NEWS,15. AND 16.02.2013

Foreign investors set to sue Spain

Foreign investors in renewable energy projects in Spain have hired lawyers to prepare potential international legal action against the Spanish government over new rules they say break their contracts.It is unclear how much claims might be worth, but international funds have more than €13bn of renewable energy assets in Spain and say that the government has reneged on the terms of their investment.The Spanish Parliament approved a law on Thursday that cuts subsidies for alternative energy technologies, backtracking on its push for green power.That measure, along with other recent laws including a tax on power generation that hit green energy investments especially hard, will virtually wipe out profits for photovoltaic, solar thermal and wind plants, sector lobbyists say.International commercial law firm Allen & Overy on Thursday that it is representing a group of investors in concentrated solar power plants in relation to potential claims under the international Energy Charter Treaty."International investment funds are consulting with legal advisers on how to proceed with action. There will be various lawsuits," Luis Crespo, secretary general of Spain's solar thermal association.He said that investors from the United States, Japan and the United Arab Emirates are among those pursuing action through the Brussels-based Energy Charter, an internationally ratified treaty that binds members to rules on energy and arbitration.Allen & Overy is already handling an earlier claim against Spain, filed in 2011 on behalf of photovoltaic investors. The investors it is representing for potential new claims are in the solar thermal industry.Spain's Industry Minister Jose Manuel Soria defended the law in Parliament on Thursday, saying that the measures were necessary to eliminate the accumulated €28bn tariff deficit in the electricity system.That deficit, built up through years of the government holding down electricity prices at a level that would not cover regulated costs including renewables premiums, is at the heart of Spain's energy sector woes.A spokeswoman for the ministry said that its policy was not to comment on legal issues."I don't know why anyone would put another penny in investment in the sector in Spain," said one leading investor whose firm is studying possible claims.The same source, who asked to remain anonymous, said that the reforms could drive some solar industry projects, particularly ones that are highly leveraged, into bankruptcy.Foreign investors poured money into Spanish wind and solar projects, drawn to generous subsidies during a decade-long economic boom that helped the country to become one of the biggest markets for investments in green energy.The problem was that the cost of the subsidies were not passed on fully to consumers because that would have pushed prices to unprecedented highs.Spanish companies such as Acciona and Abengoa have also been hit hard by the new rules, but because it is passed as a decree by the government, Spain-based companies have virtually no form of appeal and will not join the claims being studied by foreign investors.Listed foreign companies with investments in the sector include Germany's E.ON and Japan's Mitsubishi and Mitsui, several sources from the energy sector said.Some of the funds planning legal action are also among the 11 investors who sent a letter to Prime Minister Mariano Rajoy in July to complain of another energy reform with a retroactive impact on investments, the sources said.

 

EU finance trade tax applicable globally

A financial transactions tax to be adopted by 11 EU states should raise €30-35bn each year but the levy will apply worldwide, the European Commission said Thursday, sparking a sharp reaction from opponents led by Britain.The Financial Transaction Tax (FTT) imposes a tax of 0.1% on a trade in shares and bonds, and of 0.01% for derivative instruments.The Commission said that if any of these investments originate in one of the 11 FTT states, then they can be taxed wherever they are traded, giving them a global reach.The British government, which led opposition to the original 2011 proposal on concern over its impact on the giant London financial centre, said this "unilateral (tax) ... will hit growth for the countries taking part, which is why Britain was right not to participate in such a measure."Business organisation the Institute of Directors in London was scathing, rejecting any suggestion the 11 EU states could enforce the tax in Britain, which like all EU members, retains full national control over taxation."This is a daft idea which will throw grit in the wheels of the market, catching not just banks but also customers, pension funds and businesses," said Simon Walker, head of the group."Any attempt to extend it to the UK by the back door would violate the (EU) single market. We are fully entitled to transact business in financial products issued in France, Germany or the other countries on our own terms, under our own tax regime," Walker added.After failing to get support from all 27 EU states, France and Germany pushed ahead with the tax under the EU's Enhanced Cooperation procedure and they were joined by Austria, Belgium, Estonia, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.EU finance ministers last month cleared the tax, seen as a way of clawing back state money spent in propping up the banking sector during the debt crisis.EU Tax Commissioner Algirdas Semeta said the FTT "is an unquestionably fair and technically sound tax, which will strengthen our Single Market and temper irresponsible trading."Asked by reporters how the FTT could apply to countries refusing to sign up, Semeta said he saw no problem and that discussions would resolve such issues.The FTT has three main objectives, Semeta said in a statement, firstly strengthening the EU Single Market by "reducing the number of divergent national approaches to financial transaction taxation."Secondly, it will ensure that the financial sector makes a fair and substantial contribution to public revenues. "Finally, the FTT will support regulatory measures in encouraging the financial sector to engage in more responsible activities, geared towards the real economy," he said, highlighting the political drive to make the financial sector pay for some of the excesses blamed for causing the debt crisis.The statement said the FTT will to be based on a "residence principle" which could have far-reaching implications"This means that the tax will be due if any party to the transaction is established in a participating Member State, regardless of where the transaction takes place," it said.The "residence principle" is expressly aimed "to safeguard against the relocation of financial transactions," according to background notes provided.The tax will also incorporate an "issuance principle" as a further safeguard against avoidance of the tax, the statement said. "This means that financial instruments issued in the 11 Member States will be taxed when traded, even if those trading them are not established within the FTT-zone."Supporters of the tax such as Oxfam pressed for speedy adoption of the FTT."The smart design and the scope of the FTT ... will make it difficult for financial institutions to avoid or evade the tax," the charity said in a statement."It is vital that this proposal is adopted in full to ensure the financial sector contributes its fair share to the costs of the crisis, which is hurting hundreds of millions around the world."

The FTT proposals now go to the European Parliament and EU leaders for approval.

 

