Celebrations in Tunis after the firing of Prime Minister Hichem Mechichi

Welcome to Monday, where Tunisia's prime minister is sacked over handling of pandemic, U.S.-China talks are off to a rocky start and a 13-year-old skateboarder wins the first Olympic gold medal. German daily Die Welt also looks at the geopolitics behind the Nord Stream 2 gas pipeline deal between Russia and Germany.

• Tunisia PM gets sacked: After violent protests broke out over the government's handling of the pandemic and the economy, Tunisian President Kais Saied has suspended parliament and sacked Prime Minister Hichem Mechichi. The move has been condemned as an attack on democracy by his rivals but was greeted by celebrations on the street.

• Beijing accuses U.S. of treating China like imaginary enemy: The U.S.-China talks between top diplomats got off to a tense start when Chinese Vice Foreign Minister Xie Feng was quoted as saying that the breakdown in U.S.-China relations is due to certain people in Washington treating China as an "imaginary enemy." The U.S. side, represented by U.S. Deputy Secretary of State Wendy Sherman, has yet to release a statement on the meeting.

• COVID-19 update: China has reported the highest number of confirmed COVID cases since January, a total of 76. Indonesia has loosened some of its restrictions despite record deaths. The government now allows small businesses and shopping malls to reopen even though they have been warned it could spark another wave. Meanwhile, the French parliament has voted to make vaccine passports required, starting in August, for entering restaurants, bars, trains and planes.

• Protests in Iran over water shortages: At least three people were killed during violent protests over water shortages in Iran. People have been demonstrating for more than a week over the supply problems during Iran's worst drought in half a century.

• New Zealand accepts return of Islamic State-linked citizen: A woman suspected of being an Islamic State (IS) member will be allowed to return to New Zealand from Turkey. The 26-year-old mother and her children are citizens of the island nation, whose prime minister, Jacinda Ardern, said the decision to allow their return was not "taken lightly."

• Flooding in London after heavy rain: Parts of London were left waterlogged after heavy downpours on Sunday. Services were severely disrupted after vehicles became stranded and underground lines were flooded. Officials issued an amber weather alert and are advising people not to travel.

• First skateboard Olympic gold won by 13-year-old girl: Momiji Nisiya, a young school girl from Japan, has won gold in the first ever Olympic street skateboarding competition. At 13 years and 330 days, she is the second youngest champion in summer Olympics history.


Portuguese daily Jornal I dedicates its front page to the death of Otelo Saravai de Carvalho, architect of Portugal's 1974 revolution (also known as the Carnation Revolution) which resulted in the country's transition to democracy. The army captain passed away at 84 in Lisbon.


Nord Stream 2: Merkel's farewell gift to Putin is a slap to Biden

Germany and the U.S. have agreed on a compromise to complete the Baltic Sea gas pipeline that will deliver Russian natural gas to Germany and the EU, bypassing Ukraine and Poland — or rather, the Americans have submitted to Angela Merkel, who in turn had a farewell gift for Russia, writes Robin Alexander in German daily Die Welt.

American politicians across party lines have regularly criticized the pipeline as a devious Russian influence project that would entrench Europe's energy dependence, provide billions of dollars to the Kremlin, and make Ukraine more vulnerable to Russian aggression. Unlike other European politicians and her predecessor Gerhard Schröder, who has sat on the board of Russian energy companies after his term, Merkel is unlikely to benefit financially from her good contacts with the Kremlin. But this fact makes the Nord Stream 2 deal all the more irritating.

Merkel has demonstrated her negotiating skills: taking advantage of the plight of the new U.S. President Joe Biden, who needs Germany for its "Alliance of Democracies' against China, the new authoritarian world power. Observers on both sides of the Atlantic have been wondering for months why Merkel had delayed dealing with Biden for so long. She probably wanted to build up bargaining power: China is more important than Russia to Biden, and Nord Stream 2 became a powerful bargaining chip as time went by.

Remarkably, Washington agreed to end its opposition to the project without any recognizable benefit in exchange: Merkel has neither promised increased engagement for NATO nor more clarity about China. The compromise between Biden and Merkel is not a compromise at all, but an American capitulation. This will get Biden into big trouble in Congress, where the issue has allowed Democrats and Republicans to find common ground.

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Coffee on the road? French motorists loot capsules after Nespresso truck spills over

Weary motorists between Basel and Mulhouse, in eastern France, were treated to something of a jolt last week when a truck transporting a load of Nespresso coffee pods crashed, sending hundreds of capsules into the road.

The accident took place on the eastern A35 highway during a traffic jam caused by the Tour d'Alsace cycling event, the local daily L'Est Républicain reports. Unaware, apparently, of the vehicles backed up ahead of him, the Nespresso driver slammed into two trucks, sending hundreds of coffee capsules flying across the highway. Perhaps he'd been running latté?

By the time police arrived on the scene, several drivers had already gotten out of their vehicles and begun helping themselves to the brand-name (and relatively expensive) coffee doses.

"People were stopping to pick up the capsules from the road," a local gendarmerie officer told reporters. "I think they saw that they were Nespresso capsules, and with the usual price per capsule, they thought: Let's help ourselves."

A video published on the Twitter account "Info Trafic Alsace" shows drivers stopped on the side of the road, collecting scattered pods, some even scoring several boxes worth. Luckily, no injuries were reported, and police opted against booking any of the coffee scavengers. No mug shots, in other words.


5,171

For the first time, the Vatican has offered a glimpse into its real estate holdings, disclosing that it owns 5,171 properties. In one of the city state's most detailed financial disclosures, the Vatican revealed more than 50 pages worth of material, showing that the majority of the properties are located in Italy (4,051), with the remaining 1,120 to be found abroad.



