For much of Washington, 2014 could not come soon enough. November's mid-term elections represented Barack Obama's last hope of redrawing the US political map and moving on from a year marred by divided government and Congressional stalemate.  

Whether Democrats succeed in their unlikely dream of seizing back control of the House of Representatives or Republicans instead continue to make inroads on their fragile lead in the Senate is another matter, and much depends on whether the White House can first restore public faith in its flagship healthcare reforms by the 31 March enrolment deadline.

Spring will also see Republican leaders under renewed pressure from their Tea Party wing, which is preparing primary challenges against moderates in the Senate that will further constrain any ability to cut deals with Democrats once election fever starts.

Several potential bright spots could lift everyone's spirits, however. A recovering economy may take pressure off America's anaemic job market and shocking social stagnation. US troops should return from Afghanistan – with or without a deal in Kabul to retain a security presence. And progress toward Iranian nuclear detente may give the White House cause to celebrate a rare foreign policy success, even if Congress will still need persuading.

Other challenges looming in 2014 have been postponed by the dysfunction and inertia of 2013. Barack Obama still needs to decide whether to authorise the Keystone energy pipeline, which pits environmentalists against North America's unconventional oil boom; expect tough new climate change controls for power companies instead if he does. And with all three branches of government now proposing reform of the NSA, Obama will finally have to decide before January's state of the union address what to do about America's surveillance state.

For much of 2014, the US Capitol dome will be shrouded in scaffolding for renovations – both real and metaphorical. What emerges next December will say much about the future of American democracy.

Dan Roberts in Washington

Unnerved by the escalating sovereign debt crisis, American fund managers had viewed European stock markets as far too risky a proposition in recent years. But confidence in the region’s political stability and economic recovery has started to grow, and European stock markets climbed this year as US investors poured money into equities again.

“Clearly 2013 was the year when we saw large inflows from the US into Europe for the first time in several years and it has contributed to a significant expansion of equity valuations in Europe,” said Emmanuel Cau, an equity strategist at JPMorgan Cazenove. Data from Lipper showed that in the week ending Wednesday December 18, American funds investing in European shares saw a record 25th consecutive week of inflows.

“Investors have been much more comfortable with the tail risks in Europe,” Mr Cau said, adding that the process began in July 2012, when European Central Bank President Mario Draghi pledged to do “whatever it takes” to protect the euro.

Boosted by that revival in confidence, Germany’s DAX index has risen 25.5pc this year and hit record highs, the CAC 40 in France is up 18pc, Spain’s IBEX has gained 21.4pc and the Italian FTSE MIB has advanced 16.6pc.

PREDICTION - Jason Burke in Delhi FOR THE GUARDIAN...

No one doubts that 2014 will be another year of dramatic change in south Asia. Economies in India and its neighbours are struggling to create growth and jobs to satisfy hundreds of millions of young people. In Bangladesh, whatever the result of polls in January, the battle between Sheikh Hasina and Khaleda Zia will continue to paralyse politics – and could hinder efforts to better conditions for workers in the country's vast garment industry.

In India, a general election in May – the biggest democratic exercise in history – will pit an ailing Congress party (led by the scion of the Gandhi-Nehru dynasty) against the Hindu nationalist opposition, whose candidate is the controversial Narendra Modi. There have been upsets before but all the indications are that the Congress party is in trouble. There is a huge list of outstanding issues – from major structural economic weaknesses to violence against women – to be dealt with by whoever gains power in May.

That task may be complicated by the aftermath of the US and Nato pull-out from Afghanistan. All that country's neighbours have a stake in the aftemath and will do whatever they need to protect their interests. In disputed Kashmir, 2013 saw an increase in clashes along the de facto border splitting the former kingdom between India and Pakistan. Violence is likely to worsen this coming year. There is likely to be trouble elsewhere in the mountains too, as Nepal tries yet again to find some kind of political stability.

Down in the Indian Ocean, President Mahinda Rajapaksa will seek to further bolster his hold on power and his popularity in Sri Lanka. Many in the Maldives will simply want calm. By the end of 2014, there will be plenty of others across this region who will share that wish.

In a letter to the Open Government Partnership, the inventor of the web, Sir Tim Berners-Lee, who collaborated with more than 100 free speech groups and leading activists condemns the hypocrisy of member nations of Open Government Partnership in signing up to an organisation which aims to preserve freedom while at the same time running one of the largest surveillance networks the world has ever seen. The organisations that have signed up include Oxfam, Privacy International and the Open Rights Group, and the individuals include Satbir Singh of the Commonwealth Human Rights Initiative and Indian social activist Aruna Roy. The letter calls on member governments to overhaul their privacy laws, protect whistleblowers and increase the transparency around their surveillance mechanisms.

"We join other civil society organisations, human rights groups, academics and ordinary citizens in expressing our grave concern over allegations that governments around the world, including many OGP members, have been routinely intercepting and retaining the private communications of entire populations, in secret, without particularised warrants and with little or no meaningful oversight," the letter states.

"These practices erode the checks and balances on which accountability depends, and have a deeply chilling effect on freedom of expression, information and association, without which the ideals of open government have no meaning."

