NEWS,06.02.2013

US tightens oil sanctions on Iran

The United States on Wednesday imposed new sanctions on Iran to choke off its oil income, saying it was necessary to increase the pressure on Tehran over its suspected nuclear weapons program.The US Treasury said it was tightening up the list of countries allowed to continue buying Iranian oil without violating the US sanctions regime.Those still permitted to buy Iranian oil will have to retain their payments outside Iran, to prevent Tehran access to the funds, the Treasury said."So long as Iran continues to fail to address the concerns of the international community about its nuclear program, the US will impose tighter sanctions and intensify the economic pressure against the Iranian regime," said US Treasury official David Cohen.The United States also placed sanctions on Islamic Republic of Iran Broadcasting, the government's broadcast authority, and its chief Ezzatollah Zarghami, for censorship and for broadcasting forced confessions of political detainees.

 

US sues S&P over inflated ratings

The US Justice Department said on Tuesday it is seeking at least $5bn in civil penalties from Standard & Poor's for losses due to inflated ratings of mortgage bonds.Announcing a suit against S&P and its parent, The McGraw-Hill Companies, Attorney General Eric Holder said the powerful rating agency knowingly exaggerated the ratings on financial securities, misrepresenting their true credit risk."Put simply, this alleged conduct is egregious and it goes to the very heart of the recent financial crisis," said Holder, flanked by justice officials from several states joining the suit."Today's action is an important step forward in our ongoing efforts to investigate and punish the conduct that is believed to have contributed to the worst economic crisis in recent history," he said.The suit cited S&P's top-grade ratings of dozens of mortgage-based collateralsed debt obligations (CDOs) issued in early 2007 that were in default within one year, some within six months.The defaults dealt billions of dollars in losses to financial institutions insured by the US, some of which collapsed in the 2008 crisis and others, like Citigroup, forced to seek a government bailout."At the very least, we believe conservatively that S&P's actions make it liable for more than $5bn in civil penalties," said US Acting Associate Attorney General Tony West.S&P called the lawsuit "entirely without factual or legal merit," and an S&P lawyer hinted that it was political retribution for the agency's historic downgrade of the US credit rating from triple-A status in August 2011."Is it true that after the downgrade the intensity of the investigation significantly increased? Yes," Floyd Abrams, an attorney representing S&P, said on CNBC television."I'm sure the government would say it has nothing to do with it."Holder, in a news conference, said there was "no connection" between the S&P downgrade and the litigation.The suit, filed in California and backed by a number of state governments, accused the credit rater of knowingly inflating its ratings on CDOs and residential mortgage-backed securities in 2007 in order to win revenue from issuers.S&P was specifically charged with wire fraud, mail fraud and financial institution fraud.The suit cited internal communications in which S&P considered the need to update its analytic models to keep up with the securities in the changing market, only to continue with the weaker models that permitted higher ratings to go through.S&P's modus operandi was to "limit, adjust and delay those updates" to favor issuers and "maintain and grow S&P's market share and profits," the complaint alleges.S&P staff debated how many securities to downgrade as more of the loans came up delinquent and the housing market began to sink. As the troubles became more widely apparent, one S&P analyst likened the situation to "Burning Down the House" in an email, satirizing the market problems with mock lyrics of the famous Talking Heads song."Strong market is now much weaker. Subprime is boi-ling o-ver. Bringing down the house."But at the same time, S&P continued to rate new CDOs "without making adjustments to account for continuing deterioration" in the investments, the complaint alleges. S&P said the Justice Department took statements from internal communications out of context. "There was robust internal debate within S&P about how a rapidly deteriorating housing market might affect the CDOs - and we applied the collective judgment of our committee-based system in good faith," S&P said. "The email excerpts cherry-picked by DOJ have been taken out of context, are contradicted by other evidence, and do not reflect our culture, integrity or how we do business," S&P continued.S&P also argues that it was far from alone in its failure to predict the scale of the housing collapse.But the government has not taken any action against S&P's competitors. Moody's remained quiet on the subject Tuesday, while Fitch told AFP that it has "no reason to believe Fitch is a target of any such action."S&P is a unit of McGraw-Hill, whose shares fell 10.7% on Tuesday after losing nearly 14% on Monday. Moody's lost 8.8%.

