NEWS,09.07.2013

UAE agrees to give Egypt $3bn - source

The United Arab Emirates has agreed to grant Egypt $1bn and lend it another $2bn, an Egyptian source close to the talks said on Tuesday.
The source said the amount was expected to be part of a larger financial package from the UAE.
The loan would be in the form of a deposit at Egypt's central bank, although the interest rate and maturity had yet to be finalised.
He also said that Saudi Arabia was expected to lend Egypt $2bn, which he expected to be confirmed within two days.

White House trims GDP forecast

The White House on Monday trimmed its outlook for US economic growth in 2013 and 2014, citing "serious headwinds" from European austerity measures and a slowdown in China, as well as across-the-board budget sequester cuts at home.
The mid-session budget and economic update highlighted the lingering impact of the recession that has stymied President Barack Obama's economic agenda.
In the review, the White House said it expected gross domestic product (GDP) to rise 2.0% this year and 3.1% next year less than the 2.3% and 3.2% forecast in Obama's budget of April 10.
The unemployment rate has fallen somewhat over the past six months but remains stubbornly high - at about 7.5%, because of what the Obama administration says is the lingering impact of the worst recession since the Great Depression.
Ahead of tough negotiations with Congress on spending cuts and raising the US debt limit, the White House slashed its estimate of the current year's fiscal deficit to $759bn, or 4.7% of GDP, from its April forecast of $973bn.
Republicans have been focusing on deficit reduction and spending cuts, while Obama has argued for programmes to spur jobs, financed in part by higher taxes on the wealthy.
White House budget director Sylvia Mathews Burwell said in a statement that the report shows Obama's budget "achieves the core goal of fiscal sustainability by putting federal debt on a declining path as a share of the economy".
Congress, however, is not expected to pass Obama's budget this year.
 

Brazil to probe reports of US spying

Brazil said on Monday it will investigate reports of US electronic spying on its citizens and called for a multilateral agency to govern the global internet.

The pledge came after the daily O Globo reported on Sunday that the US National Security Agency (NSA) spied on Brazilian residents and companies as well as people travelling in Brazil, citing documents leaked by the fugitive former NSA contractor Edward Snowden.

Earlier documents leaked by Snowden had alleged that the US maintained a vast surveillance system over the US territory, as well as EU offices in Washington and New York and some European countries, such as Germany.

The satellite intelligence collection base in Brasilia was jointly operated "at least until 2002 by the NSA and the Central Intelligence Agency", the report said.

"I have absolutely no doubt" about the veracity of the reports, Communications Minister Paulo Bernardo said.

"Now the circumstances in which this was carried out, the exact form and date, this we must verify," he added.

No confirmation

Foreign Minister Antonio Patriota welcomed Washington's readiness to discuss the issue describing the spying allegations as "extremely serious".

State Department spokesperson Jen Psaki confirmed the US had "spoken with Brazilian officials regarding these allegations".

But she refused to deny or confirm any details, saying simply "we plan to continue our dialogue with the Brazilians through normal diplomatic channels, but those are conversations that of course we would keep private".

President Dilma Rousseff, who is due to visit the United States later this year, "was very concerned. I would even say outraged", Bernardo said.

The communications minister said Brasilia planned to use the case to seek international support for the creation of a multilateral agency to govern the global internet.

"We need a change in the governance of the internet. It cannot be governed by a private US entity when we know that this entity is controlled by the US government," he added.

Not enough evidence

Bernardo also said he did not believe the NSA monitoring of Brazilians' telephone and email data was done with the collusion of Brazilian firms.

He met on Monday with the head of the National Telecommunications Agency Anatel, Joo Rezende, ordering him to check whether domestic companies were involved

O Globo said the US facility in Brasilia was part of a network of 16 "Primary Fornsat Collection Operations" maintained by the NSA around the world to intercept transmissions from foreign satellites.

Brazil leases eight satellites.

The daily said it did not have enough evidence to say whether the US operation continued after 2002.

It also published an NSA document dated September 2010 which seemed to indicate the Brazilian embassy in Washington and the Brazilian mission to the UN in New York were targeted by the agency.

