NEWS,31.07.2012

Cyprus taxes set for hike to pay for bailout

International lenders negotiating a bailout for cash-strapped Cyprus are likely to seek cutbacks in its public payroll and some increases in taxation, the Cypriot finance minister said today.Officials from the International Monetary Fund, European Commission and European Central Bank held inconclusive talks in Cyprus last week. Cypriot officials said discussions would continue, with a new visit by the team, known as the "troika", possibly in September."From our side, there are certain issues which are not acceptable from the outset and require further discussion," said Vassos Shiarly, Cyprus's finance minister.He did not elaborate on the differences with lenders - the troika's insistence on scrapping wage indexation has been widely reported as a point of dispute - but implied that cutbacks in salaries in an inflated public sector could be an option.Cyprus, one of the smallest of 17 nations sharing the euro, became the fifth member of the currency bloc to seek a bailout last month, in its case from a banking sector burdened by the debt restructuring European leaders agreed for Greece."Based on the experience of Portugal and Spain, we believe the troika will expect cutbacks in state spending, which include the payroll, and an increase in taxes which will not impact the economy," Shiarly, a former top banker, told the semi-official Cyprus News Agency.He said however that the decision on what measures to take would be up to Cyprus, and not lenders."Since we are trying to find a considerable amount, that won't be achieved by cutting back on electricity or telephone bills," he said.Authorities introduced staggered cuts in public sector salaries last year, a two-percentage point rise in value-added tax this year, and increased tax on private-sector earnings.Glafcos Hadjipetrou, who heads Cyprus's main civil servants union Pasydy, said any measures should be balanced. "It is not possible for some people to finger-point and target public sector workers at every opportunity," he told reporters.Cyprus's two largest banks booked considerable losses on the writedown in Greek sovereign debt this year, diluting their regulatory capital and forcing them to seek government aid to recapitalise. Combined, the banks seek 2.4 billion euros, the equivalent of more than 10 percent of Cyprus's GDP.Shut out of international financial markets for more than a year in part because of fiscal slippage, Cyprus had little option but to seek aid from its EU partners.It has also asked Russia, which lent Cyprus 2.5 billion euros last year, for another 5 billion euro loan.It is not clear how much Cyprus will require from the troika. Authorities say the bailout will be comprehensive, and not limited to recapitalising banks.

 

Greece says cash reserves drying up

 

Near-bankrupt Greece is fast running out of cash while it waits for its next installment of aid from international lenders, a deputy finance minister said on Tuesday, sounding the alarm on the country's precarious financial position. Greece's European partners have repeatedly promised the country will be funded through August, when it must repay a 3.2 billion euro bond, but the details of the funding have yet to be disclosed.In the absence of that money, Greece would run out of funds to pay everyday public expenses ranging from police and other public service wages to pensions and social benefits. The country is wholly reliant on aid from its European partners and the International Monetary Fund, who have turned up the pressure in recent weeks by withholding further aid until an assesment of Greece's compliance with reforms is complete."Cash reserves are almost zero. It is risky to say until when (they will last) as it always depends on the budget execution, revenues and expenditure," Deputy Finance Minister Christos Staikouras told state NET television."But we are certainly on the brink, we did not receive the aid tranche we were supposed to and we have the pending issue of an ECB bond maturing on Aug. 20." Greece has narrowly dodged bankruptcy several times before, with the government carrying out a juggling act of holding off on paying some suppliers and issuing T-bills until the next tranche of aid from lenders arrives. The assessment of Greece's progress in meeting the terms of its bailout by EU/IMF inspectors, who are currently on a visit to Athens, is not expected until September. Adding to the uncertainty, Greek political leaders have been wrangling over €11.5bn of cuts that are crucial to appeasing the lenders.

 

Obama: Eurozone must take decisive steps

 

US President Barack Obama said on Monday that the eurozone is not buckling under the weight of the debt crisis, but that "decisive steps" have yet to be taken.Speaking at an event for campaign donors, the Democratic incumbent in the November 6 presidential election noted that the US economy is still unsteady, and warned of "some continued headwinds over the next several months.""Europe is still a challenge, and a lot of people in this room who have business in Europe understand that," he said to some sixty people, including Wall Street CEOs. "I don't think ultimately that the Europeans will let the euro unravel. But they're going to have to take some decisive steps. And I'm spending an enormous amount of time trying to work with them - and Tim Geithner is spending a lot of time working with them - to recognise that the sooner they take some decisive action, the better off we're going to be," Obama added, referring to the US treasury secretary.Obama spoke of the US's own "decisive action," referring to the $800bn stimulus package his administration pushed for in 2009."Despite it's unpopularity, (the plan) avoided this chronic bleeding wound that has been an enormous problem not just for Europe now, but for the entire global economy," he said.Obama's campaign for reelection suffers in the the polls from voters' attitudes on the wavering economy. Unemployment is at 8.2%, still 3% higher than before the 2008 crisis, and the White House does not expect the rate to dip below 7.9% before the end of the year.

