NEWS,24.08.2012

dear folLowers, i will return with new post on 16^th september

 

Mission Accomplished for Big Oil?

In 2011, after nearly nine years of war and occupation, U.S. troops finally left Iraq. In their place, Big Oil is now present in force and the country’s oil output, crippled for decades, is growing again. Iraq recently reclaimed the number two position in the Organization of the Petroleum Exporting Countries (OPEC), overtaking oil-sanctioned Iran. Now, there’s talk of a new world petroleum glut. So is this finally mission accomplished?Well, not exactly. In fact, any oil company victory in Iraq is likely to prove as temporary as George W. Bush’s triumph in 2003. The main reason is yet another of those stories the mainstream media didn’t quite find room for: the role of Iraqi civil society. But before telling that story, let’s look at what’s happening to Iraqi oil today, and how we got from the “no blood for oil” global protests of 2003 to the present moment.Here, as a start, is a little scorecard of what’s gone on in Iraq since Big Oil arrived two and a half years ago: corruption’s skyrocketed; two Western oil companies are being investigated for either giving or receiving bribes; the Iraqi government is paying oil companies a per-barrel fee according to wildly unrealistic production targets they’ve set, whether or not they deliver that number of barrels; contractors are heavily over-charging for drilling wells, which the companies don’t mind since the Iraqi government picks up the tab.Meanwhile, to protect the oil giants from dissent and protest, trade union offices have been raided, computers seized and equipment smashed, leaders arrested and prosecuted. And that’s just in the oil-rich southern part of the country. In Kurdistan in the north, the regional government awards contracts on land outside its jurisdiction, contracts which permit the government to transfer its stake in the oil projects  up to 25%  to private companies of its choice. Fuel is smuggled across the border to the tune of hundreds of tankers a day.In Kurdistan, at least the approach is deliberate: the two ruling families of the region, the Barzanis and Talabanis, know that they can do whatever they like, since their Peshmerga militia control the territory. In contrast, the Iraqi federal government of Prime Minister Nouri al-Maliki has little control over anything. As a result, in the rest of the country the oil industry operates, gold-rush-style, in an almost complete absence of oversight or regulation.Oil companies differ as to which of these two Iraqs they prefer to operate in. BP and Shell have opted to rush for black gold in the super-giant oilfields of southern Iraq. Exxon has hedged its bets by investing in both options. This summer, Chevron and the French oil company Total voted for the Kurdish approach, trading smaller oil fields for better terms and a bit more stability.Keep in mind that the incapacity of the Iraqi government is hardly limited to the oil business: stagnation hangs over its every institution. Iraqis still have an average of just five hours of electricity a day, which in 130-degree heat causes tempers to boil over regularly. The country’s two great rivers, the Tigris and Euphrates, which watered the cradle of civilization 5,000 years ago, are drying up.  This is largely due to the inability of the government to engage in effective regional diplomacy that would control upstream dam-building by Turkey.After elections in 2010, the country’s leading politicians couldn’t even agree on how to form a government until the Iraqi Supreme Court forced them to. This record of haplessness, along with rampant corruption, significant repression, and a revival of sectarianism can all be traced back to American decisions in the occupation years. Tragically, these persistent ills have manifested themselves in a recent spate of car-bombings and other bloody attacks.In the period before and around the invasion, the Bush administration barely mentioned Iraqi oil, describing it reverently only as that country’s “patrimony.” As for the reasons for war, the administration insisted that it had barely noticed Iraq had one-tenth of the world’s oil reserves. But my new book reveals documents I received, marked SECRET/NOFORN, that laid out for the first time pre-war oil plans hatched in the Pentagon by arch-neoconservative Douglas Feith’s Energy Infrastructure Planning Group (EIPG).In November 2002, four months before the invasion, that planning group came up with a novel idea: it proposed that any American occupation authority not repair war damage to the country’s oil infrastructure, as doing so “could discourage private sector involvement.” In other words, it suggested that the landscape should be cleared of Iraq’s homegrown oil industry to make room for Big Oil.When the administration worried that this might disrupt oil markets, EIPG came up with a new strategy under which initial repairs would be carried out by KBR, a subsidiary of Halliburton. Long-term contracts with multinational companies, awarded by the U.S. occupation authority, would follow. International law notwithstanding, the EIPG documents noted cheerily that such an approach would put “long-term downward pressure on [the oil] price” and force “questions about Iraq’s future relations with OPEC.”At the same time, the Pentagon planning group recommended that Washington state that its policy was “not to prejudice Iraq’s future decisions regarding its oil development policies.” Here, in writing, was the approach adopted in the years to come by the Bush administration and the occupation authorities: lie to the public while secretly planning to hand Iraq over to Big Oil.There turned out, however, to be a small kink in the plan: the oil companies declined the American-awarded contracts, fearing that they would not stand up in international courts and so prove illegitimate. They wanted Iraq first to have an elected permanent government that would arrive at the same results. The question then became how to get the required results with the Iraqis nominally in charge. The answer: install a friendly government and destroy the Iraqi oil industry.In July 2003, the U.S. occupation established the Iraqi Governing Council, a quasi-governmental body led by friendly Iraqi exiles who had been out of the country for the previous few decades. They would be housed in an area of Baghdad isolated from the Iraqi population by concrete blast walls and machine gun towers, and dubbed the Green Zone.  There, the politicians would feast, oblivious to and unconcerned with the suffering of the rest of the population.The first post-invasion Oil Minister was Ibrahim Bahr al-Uloum, a man who held the country’s homegrown oil expertise in open contempt. He quickly set about sacking the technicians and managers who had built the industry following nationalization in the 1970s and had kept it running through wars and sanctions. He replaced them with friends and fellow party members. One typical replacement was a former pizza chef.The resulting damage to the oil industry exceeded anything caused by missiles and tanks. As a result the country found itself -- as Washington had hoped -- dependent on the expertise of foreign companies. Meanwhile, not only did the Coalition Provisional authority (CPA) that oversaw the occupation lose $6.6 billion of Iraqi money, it effectively suggested corruption wasn't something to worry about.  A December 2003 CPA policy document recommended that Iraq follow the lead of Azerbaijan, where the government had attracted oil multinationals despite an atmosphere of staggering corruption (“less attractive governance”) simply by offering highly profitable deals. Now, so many years later, the corruption is all-pervasive and the multinationals continue to operate without oversight, since the country’s ministry is run by the equivalent of pizza chefs.The first permanent government was formed under Prime Minister Maliki in May 2006. In the preceding months, the American and British governments made sure the candidates for prime minister knew what their first priority had to be: to pass a law legalizing the return of the foreign multinationals tossed out of the country in the 1970s to run the oil sector.The law was drafted within weeks, dutifully shown to U.S. officials within days, and to oil multinationals not long after. Members of the Iraqi parliament, however, had to wait seven months to see the text.The trouble was: getting it through that parliament proved far more difficult than Washington or its officials in Iraq had anticipated. In January 2007, an impatient President Bush announced a “surge” of 30,000 U.S. troops into the country, by then wracked by a bloody civil war. Compliant journalists accepted the story of a gamble by General David Petraeus to bring peace to warring Iraqis.In fact, those troops spearheaded a strategy with rather less altruistic objectives: first, broker a new political deal among U.S. allies, who were the most sectarian and corrupt of Iraq’s politicians (hence, with the irony characteristic of American foreign policy, regularly described as “moderates”); second, pressure them to deliver on political objectives set in Washington and known as “benchmarks” -- of which passing the oil law was the only one ever really talked about: in President Bush’s biweekly video conferences with Maliki, in almost daily meetings of the U.S. ambassador in Baghdad, and in frequent visits by senior administration officials.On this issue, the Democrats, by then increasingly against the Iraq War but still pro-Big Oil, lent a helping hand to a Republican administration. Having failed to end the war, the newly Democrat-controlled Congress passed an appropriations bill that would cut off reconstruction funds to Iraq if the oil law weren’t passed. Generals warned that without an oil law Prime Minister Maliki would lose their support, which he knew well would mean losing his job. And to ramp up the pressure further, the U.S. set a deadline of September 2007 to pass the law or face the consequences.It was then that things started going really wrong for Bush and company. In December 2006, I was at a meeting where leaders of Iraq’s trade unions decided to fight the oil law. One of them summed up the general sentiment this way: “We do not need thieves to take us back to the middle ages.” So they began organizing. They printed pamphlets, held public meetings and conferences, staged protests, and watched support for their movement grow.  Most Iraqis feel strongly that the country’s oil reserves belong in the public sector, to be developed to benefit them, not foreign energy companies. And so word spread fast -- and with it, popular anger. Iraq’s oil professionals and various civil society groups denounced the law. Preachers railed against it in Friday sermons. Demonstrations were held in Baghdad and elsewhere, and as Washington ratcheted up the pressure, members of the Iraqi parliament started to see political opportunity in aligning themselves with this ever more popular cause. Even some U.S. allies in Parliament confided in diplomats at the American embassy that it would be political suicide to vote for the law.By the September deadline, a majority of the parliament was against the law and  a remarkable victory for the trade unions it was not passed. It’s still not passed today.Given the political capital the Bush administration had invested in the passage of the oil law, its failure offered Iraqis a glimpse of the limits of U.S. power, and from that moment on, Washington’s influence began to wane.Things changed again in 2009 when the Maliki government, eager for oil revenues, began awarding contracts to them even without an oil law in place. As a result, however, the victory of Big Oil is likely to be a temporary one: the present contracts are illegal, and so they will last only as long as there’s a government in Baghdad that supports them.This helps explain why the government's repression of trade unions increased once the contracts were signed.  Now, Iraq is showing signs of a more general return to authoritarianism (as well as internecine violence and possibly renewed sectarian conflict).But there is another possibility for Iraq. Years before the Arab Spring, I saw what Iraqi civil society can achieve by organizing: it stopped the world’s superpower from reaching its main objective and steered Iraq onto a more positive course.Many times since 2003 Iraqis have moved their country in a more democratic direction: establishing trade unions in that year, building Shi'a-Sunni connections in 2004, promoting anti-sectarian politicians in 2007 and 2008, and voting for them in 2009.  Sadly, each of these times Washington has pushed it back toward sectarianism, the atmosphere in which its allies thrive.  While mainstream commentators now regularly blame the recent escalation of violence on the departure of U.S. troops, it would be more accurate to say that the real reason is they didn’t leave far sooner.Now, without its troops and bases, much of Washington’s political heft has vanished. Whether Iraq heads in the direction of dictatorship, sectarianism, or democracy remains to be seen, but if Iraqis again start to build a more democratic future, the U.S. will no longer be there to obstruct it.  Meanwhile, if a new politics does emerge, Big Oil may discover that, in the end, it was mission unaccomplished.

