NEWS,07.08.2013

BoE looks forward to help UK recovery

The Bank of England overhauled its policy strategy on Wednesday, saying it planned to keep interest rates at a record low until unemployment falls to 7% or below, something unlikely for another three years.
Barely a month after Canadian Mark Carney took over as governor, the central bank said it would keep interest rates at 0.5 percent unless inflation threatened to get out of control or there was a danger to financial stability.
Carney said a recovery in Britain's fragile economy was underway and it appeared to be broadening but he warned that it had a long way to go before it was on solid ground.
"This remains the slowest recovery in output on record," he told his first news conference since taking over at the Bank. "We're not at escape velocity right now."
The pound rallied after an initial fall on the announcement and British government bond prices were lower as the BoE's commitment on interest rates fell short of some expectations of a more aggressive plan to revive growth.
"It looks like rates are not going to rise in the next three years, though they could, as Carney has stressed they are not pre-committed, so again this is a rather valueless bit of 'forward guidance' as is the case with the ECB," said Mark Ostwald at Monument Securities.
The Bank of England followed the US Federal Reserve's approach by setting an unemployment target rather than committing to keeping rates low for a set period of time but included get-out clauses.
BoE policymakers said they stood ready to buy more government bonds if additional stimulus was needed and would not reverse existing purchases while unemployment was too high.
The central bank said inflation was forecast to stay above its 2% target until the second half of 2015 based on market rate expectations.
"Attempting to return inflation to the target too quickly risks prolonging the period over which the nation's resources are underutilised," it said.
A growing number of major central banks are providing so-called forward guidance to help nurse their economies back to health after the damage of the financial crisis.
For the BoE, the challenge is to hold off a premature rise in British borrowing costs at a time when signs of economic recovery at home and the US Federal Reserve's decision to phase out stimulus are pushing up market interest rates.
Last month its Monetary Policy Committee took a step towards guidance by saying that a rise in British market rates was not justified by economic fundamentals, and it reiterated that point on Wednesday.
Markets already did not expect the BoE to start to raise interest rates until late 2015 at the earliest.
Three years' grace?
The BoE said Britain's economy had strengthened over the past three months. But output still remains more than 3 percent below its pre-crisis peak, a much weaker recovery than in the United States or Germany.
It now forecasts the economy will grow 0.6% during the current quarter  the same as between April and June, and that growth will reach an annual rate of 2.6% in two years' time, compared with 2.2% forecast three months ago, assuming interest rates stay on hold.
Unemployment is forecast to fall only slowly from its current level of 7.8% of the workforce, with the central bank expecting it to average 7.1% in the third quarter of 2016, the end of its forecast horizon.
This implies that the BoE expects to keep interest rates unchanged until at least that time, unless one of three conditions is breached before then.
The BoE will consider raising interest rates if their low level poses a threat to financial stability, if the public's medium-term inflation expectations rise dangerously high or if it forecasts that inflation in 18-24 months will be at 2.5% or higher.
It said that if those thresholds or the 7% unemployment rate are reached, the MPC would consider the case for interest rate rises on a month-by-month basis.
"There is therefore no presumption that breaching any of these knockouts would lead to an immediate increase in Bank Rate or sale of assets," it said.
Inflation is forecast to average 2.9% in the last three months of this year  close to its current level and a lower peak than previously thought  and then to fall roughly as predicted three months ago.
Finance minister George Osborne named Carney in November to succeed King, impressed by the Canadian's reputation for innovative thinking and applying forward guidance while he led Canada's central bank.
Osborne welcomed the plan and said it was consistent with the government's "absolute commitment" to Britain's 2% inflation target.
Carney has previously stressed the importance of reassuring ordinary people and businesses that their debt costs are not going to rise any time soon in order to give them more confidence about spending which would help the economy.
The new governor also signalled he was not concerned about signs of a fast recovery in the housing market in some parts of Britain, especially London.
"The housing market is starting to recover and actually the overall level of housing activity relative to GDP is a couple of percentage points lower than where it was prior to the crisis," Carney said at the news conference.

China fines baby formula makers $110m

China fined six companies including Mead Johnson Nutrition, Danone  and New Zealand dairy giant Fonterra a total of $110m following an investigation into price fixing and anti-competitive practices by foreign baby formula makers.

The other three penalised were Abbott Laboratories, Dutch dairy cooperative FrieslandCampina and Hong Kong-listed Biostime International Holdings, the National Development and Reform Commission (NDRC) said on Wednesday.

The fines, announced just over a month after the NDRC said it was conducting the antitrust review, coincide with separate pricing investigations into foreign and local pharmaceutical firms as well as companies involved in gold trading. Those probes have yet to conclude.

The official Xinhua news agency said the fines were a record for China, although it did not elaborate.

Foreign infant formula is coveted in China, where public trust was damaged by a 2008 scandal in which six infants died and thousands of others were sickened after drinking milk tainted with the toxic industrial compound melamine. 

Foreign brands account for about half of total sales and can sell for more than double the price of local formula. The infant milk market in the world's second biggest economy is set to grow to $25bn by 2017.

The NDRC said in a statement the fines were for restricting competition, setting curbs on minimum prices for distributors and for using a variety of methods to disrupt market order. 

Swiss giant Nestle, Japan's Meiji Holdings  and Zhejiang Beingmate Scientific Technology Industry and Trade Co were not punished because "they cooperated with the investigation, provided important evidence and carried out active self-rectification", Xinhua said, citing the NDRC.

The commission fined Mead Johnson 203.8m yuan ($33.29m); Danone 172m yuan; Biostime 162.9m yuan; Abbott 77m yuan; FrieslandCampina 48m yuan and Fonterra m yuan.

