NEWS,07. AND 08.06.2013

Denmark's CEOs bank the most

Denmark's CEOs are leading the field in receiving the highest gross pay levels for those in middle order jobs, although the countries with the highest basic CEO salaries are in the two struggling economies of Italy and Spain.

There are also some signs that companies are converting bonus payments into base salary for senior staff.

The 12th edition of Europe’s most comprehensive review of remuneration levels has just been published by the Federation of European Employers (FedEE).

Pay in Europe 2013 provides median pay figures for 32 job positions in 47 countries and territories ranging from the micro states of Andorra and Liechtenstein to the continents biggest and most populous economies such as Germany and Russia.

The figures are expressed as gross hourly rates and exclude bonus, commission, 13/14th month payments and benefits.

Generally, the differential between Europe’s poorer and higher paying countries is narrowing, although for some countries such as Moldova - where gross hourly pay levels are just 4% of those in Denmark - improvement remains slow.

In fact, nine countries remain with median wages and salaries less than 10% of those in Denmark - Moldova (4%), Belarus (5%), Albania (5%), Ukraine (6%), Bulgaria (7%), Macedonia (7%), Serbia (7%), Romania (9%) and Russia (9%).

Speaking at the launch of this year’s report Robin Chater, secretary-general of FedEE, pointed out that “the pay gap between Denmark the other higher paying states of Liechtenstein, Norway and Switzerland is now closing fast".

In many eastern and southern European states the increased attention of tax authorities is bringing many hitherto unrecorded payments into the formal payroll.

"Although gross salary levels in eastern Europe are rising, the continuation of inflation rates well above the European average mean for many people in countries such as Romania and Turkey real pay levels are failing to improve,” Chater said.

EU, IMF at odds over Greek bailout

The European Commission clashed with the International Monetary Fund on Thursday over their handling of the first Greek bailout, which the IMF said had pushed an extra burden on Eurozone taxpayers by letting Athens delay restructuring its debts.
The Commission, together with the IMF and the European Central Bank, forms the so-called Troika that prepared financial assistance programmes for Greece, Ireland, Portugal, Spain and Cyprus in the three years since the euro zone sovereign debt crisis started.
The IMF said some aspects of the first aid package to Athens might have been handled better, starting with a restructuring of Greek privately held debt already in 2010.
"I think we would all agree that some things could have been done differently," IMF spokesperson Gerry Rice told reporters in Washington. "And I think we would all agree that with our European partners we have learned, and we have adapted."
The European Commission said the first, €110bn rescue for Greece had been put together in extremely difficult circumstances and stressed it had a very different view from the IMF on the feasibility of an early Greek debt restructuring.
"The (IMF) report argues that an upfront debt restructuring in 2010 would have been desirable. We fundamentally disagree," Commission spokesman Simon O'Connor told a news briefing.
Greece restructured privately held Greek bonds only in 2012, imposing losses of more than 70 percent on investors after the country's recession turned out to be longer and deeper than anticipated and reforms were delayed.
"An upfront debt restructuring would have been better for Greece although this was not acceptable to the euro partners," the IMF report said late on Wednesday.
It said the delay only allowed private investors to sell their Greek bonds and shifted the burden to euro zone governments and their taxpayers, who now, being the main creditors of Greece, might have to offer it further debt relief if the country meets agreed fiscal targets.
IMF mistake
The IMF said it, too, made mistakes; it lowered its normal standards for debt sustainability to take part in the bailout and made overly optimistic forecasts for the Greek economy.
The euro zone had asked the IMF to take part in its emergency lending programmes to boost their credibility with markets, undermined by the lack of respect for the European Union's own budget rules among EU governments.
After three years of close cooperation with the single currency bloc on five aid packages, the IMF said their operations would benefit from some changes.
"Options for dividing up work on areas that are not macro-critical should ... be explored," the IMF said in the section of its report entitled "Possible lessons".
"There may also be some scope for streamlining procedures and documents to reduce the burden on the authorities," it said.
European Central Bank President Mario Draghi told a news conference the IMF's remarks should be considered.
"If the IMF decides to do a mea culpa, identifies mistakes that have been made, we have to take this into account in the future," he said, but appeared to distance himself from the IMF's view that debt restructuring should have happened earlier.
"Often ... you judge what happened yesterday with today's eyes. It's always very hard to make ex-post judgments," he said.
Last month ECB Executive board member Joerg Asmussen told the European Parliament that the arrangement with the Troika should eventually be replaced by the euro zone bailout fund and the European Commission. But this was for the future, he said.
"I would not advise to change the Troika system now in the middle of the crisis," he said. "We have no alternative to it right now."
Some Eurozone policymakers, including authorities in Berlin, are unhappy with the fact that the Troika is composed of officials who are not democratically accountable for the tough reforms they prescribe to governments.
"It is clear that the Troika needs to be rethought," said Sharon Bowles, who heads the European Parliament's economic committee. "It is not possible that decisions which strike at the very heart of a country continue to be taken without the proper level of accountability," she said.
Asked about the prospects for future cooperation with the IMF within the Troika, the Commission spokesman said the two organisations had been effective despite their differences in extremely complex circumstances.
"We have different traditions, different approaches to many issues. We have always managed to come to sound and constructive solutions and a way forward. I would not jump to any conclusions if there should be any changes to the way we work together on the basis of this report," O'Connor said.

Inquiry may curb China's thirst for wine

China's rapidly growing urban middle class has fuelled a boom in wine sales over the past decade and offered a lifeline to ailing European vineyards, especially in France.
That lifeline could be jeopardised if Beijing decided to impose tariffs on EU wines, analysts said on Thursday.
"The EU countries were the first to introduce and import wines to China," said Deng Yutian, general manager of importer and distributor Blue Beacon Fine Wines.
"The French government and district trading associations made collective efforts to promote their products, leaving Chinese consumers with a strong first impression," Deng said, adding that other EU wine-producing nations were slower to enter the Chinese market.
"Countries like Italy produce wines that are equal in quality to the French wines, but their sales fall far behind," he said.
France is Europe's biggest supplier of wine to China with exports last year reaching a value of €546m the European Commission's data shows.