NEWS,23.08.2012

Global economy slips into dire straits

The eurozone is on track for its second recession in three years, China's once booming manufacturing sector is contracting at a faster pace than previously reported, and the United States is widely seen as struggling to keep up its pace of growth.Business surveys released on Thursday painted a global picture of economic malaise from Beijing to Berlin.The eurozone economy will shrink around 0.5% in the current quarter as the economic rot is even spreading through Germany, the region's largest and strongest economy, Markit's Purchasing Mangers' Index (PMI) suggested.It came on the heels of the HSBC Flash China manufacturing PMI falling to 47.8 for August, its lowest level since November and well down from July's final figure of 49.3.Growth in the United States manufacturing sector is also expected to have slowed in August. U.S. data due at 12:58 GMT."The indicators taken as a whole indicate a material slowdown in the pace of the world economy," said economist Philip Shaw at Investec.The eurozone composite PMI, which measures manufacturing and services together, was actually slightly better than a month earlier, nudging up to 46.6 and just pipping forecasts for it to hold steady at July's 46.5. But was still its seventh month in a row below 50, the dividing line between contraction and growth."August's flash eurozone PMI does nothing to challenge the notion that the single currency area is now firmly in recession," said Jonathan Loynes, chief European economist at Capital Economics.More worryingly, the downturn in smaller eurozone economies is clearly taking root in the core. The flash composite PMI for Germany fell to a three-year low, a fourth straight month of contraction.German economic growth slowed to 0.3% in the second quarter on a sharp drop in investment, adding to evidence that it can no longer be relied on to pull the eurozone out of a deep slump, data showed earlier on Thursday. "Another reminder that a chronic lack of economic growth in the eurozone will continue to impede efforts to bring the debt crisis to an end," Loynes said.The eurozone economy shrank by 0.2% in the three months to June, according to official data. Economists polled by Reuters last week predicted a similar outcome for the current quarter, with no growth until the start of next year. Falling demand from debt-ridden Europe, China's single biggest export market, has put the Chinese economy under pressure, with the ripples now being felt across the world."It's very hard to put a positive spin on anything within the (China) data. Bottom line - a very poor update," said Robert Rennie, chief currency strategist at Westpac Bank In Sydney.Japan said on Wednesday that exports slumped the most in six months in July as shipments to Europe and China tumbled. Exports from Taiwan, a key part of the global technology supply chain, fell for a fifth straight month in July and South Korea, home to major car makers, computer chip and flat-screen producers, recorded its sharpest export fall in July in nearly three years.Six consecutive quarters of slowing Chinese growth have also taken a toll on commodities markets, with falling prices and an uncertain outlook prompting miner BHP Billiton to shelve a $20bn expansion project in Australia."Today's PMI report is a clear reminder that the slowdown is not yet over and that the Chinese economy is still too shaky to recover without ongoing policy stimuli," said Nikolaus Keis at UniCredit. "The pressure on the Chinese authorities to further step up their policy accommodation is therefore growing."China has been fine tuning policies to keep growth on track without releasing curbs on the property sector.In contrast central banks in the developed world have slashed interest rates to near zero and injected trillions of dollars into the money supply in efforts to support growth.The European Central Bank is expected to cut rates by 25 basis points to a new record low of 0.5% when it meets next week, but analysts say that will do little to stimulate lending. The U.S. Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the U.S. central bank's latest meeting suggested.