Mead Johnson, Biostime, Abbott and Fonterra said they would not contest the penalties. Officials at French food group Danone and FrieslandCampina were not immediately available to comment. 

After the NDRC probe was announced, a number of companies including Mead Johnson, Danone and Nestle cut prices on their baby formula in China by up to 20%.

Analysts said the probe was possibly part of a broader Chinese plan to boost consumption of local infant milk products.

But they said the fines were unlikely to damage the reputation of the affected companies. If anything, foreign infant formula makers might increase their market share because of the price cuts.

"It will have an impact on domestic brands over the long term as the prices of high-end premium brands come down. Customers will tend to buy the foreign brands as the price gap between domestic and foreign brands narrows," said Jacqueline Ko, an analyst at Maybank Kim Eng Research.

Fonterra, the world's biggest dairy exporter, said it would give additional training to sales staff and review its distributor contracts in the wake of its fine. 

"We believe the investigation leaves us with a much clearer understanding of expectations around implementing pricing policies," Kelvin Wickham, president of Fonterra Greater China and India, said in a statement.

Fonterra is embroiled in a separate milk powder contamination scare that has led to product recalls in China, Hong Kong and elsewhere in Asia. 

    

Powerful commission

A source with direct knowledge of the China investigation said the NDRC was concerned with manufacturers suggesting retail prices to distributors and then offering incentives if these were met, believing this was tantamount to dictating retail prices.

The agency also told the firms they had inhibited fair competition by setting up regional distributors and discouraging them from selling outside their territories, said the source, who spoke on condition of anonymity because he was not allowed to speak to the media.

The commission is one of China's most powerful government bodies, with a role in overseeing prices as well as broad economic policies.

The milk sector is still relatively young in China, with consumption of dairy products growing at an annual compound rate of 20%, a contrast to US and European markets where demand has been shrinking in the past decade.

Some analysts also said the pricing investigation could result in tougher rules governing imports.

Indeed, the China Food and Drug Administration is proposing tightening conditions for the granting of licences for milk powder production, including requiring producers to have their own controlled milk sources and research and development capabilities. 

In a statement late on Tuesday, the regulator said it was seeking public comment on the proposals, which also include requirements for license holders to strengthen hygiene practices and management standards.

Mead Johnson said its fine would reduce its full-year earnings by about 12 cents per share, but it reiterated its 2013 earnings forecast for profit, excluding one-time items, of $3.22 to $3.30 per share. 

Shares of Biostime, which has a market value of $3.3bn, were up 5.3% at midday, beating a 0.3% drop in the benchmark index. It shares resumed trading after being suspended the day before. 

Obama cancels Putin meeting over Snowden

US President Barack Obama is cancelling a meeting with Russian President Vladimir Putin scheduled for next month in Moscow, the White House said on Wednesday.
The Obama administration has repeatedly expressed disappointment after Moscow granted temporary asylum to former US spy agency contractor Edward Snowden, rejecting US pleas to hand him over to face criminal charges including espionage.
The White House, in a statement, said it valued "achievements made" between Russia and the United States, but cited a "lack of progress" on a host of other issues "such as missile defence and arms control, trade and commercial relations, global security issues, and human rights and civil society."
"Russia's disappointing decision to grant Edward Snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship," the statements said.
Obama plans to add a stop in Sweden as part of this travels to the G20 summit in early September, a White House official said.
On Tuesday, Obama confirmed that he would go to Russia this autumn for a G20 summit in St Petersburg, Russia, but said he was "disappointed" with Moscow's decision on Snowden.
Senator Charles Schumer praised Obama's decision to cancel the bilateral summit with Putin.
"The President clearly made the right decision. President Putin is acting like a school-yard bully and doesn't deserve the respect a bilateral summit would have accorded him," the New York Democrat said in a statement.