NEWS,30.07.2012

Draghi under pressure to deliver euro pledge

European Central Bank (ECB) President Mario Draghi must back up his pledge to do what it takes to protect the euro when the bank's policymakers meet on Thursday or else face deep disappointment from investors hungry for, and expecting, immediate action. In his boldest comments to date, Draghi said last week that, within its mandate, the ECB was ready to do whatever it takes to preserve the euro, fuelling expectation it could revive its bond purchase programme as it did a year ago when it started buying the government debt of Spain and Italy.But that is far from certain. The ECB might instead explore new policy tools such as outright asset purchases, or quantitative easing, something its peers in Britain, the United States and Japan are already using to stimulate growth.There have also been recent suggestions that it could empower national central banks to broaden their asset buying abilities.The ECB is under intense pressure from within and outside the euro zone to intervene and bring those governments' soaring borrowing costs under control as the debt crisis deepens and increasingly poses a risk to the global economy. Reflecting the increased tension, U.S. Treasury Secretary Timothy Geithner is travelling to Germany, the euro zone's biggest economy and key to any euro rescue plan, on Monday to meet Germany's finance minister and Draghi. The ECB chief will also meet Bundesbank President Jens Weidmann, a strong opponent of the ECB's mothballed government bond purchase programme, ahead of Thursday's ECB meeting, a central bank source said. Italian and Spanish bond markets rallied after Draghi's comments last week, but fresh turmoil is on the cards if Draghi fails to persuade investors on Thursday that the ECB stands behind its pledge. "With expectations running high, the scope for disappointment at Thursday's ECB policy meeting has increased considerably," said Nicholas Spiro at Spiro Sovereign Strategy.The August meeting usually draws little attention and in fact the ECB used to skip the summer month's meeting until 2006 - the last year in which it took policy action in August.The ECB could well break with tradition this year.Huw Pill, economist at Goldman Sachs and a former senior ECB official, said the ECB could decide on Thursday to buy unsecured debt of bank or firms via the national central banks to spare its own balance sheet. "We forecast the announcement of measures to permit national central banks to purchase private-sector assets under their own risk to implement 'credit easing', within a general framework approved by the Governing Council," Pill said. Another cut in interest rates seems less likely as the ECB assesses the impact of its July rate cut to a new record low at 0.75%. At that meeting, the bank also decided to stop paying banks interest on their overnight deposits with it.A poll showed 44 out of 69 economists expect the ECB to cut rates again by the end of the year, with seven saying the bank would cut already in August. Draghi's remarks last Thursday left many in the market wondering whether his message had been intended and if so how far the ECB would be prepared to go before it reaches the limits of its mandate."If you had just landed from planet Mars, and this was the first time that you had heard the ECB speak on this issue, you might think that it was about to fire a big bazooka at sovereign bond markets," said David Mackie, economist at J.P. Morgan."But, having listened carefully to the central bank over the last two and a half years, we don't think that is about to happen," he added. Germany's Bundesbank doused hopes for renewed bond purchases on Friday, saying it still opposed the programme. Instead the ECB would rather see Europe's permanent ESM bailout fund start buying the bonds of euro zone strugglers, but the fund's limited fire power could make its intervention less effective. One solution would be to give the ESM access to ECB funding and Austrian policymaker Ewald Nowotny last week broke ranks with his colleagues, saying such a step had merits. Draghi's candid remarks took some of his fellow Governing Council members by surprise, having not agreed with them before hand on the message he would send. This has prompted concerns Draghi may have raised false hopes in the market."Nothing new has been discussed (on action ECB could take), but Draghi is not a man to make comments lightly and at the end of the day he is the one calling the shots," said a euro zone central bank source. "There was always going to be a time when Draghi decided he had to act," the source said. Draghi did not have a pre-written speech when he spoke in front of an investment conference in London on Thursday and only much later that day did the ECB publish the transcript online.Another source said Draghi was not flagging an imminent move, and any action would likely come only in September or October, in conjunction with euro zone governments, and with a request from Spain for a bailout programme, which Madrid was still trying to avoid.

Spanish economy shrinks faster

Spain slid deeper into recession in the second quarter as a tough new round of austerity to head off the budget crisis that threatens the euro took effect both on overall demand and the price consumers have to pay for goods. The first official numbers on gross domestic product showed the economy shrank 0.4% from the previous quarter after contracting 0.3% in the first three months of the year. The economy was 1.0% smaller than a year earlier. Consumer prices according to both Spanish and EU methodology rose 2.2% year-on-year, with the EU-harmonised increase above forecasts being due to medicine price hikes put in place by the government to save money and deflate the deficit. Economists warned price hikes, and especially a 3-point rise in value-added tax due to come into effect in September, would distort consumer prices while the deepening recession reflected slower domestic demand. That will further weaken the government’s efforts to get the economy growing again - vital if it is to meet targets on reducing its budget shortfall and halting a market-inspired crisis in how it finances its debt. “To properly follow Spain's economic reality, I would look at domestic service inflation, which is where we’ll see stagnation and even deflationary pressures. Consumption remains very weak,” economist at Madrid-based broker Intermoney Jose Carlos Diez said. Spain slipped into the second recession since 2009 in the first quarter and is expected to continue to shrink until well into 2013 as consumers and businesses rein in spending and the eurozone debt crisis saps investor confidence. Fears over the health of Spain’s economy as it fights to reduce its public deficit has lifted funding costs to euro-era highs in recent weeks leading many to think an application for a full-bailout could soon become inevitable. A full breakdown of the growth data will be published August 28, while the final price data will be available August 14.

NEWS,29.07.2012

The Countries That Will Win the Most Olympic Medals

 

According to a newly released report, the United States is predicted to win the most medals at the London 2012 Olympics. For a country with less than 5% of the world’s population, the U.S. is expected to win 103 medals at the XXX Olympiad, 10% more than the runner up China. This may come as no surprise to some, considering that it has won the most medals in 14 of the 25 Summer Games that it has participated in,including the past five Games.However, based on a report, published by the Tuck School of Business at Dartmouth, the number of medals a country wins supports the probability that it will win medals in subsequent Olympics. The report’s model predicted the medal count in Beijing in 2008 with 95% accuracy and has been the most accurate predictor of medal distribution among countries since it was unveiled for the Sydney Games in 2000. Based on the report, 24/7 Wall St. identified the ten countries that will win the most Olympics Medals at the London Summer Games.The accuracy of the formula is impressive, given that it only considers four main factors. It includes two economic measures population and gross domestic product (GDP) per capita which it assigns equal weight. The other two factors that it considers are unique to the Olympics and include total medals won, which it accords the most weight, and whether a country is hosting the Olympics, which has been assigned a different weight with each game.According to Emily Williams, author of the report and PhD candidate at London Business School and a recent graduate of Tuck School of Business at Dartmouth, when looking at the results “the lagged medal share has the biggest impact and the hosting effect is also pretty substantial.” The model takes into account the total number of medals won by each country in every Olympiad since 1960. China and the U.S. have dominated in recent years, which was factored into their 2012 estimate. Meanwhile, Russia, Australia, and Germany, fell below expectations last year, which has hurt their projections for this year as well.The host effect is considerable and should be a boon to the United Kingdom this summer. “The U.K. stands ready to greatly benefit in terms of its overall medal count and especially its coveted gold medal total,” Williams observes in the report. For the United Kingdom, the model predicts that this advantage will assure third place this summer with 25 golds, up from fourth place in 2008 when it was awarded only 19. It will also increase its total medals won from 47 in 2008 to 62 in 2012.In the 2004 study which the Williams’ report is based on, the authors suggest that the host effect could be the result of diminished costs for athletes from the host nation to participate, the benefit of participating in a home facility or the motivational force of competing before family, friends and fellow countrymen.A look at the countries with the most medals demonstrates the impact that a country’s population can have on the eventual medal count. According to the report, “The larger the population a country has, the more chance it will have an athlete with the extraordinary natural ability necessary to become an Olympic champion.” Of the top ten countries that are predicted to win the most medals this year, seven of the 10 are among the 10 most populous countries in the world. The exceptions are Pakistan, Nigeria and Bangladesh.Neither the population size nor the GDP per capita can be considered in isolation of the other. The U.S. and Germany both do well because they have large populations and considerable wealth. But having an edge in one of these factors can help compensate for a weakness in the other. For instance, China, with its large population, wins more medals than many countries with a higher GDP per capita. Although Australia’s population size ranks just 51st in the world, its GDP per capita ranks seventh, and its standing in the medal count for 2012 is predicted to be seventh.Based on the report, “Jolly Good Show: Who Will Win the 2012 Olympic Games in London?,” by Emily Williams, which relies on the model developed by Dartmouth professors Andrew Bernard and Meghan Busse, 24/7 Wall St. reviewed the countries that are likely to win the most medals at the 2012 London Games. To approximate the data which was used to calculate the projections, we considered 2011 GDP and population data from the World Bank for the 28 countries that the model predicts will win 6 or more gold medals. We obtained total Summer Olympics medal counts from the NBC website, also to approximate the data used for the formula. For countries that have not consistently had the same borders, including Germany and Russia, the medal counts for the entire area were included. For example, all medals won by the former USSR were included in Russia’s count.These are the ten countries that will win the most medals in the London Olympic Games.

