NEWS,26.03.2013

China, Brazil sign currency deal

Brics members China and Brazil agreed on Tuesday to trade in their own currencies the equivalent of up to $30bn per year, moving to take almost half of their trade exchanges out of the US dollar zone.The agreement, due to last three years and signed hours before the start of a Brics summit in Durban, South Africa, marked a step by the two largest economies of the emerging powers group to make real changes to global trade flows long dominated by the United States and Europe. "Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets," Brazilian Central Bank Governor Alexandre Tombini told reporters after the signing. Trade between the two countries totalled around $75bn in 2012. Brazilian officials have said they hope to have the trade and currency deal operating in the second half of 2013. At the summit in Durban, the fifth held by the group since 2009, Brazil, Russia, India, China and South Africa are widely expected to endorse plans to create a joint foreign exchange reserves pool and an infrastructure bank. They are also due to discuss trade and investment relations with Africa.

 

Brics wrangle over new development bank

Brics emerging powers on Tuesday sought a deal on setting up a development bank that would rival Western-backed institutions, trying to iron out significant differences ahead of a leaders' summit in Durban.The grouping of Brazil, Russia, India, China and hosts South Africa are racing to flesh out proposals for an infrastructure-focused lender that would challenge seven decades of dominance by the World Bank.Just hours before leaders kick off the summit at 17:30 GMT, finance ministers were still working to agree key elements of the plan. Disputes remain over what the bank will do, with each side trying to mould the institution to their foreign or domestic policy goals and with each looking for assurances of an equitable return on their initial investment of around $10bn.Failure to secure a deal would be a major embarrassment for many of the participants and would play into the hands of those who argue the Brics have little to bind them together.Xi Jinping, who has underscored the growing importance of the group by making Durban his first summit as China's president, earlier expressed hopes for "positive headway" in establishing the bank.In a keynote speech in Tanzania on Monday Xi vowed Beijing's "sincere friendship" with the continent, and a relationship that respects Africa's "dignity and independence."Meanwhile host President Jacob Zuma has lauded the summit as a means of addressing his country's chronic economic problems including high unemployment."Brics provides an opportunity for South Africa to promote its competitiveness" Zuma said in a speech on the eve of the summit."It is an opportunity to move further in our drive to promote economic growth and confront the challenge of poverty, inequality and unemployment that afflicts our country."A failure to take concrete steps would raise questions about whether the Brics grouping can survive."Ironically it may be the cleavages within the Brics grouping that more accurately hint at the future of the global order: tensions between China and Brazil on trade, India on security, and Russia on status highlight the difficulty Beijing will have in staking its claim to global leadership," said Daniel Twining of the German Marshall Fund.But if the leaders succeed it would be the first time since the inaugural Brics summit four years ago that the group matches rhetorical demands for a more equitable global order with concrete steps.That would send a loud message to the United States and European nations that the current global balance of power is unworkable.Together the Brics account for 25% of global GDP and 40% of the world's population.But members say institutions like the World Bank, the International Monetary Fund and the United Nations Security Council are not changing fast enough reflect their new-found clout.Diplomats say it could start with $10bn seed money from each country, but the exact role of the bank is up for debate.Indian officials have pressed for a Brics-led South-South development bank, recycling budget surpluses into investment in developing countries.Many developing nations inside and outside Brics will hope that is a way of tapping China's vast financial resources.Meanwhile China would no doubt like the bank to invest in trade-multiplying projects.Aside from the development bank, the group will also try to establish a foreign exchange reserve pool worth as much as $240bn to be drawn on in financial crises.China has the world's largest foreign exchange reserves, worth $3.31 trillion at the end of 2012, and establishing currency swap lines could help other Brics tap that massive resource.Later on Tuesday Brazil is to sign a bilateral accord with China to promote trade in their national currencies.Brics leaders will also establish business and think tank councils.With Syria's two-year long civil war escalating through the suspected use of chemical weapons, Brics leaders will also have to weigh a call from President Bashar al-Assad to intervene.In a message to the summit leaders Assad asked "for intervention by the Brics to stop the violence in his country and encourage the opening of a dialogue, which he wishes to start," said his senior adviser Bouthaina Shaaban after he delivered the message to South African President Jacob Zuma.