NKorea lifts ban on joint factory ops

North Korea said Wednesday it is lifting a ban on operations at a jointly run factory park shuttered since Pyongyang pulled out its 53,000 workers in April amid tensions with South Korea, and the rivals agreed to meet next week for talks meant to restart the complex.
The agreement revives hope for the resumption of production at the Kaesong complex, the last remaining symbol of inter-Korean cooperation from an earlier period of detente.
The industrial park combined South Korean initiative, capital and technology with cheap North Korean labour.
It was also a rare source of hard currency for North Korea, though the economically depressed country chafed at suggestions that it needed the money Kaesong generated.
North Korea said it will lift its ban on operations at the complex, including restrictions on the entry of South Korean managers.
But the two countries must reach a formal accord on their differences before production can resume, and six past meetings on the park's fate remained deadlocked.
The statement by the North's Committee for the Peaceful Reunification of Korea, which is responsible for dealings with Seoul, appeared to accept a demand that South Korean negotiators had made in the deadlocked sessions: That North Korea won't unilaterally close the industrial complex, just north of the heavily armed border, should tensions between the rivals rise again.
The fate of Kaesong
Ahead of Wednesday's statement, which North Korea described as "bold and magnanimous", there was unease in Seoul about the fate of Kaesong. The statement came after 10 days of silence from Pyongyang on a South Korean demand for "final talks."
It also came about an hour after Seoul said it would begin insurance payments to 109 South Korean businesses shut out of Kaesong, which some saw as a step toward closing the park.
South Korea's Unification Ministry, which handles relations with North Korea, accepted the North's proposal for talks on 14 August, a day before a holiday in both Koreas that celebrates independence from Japan's 1910-1945 colonial rule.
Seoul expressed hope the meeting would resolve differences on Kaesong.
South Korean businesses with operations at Kaesong welcomed the development. The park had survived previous periods of tension between the rivals, including attacks blamed on Pyongyang that killed 50 South Koreans in 2010, and the shutdown of other big cooperation projects.
North Korea banned South Korean managers from crossing the border to their jobs in Kaesong and then withdrew its workers from the park during a torrent of warlike threats it made in March and April, including vows of nuclear strikes on Washington and Seoul.
Military drills
Pyongyang said it was angry over annual US-South Korean military drills and UN sanctions over North Korea's February nuclear test - the country's third such test since 2006.
There have been recent attempts at tentative diplomacy by the Koreas, but tensions could rise again this month as South Korea and the United States are scheduled to begin a joint military exercise on 19 August.
Starting on Thursday, South Korean companies that had signed up for insurance were to receive payments to help cover investments in constructing production lines and buildings at Kaesong.
Both countries should ensure that operations at the complex continue normally regardless of external matters, the North's statement said.
North Korea also said it will guarantee the safety of the South Korean managers and property at Kaesong, and start sending North Korean workers to the park once South Korean businesses are ready to resume operations.
After breaking ground in 2003, earlier South Korean governments paved roads and erected buildings at Kaesong, which lies in a guarded, gated complex on the outskirts of North Korea's third-largest city.
By the end of 2012, South Korean companies had produced a total $2bn worth of goods during the previous eight years.
Pyongyang needs to reach out to Seoul and resume operations at Kaesong to resolve its huge economic problems, said Yoo Ho-yeol, a North Korea studies professor at Korea University in Seoul.
North Korea is estimated to have received $80m in workers' salaries in 2012, an average of $127 a month per person, paid in US dollars, according to the Unification Ministry.
For South Korea, Asia's fourth-largest economy, the complex was more than a business opportunity and a source of cheap labour it was a symbol representing the possibility of eventual unification.
Before April, the Kaesong industrial complex was the only place for South Korean entrepreneurs to collaborate with North Korean workers.

Talks will fail, say most Israeli Jews

Israel's Jewish population is overwhelmingly of the opinion that negotiations with the Palestinians will fail to achieve peace, according to a poll published on Wednesday.

About 80% of Israeli Jews said the chances of success of US-brokered talks, which resumed on 29 July after a three-year hiatus, were "low", against only 18% who said they were "high".

The survey, conducted by Tel Aviv University, interviewed 602 Israelis between 28 and 30 July and has an error margin of 4.5%.

Most of those interviewed  64%  believed Palestinian leaders were not genuine in wanting to resume talks, but 63% believed the Israeli government did want peace.

They were mostly unwilling, however, for the government to concede on issues deemed crucial to achieving an agreement.

Almost 63% opposed a return to the 1967 lines that existed before Israel occupied the West Bank - a key Palestinian demand  and 58% opposed the evacuation of Jewish settlements in the Palestinian territory, even if the largest settlements were allowed to remain.

Arab population more optimistic

The previous round of talks in September 2010 collapsed when Israeli refused to stop its settlement building.

About 77% on those interviewed also opposed the right of return for Palestinian refugees exiled after the Jewish state's creation in 1948 and the 1967 Six Day War.

And half the Jewish respondents opposed the partition of Jerusalem, which the Palestinians want as capital of their future state.

Israel's Arab population were more optimistic about the chances of peace.

Around 47% of Israeli Arabs thought talks were likely to achieve a peace agreement, against 41% who said the chances were low.

A vast majority 85%  believed the Palestinians genuinely wanted talks to succeed.

NEWS,29.07.2013

Amazon hiring thousands of people

Amazon announced plans Monday to add 5 000 full-time jobs at 17 facilities in the United States and to hire more than 7 000 workers as it beefs up its customer-service network.
The online retail giant is creating jobs as it expands its distribution network to speed up deliveries. The facilities in 10 states across the country, from South Carolina to California.
Amazon said that more than 5 000 jobs were now available across its warehouse network, touting pay that is 30% higher than that of traditional retail stores.
"In the last year alone, Amazon opened eight fulfillment centers in the US, resulting in thousands of new jobs being added to communities nationwide," the company said in a statement.
The Seattle-based retailer also said it was currently hiring in four states for more than 2 000 jobs in its customer service network, which includes a mix of full-time, part-time and seasonal jobs.
Amazon shares fell 0.9% in morning trade in New York.

China agrees to talks on wine dispute

China and the European Union have agreed there is a "window for discussions" to try to resolve accusations that Europe is dumping wine in China, the EU's trade chief said on Monday.
The agreement is part of a deal announced at the weekend to defuse a row over dumping of Chinese solar panels in Europe, the biggest trade dispute yet between the two economies.
Responding to the EU's initial plan to impose punitive duties on solar panels, China launched an anti-dumping inquiry into European wine sales, which would lead to retaliatory duties on exporters in France, Spain and Italy.
"There is a window for discussions between the European Union and Chinese (wine) producers," EU Trade Commissioner Karel De Gucht told a news conference. "The Chinese government has promised to facilitate such discussions," he said.
EU and Chinese diplomats expect the wine dispute, as well as another conflict over EU exports of polysilicon a raw material for solar panels to be dropped as a goodwill gesture.
China is the world's biggest importer of Bordeaux wines and consumption soared 110% in 2011 alone.
China's commerce ministry could not confirm any freeze to the EU wine investigation, the website associated with the Communist Party mouthpiece the People's Daily reported on Monday, citing an unnamed official.
A lawyer representing the Chinese industry association that filed the wine complaint said the firm had not received any notice on the freezing of the probe, the website www.people.com.cn said.
"The relevant investigation is still proceeding regularly," Yao Fengwen, a lawyer with Bo Heng (Beijing B&H Associates) law firm, told the site.
Germany's Wacker Chemie is the world's second biggest maker of polysilicon and would be hurt by any tariffs in China.