Aurora Shooting: Mall's Troubled History Of Racism, Crime

Until last week, the Town Center at Aurora seemed like a typical mall.But the 37-year-old shopping center had problems even before July 20, when a gunman opened fire at a midnight screening of "The Dark Knight Rises" in the movie theater that sits adjacent to the mall in its parking lot.In recent years, shoppers have fled the aging mall for fancier centers like nearby Cherry Creek. Management, seeking to weed out what it perceived as undesirable customers, set a curfew for minors and enforced a dress code for shoppers. In 2004, a mall leasing agent was caught on audio tape explaining that the mall wanted to attract more whites and "reduce negative aspects" like "young, black customer(s)." "This is why we don't hang around aurora mall/Century 16," one resident tweeted hours after the shooting. "Aurora mall has always been ghetto, tho" said another.In some ways, Town Center's history follows the same rise and stumble as many American malls. When it opened in 1975, J.C. Penney and Sears fed the shopping appetite of new middle class fleeing Denver for cul-de-sacs and spotless mailboxes. In 1998, Simon Property Group, the largest mall owner in America with 221 U.S. properties and an annual revenue of $4.3 billion in 2011, acquired the mall. Simon rechristened the structure in 2005, calling it Town Center, an appropriate name in Aurora; the sprawling suburb of 325,000 had built its own municipal campus across the highway from the mall in 2003 -- an attempt to manufacture a downtown.When malls were first conceived, they were meant to be utopias. Early mall developer Victor Gruen called them "crystallization points for suburbia's community life." But these days, the rise of online shopping and a lingering economic crisis have sucked away malls' reverie. Many are abandoned, attracting crime and draining municipal budgets; others are losing shops. The average vacancy rate for regional malls is currently at 8.9 percent, according to Reis Inc., a real estate data and analysis firm. Once hovering around 5 or 6 percent in the mid 2000s, the rate nearly doubled over the course of the recession.While Town Center hasn't suffered from fleeing stores, it has coped with crime before. Gang activity surfaced at the mall in the early 2000s and was one factor that led Simon to announce it planned to spruce up the center with a $100 million renovation. In 2005, during the renovations, a woman was shot and killed outside the Champs store. The city of Aurora contributed $15 million in tax incentives to the renovations.At the time, the mall also faced accusations of racism. Before the shooting, a leasing agent was caught on audio tape by one of the mall's tenants saying the planned renovations were in part to attract more white people. After local television station 7NEWS aired the comments in August 2004, Simon suspended the agent, promising to hire more black staff and begin a parental patrol program that paid adults to supervise youth. Three months after the shooting in 2005, Simon also established a curfew for teens. The movie theater, where the shooting occurred Friday, was built in 1998 by Century Theaters now a part of Cinemark in the southeast parking lot of the oval-shaped mall complex. Though unattached, the Century 16 theater has always been considered part of the mall. The theater sits on land registered to Simon Debartolo Group, the former name of Simon Property Group, according to the Arapahoe County assessor database. The theater is owned by Century Theatres.Up until this week, the theater was also listed as a business on Simon's official website for the mall alongside the rest of the stores. But in the days following the shooting, Town Center removed Century 16 from its online directory. A cache of the old listing from July 7 is still available.In a written statement sent to The Huffington Post on Thursday, Simon said, "There is no connection between our operation of the mall and the terrible tragedy which occurred at the theater last Friday morning. Since 2004, we have invested nearly $60 million in Town Center at Aurora and have made it a great shopping venue for our tenants and customers." Les Morris, a spokesman for Simon, refused to answer questions or confirm facts about the mall. Since the shooting, store employees have been told by management not to talk to press, according to a cashier at the mall boutique Luxie.In a statement released on Friday, Cinemark said that it was "deeply saddened about this tragic incident."Locally, there is a history of complaints about racial profiling at the mall. In 1990, the NAACP spoke out about the mall's security guards, provoking then owner Corporate Property Investors to retrain staff and hire more minority guards.In wake of the scandal over the leasing agent's comments, residents hoped the mall's policies might change for good. Alvertis Simmons, 55, a community organizer in Aurora, flew to Simon's headquarters in Indianapolis that year to discuss how the mall could improve its relationship with minorities. He worked with the company to implement its parental patrol program.But Simon never followed through on its promise to hire more black staff, according to Simmons, even though it hired a few contractors during the renovations. "They could do better," he said this week. "Aurora mall would have never changed their culture had they not been taped."The leasing agent is no longer employed at Simon, the company said in its statement Thursday.In 2006, the local chapter of the Association of Community Organizations for Reform Now (ACORN) conducted a survey of 1,000 mall shoppers on discrimination and identified about 50 minority youth who said they were were profiled by mall security, mostly because of their clothing. "There was no clear demarcation [in the dress code] of what was gang attire and what was urban culture," said Ben Hanna, 31, who worked as head organizer for ACORN at the time. The Simon Property Group code of conduct posted on the websites and in the hallways of many of its malls does not mention "gang apparel" but requires shoppers to wear"appropriate" clothing. "Apparel that may provoke a disturbance or incite violence is prohibited," it states.Cinemark never adopted any of the mall's policies such as the dress code or parental patrol, according to Simmons. Still, the theater's clientele was affected as they also patronized the mall, he said. Freddie Hanns, 60, visits the mall almost every week and worked briefly as a contractor there during the renovations. Hanns, like Simmons, is black. "I think the mall has gotten better," he said. "It couldn't get any worse."But Aurora's racial tensions have mounted in the past decade as downtown Denver gentrifies and minorities move to the suburbs, according to Jeremy Nemeth, chair and professor of urban planning at the University of Colorado Denver. In 2000, Aurora was 13.4 percent black, 19.8 percent Hispanic and 68.9 percent white. In 2010, it was 15.7 percent black, 28.7 Hispanic and 61.1 percent white.Massacres like the one on July 20, however, are generally not caused by shifting demographics. Law enforcement officials call people like Aurora suspect James Holmes "active shooters," individuals who open fire in crowded areas and kill at random. Active shooter incidents are on the rise in shopping centers; besides the one in Aurora, there have been at least nine mall shooting sprees in the United States unrelated to gang or personal disputes since 2005."The mall is a victim of individuals who want to inflict as much carnage and get as much publicity as possible," said Malachy Cavanagh, a spokesman for the International Council of Shopping Centers. Like schools and churches, malls become targets because they draw large crowds and are publicly accessible, he said.In Aurora and many other suburbs, malls are also among the few public places teens can congregate. "Libraries close early. Recreation centers, they don't have them in the vicinity. And it's hot, hot, hot," said Simmons. "All they got is the mall."In the past decade, the Department of Homeland Security has partnered with the retail industry to develop training programs for dealing with active shooters, said Cavanagh.One way to deal with recurring crime like gang violence is to make malls more restrictive, as Town Center attempted to do. Unlike true public spaces, privately owned malls for the most part can expel anyone who looks suspicious; they aren't obliged to give patrons a right to free speech. There are a few exceptions: In five states, one of which is Colorado, courts have established rulings requiring mall owners to permit certain political activities like protesting and collecting ballot signatures."Malls are repressive spaces," said Michael Sorkin, an architect and critic who has written on malls and public space. "They have distorted the nature of the way in which one is able to participate in the life of a city as a citizen." This could make malls a target for violence on the part of those disenfranchised by consumer culture, Sorkin says.Yet few mall policies could have helped catch James Holmes. The 24-year-old graduate student at the University of Colorado grew up in a white, upper middle class family in San Diego as close as it gets to one of Town Center's target customers."It doesn't matter if you have 100 parent patrols at the mall or at the movies," said Simmons. "That guy was going to do what he did."