Spain and Italy are also among the top exporters.

But China said earlier that it would carry out an anti-subsidy and anti-dumping investigation into EU wine, a day after the commission imposed duties on imports of Chinese solar panels after finding evidence of below-cost selling by Chinese producers.
The Chinese investigation was a cause of "legitimate concern" to French producers, who count on new markets like China's to keep 500 000 people employed, the French Federation of Wines and Spirits Exporters said.
Subsidised
Overall, EU producers shipped 257 million litres of wine to mainland China last year, the EU statistics agency, Eurostat, said.

China was the third-largest consumer of EU wine outside the bloc, behind only the United States and Russia.

Chinese data showed 68% of wine imports came from the European Union.
If China imposes additional duties on EU wines, pushing up their prices, 'new world' wines would gain market share, Deng said.
"The current tariff is around 47%", he said.
If the Chinese investigation concludes that EU wines had been illegally dumped or subsidised, the tariff could increase to about 70%, making EU wines "really too expensive," Deng said.
China is already the world's largest wine market and remains the fastest growing market, according to London-based International Wine and Spirit Research.
Consumption in China rose by 142% from 2007 and 2011 and was forecast to rise by another 40% by 2016, the research group said in a report for the Vinexpo wine trade fair.
Online sales in China accounted for 27% of total wine sales in 2011 and were expected to jump to 47% in 2016 with sales at supermarkets also soaring, the Vinexpo report said.
Avoiding the cheaper wines offered by shops and online retailers, some wealthy Chinese wine drinkers and dealers travel to Hong Kong or Europe to buy high-end vintages.

Thai rice losses lower than reported

Losses incurred by the Thai state budget from its rice intervention scheme are lower than the 260 billion baht ($8.5bn) mentioned by some media but it is too soon to come up with a precise figure, Deputy Commerce Minister Nattawut Saikuar said on Friday.
The government has been buying rice from farmers at a price higher than the market since October 2011. It has given very little information on how much it has bought or how much it has managed to sell, and at what price.
Media have reported various figures for the losses.
One report that the losses had reached 200bn baht ($6.5 in) in the 2011/12 crop year drew a warning about the cost to the budget from Moody's rating agency this week, adding fuel to a political debate and forcing Prime Minister Yingluck Shinawatra to promise more transparency.
Nattawut was speaking at a briefing as part of that initiative. 
($1 = 30.60 Thai baht)

Europe divided on shale gas

European countries are divided on the extraction of shale gas.
This new source has sparked an energy boom in the United States, but its method of extraction, fracking, is controversial because of the risks it poses to the environment.
Exploratory drilling has been allowed and started in some European countries like Poland, but extraction has not yet begun.
The exact quantity of shale gas reserves and their quality have not been established yet.
Nod for exploratory drilling
Poland, Britain, Romania, Hungary and Spain are the strongest advocates of shale gas energy in Europe. They all delivered permits for exploratory drilling. Poland is far ahead with 44 exploratory wells though ExxonMobil pulled out because of disappointing results.
Last December, Britain decided that exploratory fracking can resume.
In Romania, US oil giant Chevron obtained permits to explore on Romanian Black Sea Coast and hopes to do so in the Eastern region of Barlad.
Lithuania recently passed a law allowing Chevron to proceed with exploration and extraction.
While Sweden and Denmark have delivered permits for exploration, shale gas is not a priority in their energy mix.
Countries that said no
France was the first country to ban fracking in 2011 because of the risks for the environment, as did Bulgaria and the Spanish region of Cantabria.
Italy has also said that it has no intention to launch shale gas extraction.
Countries in the middle
Germany has so far refused to allow exploratory drilling, and a move to allow prospecting under tight controls was postponed until after elections later this year.
The Netherlands has issued permits but they are suspended awaiting the results of a government investigation on the potential risks of fracking.
Belgium is conducting scientific studies before issuing any permits.
The Czech Republic is preparing a moratorium freezing for any prospecting for two years.
Austria has no exploratory drilling under way, and permits can be issued only after an environment impact study.
Slovakia, Finland and Latvia have shown no interest in shale gas extraction. In Portugal, exploratory drilling has been abandoned because of a lack of commercial interest.

US, Venezuela meet to mend ties

US and Venezuelan officials will meet soon for talks that could lead to the countries exchanging ambassadors for the first time since 2010, Venezuela's foreign minister said late on Thursday.

The meeting will be "in the next days, probably in Washington", said Foreign Minister Elias Jaua, speaking on the sidelines of the Organisation of American States general assembly meeting here.
Washington and Caracas have had a stormy relationship for years, even as Venezuela exports 900 000 barrels of oil per day to the United States.
Caracas and Washington have been operating embassies in each other's country without an ambassador since a diplomatic spat in 2010.
In one sign of the difficult ties, President Barack Obama has yet to acknowledge the victory of Venezuelan leader Nicolas Maduro - the hand-picked successor of the late leftist icon Hugo Chavez - in the 14 April presidential election.
Maduro won the controversial vote by a razor-thin margin in an election that his rival, centrist Henrique Capriles, has refused to concede.
Jaua did not give a date for the meeting, but told reporters that Venezuela will be represented by its charge d'affairs in Washington, Calixto Ortega.
"I believe there is good will on both sides," Jaua said about the upcoming meeting.
Jaua also downplayed Obama's failure to recognise Maduro's victory. It is "not an issue that matters”, he said.
During his lengthy presidency Chavez regularly criticised US "imperialism" and courted US foes like Iran and Syria.
Jaua, however, said it was the late leader who told Venezuelan officials "that we had to work towards normalising these relations" with Washington.
On Wednesday Jaua met with US Secretary of State John Kerry in Antigua in a first step to mend ties.
Kerry described the meeting as "very, very positive”.
Both diplomats agreed that "we would like our countries to find a new way forward, establish a more positive relationship”, Kerry said.
The Kerry-Jaua meeting came on the same day that Venezuela expelled Timothy Tracy, a US filmmaker who said he was filming a documentary, but who authorities labelled a spy - a charge the United States denied.