Foreign firms win $22.5bn Saudi contracts

Saudi Arabia has granted three foreign consortium's contracts worth $22.5bn (€16.9bn) to build a Riyadh metro, the kingdom announced at a news conference in the capital late Sunday.
The consortiums are led by US, Spanish and Italian firms.
The 176-kilometre (110-mile) six-line network is aimed at easing chronic traffic congestion in Riyadh, a city of six million people.
A consortium led by US engineering giant Bechtel Corp will construct two lines worth $9.45bn, the official SPA news agency reported.
Spanish BTP-FCC consortium will build three of the metro lines for $7.88bn, after it beat competition from South Korea's Samsung, France's Alstom and Freyssinet, and Dutch group Strukton to secure the deal.
Another line costing $5.21bn went to Italy's Ansaldo.
The lines are planned to stretch across the capital and serve the airport and the future King Abdullah Financial District.
Oil-rich Saudi Arabia also plans to invest billions of dollars in rail networks linking major cities across the vast desert kingdom.
The kingdom already has a 449-kilometre passenger line between Riyadh and Dammam in Eastern Province, with a parallel freight line linking the capital with the Gulf coast city.

Focus on emerging markets

Fickle investors have spurned emerging markets in recent weeks, but this route has obscured a more alluring vista out on the horizon.

Developing economies now account for 50% of global output and 80% of economic expansion, and are projected to continue growing far faster than developed nations. They are expected to possess an even larger share of global growth, wealth and investment opportunities in years to come.
So much so that the labels investors use to classify some of these nations will change as the developing develop and the emerging emerge into more potent economic powers.
But this long-term view has been lost on many of those who look to emerging market assets for a higher yield in the short term. Their ardour cooled when the Federal Reserve signalled it may soon ease the stimulus that has kept credit cheap, heralding higher interest rates ahead.
That was coupled with signs of slower growth in key emerging markets like China and Brazil.
Still, the developing world's gross domestic product growth of 5.0% this year and 5.4% next, as projected by the International Monetary Fund, will far outpace the advanced economies' 1.2% and 2.1%.
Developing countries are now also better armed to keep panic at bay, with more foreign exchange reserves than before and less aggregate debt than developed nations. Many have put their economies on firmer foundations.
Fear of a mass exodus of investors, however, has still sent emerging market shares down about 10% in the past two months, as measured by the MSCI Emerging Markets Index, compared with a marginal rise in the Standard & Poor's index of US shares.
Consider some other data that the World Bank has crunched, suggesting developing nations will attract increased capital flows because their growth implies big investment opportunities, improved creditworthiness and the ability to better diversify portfolios and manage risk.
According to one bank report, by 2030 developing countries will represent two-thirds of all global investment, up from about half today and from one-fifth in 2000.
At that time, half the global stock of capital is expected to reside in the developing world, compared to less than one-third today. That means a shift in the distribution of wealth and in the creation of opportunity.
This shift in investment activity coincides with the catch-up growth that began during the 1990s, as developing nations integrated into global markets, transformed their economies and improved their institutions, Hans Timmer, director of the World Bank team that produced the report, said.
"Productivity catch-up, increasing integration into global markets, sound macroeconomic policies and improved education and health are helping speed growth and create massive investment opportunities, which, in turn are spurring a shift in global economic weight to developing countries," the report said.
And to be clear, this is investment in buildings and machinery, not the more flighty financial flows.
The Bric nations (Brazil, Russia, India and China) are expected to loom large. China will make up 30% of all investment activity, while Brazil, India and Russia together will account for more than 13% of global investment in 2030, edging the 11% projected in the United States.
But their growing importance as sources and destinations of capital flows will not be a Bric story alone, the report says. It calls out sub-Saharan Africa, for example, which can be expected to not only receive a growing volume of capital flows but also to attract an increasing share of the total capital flows to developing countries.
The bank's researchers forecast that developing countries will likely have the resources needed to finance massive future investments for infrastructure and services.
That's predicated on strong saving rates, expected to top out at 34% of national income in 2014 and averaging 32% annually until 2030. Meanwhile, the saving rate for high-income countries will fall from 20% to 16%.
In aggregate terms, the developing world will account for 62-64% of global saving of $25-27trn by 2030, up from 45% in 2010.
This points to greater wealth in the developing world as a percentage of the global total: the average per capital income of the developing world is expected to rise from about 8.0% of that in high-income countries in 2010, to about 16% by 2030.
The average citizen of what is now a developing country, according to one bank scenario, will earn 19% of the income of an average high-income country citizen by 2030.
Indeed, one McKinsey study projects more than half the world's population will have joined the consuming classes by 2025, boosting consumption in emerging markets to $30trn a year. It will, the report says, be nothing short of the "defining growth opportunity of our times".
Seizing on this theme, Bhaskar Chakravorti and Gita Rao, writing in Foreign Affairs recently, pointed to the hand-wringing over the decline of American power and urged US businesses to compete in emerging markets to help themselves grow, hire again and create wealth.
Another fan with a long lens is Mark Mobius, chairperson of the Templeton Emerging Markets Group, who wrote last month that commodities, exports and infrastructure development could continue to be leading growth drivers in many emerging economies, but overall growth is likely to arise increasingly from healthier domestic demand.
"Expanding consumer wealth is creating an increasingly large and discriminating body of middle class consumers across emerging markets, and their demand is, in turn, creating increasingly significant domestic economic activity," Mobius said. "
"With a relatively high proportion of the population in emerging markets moving into the workforce and a relatively low proportion of dependents, demographics are acting to reinforce consumer demand."
These forecasts are not unconditional. Some risks will reduce over time. Others will increase.
The countries must continue to drive increases in productivity and attract investors to finance the investments, the bank's report says.
There is also an assumption that some of markets will have addressed some of the hurdles to invest now which variously include poor governance, lax enforcement of contracts and property rights, corruption, lack of adequate infrastructure and distribution networks and uneven pipeline of talent.
In addition, as emerging economies develop, their financial markets integrate more into global ones, and they ease restrictions on capital that flows across their borders. It then  becomes more difficult to shield them from international shocks, the World Bank's Timmer said.
They can mitigate those shocks as alternatives to the dollar rise, and as they build reserves in other currencies like the euro and the yuan.
There are other challenges that concern Neil Shearing, chief emerging markets economist at Capital Economics in London. The first, already well known in China, is the need to reposition economies to be more consumer-driven and less dependent on exports.
The second is avoiding the kind of investment bubble created in the eastern European property market - which burst a few years ago.
"If the investment is in glitzy shopping malls," Shearing told me, "it can create bubbles and be dangerous. Whereas investment in China is excessive but in roads, railways and ports that you do want to look for."
Growth may slow, and challenges will abound, but the prospects loom large. And therein lies opportunity.