In limbo

Psaki refused to comment on the allegations saying "we're not going to comment publicly on every specific alleged intelligence activity".

The new reports came as the former CIA contractor Snowden, aged 30, remained in limbo in a Moscow airport as he seeks a safe haven in Latin America having fled the US where he faces three felony charges.

The leftist leaders of Bolivia, Venezuela and Nicaragua, who have strained ties with Washington, have all offered him asylum.

But he cannot leave the airport without a travel document after the US revoked his passport.

Washington has urged Russia to hand him over as a gesture of good will because the two sides have no extradition agreement.

The US has warned "any country where he may be moving in transit, where he could end up and certainly any country that were to grant asylum, that could have an impact, of course, on our bilateral relationship", Psaki said.

Manning was 'upset' over Iraq, witness

Bradley Manning, the US soldier accused of espionage, was "upset" about the plight of Iraqi civilians before he handed over a trove of secret files to WikiLeaks, a witness testified on Monday.

The Army private was dismayed over an incident in which 15 Iraqi civilians had been jailed - with US backing for handing out pamphlets criticising the government, said Sergeant David Sadtler, who helped oversee Manning's work as an intelligence analyst in Baghdad.

Manning "was concerned that this was happening," said Sadtler, who was called as a witness for the defence.

"He was upset at the situation."

Manning's lawyers focused on the episode as they began to present the case for the defence, painting a picture of a conscientious young man bothered by injustice and eager to shed light on US foreign policy.

In an earlier statement to the court, Manning said the Iraqis who were arrested had no ties to militants and their pamphlets were only a "scholarly critique" of government corruption.

Sadtler said Manning was up on international events and that other troops in his unit would come to him "if they needed to know what was going on in the world".

‘Delightful blood lust’

Manning, aged 25, has admitted to giving WikiLeaks more than 700 000 secret military intelligence files and diplomatic cables in the worst leak of classified information in American history.

He has pleaded guilty to lesser offenses that could carry a 20-year prison sentence.

But he is contesting 21 other charges, including the most serious count that he knew he was "aiding the enemy" by funnelling the files to the website. That charge carries a maximum penalty of life in prison.

Manning's lawyers earlier filed motions asking the military judge to dismiss several counts against their client, including the most serious charge that he "aided" al-Qaeda by spilling secrets.

The defence lawyers argued prosecutors lack evidence to back allegations he broke rules for using military computers, stole government "property", disclosed email addresses and assisted the enemy when he gave classified files to the anti-secrecy website.

The defence opened the proceedings by playing a 39min video of a 2007 US helicopter attack in Baghdad that went viral in 2010 after Manning passed the footage to WikiLeaks, which released the clip under the title "Collateral Murder".

The disturbing video, from a cockpit gunsight, shows two Apache helicopters firing at a group of Iraqi men whom the crew mistakenly believed were carrying weapons.

Two of those killed in the assault were Iraqis working for the Reuters news agency.

Manning has told the court the video troubled him, particularly jokes made by the air crew that showed what he called "seemingly delightful blood lust".

Talented

The prosecution rested its case last week but suffered an embarrassing setback after acknowledging the military had lost the contract Manning signed laying out the terms of his access to classified information.

As the trial entered its sixth week at Fort Meade in Maryland, north of Washington, the first defence witness told the court Manning had been one of the most talented members of an intelligence analysis unit, excelling at "data mining".

"He was our best analyst by far when it came to developing products," said Chief Warrant Officer Joshua Ehresman, who oversaw intelligence work produced by Manning and other enlisted soldiers.

Unlike other troops who often needed assignments to be spelled out in detail, Manning was the "go-to guy" and "would come up with exactly what you were looking for," he said.

Ehresman and two other witnesses said there were no rules in Manning's unit barring soldiers from running an executable file or program off of a CD.

The testimony was meant to bolster the defence’s argument that Manning did not exceed his authorised access to government databases or violate computer regulations.

The defence also called a former chief prosecutor of terror suspects at the US prison at its naval base in Guantanamo Bay, Cuba, Morris Davis, to try to cast doubt on the importance of documents leaked by Manning about detainees at the jail.