The letter underscores the difficulty the UK and USA have had in maintaining that countries like China and Iran should ease restrictions on the internet in the face of revelations from the NSA files that they themselves are intercepting private communications.

"Laws to limit the state’s power to spy on its citizens are fundamental to democracy’s checks and balances. But these laws are outdated," said Anne Jellema, the chief executive of the World Wide Web Foundation, which was founded by Berners-Lee to promote a free internet.

"With digital technologies making it trivially easy to collect and store billions of pieces of data on entire populations, and with public interest whistleblowers receiving little protection, the whole system of checks and balances on state power is being pushed dangerously close to breaking point," Jellema continued. "We are calling for an urgent public debate to review and strengthen the safeguards that will keep our societies open".

The Open Government Partnership was formed in 2011 to aid reformers committed to making their governments more accountable, open and responsive to citizens. The UK and USA were two of the first countries to join, and the partnership has since grown to include 62 nations from Australia to Mongolia.

When German Finance Minister Wolfgang Schäuble, a trained lawyer, announced an agreement on Wednesday night in Brussels on the long negotiated EU banking union, observers might have been left thinking that he is precisely this type of lawyer.

On paper, Schäuble and his negotiators are right about very many points. They succeeded in ensuring that in 2016, the Single Resolution Mechanism will go into effect alongside the European Union banking supervisory authority. The provision will mean that failing banks inside the euro zone can be liquidated in the future without requiring German taxpayers to cover the costs of mountains of debt built up by Italian or Spanish institutes.

They also backed the European Commission, which wanted to become the top decision-maker when it comes to liquidating banks. The Commission will now be allowed to make formal decisions, but only in close coordination with national ministers from the member states.

But it goes even farther. Negotiators from Berlin have also created an intergovernmental treaty, to be negotiated by the start of 2014, that they believe will protect Germany from any challenges at its Constitutional Court that might arise out of the banking union.

They also established a very strict "liability cascade" that will require bank shareholders, bond holders and depositors with assets of over €100,000 ($137,000) to cover the costs of a bank's liquidation before any other aid kicks in. The banks are also required to pay around €55 billion into an emergency fund over the next 10 years. Until that fund has been filled, in addition to national safeguards, the permanent euro bailout fund, the European Stability Mechanism, will also be available for aid. However, any funds would have to be borrowed by a national government on behalf of banks, and that country would also be liable for the loan. This provision is expected to be in place at least until 2026.

The government in Berlin put a strong emphasis on preventing the ESM, with its billions in funding, from being used to recapitalize debt-ridden European banks. Schäuble was alone with this position during negotiations, completely isolating himself from the other 16 finance ministers from euro-zone countries. Brussels insiders report that it was "extremely unusual because normally at least a few countries share Germany's position."

BBC article ....short version

It was a banking crisis, in late 2011, that almost destroyed the eurozone - and would have done, if the European Central Bank hadn't weighed in with unprecedentedly cheap loans to struggling banks and a pledge to do "whatever it takes" to keep the monetary-union show on the road.

But the ECB's succour represented short-term emergency treatment, not the kind of long-term reforms that would succeed in breaking the vicious connection between bloated weak banks and individual sovereign states lacking the resources to bail out those weak banks.

Which is why the stakes were so high for the so-called "banking union" being created to accompany "monetary union" and - in particular - the creation of what is known as a "Single Resolution Mechanism", intended to minimise the collateral damage from bank failures.

A successful resolution system has to achieve two things when a bank gets into difficulties, if the damage to all our wealth is to be minimised - there needs to be speedy action to maintain the really essential functions of the bank, and the financial costs of propping up the good bits of the bank and quarantining the bad need to fall as little as possible on taxpayers.

So after all the fraught negotiation to create the Single Resolution Mechanism, will it meet those two criteria - or is it a traditional eurozone plate of fudge and mudge, a breakfast concoction fit primarily for canine consumption.

I shall let you to be the judge of that.

Russia's economy is now forecast to have grown in 2013 at less than half the pace expected at the start of the year and will perform only slightly better in 2014, weighed down by weak investment and tapering consumer demand.

A Reuters poll of 15 economists said that gross domestic product had risen just 1.4 percent this year, when last December they had predicted an expansion of 3.2 percent.

Economists are also more pessimistic about the economy's well being next year than the government, envisaging growth of 2 percent, against the Economy Ministry's forecast of 2.5 percent.

Russia's economy decelerated sharply this year, reflecting deep structural problems that analysts and officials say undercut its long-term growth potential.

Investment by firms disappointed and international money has been flowing out of Russia, in part due to companies' concerns about political freedoms and the likely consistency of the legal backdrop in years ahead.

The fading of an economic success story that buoyed Vladimir Putin's first decade in power is increasingly a challenge to the president as he seeks reelection in 2018.

Economists now say there has been no growth in investment in tangible assets, such as buildings and plants, this year. A year ago, they had expected such expenditures would grow by 6 percent in 2013. For next year, they now expect a small rebound to 2 percent growth.

The pickup will come mainly from the expected spending from one of Russia's oil windfall revenue funds on infrastructure.

"However, their positive impact in 2014 should not be overestimated, as most likely it will not appear before the second half of the year," Maria Pomelnikova, an economist at Raiffeisenbank, said.