NEWS,12.08.2012

Israel - Iran threat dwarfs all others

The threat from Iran dwarfs all other challenges the Jewish state faces, Israel's prime minister declared on Sunday, as high-level hints of a possible Israeli attack on Iran's suspect nuclear programme mounted. One indirect indication came on Sunday, when Israel's military began sending mock text messages to cell phones warning of incoming missiles, part of a nationwide experiment that is to continue through Thursday and reach hundreds of thousands of cell phone users. Last week, defence officials confirmed that Israel's top-tier missile defence system has been upgraded."All threats directed at the Israeli home front are dwarfed by another threat, different in its magnitude and substance, and so I have repeated and shall repeat: Iran must not be allowed to obtain nuclear weapons," Prime Minister Benjamin Netanyahu told his Cabinet on Sunday.The prime minister's opening statement at the Cabinet meeting is open to reporters, providing him with a channel for a weekly public message.Sceptics say Israel is rattling its sabres as part of a diplomatic campaign but would hesitate to actually attack Iran, because of the real possibility that it could trigger an all-out war targeting Israel from several directions at once.Tehran insists its nuclear program is peaceful and designed to produce energy and medical isotopes, but Israel, like much of the international community, thinks it could be a cover to build bombs.Netanyahu said earlier this month that Israel has not decided whether to launch an attack. But he and other leading Israeli officials have noted that tough international sanctions have not pressured Iran to abandon its suspect uranium enrichment programme - a process that has civilian uses but could also be used to build bombs.Some senior officials have suggested in the past that Israel cannot wait beyond early fall to strike, as Iran moves key facilities into fortified underground bunkers out of the reach of Israeli bombs.Over the weekend, a senior "decision-maker" widely identified as Defence Minister Ehud Barak was quoted by an Israeli newspaper as saying that "the sword hanging over our neck today is a lot sharper than the sword that hung over our neck" before the Jewish state went to war with three Arab nations in 1967.Although Israeli leaders haven't explicitly threatened to attack, they have been saying for years that they would not tolerate a nuclear Iran, and "all options are on the table." The US has a similar policy.Standing beside US Defence Secretary Leon Panetta earlier this month, Netanyahu warned that time was quickly running out to stop Iran from achieving nuclear capability.The United States has said it would be prepared to use military force to prevent Iran from becoming a nuclear power. But with its superior fire power, it could wait longer than Israel could to strike at Iran's underground facilities, and experts have judged Washington has more than a year to act.Another factor in the timing could be the US presidential election in November, where a Mideast flare-up sending oil prices soaring could harm President Barack Obama's re-election chances.White House spokesperson Jay Carney said over the weekend that Obama "remains committed to preventing Iran from acquiring a nuclear weapon," but that the US still thinks there is time to persuade Iran through sanctions and diplomacy.While Netanyahu and Barak have concentrated on the perceived nuclear threat, critics of an attack - including a recently retired spymaster and previous internal security chief - have warned of its repercussions.At best, they say, Israel could set back Iran's nuclear development for two to three years, and at worst, trigger a harsh retaliation from Iran and its proxies in Lebanon and Gaza - and possibly set off a region-wide war.

Swiss banks sweat tax fall-out

 

Swiss banks hoping to atone for decades of complicity in tax evasion may be left to sweat it out for months as the United States and Germany ponder the right level of punishment.Switzerland has long dodged US accusations of hiding money for wealthy Americans. But now eleven Swiss banks are under investigation in the United States and there is pressure too from Europe where burdened taxpayers want scalps after numerous banking scandals. The Swiss need a deal to remove the taint from their financial industry.However, Washington must factor forthcoming elections into its thinking, and Germany is delaying ratification of a tax deal key to Switzerland’s efforts to strike similar agreements elsewhere in Europe. So the Swiss may be in limbo for a whileThe wait is painful for a country which counts on banking for 7% of its economic output: until Swiss banks know how much information they need to share with foreign tax authorities they will struggle to attract new clients.As a result the share prices of its top banks - Credit Suisse and Julius Baer are among those being investigated - are falling as investors fret about earnings.“We are prepared to sign a settlement with the US for the Swiss banks today. We feel we have made a constructive proposal to the US but it is up to them to accept it or not,” said Switzerland’s Finance Minister Eveline Widmer Schlumpf.“This depends on whether the US is willing to reach a settlement before or after their elections, which is unclear at the moment,” she said.Both Widmer-Schlumpf and chief negotiator Michael Ambuehl have dampened expectations for a US deal by November, stoked as recently as last month by the finance minister herself.“There is an open window after the summer lull, but it’s relatively tight. Otherwise, I think we’re looking at next year,”  said Martin Naville, chief executive of the Swiss-American Chamber of Commerce in Zurich.Switzerland’s efforts to spur along a deal include tentatively agreeing with the US Foreign Account Tax Compliance Act, an anti-tax evasion law known as Fatca.The rules on enforcing Fatca have yet to be finalised, but many Swiss bankers see it as a crippling blow that effectively prevents their clients from investing in US securities.Acquiescing to Fatca was a tactic to build goodwill for a Swiss bank deal, a source close to the talks said.But the strategy doesn’t seem to be paying off.Washington is now pushing banks in Switzerland to divulge names and financial details of wealthy Americans hiding money in their accounts, spurred on by success in 2009 when UBS handed over data to avert a criminal indictment.“Contrary to what may appear as inactivity, the US is in fact keeping the pressure on Swiss banks, which are like mice before a snake,” said Martin Janssen, professor of finance at the University of Zurich. “The US is really maximising its position here.” The tension is such that Swiss bankers are afraid they will be personally targeted by US officials if they leave the country, after Credit Suisse and Julius Baer handed over employee names to US authorities. Originally a gesture towards cooperation, the move now has many Swiss bankers hunkered down at home, fearful of arrest and extradition if they leave Switzerland.