Obama unveils plans to avert budget cuts

US President Barack Obama on Tuesday called for a balanced program of stop gap spending reductions and tax reforms to avert punishing multi-billion dollar automatic budget cuts due to kick in on March 1.Obama said the fragile US economy could not afford the hit from huge cuts to defense and other government programs, known as the sequester, and the jobs of Americans should not be held hostage to partisan wrangling in Washington.The president said if Congress could not act on a bigger deficit cutting package by March 1, lawmakers should pass a smaller plan of spending cuts and tax reforms to delay the economically damaging impact of the sequester."There is no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy," Obama told reporters."Let me repeat, our economy right now is headed in the right direction. It will stay that way as long as there aren't any more self-inflicted wounds coming out of Washington."The Congressional Budget Office reported Tuesday that if the sequester is put through, the US budget deficit will shrink sharply this year but that also economic growth will be crunched from 2012's 1.9% to just 1.4%."If all of the fiscal tightening still embodied in current law for 2013 was removed, growth in real GDP would be about 1.5 percentage points higher this year than CBO currently projects," the study said.Obama said his short-term spending would allow the White House and Congress more time to come up with a plan to cut the deficit, which he insists, despite Republican opposition, must include new revenue from higher taxes.The sequester was agreed by the president and Congress last year to be so punishing that it would force Washington's warring political factions to forge an agreement on deficit cuts.But no agreement is in sight, and the cuts have already been put off once, by a short-term deal agreed between Obama and Republicans late last year.House Republican Speaker John Boehner Tuesday blamed Obama for the sequester, which many observers now believe will come into force, despite its punitive impact on defense and social programs and the fragile US economy."We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," Boehner said in a statement."The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years."Cuts due to come into force in March will slash defense spending by $55bn and non defense discretionary spending by $27bn this year, and will have a painful impact on the economy.The Bipartisan Policy Center has warned that a million jobs will be lost by the end of next year caused by a slowdown brought on by the cuts.

Clinton website stokes 2016 speculation

Once again fuelling speculation about whether she will run for president in 2016, Hillary Clinton launched a new website even before she officially stepped down as secretary of state.HillaryClintonOffice.com only features a picture of Clinton without the black glasses she took to wearing in the last few weeks of her reign at the State Department and a contact sheet.But in a nod to her future career and the fierce news buzz which surrounds her, the contact sheet urges visitors to specify whether they are trying to contact Clinton for a scheduling request, or for a media inquiry.According to news reports, the website was registered on Thursday, just 24 hours before Clinton stepped down as America's top diplomat, handing the baton to John Kerry.Clinton has so far said she has no plans to re-enter politics and run in the 2016 presidential elections, saying she wants to rest after two decades in the public spotlight, catch up on reading and spend time with her family.But as the woman dubbed "the rock star diplomat," there is little doubt she will be highly sought after on the lecture circuit and could command substantial fees.In a second bid aimed at ensuring she remains in the public eye, her husband, former president Bill Clinton, and her daughter, Chelsea, sent out a message on Tuesday entitled "Thank you Hillary" that praised her four-year tenure as secretary of state."We couldn't be more proud of what she's accomplished or more humbled by her commitment to making our country and our world stronger, safer, and better," they said in a joint message released by the Clinton Foundation."She's transformed the way we practice diplomacy and taken advantage of global trends - engaging directly with people, embracing technology, and championing economics, education, and energy to improve lives and strengthen communities around the world."The message, emailed to supporters, also called on them to send a message of thanks to Hillary Clinton a move that could add even more names to her already substantial mailing list, vital if she intends to elicit donations for a 2016 campaign.