Venezuela Elections 2012: Chavez Has Money Edge In Presidential Race

Opposition candidate Henrique Capriles typically runs his presidential campaign by jogging through Venezuela's small towns, reaching out to supporters with both hands and climbing aboard the back of a flatbed truck to speak to hundreds of people.By contrast, President Hugo Chavez brings large sound trucks, a production team and a fleet of buses that carry supporters and government employees to plazas to cheer him on by the thousands.A little more than a month ahead of Venezuela's Oct. 7 election, Chavez enjoys clear advantages over his challenger in campaign funding and media access. While neither campaign has revealed how much it's spending, Capriles says he is in a "David vs. Goliath" contest, facing a well-financed incumbent backed by an even richer government."We're fighting against two checkbooks. There's no way to compete economically speaking," said Rafael Guzman, who is in charge of finances for the opposition coalition. He accused the government of using money from the state oil company, Petroleos de Venezuela SA, and a separate development fund, Fonden, to support Chavez's campaign and bankroll projects aimed at boosting his support.Chavez's allies say Capriles is being backed by business tycoons including fugitive bankers who have fled the country and oppose the president. Chavez's camp hasn't provided details of those accusations.The law does not limit individual campaign contributions, though Guzman says the Capriles campaign caps donations it receives at a maximum of 2,000 bolivars ($465), even though people can make many such donations. He said all have come from individuals, none from companies."We aren't receiving anything from businesses," Guzman said.So far, Capriles' campaign doesn't look like it's rolling in wealth. It has even taken to holding raffles, fundraising dinners and weekend street fairs selling used clothes and donated food.Judith Beltran recently browsed through stands selling landscape paintings, handbags, underwear and used baby clothes at Caracas' Petare slum, holding a bagful of clothes she'd just purchased."I came because they're selling everything cheap and also to help out Capriles," she said.Meanwhile, Chavez's face smiles down from innumerable billboards and signs festooned on lampposts throughout Caracas and other cities, far more than Capriles' campaign has managed.There's no spending limit on such advertising, but the law limits campaigns to just three minutes of paid TV ads a day, and Capriles' backers say there's no clear line between Chavez's campaign ads and the much more frequent government promotional spots showing the president doling out apartments to the needy.The law doesn't prevent Chavez from using his power as president to take over programming on all of the country's TV channels and radio stations for his speeches, something he does regularly.Chavez and his allies say he's merely governing, not wielding any campaign edge that could be considered unfair."Hugo Chavez's advantage (is) in his power of communicating with his people," his campaign manager, Jorge Rodriguez, said last month.Rodriguez on Wednesday also denied that Chavez has an edge in airtime, saying much of the coverage by private TV channels and radio stations favors Capriles.In a recent televised appearance for the opening of a state-run supermarket, Chavez tried to differentiate his roles as president and candidate. "I'm complying with an obligation to inform the public," he said."I am going to say what I'm going to say very carefully. It shouldn't be interpreted as campaigning," Chavez said. Chavez then responded to criticism by Capriles and other adversaries that he is giving away Venezuela's oil wealth through preferential deals with allies.Chavez's socialist party, for its part, insists it uses no public funds and gets its money from supporters. It held a raffle last week with prizes that included a new car, motorcycles and appliances. Some Chavez opponents called for electoral officials to investigate that raffle, saying public employees had reported that they were forced to buy tickets.Venezuelan election law requires candidates to provide detailed monthly financial reports to electoral officials, but the National Electoral Council generally doesn't publicly release financial figures during the campaign.Neither the Chavez nor Capriles campaign revealed how much money they've raised when asked. Chavez's campaign didn't respond to requests for comment, and officials in Capriles' campaign said it was unable to provide a figure.Venezuelan election law also prohibits campaign donations from government entities, foreign donors and companies that are contracted to provide public services.Venezuela is atypical in Latin America in that it doesn't provide public financing for campaigns or political parties, said Jennifer McCoy, director of the Americas program at the Carter Center. She has directed past election-monitoring missions in Venezuela and other countries."Because there's no regulated public financing, then that means that all of the sources of money are private or undisclosed, and so it's very difficult to assess how much each side is spending and where the money comes from," McCoy said in an interview during a visit to Caracas."I really have no idea how much each side is spending," she said, "but in terms of the opportunities particularly for the media presence and the opportunities for providing benefits to voters, certainly an incumbent government – and this incumbent government – has an advantage."The opposition has complained that Chavez has abused his presidential authority by taking over the airwaves, but the National Election Council has taken no action on the matter. Four of the council's five members are Chavez allies or widely perceived as favoring the president.Vicente Diaz, the one council member often openly critical of the government, said in an interview that a candidate such as Capriles is essentially running "against the state.""It's not fair," Diaz said, but added that "the popular will is respected, and the one who has the votes is going to win."

NEWS,22.08.2012

Russia finally joins WTO

After 18 years of negotiation, Russia on Wednesday entered the World Trade Organization, which restricts import duties and subsidies in an attempt to create a level playing field for international trade.Analysts and politicians hope that Russia, which has long proven a formidable market to foreign investors because of its byzantine bureaucracy and protectionist tariffs, would be transformed by its entry into the WTO. Russia is one of the last major global economies to enter the group, which has long included other developing nations like China.While consumers here will benefit from the lower cost of imported goods, some worry that struggling industries long coddled by state subsidies, such as agriculture or the automobile industry, will suffer from foreign competition.Russians often complain about the burdensome cost of Western-imported consumer products, which range from refrigerators to jeans. With its entry into the WTO, the country will cut its average import tariff by 5.9%, making those imports cheaper.M. Video, one of Russia's largest electronics retailers whose shelves are packed with foreign-made CD players and American movies, said Russia's entry into the WTO would bring more customers into their stores."We believe that (entry into the WTO) is going to be a very good decision for our customers in the future, because they will be able to purchase goods with prices harmonized with other economies," said Enrique Fernandez, chief commercial officer of the company.But uncompetitive domestic goods, which have long been propped up by Soviet-style subsidies, could be threatened by the invasion of higher-quality imports. Nearly 100 major business leaders and industry groups including dairy and meat producers signed a petition earlier this summer addressed to the ruling United Russia party, asking that its deputies vote against ratification of the WTO treaty.Agriculture, the automobile industry, and Soviet-style "Monogorods," or towns which revolve around a single factory or industry, are bound to suffer next to foreign competition unless they can reform quickly. These industries are based in regions that have often displayed the most support for President Vladimir Putin, but could easily turn into a hotbed for protest if already fragile industries were to collapse.At a car dealership in Moscow, 63-year-old engineer Alexei Tarakanov said he doubted that low-quality Russian cars could win on an open market."I already have a negative attitude towards our (Russian) cars," said Tarakanov, who was buying a Renault. "I doubt that they can win the preference of the modern buyer."Because state-subsidized industries proved such a pivotal issue in Russia's WTO negotiations, financial aid to struggling sectors will be gradually phased out, rather than abruptly cut off,over the course of seven years."The industry will not collapse immediately, (major Russian car-maker) AvtoVaz is going to continue steadily producing its 700 000 cars per year," said Ovanes Oganisyan, an analyst at the Moscow-based investment bank Troika Dialog. "But eventually there's going to be more competition, and if AvtoVaz doesn't change in seven years it will have to go out of business."In addition to the challenges faced by unreformed industries, the Russian government expects to take a short-term financial hit from the loss of income from import duties and taxes. But the government emphasizes long-term gains, and the World Bank has estimated that WTO membership could increase Russia's GDP by an extra 3.3% a year in the next three years.While the WTO will significantly open up the Russian market to foreign producers, the U.S. faces the threat of paying higher tariff rates than other WTO members to sell goods in Russia, leaving American producers at a competitive disadvantage compared to European or Asian industries.The reason for the disparity is the Jackson-Vanik Amendment, a law passed by Congress during Soviet times that denies Russia normal trade relations with the U.S.The U.S. president has been granting Russia annual waivers since 1992, but Moscow insists it will not lower its tariffs for the U.S. as much as for other countries until the law is scrapped."The last thing that America needs right now is for foreign companies to have lower tariff rates than American companies," said Andrew Somers, President and CEO of the American Chamber of Commerce.Vice President Joe Biden lobbied for the repeal of Jackson-Vanik in 2011, as have previous presidential administrations, but Congress has so far proven intransigent to executive pleas.Congress has increasingly taken fire at the Russian administration for its human rights record. In June, the U.S. House of Representatives passed the Justice for Sergei Magnitsky Act, a bill named for a Russian lawyer who died in a Russian prison last year after allegedly being abused at the hands of Russian authorities.This week, President Barack Obama expressed his disappointment after the three participants of Pussy Riot, a punk band who sang an anti-Putin prayer in Moscow's Cathedral of Christ the Savior, were convicted to two years in prison."Business hates uncertainty," said Somers, "If the Jackson-Vanik Amendment remains on the books and the U.S. continues not to have normal trade relations with Russia, who knows what will happen."

