travel abroad and own a home! Boy, capitalism sure isn't perfect, but one needs to only read that sentence a second time to appreciate the benefits of a free market society. Ultimately, it's clear full-on capitalism is not taking hold anytime soon in Cuba. But even a little change can eventually lead to big things—just ask China.

Recent political developments, while newsworthy, don't really hold the power to move global economies and markets. Also, when reviewing Cuba's past, present, and future, think of how life is for countries that embrace capitalism and reject nationalistic tendencies. Cuba's new leaders may not be ready for such a change, but Cuba's people likely wouldn't mind.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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