Gold demand losing its glitter

Demand for gold fell last year for the first time since 2009 as Asians bought less jewellery and Western investment dipped, the World Gold Council said in a report.Gold output fell by 21.2% in volume terms in December, Statistics South Africa said on Thursday.The WGC, which is funded by the gold industry, said on Thursday that gold consumption was expected to be steady this year but added that it may be some time before it revisits the high levels seen in the worst of the financial crisis."It's hard to see a major move up in demand (this year). I know there are bears out there who are starting to call the end of the bull market in gold, but we don't agree," said the WGC's managing director for investment, Marcus Grubb. "Demand will remain high, but we're talking small single-digit (percent) numbers in terms of growth from the current tonnage level," he said.In 2012 demand was down 4% from the previous year's total, the WGC report said. "The tonnage last year was 4 405 tonnes for consumer demand, and if you add in over-the-counter demand, it's another 100 tonnes higher," Grubb added. "We would expect 2013 to be quite similar."Grubb said he saw gold prices, which have traded between $1 625 and $1 695 an ounce this year, staying in their current trading range, although events that could destabilise the market, such as US budget talks, could push them higher.The gold price is down 1.4% so far this year after posting its biggest quarterly drop since 2008 in the last three months of 2012. Credit Suisse, Goldman Sachs and GFMS have all forecast a turn in gold's bull cycle this year."Unless something major changes in the macro landscape, this (report) does back up the idea that investors' attention is much more focused elsewhere at the moment," Credit Suisse analyst Tom Kendall said. Jewellery demand fell 3% last year to 1 908.1 tonnes, with the biggest absolute drop noted in India, the largest gold consumer, where a weak rupee led to record-high local prices.In the fourth quarter it rose 11%, however, helped by a 35% rebound in Indian jewellery demand. "Jewellery could have a good year in 2013," Grubb said. "Western demand might at last improve as the US economy and others improve."China, the second-biggest gold buyer behind India, saw a 1% drop in jewellery demand to 510.6 tonnes, its first annual decline since 2002.Overall demand was flat in China in the full year and fell 12% in India, although buying rose in the final quarter as buyers scrambled to avoid a widely anticipated rise in import duty that was announced in January."Provided we see no more increases in import duty, we still think we will see India continue to recover from what was a difficult year in 2012 overall," Grubb said. He said a higher number of auspicious gold-buying occasions in the first quarter of 2013 would probably favour the metal.When you look at the full year, we're anticipating that we'll see 865-965 tonnes of demand," he said. In China, demand is expected to recover to between 780 and 880 tonnes this year, against 776.1 tonnes last year."The jury's out on a major re-acceleration of growth in Chinese gold demand," Grubb said. "Last year we saw the first significant slowdown in the Chinese economy in years. That did affect these numbers. What you're seeing in January and February is a re-acceleration in the Chinese economy."Buying by various central banks continued its upward trend to hit a 48-year high at 534.6 tonnes. Grubb said he expected the official sector to match last year's buying in 2013, partly because monetary easing by developed countries was undermining confidence in the value of currencies."Emerging country central banks regard quantitative easing policies as divisive and (believe they) affect the value of the assets that they hold - the dollar and euro, for example," he told at the Global Gold Forum."They are diversifying away from traditional currencies and buying gold as a hedge." Bar and coin investment fell sharply in the United States and Europe last year, with US offtake dropping by more than a third and European buying down 29%. Overall investment demand last year fell 10% to 1 534.6 tonnes. Investment via gold-backed exchange-traded funds rose, however, with ETF demand up by more than half at 279 tonnes."Overall for the year (coin and bar demand) was weak, and it reflects the fact that in Europe the announcements by the European Central Bank took away tail risk in the mind of the investor," Grubb said."The announcement of (bond-buying) in Europe and quantitative easing in the United States also mitigated fears of a near-term crisis, and I think that's why bar and coin demand fell. Institutional investors and private wealth took a different view you see the ETF tonnages went up 51 percent and over-the-counter (demand) had a strong year." He said while more optimism over the outlook for the global economy was likely to encourage investment in other assets like stocks, the fact that much of that was driven by extremely loose monetary policy meant gold investment was unlikely to fall."Investors are trying to call a turn in the asset cycle," Grubb said. "The jury's still out on whether this will be the year when it actually happens. Even if you do start to look at the world more optimistically in 2013, it doesn't mean there isn't a role for gold in your portfolio."

US jobless claims drop

The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a continued steady improvement in labour market conditions.Initial claims for state unemployment benefits dropped 27 000 to a seasonally adjusted 341 000, the Labour Department said on Thursday. The prior week's claims figure was revised to show 2 000 more applications received than previously reported.Economists  had expected claims to fall to 360 000.A Labour Department analyst said claims for Illinois and snowstorm-hit Connecticut had been estimated.Nevertheless, because most claims are filed online, the blizzard that slammed the East Coast appeared to have little effect on the broader claims data, he said.While companies are no longer aggressively laying off workers, they appear to be in no hurry to step-up hiring against the backdrop of still lackluster demand.The economy has struggled to grow much more than 2% since the 2007 to 2009 recession ended.ob gains averaged 181 000 per month in 2012, far less than the at least 250 000 that economists say is needed to significantly reduce the ranks of unemployed.The four-week moving average for new claims, a better measure of labour market trends, rose 1 500 to 352 500.The prior week's drop to a near five-year low was probably exaggerated by difficulties at the start of the year smoothing out the data for seasonal fluctuations.The number of people still receiving benefits under regular state programs after an initial week of aid dropped 130 000 to 3.11 million in the week ended February 2. That was the lowest level since July 2008 and could reflect people exhausting their benefits.So-called continuing claims had hovered around 3.2 million since late November and economists had viewed that as an indication of little change in the unemployment rate. The jobless rate rose 0.1 percentage point to 7.9% in January.

Eurozone falls deeper into recession

The eurozone slipped deeper into recession in the last three months of 2012 after its largest economies, Germany and France, shrank markedly at the end of the year.It marked the currency bloc's first full year in which no quarter produced growth, extending back to 1995. Economic output in the 17-country region fell by 0.6% in the fourth quarter, the EU's statistics office Eurostat said on Thursday, following a 0.1% drop in output in the third quarter.The drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4% drop in a poll of 61 economists. For the year as a whole, gross domestic product (GDP) fell by 0.5%.Within the zone, only Estonia and Slovakia grew in the last quarter of the year, although there are no figures available yet for Ireland, Greece, Luxembourg, Malta and Slovenia. The big economies set the tone. Germany contracted by 0.6% on the quarter, official data showed, marking its worst performance since the global financial crisis was raging in 2009.France's 0.3% fall was also slightly worse than expectations. Worryingly for Berlin, it was export performance the motor of its economy that did most of the damage although economists expect it to bounce back quickly. "In the final quarter of 2012 exports of goods declined significantly more than imports of goods," the German Statistics Office said in a statement.The euro hit a session low against the dollar after the weaker than forecast German reading and dropped again after the release of full eurozone figures. Back revisions to the French figures showed its output fell by 0.1% in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last twelve months.While the European Central Bank's pledge to do whatever it takes to save the euro has taken the heat out of the bloc's debt crisis, even its stronger members are gripped by an economic malaise that could push debt-cutting drives off track.French Prime Minister Jean-Marc Ayrault acknowledged for the first time on Wednesday that weak growth was putting his government's deficit goal for 2013 out of reach.Economists say the eurozone may also shrink in the first quarter of 2013 although more resilient Germany is expected to rebound."The chances that the (German) economy will return to growth at the beginning of this year are very good. The early indicators are all pointing upwards," said Andrea Rees, chief German economist at UniCredit."The question is how strong the first quarter will be. We expect growth of 0.3% but it could be more."Dutch GDP dropped 0.2% over the quarter, keeping it in recession, while the Austrian economy shrank at the same rate.For the more embattled members of the currency bloc, matters are of course worse.Italy suffered its sixth successive quarterly fall in GDP his time by a sharp 0.9% putting it into a longer slump than it suffered in 2008/2009.Its recession has been deepened by austerity measures that outgoing Prime Minister Mario Monti introduced to stave off a debt crisis.With an election due on February 24/25, all sides in a three-way race between Monti's centrist bloc, Pier Luigi Bersani's centre-left coalition and Silvio Berlusconi's centre-right are pledging to cut taxes to try to kickstart economic growth.Spain, the eurozone's fourth largest economy, released figures two weeks ago which showed it remained deep in recession after a 0.7% contraction in the fourth quarter.Madrid is also pressing on with harsh austerity measures to cut its debt but may be given more time to meet its deficit targets by the European Commission if its economy worsens further.There are signs that countries like Spain are starting to benefit from harsh internal devaluations marked by wage falls and job losses aimed at making companies leaner and more productive.The ECB predicts the eurozone will pick up later in the year although its currency, if it keeps strengthening, could quickly snuff out any of those hard-won competitive advantages for its high debt members.More recent data for January have already suggested some upturn in the first months of 2013, in the bloc's stronger members at least, and if improvement comes it is likely to be seen in Germany first."The debt crisis has ebbed significantly and the global economy has turned up," said Joerg Kraemer at Commerzbank. "Therefore all the important early indicators for Germany are pointing upwards. I expect noticeable economic growth again in the first quarter."