Cypriot youths rally against bailout

Hundreds of Cypriot students marched on the presidential palace in Nicosia on Tuesday, after a Facebook call for a rally against a painful bailout for the financially crippled island."Troika out of Cyprus," said banners held by the angry students, in reference to the creditors of the European Union, European Central Bank and the International Monetary Fund (IMF)."Hands off Cyprus," and "Those who stole our money should go to jail and pay," chanted the demonstrators, who an AFP cameraman said numbered around 1 500.The protesters, who gathered following an appeal on their student union's Facebook page, were cheered by government workers as they marched past the labour ministry.Cyprus secured a deal with the troika on Monday for a €10bn bailout that helped it avert bankruptcy but which will see large deposit-holders at its two biggest banks losing much of their savings."We don't know what our future is, and we are angry that it will not stop at those measures," said one of the youths who only gave his name as Christos, aged 16. "This why we... came out to express our opinion."Banks under lockdown"We must all come together to save our country. It's about us, not only for our parents, it's for our future," another protester also named Christos said."We fear for our future. What is happening in my country makes me angry," said Lauren, aged 17, who added she was seriously considering going abroad to finish her studies because of the uncertainty.Cypriots woke on Tuesday to find banks under lockdown for an 11th day after authorities reversed course and kept them closed to prevent a run on deposits following the bailout.The bailout involves depositors in the two biggest banks paying huge levies on deposits more than €100 000. It also effectively shuts down Laiki, the island's second-largest lender also known as Popular Bank.The student protest will be followed by a leftwing anti-austerity demonstration organised by the communist Akel party on Wednesday outside the presidential palace.

N Korea threatens Hawaii, US mainland

North Korea's military put its "strategic" rocket units on a war footing on Tuesday, with a fresh threat to strike targets on the US mainland, Hawaii and Guam, as well as South Korea."All artillery troops including strategic rocket units and long-range artillery units are to be placed under class-A combat readiness," the Korean People's Army supreme command said in a statement.The units should be prepared to attack "all US military bases in the Asia-Pacific region, including the US mainland, Hawaii and Guam" and South Korea, said the statement carried by the Korean Central News Agency.Despite a successful long-range rocket launch in December, most experts believe North Korea is years from developing a genuine inter-continental ballistic missile that could strike the mainland United States.Hawaii and Guam would also be outside the range of its medium-range missiles, which would be capable, however, of striking US military bases in South Korea and Japan.The supreme command announcement came days after the South Korean and US militaries signed a new pact, providing for a joint military response to even low-level provocative action by North Korea.Elevated tensionsWhile existing agreements provide for US engagement in the event of a full-scale conflict, the new protocol addresses the response to a limited provocation such as an isolated incident of cross-border shelling.It guarantees US support for any South Korean retaliation and allows Seoul to request any additional US military force it deems necessary.Military tensions on the Korean peninsula have been at an elevated level for months, following December's rocket test and the North's third nuclear test which it carried out last month.Both events triggered UN sanctions that infuriated the North, which has spent the past month issuing increasingly threatening statements about unleashing an "all-out war" backed by nuclear weapons.Some have included similar warnings of looming strikes on US bases in the Pacific region, including Guam.North Korea was particularly incensed that nuclear-capable US B-52 bombers flying out of Andersen Air base on Guam took part in recent joint South Korea-US military exercises.Sinking anniversary"We will demonstrate the firm resolution of our people and military to protect our sovereignty and dignity through real military action," Tuesday's statement warned."There is no greater delusion than the idea that they will have an opportunity for retaliation," it added.The statement coincided with the third anniversary of the sinking of a South Korean naval vessel by what Seoul insists was a North Korean submarine. Pyongyang has always denied any involvement.Addressing a memorial ceremony for the 46 sailors who died in the incident, South Korean President Park Geun-Hye warned North Korea that its only "path to survival" lay in abandoning its nuclear and missile programmes.Sabre-rattling and displays of brinkmanship are nothing new in the region, but there are concerns that the current situation is so volatile that one accidental step could escalate into serious conflict.

Poles protest for job security, pensions

Thousands of workers held work stoppages in Poland's southern industrial region on Tuesday to demand more job security, higher pensions and government protection for coal mines. The four-hour protests in the Silesia region were led by the Solidarity trade union. The protesters called for the government of Prime Minister Donald Tusk to improve the labor code to give companies more work time flexibility in times of crisis, and to restructure the strapped and inefficient health care system.The stoppages involved coal mines, local railways and some schools. In a sign of support some hospitals and city transport flew Solidarity flags. Union members also held support actions in the cradle of Solidarity, Gdansk and some other cities across Poland.Economy Minister Janusz Piechocinski said the government had been in talks with the unions, which had pressed "unacceptable" demands that would burden the already tight state budget.Silesia was Poland's most prosperous region under communism, but it has suffered under the market economy since 1990 as many mines and steel mills have been closed down.Bowing to the power of tens of thousands of miners, some previous governments have agreed to lenient lay-off and pension terms for them. Poland still depends on black coal for much of its electricity, a policy that has put Warsaw at odds with nations that are cutting down on carbon gas emission.