 

UK economy misses out on Olympic gold

 

With the London Olympics set to wrap up on Sunday, analysts said Britain's recession-hit economy was unlikely to have won a major boost from the Games that have been a triumph for the nation's athletes.While Britain's construction sector benefited hugely before the Olympics, experts have said the 17-day sporting spectacle had not delivered significant financial rewards and neither was it expected to in the months and years ahead.Mary Rance, chief executive of tourism body UKinbound, said the Olympics which have cost British taxpayers £9.3bn ($14.5bn) to stage have failed to lift her sector."From a positive perspective, the Olympics have been a catalyst for huge investment in infrastructure in London," Rance told AFP.But she added: "All the signs are that the Olympics have not delivered additional visitors to London and the UK. In fact, it is expected that numbers may well end up having fallen by well over 30%." Following claims in the first few days of the Games that they had turned London into a ghost town, British Prime Minister David Cameron urged people to "come back into the capital".And his words seem to have made an impact, with retailers across London's main shopping district in and around Oxford Street reporting an increase in sales and a higher footfall in the days after Cameron's remarks.In the run-up to the Olympics, which began on July 27, commuters and tourists were warned to stay away amid fears that London's transport system could not cope with millions of extra people descending on the capital.The Games had long been heralded as a key boost to the British economy but industry body the European Tour Operators Association said tourist numbers had fallen "dramatically" in the first few days of the Games."Hotels have been cutting their prices and many shopping areas, restaurants, theatres, attractions and entertainment venues have seen a significant reduction in business," added Rance. "Although it must be said that shopping centres like Westfield Stratford City, next to the Olympic Park, have benefited significantly - and over recent days visitors seem to be returning to central London," she added.Businesses complained of being sidelined as tourists made a beeline for the Games and avoided the capital's other attractions and shopping destinations, while non-sports fans opted to stay at home or delay their trips.The Bank of England's chief economist Spencer Dale last week said the Olympics would provide only "a small positive contribution" to the British economy. "There may well be some extra spending from tourism, but as many of us know there has also been travel disruption, more people are going on holiday. So I think those effects are small."But the contribution from ticket sales and TV rights may lead to a very small boost to GDP in the third quarter."Britain's Office for National Statistics has already said that Olympic tickets sold last year would be incorporated into gross domestic product figures for the third quarter, despite the bulk having been paid for last year.Asked about the long-term benefits to the economy from the Olympics, Dale said: "Those type of effects are a lot harder to try and work out and I don't think it will have a material impact in our projections."Analysts have said the Games could added 0.3 percentage points to British output in the third quarter, or July to September period.

Britain escaped a deep downturn in late 2009 but fell back into recession at the end of 2011. Latest official data showed GDP slumped 0.7% in the second quarter from the first three months of this year.Meanwhile the nation's coalition government, which has been hosting country leaders such as Russian President Vladimir Putin on the sidelines of the Olympics, said it hoped to strike trade deals during the event.And it believes it can generate £13bn of business, including almost half coming from foreign direct investment, over the next four years as a direct result of the Olympics.But Slavena Nazarova, economist at French bank Credit Agricole, said the longer-term target was "a little exaggerated" given that Cameron had not included the greatest benefit thus far - the boost to the construction sector as a result of transforming a disused part of east London to host much of the Games.