NEWS,15.10.2012

Softening stance on Greece, Merkel rules out default

Chancellor Angela Merkel has ruled out letting Greece default on its debt, in the latest sign Berlin is softening its stance towards Athens ahead of an eagerly awaited report on its reform progress from the "troika" of international lenders.The German leader signalled that she would be taking a more conciliatory approach towards Greece by visiting the country last week for the first time since the euro zone crisis erupted there three years ago.And over the weekend, comments by several conservative allies of the chancellor provided further evidence that the government has embarked on a delicate policy pirouette.Finance Minister Wolfgang Schaeuble, one of Greece's harshest critics, told a meeting of business leaders in Singapore on Sunday that the country would not go bankrupt - an acknowledgement that Athens will get the 31.5 billion euro aid tranche it needs next month to avert a default.Merkel told a news conference with Panama's president on Monday that she was in total agreement with Schaeuble, and explicitly ruled out any steps  including a Greek insolvency or euro zone exit that might unleash "uncontrollable developments" in the single currency bloc.The change in tone, which helped push down Greek bond yields to their lowest levels in over a year, reflects a reassessment by Merkel of the costs and benefits of her tough public stance towards the euro zone's most vulnerable member.The hard line served two main purposes: it ensured that reform pressure on Greek Prime Minister Antonis Samaras remained high, and it convinced sceptical conservative allies of Merkel in parliament to support her.Now the calculation has changed. With a US election less than a month away and a German vote due one year from now, reducing the risk of turmoil has become the top priority, even if it complicates Merkel's domestic dance.She now looks set to grant Samaras the two extra years he is seeking to hit deficit reduction targets. This will be a tough sell at home, in part because it would tear a new hole in Greece's funding plan.But it is seen as workable as long as Merkel can avoid going to parliament to seek approval for additional loans, on top of those set out in the country's second bailout package."There is a recognition, not just in Germany, that we need to avoid going back to national parliaments for Greece," a senior German official told Reuters, requesting anonymity.Bundling aid an "illusion" Ideas under consideration range from front-loading the loans in the second bailout, to using left-over EU budget funds to plug a Greek hole that sources say could total as much as 30 billion euros.Governments and the European Central Bank have ruled out accepting losses on their existing loans to Greece a solution favoured by the International Monetary Fund (IMF) to fill the Greek gap.Merkel also seems to have cooled on the idea, floated by some German officials, of bundling aid for Greece, Spain and Cyprus together in one final package towards the end of this year."It's an illusion to think we can align these three countries in one package," a second senior German official said. "Things just don't work that way in Europe."Working in Merkel's favour is the support of the main opposition party, the Social Democrats (SPD), for a softer stance on Greece.Her SPD challenger in the 2013 election, Peer Steinbrueck, has come out in favour of giving Greece more time to make savings, reducing the domestic risks for Merkel of that course.There are also signs that doubters in her own coalition are prepared to go along if a divisive debate in the Bundestag can be avoided. Rainer Bruederle, leader of the Free Democrats (FDP) in parliament, said on Monday that there was a readiness within the government to give Greece another chance.Until he struck a softer tone in Singapore, Schaeuble was seen by many outside of Berlin as the biggest obstacle to agreement on a range of euro zone issues - from aid for Greece and Spain, to European banking supervision and direct recapitalisation of banks via the ESM rescue fund."There have been several instances when he was clearly speaking for himself and not for the German government," one senior EU official said. "He seems to be trying to limit Merkel's room for manoeuvre."Two senior German officials agreed with that assessment, saying Schaeuble was worried about Merkel making too many compromises, and therefore felt the need to come out strongly in public to defend what he saw as German interests."If Merkel wants to give Greece additional money without new steps in return, then she will have to give Schaeuble a clear order to do it," one official close to the minister told Reuters earlier this month.Whether that order has indeed come down is unclear, but Schaeuble now seems to have got the message.

Brics 'need political reform for growth'

The world's five emerging economic powerhouses will experience significantly slower growth if they delay in implementing key political reforms, according to a report released on Monday by Germany's Bertelsmann foundation. The report said the five Brics countries Brazil, Russia, India, China and South Africa must focus on creating competent and stable political institutions and improving their education, health and judicial systems in order to achieve sustainable growth. Brazil, which the report says has halved incidences of extreme poverty and moved 20 million people into the middle class in the last decade, was called "the most promising of the Brics states" because of its institutional reforms and infrastructure improvements. The "worst-performing" country in the comparative study was Russia, which suffers from "a unilateral economic strategy, patronage and the lack of involvement of civil society." It said Russia must diversify its economy by overcoming its reliance on natural resources. The Bertelsmann report, titled "Sustainable Governance in the Brics," said the results for China were "ambivalent" as the country grapples with problems related to demography, social inequality and pollution. India too is plagued by "enormous regional and social imbalances," as well as infrastructure shortfalls and widespread corruption, which hinder growth. The report lauded South Africa for its economic stability, reduction of state debt and strengthening of social welfare policies, but said it held a "middling" position within the Brics, due in large part the poor performance of its education system and labour market. It has the highest level of social inequality in the grouping. The five countries are home to 42% of the world population and make up some 18% of global gross domestic product (GDP). Goldman Sachs, the investment group that coined the Brics acronym in 2001, forecasts the countries to account for some 40% of global GDP by 2050