Obama picks second female cabinet member

President Barack Obama will seek to add another woman to his cabinet on Wednesday by picking business executive Sally Jewell to head the vast interior department, a White House official said. Obama has been criticised for naming middle aged white men to the top jobs in his second term team, but has pledged to promote diversity in his other picks, and has now settled on several prominent females.If confirmed by the Senate, Jewell who heads Recreational Equipment, an outdoors retail chain will succeed Ken Salazar at interior, which manages US national resources, wildlife, tribal issues and national parks."With years of experience managing a nearly $2bn a year company, she will bring to the position integrity, keen management skills, as well as dedication to the department's mission of managing our nation's lands," a White House official said."She believes deeply in the American tradition of preserving our nation's wild places, while also understanding firsthand the inextricable link between conservation and the economy. "She also believes we must be good stewards of our nation's natural resources, underscoring the administration's ongoing priority of expanding safe and responsible energy production," the official said, noting that Jewell began her career as an engineer for Mobil Oil Corporation.Obama had been under pressure to add more diversity to his new cabinet after picking Chuck Hagel, John Kerry and Jack Lew, to serve as the secretaries of defence, state and treasury.In January, Obama nominated high powered New York prosecutor and organised crime buster Mary Jo White to lead the Securities and Exchange Commission to implement his Wall Street reforms.

Media vents North Korea frustration

China should exact a "heavy price" from North Korea if an imminent nuclear test goes ahead, state-run media said on Wednesday in their strongest call yet, but analysts say Beijing appears unable to restrain its wayward ally. The state-run Global Times raised the prospect that the relationship founded on the battlefields of the 1950-53 Korean War, and which Pyongyang has relied on ever since, "might break down" over the issue.That would "be of no benefit to Pyongyang", it said. "North Korea would face an even worse situation, but China could find some ways to compensate for geopolitical losses."The article appeared in both the English- and Chinese-language editions of the paper.But analysts and diplomats said that despite its discontent Beijing was unwilling to carry out meaningful action, leaving the media as its only theatre to display its frustrations.North Korea vowed to conduct its third nuclear test after the UN Security Council condemned its 12 December rocket launch in a resolution that was the product of extensive negotiations with China.The Global Times - which is owned by the People's Daily, the official mouthpiece of the ruling Communist Party has previously urged Beijing to cut off aid if it goes ahead with the blast.But the threats contrast with Beijing's official position of repeatedly urging calm and restraint, and avoiding punitive measures to prevent regional instability.China is widely seen as fearing the consequences of a North Korean collapse, which could send an exodus of refugees across the border and potentially lead to a reunified, US-allied Korea on its border."If North Korea insists on a third nuclear test despite attempts to dissuade it, it must pay a heavy price," said Wednesday's Global Times editorial. "The assistance it will be able to receive from China should be reduced.""China is never afraid of Pyongyang," it went on. "If Pyongyang gets tough with China, China should strike back hard, even at the cost of deteriorating bilateral relations."Stephanie Kleine-Ahlbrandt, the Beijing-based Northeast Asia director for the International Crisis Group, said that "editorials are a great way to let off steam".Although Beijing has long maintained its stance of supporting its unpredictable neighbour, she said, the media provides a way to vent the views of those arguing for a tougher tack."They are really upset," she said. "But there's a higher-order priority."Avoiding instability was China's main concern in the Korean peninsula, she said."Even if they diminish the assistance, they are not going to do it enough to cripple the regime or make a difference," she said. "Beijing is simply afraid of pushing the regime too far."Beijing provides substantial economic support to Pyongyang through cross-border trade and investment, while aid constitutes "just one part of the relationship", she added.The foreign ministry did not immediately respond to requests for comment on reports in South Korea that Pyongyang's ambassador had been summoned for talks "several times".A car bearing diplomatic plates and carrying a North Korean flag was seen entering the foreign ministry on Tuesday.A Western diplomat in Beijing said: "I don't think the Chinese are going to change their policy, even if there is a lot of frustration here about the fact that they can't persuade Pyongyang."The foreign ministry distanced itself from the editorials, with spokesperson Hua Chunying saying that Global Times pieces "are perhaps not that in line" with its positions, and repeating China's call for calm and restraint.China has acted as Pyongyang's main benefactor since the Korean War, providing vital diplomatic support and economic ties to one of the world's most isolated regimes.