Dubai to build giant Ferris wheel

Dubai's ruler approved a $1.6bn island development project that would be home to what's billed as the world's biggest Ferris wheel.The project reflects a renewed appetite in Dubai for extravagance as the economy rebounds from a debt-driven slump during the past three years.The official WAM news agency said Wednesday that the Ferris wheel, dubbed the Dubai Eye, will stand 210 meters (688 feet), exceeding the London Eye's 135 meters (443 meters). Construction is set to begin this year.Dubai has proposed a series of mega projects reminiscent of its boom years before the downturn hit in 2009. The projects include theme parks and a satellite city named for Dubai's ruler, Sheik Mohammed bin Rashin Al Maktoum.

Strikes cripple German airports

A strike by security staff over pay hit two key regional airports in Germany for the second day in a row on Friday and was set to resume next week.At Hamburg airport, 147 flights were cancelled out of a total of 358 scheduled for Friday, a spokesperson for the northern German airport told AFP.The day before some 117 departures and arrivals had been cancelled in Hamburg.At Cologne/Bonn airport in the west of Germany, 107 flights were scrapped, or more than half of those scheduled for the day, according to a statement on its website.The Verdi services union called the strike for security staff responsible for checking passengers and hand luggage, in a dispute with management over pay deals.The union said the strike would be suspended over the weekend before resuming Monday.On Thursday, Duesseldorf airport had also been affected by the walkouts.

Luhabe: World needs economic revolution

In a world rife with inequality and unemployment there is a crying need for a new breed of entrepreneur who can combine profit with a social conscience, said acclaimed author and social entrepreneur Wendy Luhabe.Speaking at the Entrepreneurs Unite conference which took place in Stellenbosch this week, Luhabe said: "The global economy is at a crossroads in most parts of the world."We are experiencing an explosion of extreme wealth and inequality, and the confluence of these two factors is making it impossible to tackle poverty and address many vested interests in the economy."Luhabe pointed out that the widening gap between the top 1% and the rest of society - as well as the inequality of resource allocation and opportunity - are at their highest levels since the time of the Great Depression. Little wonder then that the World Economic Forum identified inequality as a global risk for 2013.But market forces, said Luhabe, do not exist in a vacuum. "We shape them by the decisions that we make... we shape them with poor leadership or we even shape them with moral bankruptcy."She lauded Brazil one of the world's fastest-growing economies for shaping market forces "in ways that have lowered inequality while creating more opportunities and higher growth".The worldwide trend of shrinking employment is not likely to change, said Luhabe. "We need an economic revolution therefore that can produce a new dynamic and innovative generation of entrepreneurs, but who in addition to creating great enterprises is prepared to determine a new socioeconomic contract. "The education system worldwide, said Luhabe, is "totally out of alignment with the reality of the 21st century". She identified inequality, unemployment and education as this century's biggest timebombs. "Time is running out," cautioned Luhabe. "The world needs a different economic logic where human capital, social and environmental objectives become a top priority. "Turning to Africa, Luhabe said the International Monetary Fund believes the economy of the continent has the potential to outstrip Brazil's growth over the next five years. "Much of that growth will come from startups which will bring the mobile internet to consumers" and businesses which until recently have not had internet access, said Luhabe. She further identified e-commerce, health and education as areas primed for growth."There is an entirely new generation of entrepreneurs that are changing the face of Africa.... Moral of the story is therefore that the future of the global economy will be shaped by entrepreneurs who are sensitive to the social challenges that exist in their environment."They will have the ability to create sustainable businesses which are profitable yet at the same time address social challenges, said Luhabe.

ECB officials rebuff FX targeting

The head of the European Central Bank and its two German policymakers pushed back against political pressure to target the euro's exchange rate ahead of meeting of Group of 20 financial leaders on Friday.Speaking ahead of the meeting in Moscow, ECB President Mario Draghi said recent loose talk on currencies was "inappropriate, fruitless and self-defeating".Bundesbank chief Jens Weidmann, a strong voice on the ECB's 23-man Governing Council with whom Draghi in the past has been at odds, earlier weighed in to say the euro was not seriously overvalued and that the ECB would not change monetary policy based on its impact on inflation alone."All this chatter that has been undertaken in the past few weeks is either inappropriate or fruitless in all cases it's self defeating," Draghi said in opening remarks at a news conference after meeting with Russian central bank officials.The Italian head of the bank had said last Thursday that the ECB would monitor the economic impact of the strengthening euro, feeding expectations the climbing currency could open the door to an interest rate cut.Both Weidmann and Joerg Asmussen, the German member of six-member Executive Board that forms the nucleus of the Governing Council, said the ECB would not target the euro's exchange rate."I don't think that Mario Draghi was trying to talk the euro up or down," Weidmann said, adding that the ECB "will abstain from manipulating or directly targeting the exchange rate."French President Francois Hollande last week raised the possibility of political interference in exchange rate policy when he called for a medium-term target for the euro's value, a move to counter its recent appreciation."I fear a politicization of the exchange rate," Weidmann told news agency Bloomberg in an interview."I saw indications of that in Japan but you could as well refer to recent statements by European politicians not too far from here," he added in a thinly veiled rebuff of Hollande's call for a currency target.The G20 forum, which put together a huge financial backstop to halt a market meltdown in 2009, is back in the spotlight after a week in which the Group of Seven rich nations tried, and spectacularly failed, to speak on currencies with one voice. The G7 issued a joint statement on Tuesday reaffirming "our longstanding commitment to market determined exchange rates". Yet the show of unity was quickly undermined by off-the-record briefings critical of Japan."In the last couple of days the Group of Seven biggest industrial nations made clear once again that currency exchange rates should be market-based and that we have no exchange rate targets and that's true for us at the ECB too," Asmussen told Germany's Deutschlandfunk radio.The euro hit a 15-month peak of $1.3711 on Feb. 1, before easing slightly. The euro's strength "is one factor among many in determining future inflation rates", Weidmann, who heads Germany's Bundesbank said in the Bloomberg interview conducted on Feb. 13.He added: "We will certainly not justify any monetary policy decision with one single factor".