NEWS,28.07.2012

Olympics open with pageant for next generation

Queen Elizabeth declared the London Olympics open after playing a cameo role in a dizzying ceremony designed to highlight the grandeur and eccentricities of the nation that invented modern sport.Children's voices intertwining from the four corners of her United Kingdom ushered in an exuberant historical pageant of meadows, smokestacks and digital wizardry before an audience of 60,000 in the Olympic Stadium and a probable billion television viewers around the globe.Many of them gasped at the sight of the 86-year-old queen, marking her Diamond Jubilee this year, putting aside royal reserve in a video where she stepped onto a helicopter with James Bond actor Daniel Craig to be carried aloft from Buckingham Palace.A film clip showed doubles of her and Bond skydiving towards the stadium and, moments later, she made her entrance in person."In a sense, the Olympic Games are coming home tonight," IOC President Jacques Rogge told the crowd."This great, sports-loving country is widely recognised as the birthplace of modern sport."To underline the point, Bradley Wiggins, crowned five days earlier as Britain's first winner of the Tour de France and hoping to add more road cycling gold in London, tolled the world's largest tuned bell to begin the ceremony.In one moment of simple drama, the stadium fell silent as five giant, incandescent Olympic rings, symbolically forged from British steel mills, were lifted serenely out of the stadium by weather balloons, destined for the stratosphere.And at the climax of an evening that had children centre-stage, seven teenage athletes were given the honour of lighting the Olympic cauldron that will burn for the duration of the Games, in keeping with the theme of "Inspire a Generation".More than 10,000 athletes from 204 countries will compete in 26 sports over 17 days of competition in the only city to have staged the modern Games three times.Most of them were there for the traditional alphabetical parade of the national teams, not least the athletes from Egypt, Tunisia, Libya and Yemen competing in their first Olympics since their peoples overthrew autocrats in Arab Spring revolutions.Brunei and Qatar were led in by their countries' first ever female Olympians and so, along with Saudi Arabia, ended their status as the only countries to exclude women from their teams.At a reception, the queen spelled out the role played by her family after the Olympics were revived in Athens in 1896."This will be the third London Olympiad. My great grandfather opened the 1908 Games at White City. My father opened the 1948 Games at Wembley Stadium. And, later this evening, I will take pleasure in declaring open the 2012 London Olympic Games at Stratford in the east of London," she said."Over recent months, many in these islands have watched with growing excitement the journey of the Olympic torch around the United Kingdom. As the torch has passed through villages and towns, it has drawn people together as families and communities."To me, this spirit of togetherness is a most important part of the Olympic ideal. And the British people can be proud of the part they have played in keeping the spirit alive."The opening show, costing an estimated 27 million pounds, was inspired by William Shakespeare's play The Tempest, his late-life meditation on age and mortality.But it was children who set the tone, starting from the moment when live pictures of junior choirs singing in the landscapes of England, Scotland, Wales and Northern Ireland were beamed into the stadium's giant screens, four traditional songs woven together into a musical tapestry of Britain.Oscar-winning film director Danny Boyle began his sweep through British history by grassing over the arena in a depiction of the pastoral idyll mythologised by the romantic poet William Blake as "England's green and pleasant land".Idyll turned swiftly to inferno as the Industrial Revolution's "dark Satanic mills" burst from the ground, before those same mills forged the last of five giant Olympic rings that rose into the sky.At the end of a three-hour extravaganza, David Beckham, the English soccer icon who had helped convince the IOC to grant London the Games, stepped off a speedboat carrying the Olympic flame at the end of a torch relay that inspired many ordinary people around Britain.Past Olympic heroes including Muhammad Ali, who lit the cauldron at the 1996 Atlanta Games, and British rower Steve Redgrave, the only person to win gold at five successive games, welcomed the flame into the stadium.Yet it was not a celebrity but seven teenage athletes who lit a spectacular arrangement of over 200 copper 'petals' representing the participating countries, which rose up in the centre of the stadium to converge into a single cauldron.Moments later, a balloon-borne camera relayed live pictures of the earlier-released interlocked rings gliding through the stratosphere against the curved horizon of the planet below.The performance included surreal and often witty references to British achievements, especially in social reform and the arts, and ended with former Beatle Paul McCartney singing Hey Jude.Many sequences turned the entire stadium into a vast video screen made up of tens of thousands of "pixels" attached to the seats. One giant message, unveiled by Tim Berners-Lee, British inventor of the world wide web, read "This is for Everyone".Until the last few days, media coverage had been dominated by the security firm G4S's admission that it could not provide enough guards for Olympic venues. Thousands of extra soldiers had to be deployed at the last minute, despite the company's multi-million-dollar contract from the government.Suicide attacks that killed 52 people in London in July 2005, the day after it was awarded the Games, ensured that security would remain a worry. And this year the Games mark the 40th anniversary of the 1972 Munich massacre, when 11 Israeli Olympic team members were killed by Palestinian militants.Although no medals will be awarded until Saturday, the women's soccer tournament started on Wednesday, and on Friday South Korean archers set the first world records of the Games.Im Dong-hyun, who suffers from severe myopia and just aims at "a blob of yellow colour", broke his own 72-arrow world record with a score of 699 out of a possible 720, leading his two colleagues to a record combined score as well.The Games' first medals will be decided in the women's 10 metres air rifle final on Saturday, with the big action coming in the men's cycling road race, where world champion Mark Cavendish is favourite to become Britain's first gold medallist.In the evening, Americans Michael Phelps and Ryan Lochte are scheduled to line up for a classic confrontation in the men's 400 metres individual medley final.Phelps, competing in seven events after winning a record eight gold medals four years ago in Beijing, is bidding to become the first swimmer to win gold in the same discipline three times in a row."This is going to be a special race," said Gregg Troy, head coach of the American men's team. "I can't imagine a better way to promote our sport than a race like this on the first day."