Russia ready to replace Austria in Syria

Russia is ready to replace peacekeepers from Austria in the Golan Heights, President Vladimir Putin said on Friday, after Vienna said it would recall its troops from a UN monitoring force due to worsening fighting in Syria.

Austria, whose peacekeepers account for about 380 of the 1 000-strong UN force observing a four-decade-old ceasefire between Syria and Israel, said it would pull out after intense clashes between Syrian government forces and rebels on the border.
"Given the complicated situation in the Golan Heights, we could replace the leaving Austrian contingent in this region on the border between Israeli troops and the Syrian army," Putin said at a televised meeting with Russian military officers.
"But this will happen, of course, only if the regional powers show interest, and if the UN secretary general asks us to do so," he said.
Russia, a long-time ally and arms supplier to Syrian President Bashar Assad, has been trying along with Western powers to bring the warring sides in Syria together into talks, on a solution to the more than two-year-old conflict.
The UN Security Council will meet on Friday to discuss the Austrian withdrawal after anti-Assad rebels briefly seized the crossing between Israel and Syria, sending UN staff scurrying to bunkers before Syrian soldiers managed to push them back.

UN can't accept Russia Golan offer

The United Nations on Friday thanked Russia for offering to replace peacekeepers from Austria in the Golan Heights but said an agreement between Israel and Syria bars all permanent members of the Security Council from the UN observer mission there.
President Vladimir Putin made the offer in Russia on Friday after Vienna said it would recall its troops from a UN monitoring force due to worsening fighting in Syria.
Austria, whose peacekeepers account for about 380 of the 1 000-member UN force observing a 4-decade-old ceasefire between Syria and Israel, said it would pull out after intense clashes between Syrian government forces and rebels on the border.
But UN spokesperson Martin Nesirky said it was impossible for the United Nations to accept the offer from Russia, which along with the United States, Britain, France and China, is a permanent veto-wielding member of the 15-nation Security Council.
"We appreciate the consideration that the Russian Federation has given to provide troops to the Golan," he told reporters. "However, the Disengagement Agreement and its protocol, which is between Syria and Israel, do not allow for the participation of permanent members of the Security Council in Undof."
The departure of the Austrians from the United Nations Disengagement Observer Force is the latest blow to monitoring force. In addition to the increased fighting in its zone of operation, there have been several recent incidents in which Syrian rebel forces detained Undof monitors.
Since 1974 Undof has had the task of monitoring the "area of separation," between Syrian and Israeli forces, a narrow strip of land running 45 miles from Mount Hermon on the Lebanese border to the Yarmouk River frontier with Jordan. The force has helped keep the area relatively stable, UN diplomats say.
Russia, an old ally and arms supplier to Syrian President Bashar Assad, has been trying along with Western powers to bring the warring sides in Syria together into talks on a solution to the more than 2-year-old conflict. A planned Geneva peace conference has been delayed until July at least.
The UN Security Council will meet later on Friday to discuss the Austrian withdrawal after anti-Assad rebels briefly seized the crossing between Israel and Syria, sending UN staff scurrying to bunkers before Syrian soldiers managed to push them back.
Nesirky said a meeting was under way between UN peacekeeping officials and troop contributing countries to find a member state willing to offer monitors to replace the departing Austrians, who make up a third of the force.

Obama defends phone spy programme

President Barack Obama on Friday staunchly defended the sweeping US government surveillance of Americans' phone and internet activity, calling it a modest encroachment on privacy that was necessary to defend the United States from attack.
Obama said the programmes were "trade-offs" designed to strike a balance between privacy concerns and keeping Americans safe from terrorist attacks. He said they were supervised by federal judges and Congress, and that lawmakers had been briefed.
"Nobody is listening to your telephone calls. That's not what this program is about," Obama told reporters during a visit to California's Silicon Valley.
"In the abstract you can complain about Big Brother and how this is a potential programme run amok, but when you actually look at the details, I think we've struck the right balance," Obama said. "There are trade-offs involved."
The Washington Post reported on Thursday that federal authorities have been tapping into the central servers of companies including Google, Apple and Facebook to gain access to e-mails, photos and other files allowing analysts to track a person's movements and contacts.
That added to privacy concerns sparked by a report in Britain's Guardian newspaper that the National Security Agency had been mining phone records from millions of customers of a subsidiary of Verizon Communications.
The two reports launched a broad debate about privacy rights and the proper limits of government surveillance in the aftermath of the 11 September, 2001, attacks in the United States.
Obama, who pledged to run the most transparent administration in US history, said in his first comments on the controversy that he came into office with a "healthy skepticism" about the surveillance programmes but had come to believe "modest encroachments on privacy" were worth it.
Obama said his administration also had instituted audits and tightened safeguards to ensure the programs did not overstep their bounds.
Make choices
"You can't have 100% security and also then have 100% privacy and zero inconvenience," he said. "We're going to have to make some choices as a society."
Obama may be forced to broach the subject during his meetings with Chinese President Xi Jinping at a California summit on Friday, in which US concerns about alleged Chinese hacking of American secrets were expected to be high on the agenda.
While members of the US Congress are routinely briefed by the NSA on secret surveillance programmes, it is not clear how much they knew about the widespread surveillance of private internet activity.
Representative Henry Waxman, a California Democrat, said he thought the administration had good intentions but stressed the programme was "just too broad an overreach."
"I think there ought to be some connection to suspicion, otherwise we can say that any intrusion on all of our privacy is justified for the times that we will catch the few terrorists," Waxman told MSNBC. "Good intentions are not enough. We need protections against government intrusion that goes too far."
The Washington Post said the surveillance program involving firms including Microsoft, Skype and YouTube, code-named PRISM and established under Republican President George W Bush in 2007, had seen "exponential growth" under the Democratic Obama administration.
It said the NSA increasingly relies on PRISM as a source of raw material for its intelligence reports.
James Clapper, the director of national intelligence, said the report contained "numerous inaccuracies," and some of the companies identified by the Washington Post denied that the NSA and Federal Bureau of Investigations (FBI) had "direct access" to their central servers.
Microsoft said it does not voluntarily participate in government data collection and only complies "with orders for requests about specific accounts or identifiers."
Erwin Chemerinsky, a law professor at the University of California, Irvine, said the program was "deeply disturbing" and went beyond what was constitutionally acceptable.
"It is a huge gathering of information by the federal government. The argument that it protects national security is unpersuasive," he said.