NEWS,13.12.2012

Mild pick-up for US economy next year

The US economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a  poll showed.Most consensus forecasts for the first half of 2013 were downgraded to their lowest since  began polling for this period more than a year ago. The forecast for the current quarter was slashed again.That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine."Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior US economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year.""US exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff", a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.Indeed, the poll showed growth is expected to have slowed to just 1.2% on an annualised basis in the quarter that ends this month, down sharply from 1.6% in the November poll, and well below the economy's potential.Weak exports have dragged on growth, not to mention superstorm Sandy, which hit the US east coast in October and shut down most of New York City and surrounding area for days, damaging business and infrastructure.The outlook for all of 2013 has been chopped to 1.9%, far below the Fed's September prediction of 2.5%-3.0%, and also the lowest consensus for 2013 polled so far this year.Despite a third round of bond purchases from the Federal Reserve to boost the jobs market, employment expectations remained tepid. The consensus for average monthly non-farm payrolls growth was mostly unchanged at 127 000 for the first three months of 2013. That comes despite a strong majority of forecasters, 47 of 51, expecting the central bank to buy more US Treasuries when its Operation Twist program expires at the end of December.The Fed is expected to buy $45bn of Treasuries every month in addition to the already-announced purchases of $40bn every month in mortgage-backed securities. But these new purchases will further expand the Fed's balance sheet.The poll also showed the Fed is likely to continue its monetary stimulus for at least a year, making for an additional $1 trillion of purchases. The Fed has bought bonds worth $2.3 trillion in two prior rounds of quantitative easing.A majority, 31 of 49, also expect the Fed eventually to adopt numerical thresholds for inflation and unemployment, similar to results of a survey taken last week.So far, markets have been sanguine that Washington will avoid the fiscal cliff. US stocks have erased all their losses after the November 6 presidential election and the S&P 500 is up almost 1% so far this month.But signs from lawmakers have been mixed with nothing concrete to indicate a deal will be reached by the end-of-the-year deadline.US House of Representatives Speaker John Boehner offered no signs of progress on Tuesday but said he remains hopeful that both sides would reach an agreement.But Senate Democratic leader Harry Reid said it would be difficult to get a deal before Christmas.If a deal is not reached it could lead to $600bn being sucked out of the economy in 2013 in what is essentially a self activating austerity program built into current law.

EU approves budget for 2013

EU lawmakers gave final approval on Thursday for a European Union budget of nearly €133bn ($172bn) for 2013, removing some uncertainty around the bloc's future funding after talks on spending for 2014-2020 broke down.The vote by the European Parliament in Strasbourg brought some clarity to EU finances at least for next year, and saw off a threat that some EU programmes, including the Erasmus student exchange scheme, would run out of money this year."We have managed to avoid a budgetary crisis on top of the economic crisis," Goran Farm, a Swedish socialist member of the European Parliament, said in a statement. However, doubt still surrounds the EU's long term spending plans. EU leaders were unable to reach a compromise last month on a proposed budget of some €1 trillion between 2014-2020. Under the 2013 deal, EU payments next year will be limited to a maximum of €132.84bn, which represents a just-above-inflation rise of 2.9% from the original budget agreed on for this year. The vote will also unlock an extra €6bn in spending for this year.The €6bn will fill a spending gap in research, education and employment programmes and means total EU spending in 2012 of €135bn, the highest level ever.About three-quarters of the EU's annual budget is spent on farm subsidies and funding for new motorways, bridges and other public infrastructure projects in poorer eastern and southern European member countries.EU leaders will hold further talks, possibly in February, to try to agree on the bloc's long-term funding.

EU, IMF agree to lend Greece €49bn

Eurozone finance ministers and the International Monetary Fund have agreed to release €49.1bn in aid to Greece by the end of March, with most of that sum flowing immediately, senior EU officials said on Thursday."Money will be flowing to Greece as early as next week," eurogroup chairman Juncker told a news conference after a meeting of ministers from the single currency bloc. "We are convinced the programme is back on a sound track."A eurogroup statement said €34.3 bn would be paid out in the coming days and the remainder in the first quarter of 2013.Agreement to release the funds hinged on the success of a debt buyback launched by Greece last week, which will enable Athens to retire nearly €20bn in bonds repurchased at a third of their face value from private holders.Juncker said he was not sure that additional measures would be needed to reach an agreed goal to bring Greece's debt down to 124 percent of gross domestic product (GDP) by 2020, but the bloc stood ready to take new steps if necessary.

Oil curbs spark new rivalry

 

A new rivalry at the top of the Opec oil group has emerged, pitting up-and-coming Iraq against undisputed cartel heavyweight Saudi Arabia. Having overtaken Iran as Opec's second biggest producer, a rejuvenated Iraq is beginning to worry Riyadh.At Wednesday's meeting of the Organization of the Petroleum Exporting Countries the opening salvos were fired in the struggle over who takes responsibility for cutting output if oil prices, now at a comfortable $108 a barrel, start falling.After 20 years of war, sanctions and civil strife that left its oil industry in disarray, Iraq is in no mood to consider curtailing output, especially as it starts to take off."Iraq will never cut production," said Iraq's Opec governor Falah Alamri. "Some countries that have increased their production in the last two years - they should do so. This is a sovereign issue, not an Opec issue."That was a clear reference to Saudi Arabia, which this summer lifted output to a 30-year high above 10m barrels a day to prevent oil prices ballooning after Western sanctions on Iran halved its production.The view from Riyadh, said delegates at the meeting, is that Iraq should contribute to the next round of Opec supply curbs. If Saudi pushed that line there would be "dark days ahead" warned a senior Iraqi official, saying Baghdad would not even consider output restraints until 2014.Opec delegates said ministers agreed to retain its 30m bpd output target, but many market observers think supply restrictions may be needed sooner rather than later if producers want to prevent slow global growth sending prices tumbling. "Every additional barrel that Iraq produces reinforces its confidence and its expectations that higher production is achievable and it will negotiate on that basis," said Raad Alkadiri of Washington consultancy PFC Energy. "Now Opec is dealing with a much more confident Iraq and Baghdad is looking at regional politics and is less willing to compromise.""Iraq is impervious to arguments. It says that it was subject to sanctions for so long that it has a free pass to rebuild its economy," said Neil Atkinson, director of energy research at Datamonitor.Output from Opec is already down sharply from the highs of the summer when the Saudi surge took the 12-member group to nearly 32m bpd. Production in November was down to 30.8m bpd with Saudi easing to 9.5m bpd. But Opec may need to ease further to balance the market in the first half of next year when, demand depressed by a stagnant economy, its own forecasts indicate the requirement for Opec crude will come in at only 29.25m bpd."We're concerned by the drop in demand and the high level of stocks," said Algerian energy minister Youcef Yousfi."There is rising oil from places like the US and Iraqi output is rising quite sharply. There's a risk that we see a sharp drop in price next year," said Atkinson.Iraq risesThe world's fastest growing crude exporter, Iraq expects more gains next year as foreign companies push production towards the highest level ever, Iraqi oil minister Abdul-Kareem Luaibi told reporters on Sunday ahead of the Vienna meeting.Output began to rise in earnest in 2010 after Baghdad secured service contracts with companies such as BP, Eni, Exxon Mobil and Royal Dutch Shell.Flows have now reached 3.4m bpd, up nearly a million bpd from when companies got down to work three years ago. Luaibi said output in 2013 is expected to average 3.7m bpd, just shy of an all-time high of 3.8m reached in 1979 with exports running at 2.9m bpd, including 250,000 bpd contributed by the semi-autonomous northern Kurdistan Regional Government (KRG).The changing shape of Middle East politics after the US led overthrow of Saddam Hussein in 2003 and the 2011 Arab Spring plays into Opec dynamics."Political issues sit behind this rivalry," said PFC's Alkadiri. "Regional alliances are pitting Saudi Arabia, Iraq and Iran against each other."That was illustrated in Wednesday's meeting by a quarrel over the appointment as Opec's next secretary-general, the group's public face and head of its Vienna headquarters.Iran dropped its nomination to back Iraq's candidate against Saudi Arabia.Adding to the heat is the dramatic rise in oil output from the US, spurred by hydraulic fracturing of shale reserves.The US Energy Information Administration said on Tuesday that US output will increase 760,000 bpd in 2012, the fastest pace since commercial oil production began in 1859.After years outside Opec's quota system because of low output, Iraq was brought into the fold a year ago when it set the 30m bpd target for all 12 producers. But unlike previous Opec deals no individual quotas were assigned.That suited Saudi Arabia, leaving it free to balance the markets by using its spare capacity as it saw fit. But in the event of a build in inventories that hits prices, Opec may need to restore quotas if it is to enforce a credible production cut. That is likely to prove very difficult, not just because of Iraq but because Iran is very unlikely to accept a quota anywhere near its sanctions-constrained production. Venezuela too could resist a lower quota after disputing independent estimates of its output for years."Quotas would become a big issue if we see a price drop and then everyone would have to come to the table," said Datamonitor's Atkinson. "That would cause enormous problems for Iran and Venezuela."Opec can only hope that a difficult decision is postponed by a continued stand-off between Western powers and Iran over Iran's nuclear programme, and the threat of Israeli military action, keeping oil prices high.That could mean a repeat of 2012, with oil prices supported in 2013 for fear of an attack on Iran, even if demand is poor and market fundamentals weaken."Lady luck has been a huge help for Opec because the macro numbers do not add up to 2012 being a successful year," said oil brokers PVM. "She has come in the form of geopolitical tensions and supply uncertainties which have kept speculative interest in oil lively and stimulated stock building."