 

Iran expands oil tanker insurance

Iran is expanding its insurance on its fleet of 47 oil tankers through a multi-billion-dollar line of credit as it seeks to get around EU sanctions crimping its crude exports, reports said on Saturday."Iran is ready to give total insurance for the transport of its oil... and the commitments by Iranian insurers are no different from those by Western insurers and therefore all risks and dangers are insured," Iran's Opec representative, Mohammad Ali Khatibi, was quoted as saying by the state-run newspaper Iran.The Fars news agency cited an "informed source" it did not identify as saying that the government had given the central state insurance agency, Bimeh Markazi, a line of credit worth several billion dollars to insure the tankers. It said 10% of the money had already been transferred.The measure, apparently aimed at any buyer of Iranian crude worldwide, expands on a promise of insurance for deliveries of its oil using Iranian tankers to major customers China and India. South Korea is also mulling joining the offer.Iran is suffering a cut in oil sales abroad of up to 40%, according to the International Energy Agency (IEA), because of an EU embargo on Iranian crude imports and a related ban on European insurers providing cover for deliveries of Iranian oil anywhere in the world.European insurers accounted for 90% of coverage for Iran before the EU sanctions took effect on 1 July.Iran, which is striving to maintain a semblance of business as usual over its oil exports, is attempting to fill the insurance gap itself, but it faces several obstacles.US sanctions targeting Iranian financial transactions make it unclear how Iran could pay out any claims arising from accidents involving its tankers.Oil tankers are typically insured for up to $1bn because of the risk of oil spills.A European analyst in Tehran noted that the 40 tankers in Iran's fleet owned by the NITC, formerly known as the National Iranian Tanker Company, each had a long-distance capacity of up to two million barrels of oil.Iran, before the EU sanctions, exported around 2.5 million barrels of oil per day. The IEA estimates that has now been cut to around 1.5 million barrels per day.Several of the NITC vessels were being used in June to store Iranian offshore crude that Tehran has not been able to sell because of the sanctions, according to industry specialists.Iran has announced plans to quickly expand its onshore storage capacity, which has been saturated, including by subcontracting to private firms. Tehran has also ordered 12 new supertankers from China and should receive the first in December.

Pass tax proposal - Obama urges

US President Barack Obama urged Republicans in the House of Representatives on Saturday to pass his proposal calling for extending tax cuts for everybody but the richest Americans."Now it comes down to this," Obama said in his weekly radio and Internet address. "If 218 Members of the House vote the right way, 98% of American families and 97% of small business owners will have the certainty of knowing that their income taxes will not go up next year."On 1 January, a tax cut adopted under former president George W Bush and extended under Obama is set to expire. But Democrats and Republicans strongly disagree over how to extend it.While Obama favours higher taxes for the rich, Republicans argue it would undercut the nation's fragile economic recovery.This past week, the Democratic-controlled Senate passed a tax cut extension for American families earning less than $250 000 a year, but Republicans in the House are staunchly opposed to this bill, arguing that all Americans, including the wealthy ones, should benefit from the extension.The president noted that he fundamentally disagreed with those who believed that the best way to create prosperity in America was to let it trickle down from the top."I know they're wrong because we already tried it that way for most of the last decade. It didn't work," Obama said."We're still paying for trillions of dollars in tax cuts that benefited the wealthiest Americans more than anyone else; tax cuts that didn't lead to the middle class jobs or higher wages we were promised and that helped take us from record surpluses to record deficits."The president said the country could not afford more of top-down economics. He said America needed policies that would grow and strengthen the middle class, help create jobs and make education and training more affordable.

NEWS,27.07.2012

US drought woes deepen

The drought in America's breadbasket is intensifying at an unprecedented rate, experts warned on Thursday, driving concern food prices could soar if crops in the world's key producer are decimated.The US Drought Monitor reported a nearly threefold increase in areas of extreme drought over the past week in the nine Midwestern states where three quarters of the country's corn and soybean crops are produced."That expansion of D3 or extreme conditions intensified quite rapidly and we went from 11.9% to 28.9% in just one week," Brian Fuchs, a climatologist and Drought Monitor author, said."For myself, studying drought, that's rapid. We've seen a lot of things developing with this drought that were unprecedented, especially the speed."Almost two thirds of the continental United States are now suffering drought conditions, the largest area recorded since the Drought Monitor project started in 1999."If you are following the grain prices here in the US, they are reflecting the anticipated shortages with a price increase," Fuchs said."In turn, you're going to see those price increases trickle into the other areas that use those grain crops: cattle feed, ethanol production and then food stuffs."In some rural areas, municipal water suppliers are talking about mandatory restrictions because they have seen such a dramatic drop in the water table that they fear being unable to fulfill deliveries to customers, Fuchs said."Things have really developed over the last two months and conditions have worsened just that quick and that is really unprecedented," he added."Definitely exports are going to suffer because there is going to be less available and the markets are already reflecting that."It's anticipated that this drought is going to persist through the next couple of months at least and conditions are not overly favorable to see any widespread improvement. "President Barack Obama's administration has opened up protected US land to help farmers and ranchers hit by the drought and encouraged crop insurance companies to forgo charging interest for a month.Officials have said the drought will drive up food prices since 78% of US corn and 11% of soybean crops have been hit and the United States is the world's biggest producer of those crops.The current drought has been compared to a 1988 crisis that cut production by 20% and cost the economy tens of billions of dollars.The US Department of Agriculture issued retail price forecasts Wednesday for 2013 and they already showed an impact from the drought, with consumers expected to pay between three and four percent more for their groceries."The 2013 numbers reflect higher-than-average inflation which is partly a function of the drought and the higher crop prices," said Ephraim Leibtag of the USDA's Economic Research Service."The drought effects are starting now at the farm and agricultural level."Those things take two to 12 months to work through the system. So you'll see some effects as early as the fall (autumn) in terms of the grocery stores and restaurants, certainly later in the year and into 2013."The full impact of the drought on food prices won't be known for months."It's too early to tell as we don't know how much of the crop is going to be lost and how much higher corn and soybean prices will go," Leibtag said."We are not forecasting major impacts on retail food at this point. If the drought gets worse or corn and soybean prices rise even more, that would start to have a bigger impact."Even before the last week, farmers were telling AFP they may have to cut their losses  chopping down fields of half-mature, earless corn to feed the stalks to cattle.Weather forecasters predicted no respite.

