NEWS,08.07.2013

Eurozone grants lifeline for Greece

Greece secured a €6.8bn ($8.7bn) lifeline from the euro zone on Monday, officials told Reuters, but was told it must keep its promises on cutting public sector jobs and other reforms in order to get all the cash.
The deal, which spares Greece defaulting on debt that falls due in August, will see Athens drip fed support under close watch from its international creditors to drive through unpopular reforms.
Under the terms of the deal, euro zone finance ministers agreed to make staggered payments of aid to Greece starting with a €2.5bn instalment from euro zone countries in July, said officials close to the talks.
The agreement foresees a further payment from eurozone countries of €500m in October.
Central banks in the Eurosystem will contribute €1.5bn in July and €500m in October, the officials said. The International Monetary Fund will give €1.8bn in August.
"That's the way it will be done," said one of the officials.
After more than three years on life support from Europe, Greece's governing coalition is split over how to meet the demands of its bailout programme, putting the country centre stage and threatening to reignite the euro zone debt crisis.
But a week of talks, culminating in promises to reform the public sector, appeared to convince international lenders the International Monetary Fund, the European Commission and the European Central Bank that Greece is committed to rebuilding its economy.

Talks begin over free trade zone

The United States and the European Union have launched groundbreaking free trade talks, putting aside for the time being the atmosphere of mistrust stirred up by revelations about Washington's spying on European allies.

The office of the US Trade Representative confirmed on Monday that the talks had begun in Washington.

The Transatlantic Trade & Investment Partnership (TTIP) talks have been more than a year in the planning.

The aim is to create the world's largest free-trade zone by knocking down the average 4% tariffs and, more importantly, clearing away regulatory discrepancies that now inhibit trade.

To allay European concerns about espionage without threatening negotiations, the sides have agreed to hold parallel talks on the spying allegations, which arise from documents leaked by fugitive US intelligence contractor Edward Snowden.

The US-EU economic relationship is already the world's largest, representing 30% of global trade, according to the office of the US Trade Representative.

If successful in reaching a deal on both tariff and non-tariff issues, that number could grow to nearly half of global economic output, serving a total population of 800 million.

Growth hormones

Discussions were also to take place among 15 smaller groups, according to an EU source close to the negotiations.

The US trade representative lists 24 issues to be covered, ranging from agriculture, expected to be one of the thorniest issues, to textiles and financial services.

Backers of the trade deal hope to finish talks within 18 to 24 months, with another two rounds of discussion to take place this year alone.

Officials emphasised that without compromises on standards and regulations, the expectations for economic stimulus will likely not be met.

The trade deal offers the prospect of up to 2 million new jobs, according to Germany's Bertelsmann Foundation.

The gross domestic products of the two sides could be boosted by 0.9% in the EU and 0.8% in the US, according to the Centre for Economic Policy Research.

Among the most contentious issues in agricultural production are the rules set for labelling of genetically altered products, which are banned in the EU, as well as the EU ban on growth hormones in cattle and on so-called chlorinated chickens.