Israeli minister wants Palestinian leader's ouster

Israel's foreign minister urged the international community to help oust Palestinian President Mahmoud Abbas whose policies he called "an obstacle to peace" in a letter released Wednesday.Foreign Minister Avigdor Lieberman wrote to the Quartet of Mideast mediators  the U.S., the U.N., the EU and Russia this week calling for new elections in the Palestinian Authority in order to replace Abbas, accusing the Palestinian Authority of being "a despotic government riddled with corruption.""Despite Mr. Abbas' delays, general elections in the Palestinian Authority should be held and a new, legitimate, hopefully realistic leadership should be elected" he wrote. "Only such a leadership can bring progress with Israel. We must maximize the holding of new elections in the PA alongside the tremendous changes in the Arab world, in order to bring a serious change between Israel and the Palestinians."Abbas' spokesman, Nabil Abu Rdeneh, rejected Lieberman's statement, calling it an "incitement to violence" that "doesn't contribute in any way to an atmosphere of peace." He urged Israel and the international community to condemn the letter.Elections for new Palestinian leadership were scheduled for 2010, but have repeatedly been delayed because of the bitter dispute between Abbas' Fatah and the militant Hamas, bitter rivals who had a violent falling out in 2007 and now separately govern the West Bank and Gaza Strip respectively.Israeli Prime Minister Benjamin Netanyahu also sought to quickly disassociate himself from the letter. An official in the prime minister's office, who spoke on condition of anonymity because of the sensitivity of the issue, said the letter does not represent the government's position."While Abbas has created difficulties for restarting negotiations, the government of Israel remains committed to continuing efforts to restart a dialogue with the Palestinians,"he said.Lieberman, who leads a hardline party in Israel, is known for inflammatory rhetoric that has at times agitated his partners in government.He embarrassed Netanyahu in the past by expressing skepticism over the chances of reaching peace with the Palestinians. In a high-profile speech at the United Nations General Assembly in 2010, he contradicted a goal set by President Barack Obama of reaching a final peace deal in the coming year.Lieberman wrote that Abbas should be replaced so that peace talks that collapsed in 2008 could be revived.Abbas has refused to resume talks as long as Israel refuses to stop settlement construction in the West Bank and east Jerusalem, areas Palestinians want as part of their future state. Israel rejects the calls for a halt to settlement building, and instead has called for peace talks to resume, saying that the settlement issue should be resolved along with other core disputes through negotiations.Lieberman listed in his letter a number of gestures Israel recently has made to the Palestinians  including agreeing for an additional 5,000 Palestinians to work in Israel and reducing the number of roadblocks and accused Abbas in return of "encouraging a culture of hatred, praising terrorists, encouraging sanctions and boycotts and calling into question the legitimacy of the state.” Due to Abbas' weak standing, and his policy of not renewing the negotiations, which is an obstacle to peace, the time has come to consider a creative solution in order to strengthen the Palestinian leadership," Lieberman said In Washington, U.S. State Department spokeswoman Victoria Nuland said the U.S. has "a good working relationship with President Abbas. And so we expect to be able to continue to work well with him."She also noted that Netanyahu had "clarified that the foreign minister's letter doesn't reflect his position and that he (Netanyahu) has responsibility for these issues." 
 