ECB chief vows total support for euro

 

European Central Bank chief Mario Draghi vowed unconditional support for the beleaguered euro on Thursday, sending markets soaring orbit as traders eyed further action from the bank to shore up the eurozone.In apparently unscripted comments in London, the normally reserved Draghi said his institution was "ready to do whatever it takes to preserve the euro. And believe me it will be enough".Stressing that the euro was "irreversible", Draghi said that part of his bank's remit was to keep sovereign debt levels under control when they hampered the proper functioning of interest rate policy.Analysts saw Draghi's comment as a hint the ECB could soon reintroduce its hotly contested programme of buying up the bonds of struggling eurozone countries that has lain dormant for several months.As Spanish borrowing costs soared over seven percent earlier this week  the level that forced Ireland, Portugal and Greece into bailouts  the bank has come under increasing pressure to restart the programme.And Draghi's hints had an immediate impact on borrowing costs, with Spain's shooting below the seven-percent mark and Italian costs plummeting to just above six percent.The comments also sent stock markets into euphoric mood and boosted the euro on the foreign exchange markets after several days of painful declines amid fresh speculation the eurozone might implode or Spain might need a bailout.ABN Amro economist Nick Kounis said that Draghi had "opened the door for a restart of the central bank's government bond purchase programme", untapped since February."The crisis response looks likely to focus on direct intervention in the government bond market," he added.And CMC Markets analyst Michael Hewson said that Draghi's remarks "suggest that the ECB may well do something about capping rising bond yields".Attention would now turn to Draghi's monthly news conference in Frankfurt on August 2 "to see if he means what he says", the analyst added.Since the eurozone sovereign debt crisis erupted more than two and a half years ago, the ECB has won praise as the only European institution that has acted quickly and decisively to stem the turmoil.It has cut interest rates to a record low level of 0.75% and flooded banks with more than €1 trillion of ultra-cheap loans in a bid to stimulate lending and get the economy moving again.ECB officials have never ceased to repeat that such measures are only temporary and merely meant to buy time for governments to tackle the root causes of the crisis - profligate spending.Draghi insisted again in his London speech that the ECB did not want to "supplement actions that have to be taken by governments"."That is not our job," he insisted.But the central bank chief did praise efforts taken by EU leaders to fight the flames saying that "progress has been extraordinary in the last six months".Meanwhile, European Commission President Jose Manuel Barroso, on his first visit to Athens since the crisis began, urged Greece to deliver on its obligations if it wishes to remain in the eurozone."To maintain the trust of its European and international partners, the delays must end. Words are not enough, actions are more important," Barroso said after talks with Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras."All heads of states and governments of the euro area have stated in the clearest possible terms that Greece will stay in the euro as long as commitments made are honoured," Barroso told his hosts.Samaras, who leads a three-party coalition government that campaigned on keeping Greece in the eurozone, said he was "determined to go ahead with structural changes and privatisations and implement the measures agreed on in order to reduce the deficit".But the key measure demanded by EU-IMF lenders, whose auditors are again in Athens inspecting government books, now includes €11.6bn in new spending cuts, which is certain to face stiff resistance by Greeks.The IMF said on Thursday that it expected discussions with Greek authorities over the country's bailout-supported programme to continue into September, longer than expected.

NEWS,26.07.2012

G20 Tax Evasion Crackdown Yields Results But Challenges Remain

 A global campaign to tax trillions of dollars hidden in offshore tax havens has made revolutionary progress, an official leading the drive said, rejecting suggestions that the super rich are running rings around Western authorities.Pascal Saint-Amans, director of a unit at the Organisation for Economic Cooperation and Development, also cast doubt on estimates that the havens are illicitly sheltering wealth equivalent to several hundred times the fortune of Bill Gates.Leaders of the G20 group of leading Western and developing nations launched the campaign three years ago, aiming to claw back billions in lost tax revenue at a time when many governments are trying to cut huge budget deficits.Saint-Amans said his gut feeling was that before the G20's initiative at its 2009 London summit, people could hide their wealth in offshore havens without any risk of legal reprisals."Now you are at risk and that's a major change. That's a revolution," Paris-based Saint-Amans told in a telephone interview. Even if money is transferred abroad, rules improving transparency have made it easier for the taxman to find it, said Saint-Amans, whose unit is tasked with leading the Western efforts to fight tax evasion.The Tax Justice Network, a campaign group, estimated last weekend that as much as $21 to $32 trillion of financial assets are sheltered in offshore tax havens, representing up to $280 billion in lost income tax.That total wealth would dwarf the fortune of Microsoft Corp cofounder and philanthropist Bill Gates. In March Forbes magazine ranked Gates second on its global rich list with total wealth of a mere $61 billion.Saint-Amans suggested the TJN estimates might be overstated. "I was wondering where the equivalent of 450 Bill Gates are hiding from everyone. It looks like the equivalent 20,000 unknown billionaires in the world or 200,000 people with net worth of 100 million," he said.The Scorpio Partnership, a consultancy that analyses the global private wealth management industry, estimates the amount of money held offshore by people worth at least $1 million at a more modest $8-$9 trillion.Saint-Amans, who heads the OECD's Centre for Tax Policy and Administration, acknowledged his organisation makes no equivalent estimate. "I would rather spend the resource improving the legal framework and putting an end to loopholes than trying to find the magic number," he said.In a statement accompanying its research, TJN criticised the OECD and other international bodies for not doing enough to track offshore wealth, saying it was scandalous that institutions devoted so little research to the issue.G20 leaders agreed at their London summit to crack down on tax evasion and banking secrecy, and asked the OECD to publish lists of tax havens according to how cooperative authorities there are on releasing information about offshore wealth holdings.There are now 89 countries on the OECD's "white list" of jurisdictions that have implemented internationally agreed tax standards. These jurisdictions have between them signed more than 800 agreements on exchanging information with authorities other countries, Saint-Amans said."Until 2009, countries said being secretive is justified and fair. The change in the world is nobody says that any more, so that is a big change," he said.Western tax authorities have individually stepped up efforts to net more money hidden abroad by their own citizens through a series of amnesties targeting people with accounts in jurisdictions such as Switzerland and Liechtenstein.At the same time they have turned up the heat on citizens suspected of tax evasion. This has included using details of Swiss accounts originally stolen from HSBC by a former IT employee that found their way into the hands of tax authorities around Europe.Britain's HMRC tax office expects an amnesty offering leniency to people with accounts in Liechtenstein if they come clean to raise about 3 billion pounds, while a similar deal on Swiss accounts will bring in up to 7 billion pounds.Campaigners argue that such initiatives will achieve only limited success because a financial industry designed to ensure confidentiality across multiple jurisdictions makes it impossible to shut down tax fraud or money laundering."Anybody who's serious about holding money offshore ... will hold it through a trust," said Richard Murphy, a chartered accountant and director of Tax Research, a think-tank."You'd have the trust in one territory, the company in another territory, its directors in another territory and its bank account in a fourth territory. So making an application for information is not very simple."Murphy dismissed the OECD's progress in cracking down on tax havens, arguing that implementation of information exchange between territories is limited in practice and the process too complex to be workable."They've set up a system where it's virtually impossible to apply for information ... The OECD claiming they are making progress is like checking the stable door has been shut way after the horse bolted. Not just the horse, the entire stable has bolted," he said.The TJN research on offshore wealth - authored by James Henry, a former chief economist at consultant McKinsey & Co - highlights the "often unsavoury role" played by banks in catering to rich individuals who want to hide money offshore.Large private banks with offshore businesses reject the idea they aid tax evasion."Our Code of Conduct explicitly says not to assist clients in activities intended to breach their tax obligations," said a spokesman for Swiss bank Credit Suisse who declined to comment specifically on the contents of the TJN report But recent crackdowns by tax authorities in countries such as Britain, the United States and Germany have proved embarrassing for Swiss banks.German tax authorities are investigating roughly 5,000 German clients of Credit Suisse while French officials have searched the homes of UBS employees.At least 11 Swiss banks suspected of helping wealthy American clients dodge taxes are currently subject to a U.S. investigation.Saint-Amans said the OECD's efforts have focused on engaging with governments rather than imposing more supervision on financial institutions. The complexity of the industry, he said, meant that greater information exchange was the best way to tackle people using banking secrecy to break the law."I'm not sure that nationalising the banking industry throughout the world is the solution. The fact you have private practitioners being involved in a sophisticated environment is why you need to favour transparency and exchange of information," he said.Efforts to increase disclosure and combat both tax evasion and money laundering by international bodies such as the OECD and the Financial Action Task Force (FATF), a Paris-based inter-governmental body, have focused on self regulation."We've tried to ensure that what we're talking about is not to create some draconian system where we put a policeman in every financial institution which would be impossible to do," said a senior source at the FATF, which was set up to combat money laundering and terrorist financing.Nick Matthews, anti-money laundering and offshore financial industry specialist at Kinetic Partners, said purging the world's financial system is "incredibly difficult"."Clearly tax evasion leads to money laundering and is a crime but you would have money laundering even if there was no tax, because you still have proceeds from crime or corruption polluting the financial system," he said."That is why I say that no bank would ever stand up and claim that they are not being used to launder money. They appreciate that they are only as strong as their weakest link."