President Obama to make first Israel trip

President Barack Obama will go to Israel in March, the White House said on Tuesday, marking his first visit to the staunch US ally since becoming president. While in the region, Obama will make stops in the West Bank and Jordan.Obama and Israeli Prime Minister Benjamin Netanyahu discussed the visit to Israel in late January, when Obama congratulated Netanyahu on his success in Israel's recent election. The White House has not released the date of Obama's trip or details about Obama's itinerary, but Israel's Channel 10 reported that the trip had been scheduled for 20 March."The start of the president's second term and the formation of a new Israeli government offer the opportunity to reaffirm the deep and enduring bonds between the United States and Israel and to discuss the way forward on a broad range of issues of mutual concern, including Iran and Syria," said National Security Council Spokesperson Tommy Vietor.White House spokesperson Jay Carney said Obama would work closely with Palestinian Authority and Jordanian officials on regional issues during his visit to Jordan and the West Bank.Obama's trip to Israel, coming shortly after the start of his second term, could offer an opportunity to repair a notoriously strained relationship with Netanyahu. But the trip is almost certain to raise expectations for the type of peace initiative that eluded Obama and his foreign policy team during his first four years in office. Obama has in the past warned against setting expectations too high for a breakthrough in stalled negotiations between Israelis and Palestinians.Although Obama visited Israel and Jordan while running for president in 2008, he hasn't been back since, drawing intense criticism from some pro-Israel groups who have claimed he is insufficiently supportive of the United States' closest Mideast ally. Other top administration officials, including former Secretary of State Hillary Clinton, have visited, and Clinton's replacement, John Kerry, is expected to travel to Israel on his first Mideast trip.For Obama, the trip might also be a chance to improve his image within Israel, where many view him as not supportive enough of the Jewish state.Netanyahu's office in Jerusalem had no immediate comment on the report of Obama's visit. Hanan Ashrawi, a senior official with the Palestine Liberation Organisation, said the visit was important given Obama's expressed interest in playing a role in Mideast peace efforts."We hope that this is more than just a symbolic visit, but with a clear message and clear commitment to the genuine substance and imperative of peace," Ashrawi said.The announcement of Obama's visit comes at a time of uncertainty for Netanyahu who emerged weakened from January's election but will remain in charge if he can build a governing coalition before the mid-March deadline. The emergence of a new centrist party in Israel's election offered hope to those urging the hawkish Netanyahu to make peace with the Palestinians a higher priority.Negotiations have remained frozen during Netanyahu's previous four-year term, in part because of Israeli settlement construction in the West Bank and east Jerusalem, which the Palestinians claim for their future state.Obama's upcoming trip was a long time in the making. In July, when Republican presidential candidate Mitt Romney was hammering Obama on Israel, Obama's campaign said that if he were re-elected, he would visit Israel during his second term. Then Romney himself made the trip, where Netanyahu hosted Romney as if he were already a world leader. Netanyahu denied backing either candidate but was widely perceived as preferring Romney.But the tenuous chemistry between Obama and Netanyahu was clear from early in Obama's first term. On one visit to Washington, the US-educated Netanyahu appeared to lecture Obama on the pitfalls of peacemaking, and gave a speech to Congress in which he appeared to be rallying support against Obama.For Obama, starting his second term out on firmer ground with his Israeli counterpart could also make it easier to co-ordinate on a number of pressing regional issues of critical concern to both nations. These include Iran's nuclear programme and Syria's ongoing civil war, plus lingering questions about what kind of partner Egyptian President Mohammed Morsi will be in efforts to bring stability to the region."Obama knows that he's going to have a lot of conversations with Netanyahu this year," said David Makovsky of the Washington Institute for Near East Policy. "Those conversations will be easier conversations if Obama connects with the Israeli public and demonstrates what he believes, which is that he has their back."