Gas flows from Myanmar-China pipeline

Gas has started flowing to energy-hungry China through a pipeline from Myanmar, Beijing's official media reported, in a major project that highlights their economic links even as political ties come under pressure.
The 793-kilometre (492-mile) pipeline runs from Kyaukpyu on resource-rich Myanmar's west coast, close to the offshore Shwe gasfields, and across the country.
It enters southwest China at Ruili, near areas where heavy clashes between the rebel Kachin Independence Army and the Myanmar military were reported earlier this year.
As well as diversifying China's sources of fuel, by supplying energy to the vast and less developed west it could help Beijing's attempts to promote economic growth there.
It went into operation on Sunday at a ceremony in Mandalay, the official Xinhua news agency reported. "When torches flamed in the sky.... a storm of applause and cheers broke out," it said.
But the controversial project is the fruit of Beijing's long allegiance with the military junta that ruled Myanmar for decades, a bond that is weakening as the reforming government opens up to the West.
In an editorial on Monday China's Global Times newspaper, affiliated with the ruling Communist Party, said: "This is another breakthrough in China's strategy of energy diversification and has obvious significance in reducing China's dependence on the Strait of Malacca for the import of oil and natural gas."
Construction began in June 2010, according to China National Petroleum Corporation, the key investor. A parallel oil pipeline is also part of the project.
According to Xinhua, the gas pipeline will be able to carry 12 billion cubic metres annually, while the crude oil pipeline has a capacity of 22 million tonnes per year.
Under military rule Myanmar was a pariah state largely isolated from the rest of the world and subject to heavy international sanctions, but it maintained close economic links with China, which for years was its major foreign influence.
Now, with Myanmar which also includes tin and precious gems among its natural assets opening up politically and economically, more countries are setting up operations and seeking deals that sanctions had previously prevented.
"Myanmar used to be sanctioned by the West and China was its only friend," the Global Times editorial acknowledged.
"Nowadays, it has opened more to the West. This will reduce its passion in cooperating with China, but does not mean it will set itself against China."
But in a warning that Beijing expects its economic interests to be protected, the newspaper cautioned Myanmar that it must ensure agreements regarding the project are fulfilled, no matter who eventually leads the country, where democracy activist Aung San Suu Kyi has entered parliament.
"China should be determined to supervise Myanmar in doing so," the paper said. "Myanmar should hold a serious attitude toward China, and Chinese will take (the Myanmar) people's attitude toward the pipeline as a test of their stance on China."
Chinese nervousness about its investments in Myanmar comes after Naypyidaw said last week it had revised a controversial copper mine agreement with a Chinese company, after dozens of Buddhist monks and villagers were injured in a botched police raid.
Myanmar Minister of Mines Myint Aung told parliament that new terms gave the government 51% of the revenue, replacing a previous deal that was a joint venture between the Chinese firm and a holding company owned by the Myanmar military.
In 2011, Myanmar President Thein Sein stopped construction on the China-backed $3.6bn Myitsone Dam on the Irrawaddy river amid public opposition to the project, a move that led Beijing to call for its companies' rights and interests to be protected.
The Shwe Gas Movement, a campaign group, says the pipeline project has sparked protests over issues including demands for higher salaries for local workers, and concerns among farmers about its environmental impacts.
Myanmar plans to renegotiate billions of dollars of natural resource deals as it imposes tougher environmental standards and clamps down on corruption, the US-based Asia Society said in a report last month.