Wells Fargo In Analyst Note, 'Does Service Mean Anything?'

A banking analyst suggested that good customer service hurts a bank's profits. Wells Fargo pissed off the wrong customer.Earlier this week, Richard X. 'Dick' Bove, a well-known banking analyst, blasted the bank in a research note entitled "Does Service Mean Anything?" According to Bove, 71, Wells Fargo royally botched his personal account, charging him mystery fees, bungling his mortgage refinance application and basically blowing him off on the customer service front. Bove, who had been a Wachovia customer for around 10 years before Wells Fargo took over, said the changes at the Tampa, Fla., branch where he had been banking were considerable. Gone was the greeter at the door, for example. In place of a friendly 'Hello' were sales desks. He recounts one occasion when he visited his branch to speak with a personal banker but was left waiting in limbo. "The bank officer made me wait a bit; came out of his office and entered a public bathroom; and then left the bank," Bove recounted in his note. "Nothing was solved for me on that visit."Wells Fargo acquired Wachovia in 2008, and former Wachovia locations in Florida were fully rebranded by July 2011, according to Wells Fargo. Bove said all his experiences took place at the same location on North Florida Avenue in Tampa.In his note, he assaults Wells Fargo for paying far more attention to profits than people. He concludes that customer service  the kind of customer service that involves developing a relationship over time  might actually hurt the bank's business strategy. "What my Wells Fargo experience suggests is that a succesful bank is one that keeps seeking new customers and selling them more products and not getting bogged down by offering service," he wrote in his note on July 23. Bove said he has since moved his personal bank account to JPMorgan Chase, although he told his mortgage and several other business accounts are still active with the bank.Wells Fargo did not comment directly on Bove's note when contacted by HuffPost. "We...recognize that we're only as good as our last interaction and we remain committed to putting our customers at the center of everything we do," Mary Eshet, a senior spokeswoman for the bank, said in an emailed statement. Bove's comments come as the disconnect between banks' business strategy and customer experience continues to be an issue for Americans. The banking analyst is not alone in feeling abandoned by bank customer service. A survey released Tuesday from Consumers Union, the advocacy arm of Consumer Reports, reported that nearly one-fifth of all consumers said they considered switching banks in the last year. The survey participants, like Bove, cited high fees and bad customer service.However, actually moving from one bank to another is a complicated process. More than half of the people who said they wanted to switch banks in the survey, said the reason they didn't complete the process was because of difficulty in transferring automatic payments. The survey included 1,157 adults and took place in May 2012.Consumers Union is calling on Congress and the year-old Consumer Financial Protection Bureau to consider reforms that would make it easier for consumers to switch banks. Suzanne Martindale, staff attorney for Consumers Union, said more consumers want to move their money but feel frustrated at the process. “Moving your money takes a lot of time and money and some bank policies make it harder than it should be," she said in a statement released with the poll results. "We need to make it easier for consumers to switch banks so they have a real choice when it comes to where to keep their money.”Bove is known for his independent voice, which has occasionally gotten him into trouble, as The New York Times pointed out in a 2010 story detailing a lawsuit he faced over some of his analysis.

NEWS,25.07.2012

Low Interest Rates Are Not Enough

 