No escaping the Fed

As the Federal Reserve moves closer to scaling back its monetary stimulus, central banks in the rest of the world may get another reminder this week of just how tough it is to decouple from US interest rates.
German and British bond yields tracked US yields sharply higher on Friday following solid US jobs data, a day after the European Central Bank and the Bank of England, anxious to protect their economies from rising US borrowing costs, said they would keep short-term rates firmly anchored near zero.
Minutes of the Fed's June 19 policy deliberations could put further upward pressure on bond yields if they show broad support for phasing out the central bank's asset purchases, now running at $85bn a month.
Fed chairperson Ben Bernanke caught markets off-guard by announcing after that meeting that the bond buying could run its course by mid-2014, depending on job market developments.
"You can imagine a story where bond yields are dragged higher. Obviously policy makers here and in Europe won't be too pleased with that," said David Owen, chief European financial economist with Jefferies in London.
"All they can do is to try to reiterate that, from the point of view of the macro economy, Europe and the UK are not in the same space as the US and so neither the ECB in particular, nor the Bank of England, is going to be raising rates for a very long time," he added.
Bernanke will have the chance to set the record straight as he is due to give a speech hours after the minutes come out.
Victoria Clarke, an economist with Investec in London, said the Fed chief and his deputy, Janet Yellen, probably favoured a careful withdrawal of stimulus.
"But we should also caution that the minutes risk a round of further nervousness, given that they will cite not only the views of the more influential voting members, but all members including those who are keen for a more aggressive exit to take place," Clarke said in a note.
Jobs gain momentum at last
Friday's employment report can only strengthen the hand of the Fed's hawks.
The economy added 195 000 payroll jobs in June, and the average monthly increase since September exceeds 200 000 - the threshold many think needs to be breached for growth to advance from its well-established rate of around 2%.
Bruce Kasman, an economist with JP Morgan in New York, now expects the Fed to start whittling down its bond buying in September. Before the jobs data he had thought the central bank might wait until December.
"The Fed has gotten what it needs to begin tapering. The substantial improvement in the labour market is there," Kasman said on a conference call.
Japan up, China down
Japan also has wind in its sails at long last, and the Bank of Japan - engaged, like the Fed, in a vast expansion of its balance sheet- is expected to upgrade its outlook of the economy for the seventh month in a row.
"Japan will outperform other developed markets for the rest of 2013," said Patrick Zweifel, chief economist in Geneva for Pictet Asset Management.
He said political risks facing the eurozone remained a concern, as last week's government rift in Portugal showed. But, even though May industrial output is likely to have edged down, Zweifel said economic headwinds were abating and the 17-country area could eke out modest growth in the second half of 2013.
By contrast, China, the world's second-largest economy, is likely to report sluggish exports and imports with deflation entrenched at the wholesale level - a tell-tale sign of overcapacity plaguing many industries, including shipping.
On Friday, China's largest private shipbuilder appealed for financial help from the government and big shareholders after cutting its workforce and delaying payments to suppliers.
"Despite recent signs of bottoming out in domestic activity, growth outlook remains fragile," said Tao Wang, UBS's chief China economist.

Total free over oil-for-food scandal

French oil giant Total and its chief executive were acquitted on Monday in the UN oil-for-food scandal under Saddam Hussein's rule in Iraq.

The Paris criminal court also cleared 17 other defendants and Swiss oil trader Vitol in the far-reaching corruption probe.

Designed to ease the suffering of the Iraqi people, the oil-for-food programme allowed Iraq to sell some of its oil, despite the embargo imposed after the first Gulf War, in exchange for humanitarian goods.

The programme became mired in controversy after an independent inquiry led by the former US Federal Reserve chairperson Paul Volcker in 2005 disclosed a system of kickbacks and payments to prominent individuals with access to Iraqi oil.

Total, Europe's third-largest oil group by market capitalisation, was accused of bribery, complicity and influence peddling during the 1996-2003 programme - which handed the Iraqi government an illicit $1.8bn from the fraudulent system.

Prosecutors had argued that the defendants, who included Total's CEO Christophe de Margerie and ex-French interior minister Charles Pasqua, had knowingly participated in the illegal system that violated UN regulations.

Total had faced a fine of up to $2.4m while de Margerie, 61, had risked five years in prison and a fine of $482 000.

Prosecutors have 10 days to appeal against the verdict

Hillary Clinton - will she, or won't she?

Hillary Rodham Clinton is trying to strike the right balance between staying out of the daily political maelstrom and setting herself up for a possible second presidential run. But her fans and foes are making that difficult.