NEWS,25.10.2012

Eurozone business slump accelerates

Eurozone private sector business activity slumped deeper into the mire in October, falling at its fastest rate since June 2009 to 40-month lows, a closely watched survey showed on Wednesday.The Composite Purchasing Managers Index (PMI), a survey of 5 000 eurozone businesses compiled by the Markit research firm, fell to 45.8 points in October from 46.1 in September.The index is a leading indicator and any reading below 50 indicates a contraction in activity, with the eurozone getting off to a bad start for the fourth quarter as the debt crisis continues to undermine growth and jobs.The preliminary data showed the Services sector PMI at 46.2 points in October, edging up from 46.1 in September while the Manufacturing sector fell very sharply to 45.3 from 46.1.Markit said eurozone firms "continued to cut employment, adjusting capacity down in response to lower levels of demand for goods and services."Further declines in activity over the coming year were signalled by another deterioration in business optimism in the service sector, which also suggests that employment looks likely to be cut again," it added. Markit chief economist Chris Williamson said the data suggested the eurozone economy was shrinking at a rate of 0.5% on a quarterly basis, more than enough to count the eurozone as deep in recession."While gross domestic product may decline only modestly in the third quarter, a steeper fall looks to be on the cards for the fourth quarter," Williamson said."The financial markets may have cheered the positive developments from policymakers in seeking to resolve the region’s debt crisis ... but business appears to have been less impressed."Sentiment about prospects for the year ahead are now the gloomiest since early-2009, when the post-Lehman Brothers crisis was in full swing," he said.Analysts said the survey findings were cause for concern, with the eurozone falling deeper into recession.The figures "worryingly indicate that the eurozone downturn is, if anything, deepening rather than easing. Consequently, it already looks highly likely that the eurozone is headed for further economic contraction in the fourth quarter," said Howard Archer of IHS Global insight.Archer noted how austerity policies implemented to combat the debt crisis were hitting domestic demand while muted global growth undercut exports.The European Central Bank was now likely to cut its benchmark interest rate to 0.50% from 0.75% in December in an effort to boost growth, he said, although it could be delayed until early 2013.

EU, IMF insist no Greek creditor deal yet

 

Greece's finance minister announced he had agreed a new austerity deal with international creditors, but the EU and IMF insisted that while there had been progress, no deal had yet been thrashed out.Yannis Stournaras told parliament Wednesday the so-called troika had granted a long-sought extension in return for a €13.5bn austerity package needed to unlock funds vital to keep the country afloat.But officials at both the European Union and the International Monetary Fund were quick to make it clear that the troika had not yet reached any agreement with Athens."Substantial progress has been made in talks with Greece but a few outstanding issues remain before a staff-level agreement can be reached," a spokesperson for European economic affairs commissioner Olli Rehn said in a tweet.The International Monetary Fund issued a similar message soon after."There has been progress in recent days, but some outstanding issues remain to be agreed upon to reach full staff-level agreement," a spokesperson said."Furthermore, financing issues will be discussed between the official lenders and Greece."European Central Bank chief Mario Draghi also said that while there had been progress "the review is not finished yet".The EU has been negotiating alongside the ECB and the IMF on a new round of spending cuts and reforms by Greece to unlock a €31.2bn installment from its rescue loans.A finance ministry source had said earlier that the government hoped to present the deal to a Eurogroup meeting on Thursday, ending talks that have dragged on since July.But Finance Minister Wolfgang Schaeuble of key paymaster Germany said: "As far as the German government knows there are no new findings."When the proposals (from the troika) are on the table, the Eurogroup will look at them. There is nothing more to add."Earlier Stournaras had said that he had finalised the agreement on cutbacks in talks with the troika's auditors."We have obtained the extension," he told parliament, announcing that two draft laws related to the package would be presented to parliament next week.The new measures, to be voted on by November 12, still have to be approved by Greece's three-party coalition government, with key allies remaining split over the painful reforms.According to the draft budget, Greece plans to cut the public deficit to 6.6 percent of output this year - still over twice the EU limit.'Greece will be saved by those who dare'European leaders have long maintained that extra time for Greece means more money from eurozone taxpayers.But Stournaras said: "Greece aims to cut its debt through lower interest rates and an extension in the repayment of loans it has received from the EU and the IMF."German daily Sueddeutsche Zeitung and Greek media had reported that Athens would be given two more years to slash its public debt mountain and implement key labour reforms and privatisations.Greece, heading for a sixth straight year of recession, is desperately trying to unlock the new installment of loans from the troika.In exchange, Athens has to agree to tough economic reforms, but the measures are deeply unpopular among ordinary Greeks who have taken to the streets in sometimes violent protests.With unemployment topping 25%, the government has been pleading for more time to implement the austerity measures.Media reports had said Athens would be given to 2016 to cut its deficit to the EU limit of 3% of gross domestic product rather than the previous deadline of 2014. Its total debt stood at a whopping 150% of GDP at the end of the second quarter, according to Eurostat.The reported agreement also scaled back targeted privatisation revenue to €10bn by 2016 - effectively nine billion less over an extra year - while calling for a two-year rise in the statutory retirement age and fresh cuts to state salaries and pensions.Earlier Wednesday, ECB executive board member Joerg Asmussen said that if Athens did get another two years to implement its reforms, other members of the 17-nation eurozone would have to lend it more money to bridge the deficit shortfall.Athens recently pledged €7.8bn in cuts next year, only to be told by the troika that an effort of €9.2bn was required to counterbalance the effects of the recession.Prime Minister Antonis Samaras's political allies, the socialist and moderate leftist parties, have baulked at calls to lower severance pay and facilitate layoffs while the country faces record unemployment."Greece will be saved by those who dare," Samaras said on Tuesday after a meeting of coalition leaders. "We have already modified many of the troika's original proposals - on labour issues and others - and the negotiation continues."