We are capable of detecting any underwater, above-water, airborne enemy and, if required, carry out an unpreventable strike against it.

— Russian President Vladimir Putin said at the country's Navy Day parade in St. Petersburg on Sunday. Putin's comments come after Russia fired warning shots at British vessel that had allegedly crossed into Russian territorial waters in the Crimea peninsula last month. The United Kingdom, along with several other members of the international community, consider this part of the Black Sea to be Ukrainian waters, rather than Russian.

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Economy

Merkel's Legacy: The Rise And Stall Of The German Economy

How have 16 years of Chancellor Angela Merkel changed Germany? The Chancellor accompanied the country's rise to near economic superpower status — and then progress stalled. On technology and beyond, Germany needs real reforms under Merkel's successor.

Chancellor Angela Merkel looks at the presentation of the current 2 Euro commemorative coin ''Brandenburg''

Daniel Eckert

BERLIN — Germans are doing better than ever. By many standards, the economy broke records during the reign of outgoing Chancellor Angela Merkel: private households' financial assets have climbed to a peak; the number of jobs recorded a historic high before the pandemic hit at the beginning of 2020; the GDP — the sum of all goods and services produced in a period — also reached an all-time high.

And still, while the economic balance sheet of Merkel's 16 years is outstanding if taken at face value, on closer inspection one thing catches the eye: against the backdrop of globalization, Europe's largest economy no longer has the clout it had at the beginning of the century. Germany has fallen behind in key sectors that will shape the future of the world, and even the competitiveness of its manufacturing industries shows unmistakable signs of fatigue.

In 2004, a year before Merkel was first elected Chancellor, the British magazine The Economist branded Germany the "sick man of Europe." Ironically, the previous government, a coalition of center-left and green parties, had already laid the foundations for recovery with some reforms. Facing the threat of high unemployment, unions had held back on wage demands.

"Up until the Covid-19 crisis, Germany had achieved strong economic growth with both high and low unemployment," says Michael Holstein, chief economist at DZ Bank. However, it never made important decisions for its future.

Another economist, Jens Südekum of Heinrich Heine University in Düsseldorf, offers a different perspective: "Angela Merkel profited greatly from the preparatory work of her predecessor. This is particularly true regarding the extreme wage restraint practiced in Germany in the early 2000s."

Above all, Germany was helped in the first half of the Merkel era by global economic upheaval. Between the turn of the millennium and the 2011-2012 debt crisis, emerging countries, led by China, experienced unprecedented growth. With many German companies specializing in manufacturing industrial machines and systems, the rise of rapidly industrializing countries was a boon for the country's economy.

Germany dismissed Google as an over-hyped tech company.

Digital competitiveness, on the other hand, was not a big problem in 2005 when Merkel became chancellor. Google went public the year before, but was dismissed as an over-hyped tech company in Germany. Apple's iPhone was not due to hit the market until 2007, then quickly achieved cult status and ushered in a new phase of the global economy.

Germany struggled with the digital economy, partly because of the slow expansion of internet infrastructure in the country. Regulation, lengthy start-up processes and in some cases high taxation contributed to how the former economic wonderland became marginalized in some of the most innovative sectors of the 21st century.

Volkswagen's press plant in Zwickau, Germany — Photo: Jan Woitas/dpa/ZUMA

"When it comes to digitization today, Germany has a lot of catching up to do with the relevant infrastructure, such as the expansion of fiber optics, but also with digital administration," says Stefan Kooths, Director of the Economic and Growth Research Center at the Kiel Institute for the World Economy (IfW Kiel).

For a long time now, the country has made no adjustments to its pension system to ward off the imminent demographic problems caused by an increasingly aging population. "The social security system is not future-proof," says Kooths. The most recent changes have come at the expense of future generations and taxpayers, the economist says.

Low euro exchange rates favored German exports

Nevertheless, things seemed to go well for the German economy at the start of the Merkel era. In part, this can be explained by the economic downturn caused by the euro debt crisis of 2011-2012. Unlike in the previous decade, the low euro exchange rate favored German exports and made money flow into German coffers. And since then-European Central Bank president Mario Draghi's decision to save the euro "whatever it takes" in 2012, this money has become cheaper and cheaper.

In the long run, these factors inflated the prices of real estate and other sectors but failed to contribute to the future viability of the country. "With the financial crisis and the national debt crisis that followed, economic policy got into crisis mode, and it never emerged from it again," says DZ chief economist Holstein. Policy, he explains, was geared towards countering crises and maintaining the status quo. "The goal of remaining competitive fell to the background, as did issues concerning the future."

In the traditional field of manufacturing, the situation deteriorated significantly. The Institut der Deutschen Wirtschaft (IW), which regularly measures and compares the competitiveness of industries in different countries, recently concluded that German companies have lost many of the advantages they had gained. The high level of productivity, which used to be one of the country's strengths, faltered in the years before the pandemic.

Kooths, of IfW Kiel, points out that private investment in the German economy has declined in recent years, while the "government quota" in the economy, which describes the amount of government expenditure against the GDP, grew significantly during Merkel's tenure, from 43.5% in 2005 to 46.5% in 2019. Kooths concludes that: "Overall, the state's influence on economic activity has increased significantly."

Another very crucial aspect of competitiveness, at least from the point of view of skilled workers and companies, has been neglected by German politics for years: taxes and social contributions. The country has among the highest taxes on income in Europe, and corporate taxes are also hardly as high as in Germany anywhere in the industrialized world. "In the long run, high tax rates always come at the expense of economic dynamism and can even prevent new companies from being set up," warns Kooths.

Startups can renew an economy and lay the foundation for future prosperity. Between the year 2000 and the Covid-19 crisis, fewer and fewer new companies were created every year. Economists from left to right are unanimous: Angela Merkel is leaving behind a country with considerable need for reform.

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