NEWS,26.07.2013

Tax dodgers disclose Swiss accounts

Almost 30 000 Britons and Austrians have come forward to pay tax on previously undisclosed Swiss bank accounts under bilateral agreements aimed at rooting out untaxed money in Switzerland.
Switzerland's Federal Tax Administration (FTA) said on Thursday it had transferred a first tranche of £258.3m ($396.7m) to Britain based on 14 789 declarations, and €416.7 ($551.6m) to Austria based on 13 592 clients.
Swiss secrecy laws have helped to make the country the world's biggest offshore financial centre, but have also drawn the ire of countries seeking to fight tax evasion.
Under the deals with Britain and Austria, clients with undisclosed Swiss bank accounts have the option either to provide information to the relevant tax authorities and pay any monies due, or make a punitive one-off payment in exchange for retaining their anonymity.
Thereafter taxes will be levied on the capital gains and income generated by the accounts, to be passed on to the relevant governments.
However, after Germany rejected a similar arrangement in December, Swiss banks have become less enthusiastic about a model they see as cumbersome, and which puts the onus of tax collection onto them.
With Swiss attitudes on automatic exchanges of information softening, more clients than expected are also choosing to pass account details direct to their tax authorities, rather than making the punitive payment to remain anonymous.
"Only a comparatively small group of individuals opted for the regularisation of assets by means of the one-off payment," said the Swiss Bankers Association, confirming its analysis from earlier in July.
Under a deal signed on January 1, Swiss banks paid 500m francs to Britain, which they will only receive back in full if their UK-resident clients pay at least 1.3bn francs through the anonymity scheme, rather than direct to Britain.
Britain's Office for Budget Responsibility has said it could rake in £3.2bn this year from individual payments and the anonymity scheme combined, but has raised doubts about the timing of payments after the latter scheme took in less than expected in the first part of the year.
According to an estimate by Imke Gerdes from global law firm Baker & McKenzie, Austria is expected to raise €1bn in tax revenue in 2013 from its agreement with Switzerland.
Switzerland's State Secretariat for International Financial Matters said implementation of the agreements had not thrown up any major obstacles, adding that negotiations on similar deals are currently underway with Greece and Italy.

Manning is whistleblower, not traitor

The US soldier accused of the biggest leak of classified information in the nation's history "is a whistleblower" and not a traitor as the government claims, Bradley Manning's defence lawyer said at his court-martial on Friday.
Army Private First Class Manning spilled secrets to the WikiLeaks anti-secrecy website because he wanted to provoke a broader debate on U.S. military and diplomatic policy out of concern for fellow Americans, the defense argued.
"That is a whistleblower, period. That is somebody who wants to inform the American public," defence lawyer David Coombs told Army Colonel Denise Lind, who is presiding over the trial.
Prosecutors, in five hours of closing arguments on Thursday, called the 25-year-old intelligence analyst a traitor, not a whistleblower, for releasing more than 700 000 documents through WikiLeaks. They said the short, bespectacled Manning had betrayed the trust his nation put in him when he released documents on the Iraq and Afghanistan wars.
The defence said he had been mischaracterised and recalled one of Manning's online chats in which he said, "I feel a great responsibility and duty to people, it's strange, I know. I place value on people first."
"It's an inconvenient truth for the government" that Manning cared about people, Coombs told the judge.
Manning is accused of 21 criminal counts, the most serious of which, aiding the enemy, carries a life sentence.
The case has pitted civil liberties groups, which seek increased transparency into the actions of the US military and security apparatus, against the government, which has argued that the low-level analyst, who was stationed in Baghdad at the time, endangered lives.
The WikiLeaks website, which in Manning's case published classified files, combat videos and diplomatic cables, has become controversial both for exposing secret data and for its founder, Julian Assange, who has been staying in the Ecuadorean Embassy in London for more than a year to avoid extradition to Sweden for alleged sex crimes.
Manning was arrested in May 2010 while serving in Iraq.
He chose a trial by a military judge, rather than a panel of military jurors.
In February, Manning pleaded guilty to lesser charges, including misusing classified information, such as military databases in Iraq and Afghanistan and files pertaining to Guantanamo Bay detainees.
The court-martial has recently been overshadowed to some extent by the case of fugitive US spy agency contractor Edward Snowden, who revealed to Britain's Guardian newspaper early last month the details of alleged secret US surveillance programs tracking Americans' telephone and internet use.

Remaining Snowden docs 'unlikely to stop US'

It's the stuff of spy novels: The hunted-down protagonist wins in the end because he's got damaging documents squirreled away, a bargaining chip against the bureaucrats who want to silence him.

If National Security Agency leaker Edward Snowden thinks he's living in such a thriller, legal experts say he's got another thing coming. Nothing he has is likely to scare off American prosecutors.

Snowden, stuck at a Russian airport while he seeks asylum from several countries, has not overtly threatened the US that he would release more damaging documents. But the journalist through whom he has been working, Glenn Greenwald, has said that blueprints that detail how the NSA operates will be made public if something should happen to Snowden.

"This is his insurance policy," said Greenwald, a columnist with Britain's Guardian newspaper who received Snowden's initial leaks and who communicates with the former NSA systems analyst. In a 13 July article in the Argentine newspaper La Nacion, Greenwald said, "The US government should be on its knees praying every day that nothing happens to Snowden, because if something does happen, all the information would be revealed and this would be its worst nightmare."

Snowden leaked details of two top secret US surveillance programmes. He has been charged with three offenses, including espionage, and could face up to 30 years in prison if convicted. Russian President Vladimir Putin has said that if Snowden releases any more of the materials, Russia will not grant him temporary asylum.

"If the Obama administration responds with an even harsher hand against me, they can be assured that they'll soon find themselves facing an equally harsh public response," Snowden said in a 17 June online question-and-answer forum.

No word on prosecution strategy

"Snowden has information enough to cause more damage to the US government in a single minute than any other person has ever had in the history of the United States," Greenwald said in the article in La Nacion.

The US Justice Department is not discussing its prosecution strategy. But while the US isn't eager for any more classified information to be disclosed, there's little chance Snowden will be able to use what he has as a bargaining chip to negotiate his prosecution or extradition. That's because giving into threats would risk opening the door for others to take similar action in the future.