Olympics lift Britain out of recession

Britain stormed out of its longest double-dip recession since the 1950s after its economy returned to growth in the third quarter with a robust gain of 1%, official data showed on Thursday.British gross domestic product, or combined value of produced goods and services, grew at the strongest rate for five years during the July-September period after contracting in the previous three quarters.Market expectations had been for the economy of Britain, which is not part of the eurozone, to have expanded by 0.6% in the third quarter compared with the second after falling into a double-dip recession in late 2011.British Prime Minister David Cameron welcomed the data but warned against complacency amid global economic headwinds."There is still much to do, but these GDP figures show we are on the right track, and our economy is healing," Cameron said in a statement.Finance minister George Osborne echoed the cautious sentiment, saying that "yesterday's weak data from the eurozone were a reminder that we still face many economic challenges at home and abroad."Britain escaped from a deep downturn in late 2009 but fell back into recession at the end of 2011.The economy contracted by 0.4% in the second quarter of this year after shrinking by 0.3% in the first - and by 0.4% in the final quarter of 2011."GDP was estimated to have increased by 1% in Q3 2012 compared with Q2 2012," the Office for National Statistics said in a statement."The largest contribution to the increase came from the services sector. There was also an increase in activity in the production sector. Activity in the construction sector fell."Growth was also affected by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II's Diamond Jubilee, the ONS said."Not only did the UK pull out of its double-dip in Q3, but the one percent quarterly rise in GDP was a fair bit better than expected," said Vicky Redwood, senior economist at the Capital Economics research group." Admittedly, much of this reflected temporary factors. We think that the reversal of the Jubilee effect probably added about 0.5 percent, the Olympic ticket sales added 0.2% and there may have been a wider Olympic boost."But even accounting for this suggests that underlying output managed to rise by a small amount - an improvement on recent quarters. It won't be plain sailing from now on, though. There are still a number of constraints on the recovery."Output was meanwhile flat in the third quarter compared with the equivalent period in 2011, the ONS added.Despite emerging from recession, Britain was facing considerable difficulties, not least from tight credit conditions and worries about the impact of the debt crisis in the eurozone, a key trading partner.Other major headwinds include rising inflation on higher energy and food prices, an uncertain jobs market and ongoing austerity measures from Britain's coalition government.

China to open energy to private investors

China will seek to encourage more private investment in its state-dominated energy sector, according to a new industry white paper published by official news agency Xinhua on Wednesday.China is preparing for a once-in-a-decade leadership transition in November, and its new leaders are widely expected to push for the sort of market-oriented reforms that will break up monopolies in sectors such as energy. The new policy document said China planned to “give full play to the fundamental role of the market in allocating resources” and would draw up new regulations designed to reform the energy sector.  Included in the list of possible private investment targets were the exploration and development of energy resources, coal processing, oil refining, renewables, the construction of oil and natural gas pipelines and the electricity sector.“All projects listed in the national energy program, except those forbidden by laws or regulations, are open to private capital,” the document said.Policy makers have struggled to bring market forces to bear on the energy industry, with dominant state-owned enterprises like the State Grid Corp. proving resistant to change. The white paper said China would also seek to improve legislation on, and regulation of, the industry, with plans to adopt a comprehensive new energy law and new provisions dealing with oil reserves, natural gas and nuclear reactor management. While China is committed to raising the share of renewables in its overall energy mix to 15% by 2020, it said it would also promote the clean development of fossil fuels and improve power generation efficiency.      

China slams money-making off religion

China's religious affairs ministry has lashed out at the rampant commercialisation of sacred places and temples in the country, including the practice of employing "fake monks" and fortune-tellers. In a statement posted online, the State Administration for Religious Affairs, which oversees the country's religious organisations, also criticised plans by some Buddhist and Taoist temples to raise funds by listing on the stock market." Temples shall not in any way engage in 'stock' or 'joint venture' activities," the administration said in the statement dated October 22.Policies by the Communist Party suppressing religion have been relaxed since the 1970s, leading to a rapid increase in pilgrimages and visits to temples. Religious organisationsare still required to register with the government. The State Administration for Religious Affairs picked out for particular criticism those "using the excuse of promoting traditional culture" to profit from devotees." There have been reports of non-religious sites employing fake monks... illegally setting up donation boxes to take religious donations, even threatening religious believers and tourists to cheat them out of money," the statement said."These phenomena seriously violate the party's policies towards religion, and national laws," it added, listing other abuses including pressuring tourists to buy expensive incense and illegal fortune-telling. The Famen temple in northwest China is set to list on Hong Kong's stock exchange next year, according to the Global Times daily, while Mount Putuo, a sacred Buddhist mountain, has announced plans to go public within three years.Two fake monks wearing orange Buddhist robes were detained in Beijing in April after they were caught drinking alcohol on the city's subway and checked into a luxury hotel with two women, local reports said at the time.

NEWS,14.10.2012

Eyes peeled on US earnings

The central bank-induced highs of September have given way to concern about the depressed outlook for corporate earnings and the global economy.After the International Monetary Fund kicked off the week with a downgrade of its forecast for worldwide economic growth, US companies including Alcoa reminded investors that the headwinds facing Europe and China make corporate smooth sailing increasingly challenging.Indeed, Thomson Reuters data showed 11 negative outlooks for fourth-quarter results so far from Standard & Poor's 500 companies, while none are positive.Investors are anxiously awaiting results of Bank of America, Citigroup, Goldman Sachs and Morgan Stanley released in coming days after those of JPMorgan Chase and Wells Fargo failed to inspire on Friday."We need to see big banks doing well, and JPMorgan or Wells didn't give us the boost we were hoping for," Wayne Kaufman, chief market analyst at John Thomas Financial in New York, told Reuters. "Citigroup is the one we're looking for. If profits come in worse than expected there, that would make me more bearish about the economy in general."Among the slew of other US companies reporting this week are McDonald's, Microsoft, IBM, Intel and Johnson & Johnson.In the past five days, the Standard & Poor's 500 Index shed 2.2%, while the Dow Jones Industrial Average dropped 2.1%.There were some unexpected bright spots as reports showed that US jobless claims dropped to the lowest since 2008, while confidence among American consumers rose in October to the highest level in five years.Also, data showed that China's exports increased at the fastest pace in three months in September, fuelling hope the world's second-largest economy might be holding up better than expected after all.US data due in the coming days include retail sales, the consumer price index, industrial production, housing starts, and existing home sales.By and large, the appeal of the relative safe-haven of US Treasuries remained strong in the past week, bolstering demand for the US$66 billion of notes auctioned. The yield on 30-year bonds dropped 14 basis points last week, while the yield on 10-year debt yield declined nine basis points."The IMF brought everybody back to the global economic situation," Jim Vogel, head of agency-debt research at FTN Financial in Memphis, Tennessee, told Bloomberg. "We went through roughly six weeks where everything looked more attractive than Treasuries."On Thursday, the US is scheduled to auction US$7 billion in 30-year Treasury Inflation Protected Securities.In Europe, investors will eye a meeting of EU finance ministers.Euro zone officials are considering new ways to lower Greece's debts because delays to reforms by Athens and continued recession have put the target of a debt to GDP ratio of 120 % in 2020 out of reach, Reuters reported.Europe's Stoxx 600 Index declined 1.7% last week. The euro also suffered, weakening 0.7% against the greenback in the past five days, and losing 0.9% against the yen.The region's debt crisis remains a key concern for investors.BlackRock chief executive Laurence Fink said he was still bullish on US equities but warned that the stock market could lose 5 to 10% in a correction in the final months of the year amid uncertainty over the euro zone's current key problem-child, Spain."The next three to four months we are going to probably have greater uncertainty and the market may test itself one more time," Fink said.