NEWS,12.05.2013

G7 to press on with bank reforms

Group of Seven finance officials agreed on Saturday to redouble efforts to deal with failing banks and gave a green light to Japan's drive to galvanise its economy.
British finance minister George Osborne said the finance ministers and central bankers meeting 40 miles outside London focused on unfinished bank reforms, with signs that plans for a eurozone banking union are fraying.
"It is important to complete swiftly our work to ensure that no banks are too big to fail," Osborne told reporters after hosting a two-day meeting in a stately home set in rolling countryside.
"We must put regimes in place ... to deal with failing banks and to protect taxpayers and to do so in a globally consistent manner," he said.
The emergency rescue of Cyprus after a near meltdown in March served as a reminder of the need to finish an overhaul of the banking sector, five years after the world financial crisis began.
Germany has come under pressure to give more support to a banking union in the euro zone. The plan could help strengthen the single currency area, but Berlin worries it may pay too much for future bank bailouts if it signs up to a scheme to wind up stricken lenders.
While the first step to create a single bank supervisor under the European Central Bank - looks set to be in place by mid-2014, a second pillar, a 'resolution' fund to close failed banks, is in doubt. And there is little prospect that a single deposit guarantee scheme will ever see the light of day.
A senior US Treasury official said the talks at the 17th-century Hartwell House zeroed in on the need not just for better bank supervision but also to clean up balance sheets so lending can pick up.
"There was a sense of urgency among the euro area participants," the official said.
German Finance Minister Wolfgang Schaeuble countered that the eurozone was no longer the main risk to the world economy.
As at previous international meetings, Japan escaped any censure for printing money on a scale that has pushed the yen sharply lower.
Osborne said the G7 - the United States, Germany, Japan, Britain, Italy, France and Canada - reaffirmed that fiscal and monetary policy should be aimed at domestic concerns, not currency manipulation.
"We will not target exchange rates," Osborne said. "I would say that the statement by the G7 of earlier this year was a successful statement and one that has been held to."
The yen hit a four-year low against the dollar on Friday , driven in part by Japanese investors shifting into foreign bonds, a move that had been expected since the Bank of Japan unveiled a massive stimulus plan.
But having urged Tokyo for years to do something to revive its economy, other world powers are not in a strong position to complain now that it is doing so. Then there is the fact that central banks such as the Federal Reserve and Bank of England have printed money in the way the Bank of Japan is.
Japanese Finance Minister Taro Aso said the G7 had levelled no criticism at Japan's monetary policy but Schaeuble said there had been "intense discussions" and that the situation would be monitored carefully.
Growth debate
Debate has also heated up about the need for governments to ease up on austerity, something Germany, Britain and Canada view with caution but Washington, Paris and Rome favour.
Osborne said there was less disagreement about whether governments should focus on debt-cutting or growth-boosting measures than is commonly assumed.
"Everyone is clear that there needs to be credible medium-term fiscal consolidation ... We also agreed that there needs to be flexibility," he said. "Growth prospects remain uneven and we can't take the global recovery for granted."
But his suggestion before the meeting that it should consider what more monetary policy could do to support economic recovery appeared to fall on deaf ears.
"There wasn't any call to do more," European Central Bank chief Mario Draghi told reporters after the meeting.
"It is quite clear that all central banks have done a lot, each one within its own mandate. So (the meeting) was just taking note of this ... All of us have really been active."
Several officials from visiting delegations questioned why Britain had called the gathering just three weeks after they and others met at International Monetary Fund meetings in Washington, but Bank of England Governor Mervyn King said the informal nature of the discussions had paid dividends.
"Freed from burden to agree a communique, the principals engaged more with each than I can recall before and as a result genuinely made real progress in taking forward some of the questions and issues that are facing the G7," he said.