The government must take the position: "We don't negotiate with extortionists," said Michael Chertoff, the former head of the Justice Department's criminal division and former secretary of homeland security. Chertoff said he can't recall a case in which the US government has caved under this type of threat.

"I'm betting that there is virtually nothing that Snowden could do or threaten to persuade the [US government] not to prosecute," said Peter Zeidenberg, a former federal prosecutor who was on the team that prosecuted I Lewis "Scooter" Libby, the Bush administration official who revealed the name of a CIA officer. Zeidenberg said doing so would send a damaging message from the US: "If you are going to steal secrets, get the crown jewels; that way, the government will never dare to prosecute."

Mark Zaid, an attorney who has represented people charged with espionage, said these threats from Snowden and Greenwald are a form of graymail, a tactic in which defendants charged with spying try to force the government to drop the charges by threatening to expose US secrets on the witness stand.

Zaid said every time Snowden releases more documents it could create additional criminal charges. Zaid is not working on Snowden's defence and hasn't been contacted by the leaker. But if he were representing Snowden, Zaid said, "I'd tell him to shut up" and accept a marriage proposal from Russian spy Anna Chapman. On 3 July, the attractive redhead who was swept up with nine other sleeper agents and deported from the US in 2010 tweeted, "Snowden, will you marry me?"

Common defence tactic

"The only thing really he's got now is either minimise the penalties going forward or work out some favourable resolution he's comfortable with somewhere in the world," Zaid said of Snowden.

And even then, it would be difficult for the US government to negotiate, he said.

"Because it's not just about Snowden anymore," Zaid said. "It's about anyone who would follow in his footsteps."

Graymail is a common defence tactic, and three decades ago a law was passed to combat it. Attorneys say the law was meant to let judges sort out the classified information behind closed doors and determine what the defence genuinely needs to make public. If the judge concludes the defendant cannot get a fair trial without spilling secrets, the government can decide whether to go forward or drop the case.

But Snowden has yet to enter into court proceedings. The government is in the process of trying to extradite him to face the charges.

US officials have said what Snowden already released will harm national security, though it's too early to tell what damage has been done. The US intelligence community has a good idea of what other documents he has.

'Extortion'

"I wouldn't describe it as graymail," Chertoff said. "I would describe it as blackmail."

As Chertoff sees it, Snowden's message to the government is this: "If you do anything that Snowden doesn't like he's going to try to hurt you by putting out information that could be damaging."

"To me, that's extortion," Chertoff said.

When Snowden arrived at Moscow's international airport on 23 June he was believed to be planning simply to transfer to a flight to Cuba and then to Venezuela to seek asylum. But the US cancelled his passport, stranding him. He hasn't been seen in public since, although he met with human rights activists and lawyers on 12 June. He's applied for temporary asylum in Russia and has said he'd like to visit the countries that offered him permanent asylum Venezuela, Bolivia and Nicaragua.

Russia won't budge on Snowden extradition

A spokesperson for President Vladimir Putin says Russia has not budged from its refusal to extradite US leaker Edward Snowden, who has applied for asylum.

Snowden, who is believed to have been staying at the Moscow airport transit zone since 23 June, applied for temporary asylum in Russia last week. The United States wants him sent home to face prosecution for espionage.

Asked by a reporter whether the government's position had changed, Dmitry Peskov told Russian news agencies that "Russia has never extradited anyone and never will". There is no US-Russia extradition treaty.

Peskov also said that Putin is not involved in reviewing Snowden's application or discussions of the ex-NSA contractor's future with the US, though the Russian Security Service, the FSB, had been in touch with the FBI.

Snowden issue 'not on Putin's agenda'

The fate of US intelligence leaker Edward Snowden is not on President Vladimir Putin's agenda as the fugitive stranded at a Moscow airport has made no direct approach to the Russian leader, the Kremlin said on Friday.

Snowden, who the United States wants to put on trial for leaking details of a massive surveillance programme, has been marooned at Sheremetyevo airport for over a month without ever crossing the Russian border.

He has asked Russia for asylum and wants to live in the country. But Kremlin spokesperson Dmitry Peskov indicated that Putin was in no mood to fast-track the issue.

"Looking at the president's schedule you can conclude that he is not cancelling anything for the sake of Snowden," Peskov said, quoted by Russian news agencies.

"As far as I know, Snowden has not made any request that would require examination by the head of state. Correspondingly, the question has not stood and does not stand on the agenda," Peskov added.

Airport stay could last months

He said that Putin was not involved in communications with the American side over the issue, which he stressed was being handled by the head of the FBI Robert Mueller and the head of the Russian Federal Security Service (FSB) Alexander Bortnikov.

There had been expectations that Snowden could emerge this week from the transit zone of the airport with a document allowing him freedom of movement in Russia while his application is considered. But he and the document never materialised.

The head of a civic panel that advises the Russian migration service warned on Friday that Snowden could still stay half a year in Sheremetyevo while his asylum application is considered.

"He could stay in Sheremetyevo for as long as his legal position is not clarified," Vladimir Volokh told the Interfax news agency.

"The three months asylum procedure could be extended by another three months. So he could be in the transit zone for a maximum of six months."

Pope urges Catholics to shake up dioceses

Pope Francis showed his rebel side on Thursday, urging young Catholics to shake up the church and make a "mess" in their dioceses by going out into the streets to spread the faith. It's a message he put into practice by visiting one of Rio's most violent slums and opening the church's World Youth Day on a rain-soaked Copacabana Beach.