Ailing Egypt seeks $4.8 billion IMF loan

Egypt formally asked the International Monetary Fund for a $4.8 billion loan on Wednesday, seeking a desperately needed rescue package for its faltering economy but raising the possibility of painful restructuring in a country still reeling since its revolution more than 18 months ago.The loan deal, which Egypt says it will reach by the end of the year, presents a major test to the Muslim Brotherhood-rooted president, Mohammed Morsi, the country's first ever freely elected leader, brought to power after the fall of Hosni Mubarak.The IMF has avoided making specific conditions for a loan but it seeks a cohesive government plan for restarting economic growth and reducing a deficit that has grown to $23.6 billion, some 8.7 percent of gross domestic product.A key part of that will likely be reducing subsidies that suck up a third of the government budget every year. Touching those subsidies, however, could bring social upheaval, since they keep commodities like fuel and bread cheap for a population of around 82 million, some 40 percent of whom live near or below the poverty line."The government will have to take urgent measures, at the top of them cutting energy subsidies," said Mohammed Abu Basha, a Cairo-based economist at investment bank EFG-Hermes Holding SAE. The biggest subsidies are those on fuel including gasoline and cooking gas costing the government some $16 billion a year.Egypt's upheaval since the 18-day uprising that led to Mubarak's ouster on Feb. 11, 2011, has pushed its economy toward the brink. Amid near constant instability since, foreign investment has dried up. Revenues from tourism one of the country's biggest money makers and employers fell 30 percent to $9 billion in 2011 and the industry is only making a meager recovery.Meanwhile, the government has been burning through its foreign currency reserves, which have plummeted by more than half, to prop up the Egyptian pound and prevent a devaluation that could spur inflation.The government also faces mounting demands to increase salaries for the millions of civil servants and public sector workers and boost social spending. Infrastructure has crumbled, with electricity and water outages pervasive this summer, bringing angry complaints, some directed at Morsi.Egypt's hope is that the IMF package its first loan from the organization in nearly 20 years would provide not only a cash boost but, more importantly, a seal of approval that will bring back international investment.Morsi, his Prime Minister Hesham Kandil and other Egyptian officials met Wednesday with IMF chief Christine Lagarde in Cairo. State TV said Egypt requested a $4.8 billion loan, up from the $3.2 billion proposal discussed earlier this year. Finance Minister Momtaz el-Said told the state-run Al-Ahram newspaper that the increase was needed because the deficit had grown with the drop in income from investment and tourism.Lagarde's visit "gives a positive message to Egypt and the whole world that Egypt is stabilizing and that the economy is heading to a recovery," Kandil said. He said he expects a final agreement by December.Kandil said his government has drawn up a comprehensive economic recovery plan for the IMF that includes strategies to counter the deficit, encourage investment and ensure that subsidies reach those most in need. He did not provide details.Lagarde said "Egypt faces considerable challenges." An IMF team would start talks in September with the government over its recovery plan and the loan, she said."Getting the country's economy back on track and raising the living standards for all will not be an easy task," she said. "The Egyptian people have legitimate expectations for a better life aAbdel-Hafiz el-Sawy, a chief economist with the Muslim Brotherhood who met with earlier delegations from IMF, acknowledged that "the government is facing a mountain of problems, and whenever it gets out of one trap to fall in the next.""The IMF loan is small but its impact is in the fact that it gives Egypt a certificate that improves the country's economic prospects," he said.Initial talks over a $3.2 billion loan stalled earlier this year amid wrangling between the military generals who ruled the country since Mubarak's ouster and Islamists who won the majority in the now-dissolved parliament. The Brotherhood had opposed letting the interim, military-appointed government sign a deal putting financial burdens on the next government. The IMF insisted on political consensus before approving the loan.Since then, Morsi was inaugurated in late June and a month later formed the Kandil-led Cabinet, and the military handed over authority.The plan presented to the IMF appears to be more or less similar to the previous government's plan, which the Islamist-led parliament had opposed, according to el-Said, the finance minister who also served in the former government, in an interview with el-Shorouk daily.Now Morsi faces the tough task of economic reform. Already, the government has reduced fuel subsidies to energy-intensive factories which were seen as giving a bonus to the wealthy and increased taxes on Egyptians whose income exceeds 10 million a year.But still remaining is the question of how to deal with subsidies that keep prices dirt cheap for gasoline and for butane fuel that many rely on for cooking. The gasoline subsidies are widely seen as inefficient because wealthier drivers benefit from them as much as or more than the poor.The government is studying alternatives, such as distributing to the poor coupons for gas and fuel, while restructuring the tax system.El-Said, the finance minister, also ruled out a devaluation of the pound suggesting that the government hopes that an IMF will bring enough local liquidity to keep the currency strong without infusions from the state's reserves.The IMF loan will not be enough to cover all Egypt's financing needs. IMF officials said earlier that the country needs a total of $10 billion to $12 billion in outside funding over the next 12 to 15 months.Qatar has delivered around $500 million of $2 billion it has promised Egypt. Saudi Arabia promised to deposit $1.5 billion in Egypt's Central Bank. But other aid packages from the European Union, the oil-rich Arab Gulf states and other sources will heavily depend on Cairo's ability to secure the IMF loan.