Experts cautious over equities rally

Optimism is blowing through stock markets around the world, lifting many of them to record high levels but this contrasts with widespread economic gloom and leads some analysts to wonder if some of it is just hot air.
Records have been created with increasing speed since the beginning of May.
The main DAX index in Frankfurt has reached a new record high level, and the markets in London and Tokyo have returned to the levels reached in October 2007 just before the financial crisis began.
Wall Street in New York is leading the way and sets a fresh record almost every day.
But the stock market in Paris lags behind. The main CAC 40 index has just risen to the level last reached in the middle of 2011 and is far below the record high level of almost 7,000 points set in October 2000, and still trails the 4,332 points registered just before the collapse of Lehman Brothers bank in the United States in September 2008.
Analysts at Swiss Life private investment managers commented recently that the markets "are swimming in the midst of paradox", questioning the strong rises at a time when the global economic situation is a long way from being stabilised and is even deepening in some places, including in Europe.
In financial circles, experts give various explanations for the rise of stock markets in mature economies.
Some hold that it is an artificial bull market driven by huge amounts of money pushed into economies by central banks. Others say that the rises are justified because investors are anticipating a recovery of the world economy and a recovery of those stocks which have fallen heavily.
"The dichotomy between the real economy and the financial sphere is widening and this is worrying," commented Guillaume Garabedian, a portfolio manager at French brokers Meeschaert Gestion Privee.
He held that that stock markets were rising mainly because central banks had been applying highly accommodating monetary policies, reducing their key interest rates, and pushing huge amounts of liquidity into the financial sector.
All classes of assets have been boosted by this, even the riskiest assets such as debt bonds issued by crisis-hit countries in southern Europe which are able to place their bonds despite still being in difficulty.
The rise of asset prices could even lead to a new financial bubble, some analysts are beginning to warn.
At Capital Spreads, Jonathan Sudeira said that "despite the efforts of the central banks, the volume of trading is falling and the high levels reached by some shares is beginning to look unjustified for traders who are being asked at the same time not to take account of the economic situation."
The "bulls", meaning those who think that share prices will continue to rise on a healthy and justified basis, also have their arguments. At the moment, they seem to have the upper hand.
"Extremely favourable" context
Portfolio managers in dealing rooms say that investors are encouraged by signs that the US economy is recovering, by underlying strength of activity in Germany, encouraging statements by the leaders of big companies about the outlook for the end of the year, and by the removal of the risk that the eurozone might collapse.
At French Natixis bank, economist Philippe Waechter said that apart from the policies of the central banks, the situation in the United States, still the guiding light for stock markets around the world, was satisfactory and explained why optimism had lifted the indices.
"There is growth, certainly it is moderate, but it is there and so there is positive anticipation," he said.
He noted that portfolio managers were looking for good rates of return from the shares they hold and consequently were inclined to go for riskier shares which offered higher returns.
In addition, companies which were cautious about trying to expand their businesses, were buying their own shares which pushed up the value of those stocks.
"Overall, we are in a context which is extremely favourable for stock markets," he said.
Garabedian said that the question boiled down to analysing the fundamental causes of the rise.
"Because if the markets are rising for reasons which are not sufficiently viable, the correction will be severe," he warned.

Clinton did not make Benghazi call

A seasoned diplomat who penned a highly critical report on security at the US consulate in Libya that was attacked last year defended his scathing assessment on Sunday but absolved then-Secretary of State Hillary Clinton.

Thomas Pickering, whose career spans four decades, stood by his conclusion in the report that decisions about the consulate were made well below the secretary's level.
His comments during several television show appearances were unlikely to quiet renewed Republican demands for accountability for the attacks in Benghazi that left four Americans dead, including US Ambassador Chris Stevens. Democrats say Republicans are trying to exploit the Benghazi deaths to undercut Clinton, an early favourite for the Democratic presidential nomination in 2016.
"We knew where the responsibility rested," said Pickering, who headed the Accountability and Review Board that investigated the attack, along with retired Admiral Mike Mullen, the former chair of the Joint Chiefs of Staff.
"They've tried to point a finger at people more senior than where we found the decisions were made," Pickering said of Clinton's critics.
Pickering and Mullen's report released in December found that "systematic failures and leadership and management deficiencies at senior levels" of the State Department meant that security was "inadequate for Benghazi and grossly inadequate to deal with the attack that took place."
The Obama administration has tried to move past the controversy, but a steady drip of new information is fuelling Republican claims that the government initially misled the public about the nature of the assault.
The House Oversight and Government Reform Committee last week heard a riveting minute-by-minute account from a former top diplomat in Libya about the two night time attacks on 11 September, 2012. Gregory Hicks, a former deputy chief of mission to Libya, detailed his phone conversations from Tripoli with Stevens.
Hicks and two other State Department witnesses criticized the Pickering and Mullen's review. Their complaints centred on a report they consider incomplete, with individuals who weren't interviewed and a focus on the assistant secretary level and lower.
Cover-up
The hearing produced no major revelation but renewed interest in the attacks that happened during the lead-up to the November 2012 presidential election.
The top Republican on the oversight committee, Republican Darrell Issa, said he wants sworn depositions with Pickering and Mullen. Issa said his panel has not been provided sufficient details on the State Department review, such as a list of everyone the investigators interviewed or a full transcript of those conversations.
"We want the facts. We're entitled to the facts. The American people were effectively lied to for a period of about a month," Issa said.
Republicans are insisting on exploring what happened at the consulate, what might be done to prevent future such attacks and what political calculations went into rewriting talking points the US Ambassador to the United Nations, Susan Rice, used on news shows the Sunday after the attack.
A series of e-mails that circulated between the State Department and the CIA led to weakened - and, in some cases, wrong - language that Rice used to describe the assault during a series of five television interviews the Sunday after the attacks.
"I'd call it a cover-up," said Senator John McCain, a Republican. "I would call it a cover-up in the extent that there was wilful removal of information, which was obvious."
2016 campaign
"I was surprised today that they did not probe Secretary Clinton in detail," Senator Kelly Ayotte said, of the review board.
One Republican eyeing a White House run, Senator Rand Paul, said at a public appearance that he thinks the Benghazi attack "precludes Hillary Clinton from ever holding office".
Clinton's allies said Republicans were looking to weaken her ahead of a potential 2016 campaign.
"This has been caught up in the 2016 presidential campaign, this effort to go after Hillary Clinton," said Senator Dick Durbin, a Democrat. "They want to bring her in because they think it's a good political show and I think that's unfortunate."