The "detainee assessment briefs" on Guantanamo inmates, which were leaked by Manning, were superficial biographical information that "were so wildly inaccurate as not to be useful" to prosecutors, Davis told the court.

The case has taken on added weight in the aftermath of another round of leaks from a former contractor for the National Security Agency.

Edward Snowden fled to Hong Kong and later to Moscow after handing over documents to the media revealing far-reaching US electronic surveillance of phone records and Internet traffic.

Obama still to decide on Afghan troops

US President Barack Obama has not yet decided how many troops to keep in Afghanistan after 2014, but a total pullout is one of the options under consideration, the Pentagon said on Tuesday.

Pentagon spokesperson George Little, in a news briefing, declined comment on whether Defence Secretary Chuck Hagel supported keeping US forces in Afghanistan after 2014, saying he would not disclose Hagel's private recommendations to Obama.

NEWS,07.07.2013

Inquiry into Vatican bank chief dropped

Italian prosecutors have dropped inquiries into the Vatican bank's former president, Ettore Gotti Tedeschi, after concluding a money laundering investigation that did implicate two of his juniors, judicial sources say.
Prosecutors accused the bank's director general, Paolo Cipriani, and its deputy director, Massimo Tulli, who both earlier resigned, of "authorising illegal financial transactions", the sources said.

A judge will now decide whether to proceed to a trial of Cipriani and Tulli.

The two directors left the bank on Monday last week after the arrest of a senior cleric who is accused of plotting to smuggle millions of euros into Italy from Switzerland.
Gotti Tedeschi was ousted from the bank last year.
He said earlier he had been dismissed because he wanted more transparency, but the board of directors said he had neglected his duties.
The Vatican bank, known formally as the Institute for Works of Religion (IOR), has been a byword for opaque and secretive dealings for decades and its future has been in question since the appointment of Pope Francis in March.
Italian investigators believe the way the bank operated may have facilitated money laundering, according to a document summing up their preliminary inquiries that was leaked to Italian newspapers on Saturday.

Snowden: Western states in bed with NSA

Fugitive intelligence leaker Edward Snowden said the US National Security Agency operates broad secret spying partnerships with other Western governments now complaining about its programmes, in an interview published on Sunday.
Snowden said in comments made before his exposure of US espionage practices came to light last month and printed in German news weekly Der Spiegel that NSA spies are "in bed together with the Germans and most other Western states".
In remarks published in German, Snowden said an NSA department known as the Foreign Affairs Directorate coordinated work with foreign secret services.
The partnerships are organised so that authorities in other countries can "insulate their political leaders from the backlash" if it becomes public "how grievously they're violating global privacy", he said.
The interview was conducted by US cryptography expert Jacob Appelbaum and documentary filmmaker Laura Poitras using "encrypted emails shortly before Snowden became known globally for his whistleblowing", Spiegel said.
On cooperation with Germany's BND foreign intelligence agency, Snowden said the NSA provides "analysis tools" for data passing through Germany from regions such as the Middle East.
The US government has revoked the passport of Snowden, a former NSA contractor who is seeking to evade US justice for leaking details about a vast US electronic surveillance programme to collect phone and internet data.
He has been stranded at a Moscow airport for two weeks but three Latin American countries have now offered him asylum.
His claims about widespread US spying on Western partners have sparked uproar among European allies in particular and threatened to derail talks on the world's largest free-trade zone due to start on Monday.
German Chancellor Angela Merkel spoke with US President Barack Obama on Wednesday and agreed to a "high-level meeting" between US and German security officials in the coming days to address intelligence matters.

Brazil Target Of U.S. Spying, Globo Newspaper Reports

The U.S. National Security Agency monitored the telephone and email activity of Brazilian companies and individuals in the past decade as part of U.S. espionage activities, the Globo newspaper reported on Sunday, citing documents provided by fugitive Edward Snowden, a former NSA intelligence contractor.

The newspaper did not say how much traffic was monitored by NSA computers and intelligence officials. But the Globo article pointed out that in the Americas, Brazil was second only to the United States in the number of transmissions intercepted.