NEWS,21.08.2012

Israel's Posturing: Behind Netanyahu and Barak's Threats to Attack Iran

Successive Israeli governments have consistently inhibited in the past any public discussion about Iran's nuclear program and what Israel might do to prevent Iran from acquiring nuclear weapons. In recent weeks however, Prime Minister Netanyahu and Defense Minister Barak have been openly discussing the issue while intimating their readiness to take whatever actions necessary to eliminate the Iranian threat. The question is why Netanyahu and Barak have chosen to "advertise" their deep concerns now and why they have such an urgency to act at this particular juncture, both of which have prompted newspaper reporters and bandits to speculate about what the real intentions are behind this public exposure and what is to be expected. Meanwhile, former and current officials, including President Peres, have expressed pointed objections to taking any unilateral military strikes against Iran, insisting that if such action became necessary, it must certainly be led by the U.S. to shield Israel from being singled out and blamed for the potentially disastrous regional consequences.Having concluded that sanctions and diplomacy have failed as Iran is either technologically nearing the point of no return or achieving a zone of immunity that will make their most advanced nuclear plants at Fordo (near Qom) impregnable to air attack, the Netanyahu government has decided on a new strategy designed to achieve multiple purposes. While Israel's determination to prevent Iran from acquiring nuclear weapons has not changed, the new strategy is meant to strongly convey that Israel is not bluffing. Israel's groundwork for the new strategy is as follows: Israel will alert its closest ally, the U.S., alarm its European friends, credibly threaten Iran and gather more information, warn other enemies such as Hezbollah and Hamas, test the private sentiments and public reactions of the Sunni Arab states, and will finally prepare the Israeli public while laying in wait for the right moment to strike, should everything else fail.The Netanyahu government has already expressed its displeasure with the strategy the Obama administration has adopted to prevent Iran from obtaining nuclear weapons. Whereas many Israelis believe that President Obama's credibility is on the line and he will act militarily should it become necessary, others, including Netanyahu and Barak, are not so sure. They are concerned that Obama may eventually have to choose between preventing or containing Iran and will settle on the latter by providing Israel and other Arab allies in the region with some kind of security umbrella.Netanyahu and Barak are troubled by the fact that Obama has relied excessively on a diplomatic solution knowing full well that the Iranians are masters of playing for time. Moreover, he chose to impose gradual sanctions to which the Iranian government was able to adjust instead of inflicting real, crippling sanctions, especially after the failure of the first few sets of negotiations, which could have forced Tehran to change course. This approach, from the Israeli perspective, played into Iran's hand while engaging the P5+1 (the U.S., the United Kingdom, France, Russia and China plus Germany) in futile negotiations that have never stood a chance of success.By asking the P5+1 to declare that the talks with Iran have failed, Netanyahu is alerting the U.S. that time is of the essence and challenging Obama to take more decisive actions against Iran. Netanyahu's rationale is that since Obama seeks to prevent an Israeli attack in an election year, he will be under immense pressure from his presidential rival, Mitt Romney, not only to adopt a final set of truly crippling sanctions but tobe clear about his willingness to use force against Iran before it reaches the point of no return or enters the zone of immunity.Netanyahu's message of alarm is directed against the EU, Turkey and China, which will be the most affected by the potential disruption of oil supplies should the Strait of Hormuz become imperiled. Netanyahu and Barak are convinced that the EU in particular is engaged in wishful thinking, believing that continuing diplomatic efforts coupled with stiffer sanctions will force the Mullahs to come to their senses. The EU clearly view Netanyahu as overzealous about Israel's national security, are extremely worried about an Israeli attack and are convinced that the repercussions will be catastrophic. Thus, for them, no attack should be contemplated as long as Iran is willing to continue to talk.Using the repeated Iranian existential threat against Israel, and while observing the Western powers' ineptitude in the past in dealing with the genocide in Bosnia, Sudan and now the wholesale slaughter in Syria, Netanyahu has little faith in what the EU can, or will, do to bring Iran to a halt. The EU, from Netanyahu's perspective, could have done a great deal more to cripple Iran economically but it still has yet to do so. At the same time, the EU refuses to declare Hezbollah, Iran's prime surrogate but Israel's staunchest enemy, as a terrorist organization while it continues to allow Hezbollah to freely raise tens of millions of dollars in Europe, when much of it is used for buying armaments to target Israel.The direct threat against Iran is based on Netanyahu and Barak's calculation that although public discussion about the potential attack on Iran provides Tehran more time to prepare for the worst, it will provide Israel with certain advantages. Fear of an imminent Israeli attack will force the Iranian authorities to take additional security measures to protect their nuclear facilities, which will reveal Iran's preparedness and capabilities, and expose its weaknesses and how much of its boastings of a damaging counter-attack against Israel are in fact accurate. Importantly, Israel will also be in a position to better assess the Iranian public's reaction and whether the rumors of an imminent attack will precipitate panic, which may reveal how the Iranian authorities react and pacify the public. More than anything, Israel wants Iran to take its threats seriously, which explains why Netanyahu and Barak openly stated that when it comes to Israel's national security, Israel must, in the final analysis, rely only on itself. Netanyahu's and Barak's exposé is also intended to warn all those who might think of coming to Iran's aid by engaging Israel on another front (in particular with groups such as Hezbollah and Hamas) that they should think twice before they dare to provoke Israel. By openly discussing their intentions, Netanyahu and Barak want these groups or states to assume that Israel would not have discussed such a sensitive national security matter had it not taken into full consideration their potential involvements. The message to Hezbollah is clear: there will not be a repeat of the 2006 war, Israel will break its back and that this time around no one will come to its aid considering Syria is in shambles and Iran is under intense economic pressure and too busy to deal with the potentially catastrophic effects of an Israeli attack.The other target of Israel's open discourse on attacking Iran is to test the Sunni Arabs, especially the Gulf States led by Saudi Arabia. There have been ongoing tacit discussions between Israel and the Gulf States about the potential Israeli strike and how that might affect both their public reactions and their private interests and concerns. There is no doubt that all Sunni Arab states would prefer to prevent Iran from attaining nuclear weapons peacefully. But after failing to do so by diplomatic means, they would support an attack on Iran's nuclear facilities, whether the attack is carried out by Israel, the U.S. or through a joint effort. Saudi Arabia in particular sees the conflict between Shiites verses Sunnis in terms of regional domination with a focus on the Gulf, and views Iran with nuclear weapons as a nightmarish scenario that must be prevented at all costs. Finally, Netanyahu's and Barak's message was intended for the Israeli public not only to prepare them for a potential Iranian counter-attack but to begin psychological and logistical preparations ( including the distributions of gas masks, stocking underground shelters with food and water) to avoid public panic and rally the nation around the government's prospective actions. Although the Netanyahu government is not dismissive of the voices of the Israelis who consider a unilateral attack as ill-conceived and extremely risky, Netanyahu and Barak want to demonstrate unshakable resolve in the face of an existential threat and that the public can ultimately trust their judgment. Moreover, such an exercise, even if a strike is avoided either because of the United States or because of Netanyahu's/Barak's readiness to act, will be good for Israel and good for the entire region as long as Iran never acquires nuclear weapons.Israel has time and again stated in the past that it will not allow Iran to acquire nuclear weapons or the technology to quickly assemble such arsenals. The Israelis insist that whatever repercussions arise from attacking Iran's nuclear facilities will be far less ominous than allowing Iran to obtain nuclear capabilities, which will have far more reaching geopolitical and security implications that will adversely affect every state in the region.In the final analysis, an Israeli strike on Iran's nuclear facilities may not come as soon as many predict. The strike can and may well happen but it is very unlikely that such an incredibly ominous undertaking will occur without a minimum of U.S. acquiescence, if not outright support and direct involvement. Regardless of how much Netanyahu and Barak may be sure of themselves and Israel's military capabilities, they cannot afford to make any mistakes or miscalculations because Israel's future is on the line.Yet, exactly because of that, no one should think for a moment that Israel is bluffing. Netanyahu and Barak have concluded that diplomacy has run its course and only extraordinary, crippling and immediate sanctions may still have a slim chance of success. Once Israel determines that Iran has either achieved the point of no return or is about to reach the zone of immunity and the U.S. is not prepared to take military action, Israel will attack Iran singlehandedly and no consequences of such an attack, from the Israeli perspective, will fare against such an existential threat.

China's scramble for patents

China's ambitious drive to produce millions of new patents in the next few years as part of a switch from a "made in China" to "designed in China" economic model will curtail innovation standards, a European study warned today.China is seeking to transform itself from being the world's factory floor into a global pioneer by setting ambitious state-mandated patent targets -- a goal that has already resulted in it surpassing the United States last year in patent filings.The European Union Chamber of Commerce said in a report that China filed more than 1.6 million patent applications in 2011, but only 32% met the highest threshold for patent quality - new inventions.The study noted that while China's innovation potential is "impressive", its actual innovation is "overhyped"."This explosion (of patent applications) has come with a price in terms of the quality and mix of patents. This is not in the right direction," European Chamber Secretary General Dirk Moens said.In some cases, financial incentives and performance evaluations for state-owned firms, officials and academics drive the filing of low-quality patents as they seek to meet quotas - 2 million annually by 2015 under one national plan.In addition to inventions, China also gives patents for designs and "utility models", incremental developments that can advance an existing product but rarely result in technological breakthroughs.The United States does not use utility model patents, though some developed countries, such as Germany, do.Sixty-five percent of patent applications filed by medium and large-sized Chinese state-owned enterprises in recent years have been for the lower end design or utility model patents, making them among the country's least effective innovators, the study said."One cannot drive or 'force' creativity, but only nurture it, whereas creativity leading to breakthroughs of the type that typically produce the highest quality patents at best comes in spurts," it said, noting that at least 20 countries have greater innovation potential than the world's second largest economy.But Elliot Papageorgiou, an intellectual property expert at Rouse Legal in Shanghai, said utility model patents are good for China."In developing economies, you're not going to get a new wheel, you're going to get an improved or cheaper wheel," Papageorgiou.Indigenous rules rile foreigners Experts say weak intellectual property rights (IPR) have scared off some foreign firms from transferring technology or filing patents in China. Last year, U.S. Treasury Secretary Timothy Geithner lamented Beijing's lax controls that made possible the "systematic stealing" of American innovations.China has said it would drop some of its "indigenous innovation" rules that have riled foreign companies who say access to government equipment and technology orders hinge on their transferring patents and other intellectual property to Chinese firms or partners.But the EU Chamber study said indigenous intellectual property ownership was still a requirement for firms to access some Chinese government financing and subsidies, with the language writ large into many of the country's more than 10 national and 150 sub-national patents target plans."The essence of the IIP (indigenous innovation policy) system, in terms of setting forth controversial IPR requirements with financial incentives, appears very much still in force," the study said.