Francis was elected pope on a mandate to reform the church, and in four short months he has started doing just that: He has broken long-held Vatican rules on everything from where he lays his head at night to how saints are made. He has cast off his security detail to get close to his flock, and his first international foray as pope has shown the faithful appreciate the gesture.

Dubbed the "slum pope" for his work with the poor, Francis received a rapturous welcome in the Varginha shantytown, part of a slum area of northern Rio so violent it's known as the Gaza Strip. The 76-year-old Argentine seemed entirely at home, wading into cheering crowds, kissing people young and old and telling them the Catholic Church is on their side.

"No one can remain insensitive to the inequalities that persist in the world!" Francis told a crowd of thousands who braved a cold rain and stood in a muddy soccer field to welcome him. "No amount of peace-building will be able to last, nor will harmony and happiness be attained in a society that ignores, pushes to the margins or excludes a part of itself."

It was a message aimed at reversing the decline in the numbers of Catholics in most of Latin America, with many poor worshippers leaving the church for Pentecostal and evangelical congregations. Those churches have taken up a huge presence in favelas, or shantytowns such as Varginha, attracting souls with nuts-and-bolts advice on how to improve their lives.

The Varginha visit was one of the highlights of Francis' weeklong trip to Brazil, his first as pope and one seemingly tailor-made for the first pontiff from the Americas.

Apologised in advance

The surprise, though, came during his encounter with Argentine pilgrims, scheduled at the last minute in yet another sign of how this spontaneous pope is shaking up the Vatican's staid and often stuffy protocol.

He told the thousands of youngsters, with an estimated 30 000 Argentines registered, to get out into the streets and spread their faith and make a "mess", saying a church that doesn't go out and preach simply becomes a civic or humanitarian group.

"I want to tell you something. What is it that I expect as a consequence of World Youth Day? I want a mess. We knew that in Rio there would be great disorder, but I want trouble in the dioceses!" he said, speaking off the cuff in his native Spanish. "I want to see the church get closer to the people. I want to get rid of clericalism, the mundane, this closing ourselves off within ourselves, in our parishes, schools or structures. Because these need to get out!"

Apparently realising the radicalness of his message, he apologised in advance to the bishops at home.

Later on Thursday, he travelled in his open-sided car through a huge crowd in the pouring rain to a welcoming ceremony on Copacabana beach. It was his first official event with the hundreds of thousands of young people who have flocked to Rio for World Youth Day. Vatican officials estimated the crowd at 1 million.

Cheering pilgrims from 175 nations lined the beachfront drive to catch a glimpse of the pontiff, with many jogging along with the vehicle behind police barricades. The car stopped several times for Francis to kiss babies and take a long sip of his beloved mate, the traditional Argentine tea served in a gourd with a straw, which was handed up to him by someone in the crowd.

Welcome move

After he arrived at the beach-front stage, though, the crowd along the streets melted away, driven home by the pouring rain that brought out vendors selling the plastic ponchos that have adorned cardinals and pilgrims alike during this unseasonably cold, wet week.

In an indication of the havoc wreaked by four days of steady showers, organisers made an almost unheard-of change in the festival's agenda, moving the Saturday vigil and climactic Sunday Mass to Copacabana Beach from a rural area 50km from the city centre. The terrain of the area, Guaratiba, had turned into a vast field of mud, making the overnight camping plans of pilgrims untenable.

The news was welcome to John White, a 57-year-old chaperone from the Albany, New York, diocese who attended the past five World Youth Days and complained that organisation in Rio was lacking.

"I'm super relieved. That place is a mud pit and I was concerned about the kid's health and that they might catch hypothermia," he said. "That's great news. I just wish the organisers would have told us."

Francis' visit to the Varginha slum followed in the footsteps of Pope John Paul II, who visited two such favelas during a 1980 trip to Brazil, and Mother Teresa, who visited Varginha itself in 1972. Her Missionaries of Charity order has kept a presence in the shantytown ever since.

Like Mother Teresa, Francis brought his own personal history to the visit: As archbishop of Buenos Aires, then-Cardinal Jorge Mario Bergoglio frequently preached in the poverty-wracked slums of his native city, putting into action his belief that the Catholic Church must go to the farthest peripheries to preach and not sit back and wait for the most marginalised to come to Sunday Mass.

Sensitivity towards injustice

Francis' open-air car was mobbed on a few occasions as he headed into Varginha's heavily policed, shack-lined streets, but he never seemed in danger. He was showered with gifts as he walked down one of the slum's main drags without an umbrella to shield him from the rain. A well-wisher gave him a paper lei to hang around his neck and he held up another offering a scarf from his favourite soccer team, Buenos Aires' San Lorenzo.

"Events like this, with the pope and all the local media, get everyone so excited," said Antonieta de Souza Costa, a 56-year-old vendor and resident of Varginha. "I think this visit is going to bring people back to the Catholic Church."

Addressing Varginha's residents, Francis acknowledged that young people in particular have a sensitivity toward injustice.

"You are often disappointed by facts that speak of corruption on the part of people who put their own interests before the common good," Francis told the crowd. "To you and all, I repeat: Never yield to discouragement, do not lose trust, do not allow your hope to be extinguished."

It was a clear reference to the violent protests that paralysed parts of the country in recent weeks as Brazilians furious over rampant corruption and inefficiency within the country's political class took to the streets.

Francis blasted what he said was a "culture of selfishness and individualism" that permeates society today, demanding that those with money and power share their wealth and resources to fight hunger and poverty.

"It is certainly necessary to give bread to the hungry this is an act of justice. But there is also a deeper hunger, the hunger for a happiness that only God can satisfy," he said.