Germany and Singapore to co-operate over tax evasion

Germany and Singapore have agreed to co-operate more closely to reduce tax evasion, the German Finance Ministry said, amid signs that German tax evaders are moving funds to Asia's prominent wealth management centre.Recent media reports have suggested said that wealthy German citizens were shifting funds to Singapore from Switzerland, which signed a tax deal with Germany earlier this year.The new agreement will come into effect once both countries have ratified it domestically and will allow the two states to obtain more information from each other.The ministry said in a statement on Sunday a 2004 tax agreement between Germany and Singapore would be amended to conform to the international standards for exchanging information laid out by the Organisation for Economic Co-operation and Development (OECD).The agreement will cover all kinds of taxes, not just capital and income tax as was previously the case. The exchange of information could apply to taxpayers not resident in Germany or Singapore and would not be hindered by banking secrecy rules, the ministry said.Switzerland and Germany hammered out a new deal in April to confront tax evasion, but the centre-left SPD opposition has said it will block the pact in the upper house of parliament, arguing it is too lenient on tax dodgers.One of the SPD's criticisms has been that the agreement would allow people to evade taxes by taking their money out of Switzerland before the deal takes effect.Norbert Walter-Borjans, finance minister of the German state of North Rhine-Westphalia and one of the most vociferous critics of the Swiss tax deal, welcomed the agreement with Singapore."Every effective agreement which prevents tax evasion helps to make the tax system fairer and state finances more stable," he said in a statement.

 

Poland to pump €15.5bn into shale gas

Poland will invest 50bn zlotys (€15.5bn) in the exploration of shale gas by 2020, Finance Minister Mikolaj Budzanowski said on Saturday.Investment over the next two years will total 5bn zlotys (€1.2bn), which includes a €409m shale gas deal agreed in July by five Polish energy and mining groups, Budzanowski told the press."With the Russian gas accord terminating at the end of 2022, we must be well prepared to noticeably boost the exploitation of our own gas fields three years earlier," he said, adding that state money as well as private investment would be involved.Poland which has a population of 38 million has extractable shale gas deposits estimated at 1 920 billion cubic metres, according to an official report published in March.The National Geological Institute (PIG) said Poland's shale gas deposits are the third largest in Europe after those of Norway and the Netherlands.Its extraction could make the country independent of Russian imports.Poland burns 14 billion cubic metres of gas a year, two-thirds of which come from Russia.The government expects extraction to begin in 2014.The gas is extracted from rock through hydraulic fracturing or fracking, the drilling of underground shale rock formations by injecting chemicals and water to release the trapped natural gas.Opponents say it causes pollution of the ground water but energy groups say it provides access to considerable gas reserves and drives down the price.

 

Finance leaders back shielding growth

World finance leaders on Saturday endorsed a checklist of policy reforms aimed at pressuring Europe and the United States to tackle debt troubles that threaten to choke off global growth.To hold each others’ feet to the fire, the nations - meeting under the aegis of the International Monetary Fund - agreed to review progress in six months.Their 10-page agenda, however, largely summarised previously planned steps, such as deploying a new European Central Bank bond-buying programme and avoiding the US “fiscal cliff” of spending cuts and tax hikes set to take hold early next year.The checklist and checkup were an acknowledgement of frustration within the IMF and among many emerging market economies over a sluggish and piecemeal policy response to the major risks facing the world economy.IMF chief Christine Lagarde said nations had narrowed their differences over how to implement policy, seeking to downplay disagreements between the Fund and Germany over how quickly debt-laden countries such as Greece should cut budgets.“There was no objection to the recommendation that we gave to the membership, which was A-C-T,” Lagarde said, spelling out the word letter by letter.“We might not always agree on everything, but I think there is a general consensus that collective action is going to produce results,” she told reporters.  In a communique released after two days of talks, IMF members warned that global economic growth was decelerating and that substantial uncertainties and risks remained.But the IMF’s governing panel, representing the 188 member countries, praised steps that had already been taken, particularly in Europe, to make the world financial system safer, even if they had not yet gone far enough.“Members all agreed that we are in a better position today than we were six months ago,” said Singapore Deputy Prime Minister Tharman Shanmugaratnam, the chairperson of the committee.Spain’s economy minister, Luis de Guindos, said he felt the mood toward his country lifting too. Spain is under pressure to seek a bailout as it struggles to cope with high government debt and the cost of recapitalising its banks. “The atmosphere, from International Monetary Fund policymakers or from the private sector, is much more positive than it was before the summer,” de Guindos said.Euro zone sources said they expected Spain to seek financial aid from the euro zone in November.Still, finance leaders leave Tokyo with little concrete evidence that fresh progress was being made in the world’s debt trouble spots, hamstrung by political considerations.US presidential elections and a once-a-decade leadership change in China are just weeks away. The euro area has to navigate decisions through several national governments, which Russian Finance Minister Anton Siluanov likened to manoeuvring a supertanker with 17 captains at the helm.“If you decide to turn it in one direction, it happens very slowly,” he said.Emerging strainsReports from the IMF this week downgraded global economic growth forecasts for the second time since April and warned of the need for action in advanced economies to treat a debt hangover that stems in part from earlier efforts to quell the global financial crisis.To replenish its crisis-fighting war chest, the IMF has taken in $461bn in contributions from member countries, with Algeria and Brunei the newest members of the donor group, Lagarde said. The United States is among the notable absences from the list of contributors.Frustration over what many nations see as plodding progress in Europe and in Washington spilled into public view during the meetings.“Asia alone can’t carry the global economy,” said Australian Treasurer Wayne Swan. “It is time for the other players to get off the benches and start to pull their weight on global economic growth again.”Emerging markets, which have been caught in the downdraft created by weak economies in Europe and the United States, were disappointed that the IMF missed its target for enacting voting reforms that would make China the third most influential country within the lending institution. Lagarde said there were “one or two countries” that had not finalised the reforms, which were agreed in 2010, a thinly veiled reference to the United States. The Obama administration does not want to seek congressional approval for more IMF funding before the November presidential election.European leaders argued this week they had taken big strides toward building a stronger fiscal and banking union, and they earned at least some recognition from the rest of the world.“This broad framework offers a more promising strategy for addressing the crisis,” US Treasury Secretary Timothy Geithner said. “However, what is important is how it will be applied.”German Finance Minister Wolfgang Schaeuble pointed out that euro zone decision-making does take time given the number of national governments involved.“If we are not fast enough for markets, sorry, but markets have to wait,” he said.