Welcome to what could be called "GGIRC," the great global interest rate convergence -- whereby interest rates steadily converge to zero in many countries around the world, both advanced (other than the crisis European economies) and emerging (other than the persistent financial basket cases). In theory this is a good thing for a global economy.After all, major economic areas, particularly Europe and to a lesser extent the United States, are challenged by too little growth, too much debt and too high a joblessness rate (especially among the young and the long-term unemployed).Even more dynamic economies, from Brazil to China, are slowing.According to textbook economics, lower interest rates have beneficial flow and stock effects.They make it cheaper to fund investment and consumption; and they make it easier for companies, governments and individuals to carry a given stock of already-accumulated debt.In practice, however, the situation is much more complicated and not so benign. GGIRC is not happening for good reasons.As such, the effects are slow to materialize. And, unless quickly accompanied by other policy initiatives, the consequences will be at best mixed and, probably, net negative.Three major factors are behind GGIRC.First and foremost, hyper activist central banks that are using traditional (price) and unconventional (quantity) measures to force interest rates down.Just look at the series of actions by America's Federal Reserve -- from flooring policy rates at almost zero for an exceptionally long time (and also pre-committing to keeping them there until the end of December 2014) to purchasing an enormous amount of U.S. Treasury and mortgage securities in a further attempt to drive borrowing costs down.Second, individuals and institutions are piling into government securities to protect against principal loss in an increasingly uncertain and worrisome global economy and an ever-deepening European crisis.This is most pronounced for Germany, Switzerland and the United States, where inflows of capital have led to negative nominal rates for short-dated securities (i.e., investors willingly accepting marginally less money on maturity than they invest).Third, global investors are spreading GGIRC through "the global carry trade." This search for relatively safe yield is driving the flow of money into the local bond markets of countries such as Brazil, Mexico and South Africa.Yet GGIRC is not fueling an economic boom driven by labor hiring and investment in plant and equipment. Simply put, lower borrowing costs are not enough to convince companies to expand given the list of domestic, regional and global uncertainties; indeed, many of these companies are far from credit rationed as they sit on huge cash balances.And they only help at the margin the highly-indebted consumers.This limited scope for benefits comes with the growing reality of collateral damage and unintended consequences.Today's market-based economies, and the accompanying institutional setup, do not function well at such artificially repressed interest rates.Certain segments, from pension funds and life insurance companies to money market funds, are particularly challenged.They have no choice but to shrink the scale and scope of financial services they offer to individuals and institutions.Then there are some emerging countries that could well be de-stabilized by some of the activities encouraged by artificially-repressed interest rates.It is only a matter of time until they are challenged by asset market bubbles (including in housing) and irresponsible lending by institutions subject to weak market and regulatory supervision.This is not to say that GGIRC is a bad thing. It need not be.But it will be if not quickly accompanied by major policy actions that address the causes of today's global economic malaise.What the world economy needs today is a coordinated set of measures to promote growth, allocate financial losses, match healthy balance sheet with those that are challenged and reforming, and improve the functioning of the labor and housing markets.For this to materialize, highly polarized and dysfunctional politics needs to give way to more strategic and constructive interactions across party lines and social segments.There is little to suggest that this will happen any time soon absent yet another major financial crisis.In the meantime, GGIRC may well morph from being seen as part of the solution to inadvertently becoming part of the problem.

Interests vs. Values Is the Wrong Prism for Viewing the Reset with Russia

 

With their chilly meeting in sunny Los Cabos during the G20 summit fading into memory, the fate of the "reset" in U.S.-Russian relations is for the moment out of the hands of Presidents Putin and Obama. The future of the relationship is being fought on Capitol Hill over whether to extend Permanent Normal Trade Relations (PNTR) to Russia. Doing so would require removing the application of Cold War-era legislation called Jackson-Vanik from Russia, a law that was crafted to pressure the Soviet Union by linking free trade to the freedom of emigration.Jackson-Vanik has been an irritant for Russia for two decades, but the issue is pressing our Congress now because with Putin signing Russia's WTO ratification protocols on July 21, the clock is ticking down to Russia's entry to the WTO in August. Without PNTR in place before Congress goes into recess, American businesses will lose out on the various trade concessions fought for over the years by U.S. negotiators, giving our competitors an inside track to the world's 9th largest economy. PNTR for Russia was once perceived by Congress as a "gift" to Russians; now it is a necessity for American business and workers.At the same time, the issue of human rights has not disappeared as an area of serious concern for Russia, or as a core American value. Many in Congress want to replace Jackson-Vanik with the "Sergei Magnitsky Rule of Law and Accountability Act," which targets Russian officials implicated in the death in pretrial detention of a Russian lawyer and whistleblower. The House and Senate have different versions that have cleared committee--the House bill focuses on Russian officials, whereas the Senate bill would apply to violators from any country. As negotiators hammer out the differences in the two bills, they should keep in mind that the Jackson-Vanik legislation addressed a human rights principle and did not once mention the Soviet Union.The Obama administration prefers a clean extension of PNTR to Russia, arguing they have already taken steps against the Russian officials in question. The Russian government is threatening reprisals if the Magnitsky Act should come into force. But the overall impact of the Magnitsky Act, either in terms of provoking or constraining the Russians, is overestimated.The greatest constraint on Russian violations of human rights, and the greatest pressure towards liberalizing Russian society, has ultimately come from the Russians themselves as they seek to engage in regional and global institutions. Such accessions and agreements clearly have not prevented multiple Russian abuses and outrages against the human rights of its own people; but they have set Russian society on a path towards adopting certain core values on its own terms.In 1975, the year Jackson-Vanik went into force, Moscow signed the Helsinki Accords. Leaders in the Kremlin celebrated the cementing of post-war borders; but also committed the Soviet Union to certain human rights guarantees. It led to the formation of the Moscow Helsinki Group, which remains influential to this day, and, according to Cold War historian John Lewis Gaddis, gradually became a manifesto of the dissident and liberal movement. The contradictions between Soviet practice and the human rights values they pledged to protect played a key role in the erosion of the Soviet government's legitimacy with its own people.In the 1990s, a newly independent Russia pursued and gained entry into the Council of Europe. Russia wanted acceptance on the world stage as a European power. As a condition for membership, Russia also ratified the European Convention on Human Rights in 1998, subjecting itself to the jurisdiction of the European Court of Human Rights. Today, Russia holds the dubious distinction as the origin of over 35 thousand cases (about 24 percent) now pending before the Court - by far the most. Its track record with the court is mixed. Russian government lawyers dutifully participate in contesting the various cases, and Russia reliably pays the (usually nominal) judgments rendered against it. Critics rightly point out that the government rarely implements the underlying principles of the judgments, especially with regards to abuses in Chechnya. However, in other regions, a growing number of district courts are accepting the provisions of the Convention as a part of Russian law.In December 2011, Russia finally secured an invitation to join the WTO after 18 years of on-again, off-again negotiations. While industries and businesses around the world will welcome the various reductions in tariffs that accession will bring this summer, it is Russia's agreement to be bound by the stringent rules and dispute resolution mechanisms that will be the real game-changer over time. Corruption and the prevalence of political insiders at the helm of Russia's leading state enterprises will not end anytime soon, but international (and, with the passage of PNTR, American) companies will have unprecedented rights and remedies at their disposal. More importantly, in terms of Russia's development, new Russian companies and sectors, headed by Russia's emerging professional class, will greatly benefit from the expanding culture of commercial law and greater access to world markets.Russia is not the Soviet Union. Nor is it the liberal democracy many hoped to see emerge during the 1990s. It is a nation still in search of its own identity, wrestling with the historical legacy of Soviet power/terror and the more recent pain of devastating economic collapse in the 1990s. It is also a nation looking to engage with the global political and economic institutions of the world in order to help set the rules as well as follow them. Yet the more Russia opens itself this way, the less satisfied the Russian people become with the closed system of the power vertical.The United States has long taken an interest in how Russia conducts its internal affairs -- an interest that is not matched towards other nations, it must be noted. Today's debate over PNTR and the Magnitsky Act are simply the latest manifestation of that concern. But the community of policymakers, legislators, activists, and businesses who are interested in the fate of Russia's people should keep one idea in mind: No matter what gets signed in Washington, it is what Moscow signs on to that will ultimately shape the future for Russia and its people.