Nearly six months after departing the State Department, Clinton finds herself in the middle of an early effort by both parties to prepare for her return to politics even as she keeps to a schedule of highly paid private speeches, work on her book and her family's global foundation.
Clinton has not said whether she'll seek the White House in 2016 but grass roots activists are already at work on a super political action committee called Ready for Hillary, which has rallied local supporters, started a fund raising campaign and rolled out prominent endorsements.
Republicans, meanwhile, vow to dissect her work during the Obama administration - including last year's deadly assault on the US diplomatic mission in Benghazi - and use the former first lady as a fund raising tool.
The efforts to define Clinton, who carries the scars of being seen as an inevitable president during her 2008 campaign against Barack Obama, underscore her tricky balancing act.
If she acts too political, the strong approval ratings built up from her globe-trotting, above-the-fray role as secretary of state could suffer. If she allows the presidential talk to become too loud, she might get stuck with the inevitable nominee tag, making her vulnerable to a liberal upstart in a Democratic primary.
Yet if she avoids the limelight too much, she might create an opening for another Democrat to emerge or allow the steady criticism from Republicans for her tenure at State to sully her image.
Republicans are in the early stages of an effort to chip away at her record at the State Department. American Crossroads, the Republican group tied to strategist Karl Rove, released a web video in May that suggested Clinton was less than truthful in the Benghazi case, an episode they noted happened "all under Hillary Clinton's watch".
An independent review last year blamed the State Department for inadequate security but largely absolved Clinton of wrongdoing.
President Hillary
Separately, American Rising, a Republican super political action committee led by Matt Rhoades, who served as Republican Mitt Romney's campaign manager, created the Stop Hillary PAC and has been raising money off a potential Clinton campaign.
One email request, from Ted Harvey, a Colorado state senator and co-founder of the group, warned that "massive forces are aligning to begin a coronation of 'President Hillary.'"
Republicans say they would be remiss to give Clinton the time to quietly build a campaign behind-the-scenes without scrutinising her record.
"You have to play by the rules of the game. That's what was done to Mitt Romney and other candidates," said Danny Diaz, a former adviser to Romney's presidential campaign who is not involved with either group. "To operate under different sets of rules would be foolhardy."
Ready for Hillary, meanwhile, has no official ties to Clinton. But the group is encouraging her to run and laying the groundwork for a future campaign. Veterans of the Clinton White House like Craig T Smith and Harold Ickes are advising the group, which is building a network of supporters online and holding local rallies outside Clinton speeches.
Ickes and former Rep Ellen Tauscher organised three finance briefings for donors and potential donors in New York in late June and the group will release its first fund raising report later this month, providing an early glimpse of its resources.
Some donors have privately expressed concern with the focus on Clinton so early, even while other Democrats like Vice President Joe Biden and Maryland Governor Martin O'Malley are viewed as potential candidates. They said it could backfire and create an aura of inevitability for Clinton that hurt her last time. Smith said they were trying to address just the opposite.
"If it was inevitable there would be no need for us to do it at all," Smith said.
Yet some Democrats aren't sold on the proposition. While Smith said he would have received a "red light" if the Clintons didn't approve of the super PAC's role - he said he hasn't heard anything negative - their effort is just getting off the ground and viewed with hesitation by some donors.
Private citizen
"I'd be surprised if many national donors want to spend the cash on a new grass roots organising effort geared toward 2016 when we just raised $1bn to create the best ground campaign in history," said Wade Randlett, a major Obama donor based in California's Silicon Valley. He said the Obama campaign offshoot, Organizing for Action, has been able to keep party activists engaged.
Clinton's most ardent supporters, including her husband, caution that voters should not read too much into her activities. The former president said in May his wife was "having a little fun being a private citizen for the first time in 20 years" and said the constant speculation was "the worst expenditure of our time".
Still, Hillary Clinton has spent time making her positions known on issues dear to the Democratic base. Via her much-buzzed about Twitter handle, she issued joint statements with her husband on the Supreme Court's striking down of a key provision in the Voting Rights Act and its rulings in two cases pertaining to gay marriage.
While Republicans see Clinton as a major threat in 2016, Republican officials report there is little appetite among top party donors to commit resources to anti-Hillary efforts right now.
"There are more immediate targets," said Charlie Spies, who led fund raising efforts for a pro-Romney super PAC last year.
"The most important thing Republicans can be focused on right now is keeping control of the House of Representatives in 2014. Once that is accomplished we can turn our sights to taking over the White House in 2016."