NEWS,20.03.2013

UK budget overshadowed by leak

Details of Britain's market moving budget were published on the Internet by a reporter at a London newspaper minutes before the finance minister stood up to give his speech in parliament on Wednesday, prompting calls for an investigation from lawmakers.

A copy of the front page of the London Evening Standard, containing details of economic forecasts, tax changes and borrowing, was published on Twitter at least fifteen minutes before George Osborne rose to his feet.

Some opposition lawmakers waved copies of the page, which had been compiled with embargoed details of the speech, at Osborne while he spoke in the lower chamber of parliament, the House of Commons.

"He almost needn't have bothered coming to the House because the whole budget, including the market sensitive forecasts, were in the Standard before he rose to his feet," Ed Miliband, leader of the opposition Labour party, told Osborne.

"I'm sure he'll investigate and report back to the House," Miliband said.

Osborne's ministry was unavailable for immediate comment.

The newspaper's editor, Sarah Sands, apologised and said the paper's journalists were "devastated" that an embargo had been breached.

"An investigation is immediately underway into how this front page was made public and the individual who tweeted the page has been suspended while this takes place," Sands said.

Sands told the BBC that a young journalist had tweeted a copy of the front page.

The budget is supposed to be kept secret until the chancellor of the exchequer, as the finance minister is known in Britain, briefs parliament on its contents.

In 1947, Labour finance minister Hugh Dalton resigned after divulging details of his budget to a newspaper journalist before his statement to parliament.

Britain sticks to austerity in budget

British finance minister George Osborne stuck firmly to the government's controversial austerity plan as he presented his annual budget to parliament Wednesday, despite a promise to spend on infrastructure to boost a weak economy.

Chancellor of the Exchequer Osborne, whose is facing calls from within his own Conservative party to change course, told MPs that Britain "must hold to the right track" as he outlined his tax and spending plans for 2013/14.

"We are slowly but surely fixing our country's economic problems," Osborne told the nation.

"We have now cut the deficit, not by a quarter but by a third. Despite the progress we have made there is much more to do and today I am going to level with people... It is taking longer than anyone hoped but we must hold to the right track."

This referred to sticking to his so-called Plan A of driving down the record budget deficit inherited from the previous Labour administration in 2010, despite calls from both inside and outside the coalition government to curb massive spending cuts to kick-start the economy.

Osborne's insistence on driving down the deficit comes despite the chancellor announcing that the government was halving its economic growth forecast for 2013.

Gross domestic product (GDP) was expected to grow by just 0.6% this year compared with a previous forecast of 1.2%, according to estimates issued by the Office for Budget Responsibility (OBR).

Economic growth guidance for 2014 was also cut to 1.8% from the previous estimate of 2% that was given in December.

Osborne added that Britain was on course to avoid sinking into its third recession since the 2008 global financial crisis, despite its economy contracting by 0.3% in the final three months of 2012.

In better news, Osborne said infrastructure plans would be backed by €3.5bn a year from 2015-2016, to ensure that the "economic arteries of every part of this country" could benefit.

On the eve of the budget, Prime Minister David Cameron's Downing Street office said some government departments would be made to cut their budgets to save 2.5bn over the next two years.

The money saved between now and 2015 -- the time of the next general election -- would be used on infrastructure spending, a spokesperson said.

The decision is at odds with Business Secretary Vince Cable, who has called on the government to consider borrowing more to stimulate economic growth.

Cable, a leading member of the Liberal Democrats which shares power with the Conservatives, said that the danger of slow growth may now be more damaging than the loss of confidence through increased borrowing.

But Cameron earlier this month insisted that his government, which passed the mid-term mark in January, would stick to the path of austerity despite a turbulent few weeks that saw Britain stripped of its top-level AAA credit rating.

In a further blow to the prime minister, civil servants were Wednesday holding a 24-hour strike in a row over pay and other working conditions.

The Public and Commercial Services union said up to 250 000 of its members would join the walkout, hitting government departments, jobcentres, tax offices, border patrols and courts.

On Tuesday meanwhile, a pool showed that more than four out of 10 voters believe Osborne should be sacked.

Cyprus in limbo after bank levy rejection

Cypriots faced uncertainty on Wednesday after parliament rejected a controversial levy on savings that had been agreed with international creditors as part of a bailout deal.

Lawmakers on Tuesday evening overwhelmingly rejected plans to apply a one-off tax of up to 10% on people's bank deposits, leaving decision makers scrambling on how to avert the Mediterranean island's bankruptcy or exit from the eurozone.

The euro was slightly down on the dollar, while the German stock market lost 0.6% during early morning trading Wednesday.

"The decision was the right one to take, but I would be lying if I said I am not worried - we need help and we need it now," said 50-year-old Michalis Michael, a shopkeeper in central Nicosia.

Banks across the island remained closed as the government and the country's central bank were working on an alternative proposal to find €5.8bn in funds, as requested by the European Union and the International Monetary Fund.

The eurozone, together with IMF, has asked the Cypriot government to raise the amount as part of negotiations for a €10bn package to bail out its banks and shore up the country's public finances.

Banks were not expected to reopen until Tuesday, according to news reports, although no official decision had yet been taken by the central bank.

ATMs have been dispensing cash, while credit and debit cards were working normally, although electronic transfers continued to be blocked, bank officials confirmed to dpa.

For the time being, the European Central Bank has vowed to continue to provide liquidity to the island's banks.

Cyprus' influential Orthodox Church has offered to help, with Archbishop Chrysostomos II saying the church was willing to mortgage its properties to invest in government bonds.

Nicosia was looking to renegotiate its bailout deal, with President Nicos Anastasiades due to meet creditors later in the day.

Meanwhile, Finance Minister Michalis Sarris was in Moscow to see if an existing loan of €3bn taken out in 2011 with Russia could be extended or increased to €5bn.

"We had a good meeting  no decision has been made - discussions will continue later in the day," Sarris said after he emerged from the talks in Moscow.