World's best paying jobs

What jobs offer the highest pay? Investment banking is up there. So is specialist surgery. But consider this. Slightly over twenty years ago, Johnathan Roberts started work on an oil rig at $5 an hour. Today, the newly appointed operations manager of Norway's Standard Drilling makes about half a million dollars a year.Even accounting for inflation, it's a huge jump for the 45-year-old American. Salaries on oil rigs have soared because of a global boom in offshore drilling.Managers and workers are scarce in this specialised industry, where the work is intense and the job involves living on a platform in remote seas for weeks. For new players in Asia, where the energy demands of booming economies are driving a foray into offshore drilling, the costs and availability of skilled workers will be a big restraining factor."The amount of money they are making an hour is just mind-boggling now, just five years ago they were making just half that," said Roberts, who moved to Singapore this year from Texas. He said his pay more than doubled in 1999 when the industry faced a labour shortage like the one that appears to be emerging.The increasing demand for oil and gas is pushing energy companies to explore frontier areas like the Arctic and new offshore zones given that output from accessible fields is declining. Global oil demand has risen 14% in total to 88 million barrels per day (bpd) in 2011 from 2001, according to the BP annual statistical review. Rapidly growing economies have accounted for much of the increase - consumption in China doubled in the same period to 9.76 million bpd. Energy and mining offer good salaries, said Wyn James, a Singapore-based Briton who left a career in banking this year to open Zhen Global, a firm that recruits and places workers in mining and oil extraction."What we are seeing now is an acute shortage of people actually with applied skills, from engineering or chemical backgrounds," James said. "Even if the skills do exist globally, they don't necessarily exist in the place that is needed. So what we are doing is we are picking up people from all corners of the world and we are sticking them into projects, whether it's short-term or medium-term, but where they can earn reasonable money, live in a different country, live offshore, whatever that may be."Global trendDeepwater drilling, one of the most difficult but most lucrative parts of the extraction business, has mainly been centred in the Gulf of Mexico. But in the past decade, Brazil has become a key player, exploring untapped reserves in the Santos basin as far away as 300 km southeast of Sao Paulo, and at depths of over 1,500 metres. That drive is sucking in hundreds of rig operators, drillers, engineers and other technicians.On the other side of the world, China National Offshore Oil Corp (CNOOC) aims to build capacity to produce one million barrels per day of oil equivalent in deep waters offshore China by 2020.India, Asia's third-biggest oil consumer, is also expanding into the deep waters of the Bay of Bengal. There were 540 offshore oil rigs in the world last year and, by the end of 2012, the number should rise by 51 to 591, says Faststream Recruitment, a UK-based firm that specializes in hiring for the shipping, oil and gas industry.It is the biggest jump for any year in the past decade, said Mark Robertshaw, managing director of Faststream. In 2013, the number will grow by 28 to 619.The increase would mean more than 11 000 new jobs over the next 12 to 18 months from a total of 117 000, based on an average need of about 184 jobs on one rig, he said."If you consider that over the past 10 years, the annual number of rigs under contract has grown to average 539 during 2011, it becomes apparent that offshore employment for workers actually housed on floaters and jackups will spike significantly," Robertshaw said.Roustabouts and roughnecksThe labour crunch has already seen pay for a roustabout, the least skilled worker on a rig, nearly double in the past five years to $18-$20 an hour. A roughneck, a rank higher, earns about $27-$28, said Roberts, the US rig manager. "When the rousta gets a raise it doesn't just stop there," he said. "It goes all the way to the top."A rig operates on 12-hour shifts and typically workers do 14 days and then rotate out for a break for another 14 days.The schedule puts off many and with salaries in IT and other industries growing, an engineering graduate or technician has other options."Skilled labour is becoming difficult to find," said Scott Kerr, chief executive of Norwegian deepwater drilling company Sevan Drilling.The salary increases show up on balance sheets. For Keppel Corp., the world's largest rig builder, wages and salaries surged 27% to $1.43bn by 2011 from 2007, while the number of employees increased 5.7% over the same period, according to its annual reports. Nearly 90 percent of staff work in the oil rig division. Besides pay, companies try to attract talent with career opportunities."An engineer does not need to stay an engineer all his life. I was trained as a naval architect and I practised for a few years, but beyond that I was in management," said Choo Chiau Beng, chief executive of Keppel Corp."In some respects, being a highly paid CEO has attracted people to Keppel, because it shows you don't need to be a lawyer to be highly paid, you can be an engineer and be highly paid."For rig men like Roberts, the money is not to be sneezed at."After clearing taxes, my first check after one week was $167," he said. "My first apartment was very small, it was a little bitty one bedroom studio."Today, Roberts owns a home in a community in Texas that has manicured lawns, landscaped gardens and four golf courses. He is saving to buy a $2m ranch."I didn't come up with a silver spoon in my mouth, I came up working through the ranks," he said.