Brazil was a priority nation for the NSA communications surveillance alongside China, Russia, Iran and Pakistan, Globo said.

In the 10-year period, the NSA captured 2.3 billion phone calls and messages in the United States and then used computers to analyze them for signs of suspicious activity, the paper said. In the United States, the NSA used legal but secret warrants to compel communications companies to turn over information about calls and emails for analysis.

Some access to Brazilian communications was obtained through American companies that were partners with Brazilian telecommunications companies, the paper reported, without naming the companies.

The Globo article was written by Glenn Greenwald, Roberto Kaz and José Casado. Greenwald, who works for Britain's Guardian newspaper and lives in Rio de Janeiro, was the journalist who first revealed classified documents provided by Snowden, outlining the extent of U.S. communications monitoring activity at home and abroad.

After providing the information to Greenwald, Snowden fled the United States for Hong Kong and was most recently seen in the transit area of the Moscow airport.

Snowden's U.S. passport has been revoked. He has made asylum requests to several countries, including Ecuador, Venezuela and Bolivia. Three countries - Bolivia, Venezuela and Nicaragua - have offered to give Snowden asylum.

IMF Chief Christine Lagarde Calls U.S. Budget Cuts 'Inappropriate'

The U.S. federal budget cuts are an inappropriate measure that will weigh on potential growth, IMF chief Christine Lagarde said on Sunday, urging Washington to present "credible" fiscal plans.
Washington enacted across-the-board federal government spending cuts, known as sequestration, in March because Congress could not agree on an alternative.
It has meant everything from furloughs for air traffic controllers to fewer planes for the U.S. Navy to smaller subsidies for farmers.
"The budgetary procedure that is in place in the United States, which leads to a budgetary adjustment, seems to us absolutely inappropriate ... because it blindly affects certain expenditures that are essential to support medium and long term growth," Lagarde told an economists' conference in Aix-en-Provence, southern France.
Her comments echoed those last month from the IMF itself, which said: "The deficit reduction in 2013 has been excessively rapid and ill-designed."
In its annual check of the health of the U.S. economy, the IMF forecast economic growth would be a sluggish 1.9 percent this year. The IMF reckons growth would be as much as 1.75 percentage points higher if not for the rush to cut the government's budget deficit.
While the budget cuts that took hold on March 1 do not appear to be hitting government payrolls directly so far, some economists said they were weighing on private employers and helped explained a sharp slowdown in hiring in the health care and social assistance sector.
Lagarde urged Washington  as well as Tokyo to come up with fresh plans to cut their debt.
Japan has pledged to halve the primary deficit the budget excluding new bond sales and debt servicing by March 2016 and bring it to surplus by March 2021 to contain its ballooning public debt. It will detail how it wants to accomplish that in a medium-term fiscal plan expected in August.
"It is indispensable that these countries indicate for the long and medium term predictable, credible fiscal policies, anchored in legislation that will not be challenged, which will bring the deficit down in a way that will reverse the debt trajectory to a downward trend," she said.

Bundesbank Chief: ECB Cannot Solve Euro Zone Crisis

The European Central Bank cannot solve the euro zone crisis, Bundesbank chief Jens Weidmann told economists on Sunday, pressing the bloc's governments to get their economies in shape and tighten their fiscal rules.

Weidmann addressed an economists' conference in Aix-en-Provence, southern France, only three days after the ECB broke with precedent by declaring that it intended to keep interest rates at record lows for an extended period and may yet cut further.

"Monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis," Weidmann said in his speech.

"This is the consensus of the Governing Council. The crisis has laid bare structural shortcomings. As such, they require structural solutions."

Weidmann, widely recognised to be the most hawkish member of the ECB's 23-man Governing Council, does not want the bank to intervene too strongly in tackling the bloc's economic crisis, thereby allowing governments to soft-pedal reforms.

He spoke a day after fellow ECB policymakers Christian Noyer and Benoit Coeure said the bank's decision to abandon its customary insistence that it never precommits on policy was a change in communication but meant no change from its strategy, which is based on monitoring inflation, real economy and monetary developments.