Anastasiades had a telephone conservation the night before with Russian President Vladimir Putin, whose country holds billions of euros in Cypriot banks.

Reports said Cyprus would attempt to also strike a deal with Moscow for the sale of troubled Popular Bank of Cyprus, known as Laiki, as well as the Bank of Cyprus.

Cypriot state broadcaster RIK said Russia would likely seek compensation for such an investment, possibly in the form of a naval port in Cyprus for the Russian fleet, and access to the country's natural gas reserves.

Anastasiades is also believed to be looking at the option of making use of social security fund reserves, which amount to €5bn, and offering depositors with more than €100 000 natural gas-indexed bonds in return for voluntarily paying a levy.

India's billionaires slow to share riches

They may build skyscraper mansions, travel by private jet and throw sumptuous wedding parties, but it seems India's super-rich are much slower at opening their wallets for charity.

India now has 55 dollar billionaires, the fifth-biggest number in the world, according to a Forbes ranking this month.

But like other emerging economies such as China, its charitable giving still lags markedly behind that in the West where the tradition of wealthy businessmen donating chunks of their fortunes is much more deeply ingrained.

High net worth Indians gave up an average 3.1% of their income to charitable causes in 2011 - up from 2010 but far behind the 9.1% average in the United States, according to global consultancy Bain & Company.

But analysts say the upturn in giving as more Indians get seriously rich is going at a snail's pace.

"The pace for corporate India and especially the new rich giving up its wealth is excruciatingly slow," said Manjeet Kripalani, executive director at Gateway House, a Mumbai-based think tank.

"Corporate philanthropy needs to look at a thoughtful way of scaling up giving," she said.

While impressive growth in the past decade has created a swathe of Indian tycoons, the more recent economic slowdown has compounded the slow take-up of philanthropy, despite a pressing need to tackle widespread poverty.

"Giving is impacted by sentiment, which remains weak at the moment. It is likely to be flat or extremely moderate in terms of growth," said Arpan Sheth, author of Bain's annual Indian study.

The latest report released this month did not give fresh statistics, but said donors were "putting a higher bar on understanding the impact of their giving, before they commit to causes" in the tough business environment.

India's richest man Mukesh Ambani, chief of Reliance Industries and owner of a billion-dollar, 27-storey family home, has criticised Western corporate charity as a "disempowering tool" that "increases dependency".

India does not lack a culture of giving.

Reliance has followed the lead of large industrial groups such as Tata and Aditya Birla, which donate heavily to charity through their own trusts, with projects ranging from healthcare and education to rural infrastructure.

Azim Premji, chief of software giant Wipro, last month gave $2.3bn from his own pocket to the education charity he controls, and he is now considered "Asia's most generous man" by Forbes.

He was the first Indian to join the "Giving Pledge" club, set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet to encourage the world's wealthiest to donate at least half their fortunes to charity.

But the scale of Premji's donation has renewed the debate on why the richest are not giving away more of their wealth.

"Many others haven't demonstrated the same kind of generosity," said business journalist Anand Mahadevan in an Economic Times column.

One explanation from businessmen, Mahadevan said, is that wealth creation is still a recent phenomenon in India compared with countries such as the United States, and philanthropy usually comes further down the road.

Also, Indian charity often takes a more informal form: people might donate to local schools or hospitals in kind, or "give money, hair, gold, to our temples as charity", said Kripalani.

India currently ranks a lowly 133rd out of 146 countries in the latest World Giving Index - down from 91st position in 2011 - based on surveys of charitable behaviour around the globe.

Its far poorer neighbours Pakistan and Bangladesh came in respectively at 85 and 109 in the same survey.

Analysts say a major barrier to giving is not knowing whether donations will produce sustainable results, given the lack of accountability, transparency and impact assessments.

"When we met philanthropists, the message we got was: show us the impact, we will give more," said Anant Bhagwati, co-author of the Bain report, at a conference in Mumbai this month to encourage a greater philanthropic culture.

The trends may be encouraging: last year's Bain survey found more than 70% of donors had less than three years of philanthropic experience and more than a third were 30 or younger.

Manas Ratha, director of the non-profit Dasra group which helps to pair donors with charities, said willing philanthropists were there but needed more guidance.

"A lot of work needs to be done. There is good reason to be optimistic, but we are losing time and opportunity," he said.

Ripples from Cyprus

ONE of the most interesting banking countries in the world is Cyprus, as technically it is still a country at war with its northern neighbour, making it an unlikely candidate for a safe haven.

Cyprus also has the highest private sector debt to gross domestic product (GDP) ratio in the world, which should have set alarm bells ringing to any savers - let alone Russians - who are taking their money to the island.

The Russians too are an interesting bunch in this picture, as many of them are hiding money in Cyprus due to the Russian taxman. President Vladimir Putin is out fighting the European Union for Russian private interests, and not to collect rightful Russian taxes.

A friend said this of Russian money in Cyprus: “I believe that there is a lot of money from Russia that was stolen by members of the previous communist regime and banked in Cyprus.

"There are many exceptionally wealthy Russians living in Cyprus. I wonder what Putin's agenda is.”

Nothing is what it seems in Cyprus as the overall €15bn bailout is very, very small in the bigger €16 trillion EU picture.

Yes, the bailout is less than 7% of the size of that of Greece and would be the smallest country bailout in the EU by far - smaller than some private bank bailouts in 2008. 

Something changed here, and that is that Germany - which has been the major financier of the bailouts -  has an election in September. The citizens are worried that their country’s debt to GDP is staying high at 80%, and that they are picking up the tab for everyone else.

That is one thing; the other is that the never-ending bailouts are starting to get northern Europe in a tangle as country after country in the south has a problem but does not want to fix it.