NEWS,20.08.2012

ECB: Greek exit viable but undesirable

A Greek exit from the eurozone would be manageable, European Central Bank (ECB) policymaker Joerg Asmussen was quoted on Monday as saying, although he would prefer it if the crisis-stricken country remained within the single currency bloc. He also said that the Bundesbank, whose chief ECB President Mario Draghi singled out earlier this month for expressing reservations over the bank's new bond-buying plans, was not isolated in Europe.The comments on Greece from the ECB executive board member, Germany's deputy finance minister until he took the post at the end of last year, sum up a growing debate in Berlin on the possibility of cutting Greece free. Most would prefer not to, but an increasing number of MPs and influential figures have come out of the woodwork saying the eurozone is strong enough to deal with the fallout. "Firstly, my clear preference is that Greece should remain in the currency union," Asmussen was quoted as saying in an advance copy of an interview due to appear in Germany's Frankfurter Rundschau on Monday. "Secondly, it is in Greece's hands to ensure that. Thirdly, a Greek exit would be manageable."But Asmussen also warned that a so-called Grexit would not be as orderly as some imagined: "It would be associated with a loss of growth and higher unemployment and it would be very expensive - in Greece, Europe as a whole and even in Germany."He also said it would be good if the eurozone's permanent bailout mechanism, the European Stability Mechanism (ESM), successor to the European Financial Stability Facility (EFSF), were up and running as soon as possible."The ESM is a better instrument for dealing with the crisis than the EFSF," he was quoted as saying.Germany's Constitutional Court has said it will deliver its ruling on whether the ESM and the fiscal pact are compatible with the German constitution on September 12. Germany cannot legally ratify the two treaties without the go-ahead from the court and the ESM cannot come into effect without German backing.On eurozone bonds, Asmussen said such common debt was only logical in a full fiscal union and added that they were not crisis management tools.Draghi indicated earlier this month that the euro zone's central bank may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs but not before September and only if governments activated the euro zone's bailout funds to join the ECB in buying bonds.Whether the plan goes ahead at all, however, remains largely a question of whether leaders in Germany, whose own central bank opposes bond-buying, agrees over the course of a series of key meetings next month.Whereas Draghi said that Bundesbank chief Jens Weidmann had been the only ECB policymaker to register reservations against the bond-buying proposals at this month's meeting, Asmussen hinted that the division may not be as clear cut."No-one should try to give the impression that the Bundesbank or its president is isolated," said Asmussen, adding that he and Weidmann worked closely together and trusted each other.Noting that Draghi had not said the new bond-buying programme would be limited in terms of time and volume, the paper asked Asmussen if this meant it could be successful as it would be unlimited."You heard him correctly. But wait and see. We are working on further details of the new programme and we will discuss this at our next meeting," Asmussen replied.

The Unrepentant and Unreformed Bankers

These days, the business sections of newspapers read like rap sheets. GE Capital, JPMorgan Chase, UBS, Wells Fargo and Bank of America tied to a bid-rigging scheme to bilk cities and towns out of interest earnings. ING Direct, HSBC and Standard Chartered Bank facing charges of money laundering. Barclays caught manipulating a key interest rate, costing savers and investors dearly, with a raft of other big banks also under investigation. Not to speak of the unprecedented wrongdoing that precipitated the financial crisis of 2008.Evidence gathered by the Financial Crisis Inquiry Commission clearly demonstrated that the financial crisis was avoidable and due, in no small part, to recklessness and ethical breaches on Wall Street. Yet, it's clear that the unrepentant and the unreformed are still all too present within our banking system.A June survey of 500 senior financial services executives in the United States and Britain turned up stunning results. Some 24 percent said that they believed that financial services professionals may need to engage in illegal or unethical conduct to succeed, 26 percent said that they had observed or had firsthand knowledge of wrongdoing in the workplace, and 16 percent said they would engage in insider trading if they could get away with it.That too much of Wall Street remains unchanged is not surprising. Simply stated, the banks and their leaders have paid no real economic, legal or political price for their wrongdoing and thus have not felt compelled to change.On the economic front, the financial sector has rebounded nicely from its brush with death, thanks to an enormous taxpayer bailout. By 2010, compensation at publicly traded Wall Street firms had hit a record $135 billion.Last year, the profits of the nation's five biggest banks exceeded $51 billion, with their chief executives all enjoying pay increases. By 2011, the 10 biggest U.S. banks held 77 percent of the nation's banking assets.On the legal front, enforcement has been woefully inadequate. Federal criminal financial fraud prosecutions have fallen to a two-decade low. Violations are settled for pennies on the dollar  the mere cost of doing business, with no admission of wrongdoing and with the bill invariably picked up by insurers or shareholders. (When it's shareholders, that's not someone else far away, that's your 401(k), pension fund or mutual fund.) When Goldman Sachs was charged with failing to set policies to prevent insider trading, it was fined $22 million, an amount the bank collects in about seven hours of trading. Goldman's record $550 million penalty for securities fraud in 2010 amounted to less than 2 percent of that year's revenue.On the political front, after a brief stint in the penalty box, the big banks have resumed the political muscling that got them two decades of deregulation.To block reform, the financial industry has spent more than $317 million on lobbying in Washington over the past two years and more than $230 million in federal political contributions in the 2010 and 2012 election cycles.It's been to good effect. Two-thirds of the regulations called for in the financial reform law passed two years ago are still not in place. And the House Republicans, the banks' sturdiest allies, have slashed at the budgets of the Securities and Exchange Commission and the Commodities Futures Trading Commission to impede their ability to investigate wrongdoing.Clearly, the present order is unsustainable. We need to demand fundamental changes now, breaking up the big banks to snap their stranglehold on our markets and our democracy, ensuring that the newly minted financial reform laws are implemented, and wringing out rampant speculation.But true reform can only occur if we root out the corruption that has distorted our banking system and undermined the productive work of the many good people in the financial sector.The system of financial law enforcement is clearly broken. Think of it this way: If someone robbed a 7-Eleven of $1,000 but could settle a few days later for $25 and no admission of guilt, would they do it again?Only enforcement with real consequences will work. That means vigorous pursuit of criminal cases against individuals involved in wrongdoing, the surest method to deter malfeasance.It means enforcement agencies eschewing weak settlements in civil cases and seeking remedies with teeth such as civil penalties, restitution and executives forfeiting their jobs. And, it means tougher financial fraud laws. In that regard, the bipartisan proposal by Sens. Jack Reed, D-R.I., and Charles Grassley, R-Iowa, to increase fines for securities fraud is a place to start.To make any of this a reality, the U.S. Department of Justice and the federal regulators must have the will and the resources to do the job. President Obama has asked for additional funds for the Department of Justice, the SEC and the Commodities Futures Trading Commission. Giving these agencies the tools to detect and prosecute wrongdoing will more than pay for itself  the Commodities Futures Trading Commission's fine against Barclays for interest rate manipulation alone will pay for almost an entire year of that agency's budget.None of these changes will come easily, but this much is clear: We cannot allow Wall Street to continually flout our sense of right and wrong, to erode faith in our legal and political systems, and to put our financial system and economy in jeopardy.