"The euro zone is on the mend, it must be at peace, protected, be allowed to heal," Coeure told the same conference on Sunday to explain the ECB's decision to issue such forward guidance, while urging governments to tackle structural problems.

The EU's top economic official, Olli Rehn, welcomed the ECB's move, saying the step - taken in response to turbulence caused by the U.S. Federal Reserve's plan to slow monetary stimulus - was needed to preserve recovery in Europe.

"The United States and Europe are at different points of the economic cycle. While the U.S. has a more restrictive approach, Europe needs to continue with a more accommodative policy," the EU monetary affairs commissioner said.


FISCAL RULES

While he does not see sufficient support in the euro zone for governments to give up sovereignty on fiscal matters to forge a fiscal union to prevent such crises in the future, Weidmann pressed them to stiffen Europe's fiscal rules.

"To fully unleash the common currency's potential, efforts are needed on two fronts: structural reforms as well as the abolition of implicit guarantees for banks and sovereigns (government bonds)," Weidmann said.

"In addition to stronger rules, we need to make sure that in a system of national control and national responsibility, sovereign default is possible without bringing down the financial system. Only then will we really do away with the implicit guarantee for sovereigns."

The Bundesbank chief also called for euro zone governments to sever what he describes as the "excessively close links" between banks and sovereign governments, saying that European banks hold too many of their own governments' bonds.

"This is because banks do not have to hold any capital against their government debt, as the risk-weight assigned to sovereign bonds is zero.

To counteract excessive investment in sovereign bonds, Weidmann believes that the capital rules need to be changed to take account of risk and exposure levels.

"Only then will banks be able to cope with the repercussions of sovereign default."

Countries Spending the Most on the Military

For the first time since 1998, global military spending is down. This coincides with a major decline in U.S. spending, which fell by more than $40 billion between 2011 and 2012. Even with this decline, however, the United States still had a military budget four times larger than China, the next biggest spender.

 

The Stockholm International Peace Research Institute (SIPRI) measures annual military spending for most of the world’s armed countries. According to SIPRI, the United States spent $668 billion, more than the combined budgets of the next 10 countries. While the U.S. budget has declined, some of the other global powers, including Russia and China, have ramped up spending. Based on SIPRI’s 2012 data, these are the countries spending the most on the military.
The major decline in the U.S. military budget was the result of two factors, explained Carina Solmirano, senior researcher at SIPRI’s Military Expenditure and Arms Production Programme. The first is the severe decline in overseas military spending after America’s eight-year war in Iraq ended in 2011, as well as the continued wind down of operations in Afghanistan, Solmirano said.
“The second reason,” said Solmirano, “is purely economics. … The United States is facing a huge deficit crisis, and as part of the agreements in 2011 and 2012, the Department of Defense agreed to start a reduction of expenditure quite a significant reduction.” Solmirano added that barring the emergence of a new conflict, U.S. military spending likely will continue to fall.
Short-term changes in military spending, like the nearly 6% decline in the United States, often go hand-in-hand with periods of economic growth or crisis. Indeed, spending among nearly all the top European military powers, including Italy, France and the United Kingdom, declined last year.
Meanwhile, China went against the global trend by increasing its spending by nearly 8% between 2011 and 2012, and by more than 47% since 2008. Part of this increase is for geopolitical reasons, explained Solmirano, who added the increase in spending has “been parallel to its increase in economic power as well.”
Other nations, while not the biggest spenders overall, have much larger military budgets relative to the size of their economies. As of 2012, the United States spent 4.4% of its gross domestic product (GDP) on the military. In countries like Saudi Arabia and Oman, military costs amounted to more than 8% of GDP. Part of this, explained Solmirano, has to do with the consistently tense security situation in the Middle East. She added that countries like Saudi Arabia are able to fund massive militaries with substantial oil revenue.
24/7 Wall St. reviewed the 10 countries that spend the most on their military in 2012, based on SIPRI’s measure of military spending in more than 130 nations. We also reviewed SIPRI data on military exports and imports, as well as military expenditure as a percentage of GDP. From Globalfirepower.com, we reviewed statistics on military size and strength, based on the most recent available data. We also considered GDP and GDP growth figures from the International Monetary Fund (IMF).