NEWS,19.09.2012

Russia expels 'meddling' USAid

Russia on Wednesday said it had given USAid until 1 October to halt its work as the US aid agency was meddling in domestic politics, a move that risks sparking a new diplomatic crisis with Washington.The termination of the US Agency for International Development's activities may also harm the operations of a string of NGOs that rely on its funding, including the vote monitor Golos that showed up irregularities in recent polls.The unexpected move appears part of an increasing crackdown in Russia on civil society after President Vladimir Putin's return to the Kremlin for a third term in May amid an outburst of street protests"The decision was taken mainly because the work of the agency's officials far from always responded to the stated goals of development and humanitarian co-operation," the Russian foreign ministry said in a statement."We are talking about attempts to influence political processes - including elections at different levels - through its distribution of grants," it added.USAid's activities "must be halted from October 1", it added, giving a short deadline that had not been revealed by the Americans when the decision was first made public in Washington on Tuesday.'Heavy blow'Anxious Russian NGOs expressed fears for their future financing - more than half of USAid's annual budget in Russia had been spent on democracy and civil society programmes as well as a substantial chunk on health projects."I am very sorry that the USAid office is closing," said Arseny Roginsky, the chairperson of Memorial, Russia's best-known campaigner for human rights and the preservation of historical memory across the country."It is impossible not to see here the continuation of the isolationist policy" of the Russian authorities, he added. Without giving further details, he described the material help of USAid as "significant".Lilia Shibanova, the director of Golos, described the halt in USAid's operations as a "heavy blow".She said there was now serious concern for the funding of its monitoring of local elections on 14 October, two weeks after the deadline for the closure of the USAid office."The problem is that as soon as Russian business starts giving funds to monitor elections it comes under pressure," she said.No need of 'external leadership'Viktor Kremenyuk, analyst with the USA-Canada Institute at the Russian Academy of Sciences, said that while the move was not an outright U-turn in foreign policy, it was a Kremlin "gesture aimed at worsening relations between Russia and the US"."Russia wants to say 'we do not need your help, we can stand on our own feet'," he said.The foreign ministry statement said that Russian civil society was "quite mature" and the country - now itself a foreign donor - was in no need of "external leadership".The expulsion of USAid comes after Putin signed a law forcing NGOs that receive funding from abroad to register as "foreign agents". He has even compared organisations like Golos to the disciple Judas who betrayed Jesus.A senior US administration official said that Washington regretted the decision, which according to a US government source also affects the future of 13 US staff in Moscow and 60 Russian staff."This is a difficult day for USAid," said the official, who asked not to be named.Similar incidents It is unclear whether some if any US funding of the organisations can continue but the official said that President Barack Obama's administration was committed to promoting civil society in Russia."Over the coming weeks and months the Obama administration will be looking at ways to advance our old foreign policy objectives using new means," said the official.The United States had first learned of the measure when Secretary of State Hillary Clinton attended the Apec summit in Vladivostok earlier this month, the official said.The departure of USAid echoes the 2007 clampdown on the activities of the British Council cultural agency which poisoned relations between Moscow and London. The US Peace Corps had also been asked to leave Russia in 2002.

Japan cabinet approves plan to exit nuclear energy

Japan's cabinet has approved a new energy plan to cut the country's reliance on nuclear power in the wake of last year's Fukushima disaster, but dropped a reference to meet a nuclear- free target by the 2030s, ministers said on Wednesday.Since the plan was announced on Friday, Japan's powerful industry lobbies have urged the government rethink the nuclear-free commitment, arguing it could damage the economy and would mean spending more on pricey fuel imports.Trade Minister Yukio Edano, who also oversees the energy portfolio, said the cabinet had approved the new energy plan."But whether we can become nuclear free by the 2030s is not something to be achieved only with a decision by policy makers. It also depends on the will of (electricity) users, technological innovation and the environment for energy internationally in the next decade or two," he said.In abandoning atomic power, Japan aims to triple the share of renewable power to 30 percent of its energy mix by the 2030s, but will remain a top importer of oil, coal and gas for the foreseeable future.Finance Minister Jun Azumi told a separate news conference that there needed to be flexibility in the policy to avoid putting a burden on the public in a country where nuclear supplied 30% of electricity before Fukushima.All but two of Japan's nuclear 50 reactors are idled for safety checks after an earthquake and tsunami in March 2 011 devastated the Fukushima Daiichi plant, causing the worst nuclear disaster since Chernobyl in 1986.Under the new energy plan, there should be strict implementation of a 40-year lifetime for reactors. It also said existing reactors shut after Fukushima should be restarted only if a new nuclear regulator confirms their safety and there should be no construction of new reactors.The newly established Nuclear Regulation Authority (NRA) will decide whether reactors currently under construction are safe enough to start commercial operations, Edano said.Asked if newly built reactors could run beyond the 2030s, Edano said a decision on this would be decided later.Reactors currently under construction include the 1,373-megawatt Shimane No.3 unit of Chugoku Electric Power Co's and the 1,383-megawatt Ohma unit of Electric Power Development Co's.

Wealth surge for richest Americans

The net worth of the richest Americans grew by 13% in the past year to $US1.7 trillion, Forbes magazine said today, and a familiar cast of characters once again populated the top of the magazine's annual list of the US uber-elite, including Bill Gates, Warren Buffett, Larry Ellison and the Koch brothers.The average net worth of the 400 wealthiest Americans rose to a record $US4.2 billion, the magazine said.Collectively, this group's net worth is the equivalent of one-eighth of the entire US economy, which stood at $US13.56 trillion in real terms according to the latest government data.But the 13% growth in the wealth of the richest Americans far outpaced that of the economy overall, helping widen the chasm between rich and poor.Bill Gates, the chairman of Microsoft Corp, topped the list for the 19th year in a row with $US66 billion, up $US7 billion from a year earlier.Warren Buffett, chairman and chief executive of insurance conglomerate Berkshire Hathaway, stood second with $US46 billion, followed by Larry Ellison, head of software maker Oracle Corp, with $US41 billion; and the Koch brothers, Charles and David, who run the energy and chemicals conglomerate that bears their name, Koch Industries, were tied for fourth with $US31 billion, Forbes said.The ranks of the top five were unchanged from a year earlier.Two notable names dropped from the top 10, however.Casino magnate Sheldon Adelson, also active in conservative political causes, fell to the 12 spot from No. 8 last year, and financier George Soros dropped five spots to No. 12 from the No. 7 position one year ago.The disappointing stock market debut of Facebook also took a toll on the fortune of its founder and CEO, Mark Zuckerberg.His net worth fell by nearly half to $US9.4 billion, and he slid to the No. 36 slot from No. 14 a year ago, Forbes said.