NEWS,19.08.2012

Greece told to trim further €2.5bn

Greece's creditors say it must cut €14bn from its budget in the next two years, €2.5bn more than they originally demanded, German weekly Der Spiegel reported Saturday.The amount was revised upward as a result of the most recent audit mission by the country's so-called troika of bailout lenders, the European Union, the International Monetary Fund and the European Central Bank, Der Spiegel said.Troika auditors visited Athens recently and are expected to return in September, when they have said they will remain for the entire month.Based on that audit, the EU and IMF will decide whether to release Greece's next loan disbursement of €31.5bn.The Greek government is scrambling to slash its budget in order to access the funds, which it needs to keep it from defaulting on its debt and crashing out of the eurozone.Der Spiegel said the troika had ordered the extra cuts because planned privatisations were not shaping up to be as lucrative as hoped and tax revenues were falling short of forecasts as the economy struggled through its fifth year of recession.The auditors also said in a report that the government had so far been unable to show how it planned to reach the €11.5bn in savings it had already pledged to find for 2013 and 2014.

Obama slams Romney on taxes

President Barack Obama hounded Mitt Romney on Saturday, saying his wealthy rival would pay only 1% in taxes on his vast wealth under a plan authored by his running mate Paul Ryan.Obama escalated his effort to use the pick of the conservative Republican congressman last week to drive votes away from Romney in swing states, including New Hampshire, where he was campaigning Saturday."The centerpiece of my opponent's entire economic plan is a new five-trillion-dollar tax cut, a lot of it going to the wealthiest Americans," Obama said. "His new running mate, Congressman Ryan, he put forward a plan that would let governor Romney pay less than 1% in taxes each year, and here's the kicker - he expects you to pick up the tab."The president is demanding that Romney, a former venture capitalist, release more than the two years of personal tax returns he has already promised, and paints his rival as the epitome of a society tilted toward the rich.On Thursday, Romney insisted that he had always paid at least 13% in taxes, but that figure could still be politically damaging as it is much lower than the rate paid by most middle class Americans.Romney, estimated to be worth around $250m, has his income taxed as investment earnings, rather than as an annual salary, hence the lower rate, complicating his campaign to deny Obama a second term on November 6.In his budget proposal, Ryan would eliminate double taxation on interest, capital gains or dividends, reasoning that greater savings would lead to higher productivity and more investment.Romney has however said he would keep taxes on capital gains, interests and dividends at the current rate, but eliminate them entirely for those earning less than $200 000 a year.Obama cited a study by the bipartisan Tax Policy Centre that said that Romney's policies would result in middle class families paying an extra $2 000 a year, while the wealthiest Americans would get a big tax cut.But the Romney campaign said that after the release of new figures showing a rise in the unemployment rates in 44 states, it was not surprising the president was launching another attack."The fact is President Obama wants to raise taxes on private investment and job creators, which will lead to higher unemployment and fewer jobs," said Romney campaign spokesman Ryan Williams."The Romney-Ryan plan eliminates taxes for the middle class on interest, dividends and capital gains and implements pro-growth policies to deliver more jobs and more take-home pay for middle-class families."

 

Another food crisis looms - expert

With drought parching farms in the United States and near the Black Sea, weak monsoon rains in India and insidious hunger in Africa's Sahel region, the world could be headed towards another food crisis.Asia should keep a catastrophe at bay with a strong rice harvest while the G20 group of industrialized and emerging economies tries to parry the main threat, soaring food prices."We have had quite a few climate events this year that will lead to very poor harvests, notably in the United States with corn or in Russia with soja," warned Philippe Pinta of the French farmers federation FNSEA."That will create price pressures similar to what we saw in 2007-2008," he added in reference to the last global food alert, when wheat and rice prices nearly doubled.In India, "all eyes will be on food inflation - whether the impact of a weak monsoon feeds into food prices," Samiran Chakraborty, regional head of research at Standard Chartered Bank was quoted by Dow Jones Newswires as saying.Monsoon rains were 15.2% below average in mid-August, according to latest data from India weather bureau, and Asian rice prices are forecast to rise by as much as 10% in the coming months as supplies tighten.India and Thailand are two of Asia's leading rice exporters.Indian Food Minister Kuruppasserry Varkey Thomas told parliament this month that prevailing conditions "could affect the crop prospects and may have an impact on prices of essential commodities."Despite that warning however, the UN Food and Agricultural Organization expects rice output to slightly surpass "excellent results" recorded last year, though the FAO cut its global forecast for production of unmilled rice to about 725 million tons from its previous figure of 732 million.The world is feeling the onset of the El Nino weather phenomenon, which has a natural warming effect, is active in the western Pacific and expected to last until winter in the northern hemisphere, according to Japanese meteorologists.The US farm belt has been ravaged by the most stifling drought since the 1950s, and the country's contiguous 48 states have just sweltered through the hottest July on record.Corn production is probably at the lowest level in six years, the US Department of Agriculture said, and curtailed production will likely send corn and soybean prices to record highs, it added."Cereal prices have shot up, with an increase in (corn) prices of almost 40% since June 1," strategists at the CM-CIC brokerage noted.Commerzbank commodity experts said high temperatures and drought around the Black Sea "have resulted in wheat crop shortfalls on a scale that cannot yet be predicted with any accuracy."US commodities analyst, AgResource Company president Dan Basse told the Australian Broadcasting Corporation last week that the Australian harvest could play a role in easing the food shortage."We need every metric tonne of wheat and grain the Australian farmers can produce," Basse said. "Anything that the Australian farmer can do to assure or boost his production should be profitable in the year ahead."Jean-Rene Buisson, head of France's national association of food industries (ANIA) said: "All products based on cereals, including meat, will be affected by price increases, not necessarily by September, but definitely during 2013."In China, food prices are considered politically sensitive and account for up to a third of a consumer's average monthly budget, government statistics show.China has reined in inflation as its economy slows however, while its grain output stood at 1.3 trillion tonnes in the first half of the year, up 2.8% from the same period a year earlier.The Financial Times (FT) said concerns over the US harvest had prompted senior G20 and United Nations officials to consider an emergency meeting on food supply, with a conference call on the issue scheduled for August 27.The newspaper cited officials as saying the talks were not a sign of panic but rather reflected the need to establish a consensus to avoid a repeat of the riots and tensions sparked in 2007-08 by spiking food prices.Major concerns include hoarding or export restrictions by food producing countries, along with panic buying by others.Also crucial is the balance between the use of grain as a direct source of food and its role as animal feed or as a basis for motor fuels.FAO director general Jose Graziano da Silva of Brazil called in the FT for the United States to suspend biofuel production programmes to ease the pressure on food resources."An immediate, temporary suspension" of a mandate to reserve some crops for biofuels "would give some respite to the market and allow more of the (corn) crop to be channelled towards food and feed uses," he wrote.A region where food is in chronic shortage is the Sahel region of Africa, where the number of malnourished children is estimated to have hit a new high of 1.5 million as cholera and locusts emerge as new threats, UNICEF has warned.The relief agency World Vision Australia said 18 million people need food assistance in Niger, Mali, Chad, Mauritania and Senegal.