Italy had an election and those newly elected do not want to fix state overspending; neither actually did the Greeks. The Spanish are also feeling pain, but much is done to avert future social spending cuts which are still needed.

So enter Cyprus: a small EU member which allowed its banking system to rise and rise until it was out of all proportion to its economic size.

It paid 4% plus interest while European Central Bank rates are under 1%, and savers in Germany only get 0.75% a year.

Germany started taxing social pensions to help pay for all the problems, and people with savings in the bank also get hammered as interest rates are very low.

The Finns and the Dutch have also been complaining in recent years about their payments to others, and with the Russians not part of the EU and some making use of guarantees in EU banking systems while evading taxes back home, Cyprus was never going to be such an important country for the EU to bail out.

Britain is not part of the eurozone but is seen by richer members as shouting solutions while not helping to pay for them.

The English are subscribers to the EU with a discounted subscription and many solutions northern Europeans have to pay for via taxes.

They are very, very unpopular at present and you can bet your bottom dollar that the most sane English advice is at least ignored in public.

So when Barclays shouted “fire” about Cyprus, that made the situation worse politically for Angela Merkel.

Yes, the wrong medicine was prescribed - “you get a third of the money from your depositors and we will present the rest”. Savers get hammered, even if Russian, and that makes other weak countries' savers very nervous.

Already, I suppose many in Italy are putting their money in German banks because they now fear a “Cyprus” in their own country. This policy was a mistake.

The problem is that the banking system in Cyprus could now be allowed to collapse, as parliament decided that this savers' tax option was not on. This too would make the rest of southern Europe nervous.

The banks are intertwined and I suspect that this may be a small problem that turns big, like Iceland, the Lehman Brothers, etc. Each of the banks allowed to fail would have assets in other banks, and so the situation would broaden.

But that would still be a small problem  the real issue however is the idea that a country goes back to the Middle Ages, as no money in the banks would result in a cash and barter economy and having all savings tied up for decades would also hurt.

Imagine you are have saving in Italy or Spain or worse, in Greece where banks are dicey and confidence is just coming back. The confidence in southern Europe could go up in smoke again - big time - with knock-on effects into the Middle East, Russia and other weaker European states.

Again, some world growth could get taken away.

The EU has drawn a line in the sand and said to governments and banks"'we will let you fail or make you pay a price".

This actually should have been worked out before the eurozone was established so everyone knew what the rules were, but it is human to make rules up in a crisis.

My feeling is that this was not the time for it, as the world economy was just getting back to slightly faster expansion and better prospects.

If commodity prices fall again as a result of weaker growth if confidence slips again, then I am afraid South Africa’s current account will again get exposed. The rand may dip yet again and inflation will go another few basis points higher, exposing our already extremely low rates. 

Raising rates is something the South African Reserve Bank would be loath to do, but it creeps in and confidence and growth decline here again.

With ongoing wildcat strikes in the Post Office and parts of agriculture, the economy may also stall just as the first signs of higher growth showed up on the BankservAfrica Economic Transaction Index.

How ironic that another small situation is allowed to get big. Policy makers are looking at too many interest groups to make the right decisions.

Is this 2008 all over again? No, please no.

Britain awaits tough new budget

Britain's government was on Wednesday set to unveil plans to grow the country's recession-threatened economy, despite insisting on greater state savings as it struggles to meet its deficit-reduction target.

Finance minister George Osborne unveils his latest tax and spending plans in an annual budget likely to stick firmly to the coalition government's austerity drive, even though the country's economy is sailing close to another recession.

Chancellor of the Exchequer Osborne, whose Conservative party heads a coalition government with the Liberal Democrats, will present his 2013-14 budget to parliament at 12:30 GMT on Wednesday.

Analysts expect Osborne to stick to his so-called Plan A of driving down the record budget deficit inherited from the previous Labour administration in 2010 - despite calls from both inside and outside the government to curb massive spending cuts.

On the eve of the budget announcement, Prime Minister David Cameron's Downing Street office said some government departments would be made to cut their budgets to save €2.5bn over the next two years.

The money saved would be used to on infrastructure spending, a spokesperson said.

"All unprotected departmental resource budgets will be reduced by a further 1.0% a year for the next two years," the spokesman told reporters.

"That will help fund further investment in capital spending which will be announced" in the budget.

He added that spending on health, schools and overseas development aid would be protected, while defence would benefit over the next two years from €1.6bn in underspend in its previous budget allocation.

UniCredit Research economist Mauro Giorgio Marrano said that "any new measures implying an increase in expenditure... will need to be funded by spending cuts and/or higher taxes in other areas, leaving little scope for a significant stimulus to the economy."

Cameron earlier this month insisted that his government, which passed the mid-term mark in January, would stick to the path of austerity despite a turbulent few weeks that saw Britain stripped of its top-level AAA credit rating.

But Business Secretary Vince Cable has called on the government to consider borrowing more to stimulate economic growth.

Cable, a leading Liberal Democrat, said that the danger of slow growth may now be more damaging than the loss of confidence through increased borrowing.

Also on Wednesday, Osborne was expected to revise the government's growth and budget-deficit forecasts to better illustrate Britain's present economic woes.

Markets were also waiting to see whether Osborne uses the budget to announce changes to the Bank of England's inflation target to boost an economy at risk of its third recession since the start of the global financial crisis five years ago.

The chancellor traditionally uses the budget to state the central bank's policy mandate, which for many years has been to meet an inflation target of 2.0%.

Incoming Bank of England governor Mark Carney, the Canadian central bank chief who takes up his role in July, has suggested that economic output might be a better target measure than inflation.

The BoE uses interest rates as a tool to try and keep inflation close to the government-set target, but in recent years it has spiked above 5.0%, hampering economic recovery.

British 12-month inflation rose to 2.8% in February from 2.7% in January, official data showed on Tuesday.