NEWS,20.03.2013

UK budget overshadowed by leak

Details of Britain's market moving budget were published on the Internet by a reporter at a London newspaper minutes before the finance minister stood up to give his speech in parliament on Wednesday, prompting calls for an investigation from lawmakers.

A copy of the front page of the London Evening Standard, containing details of economic forecasts, tax changes and borrowing, was published on Twitter at least fifteen minutes before George Osborne rose to his feet.

Some opposition lawmakers waved copies of the page, which had been compiled with embargoed details of the speech, at Osborne while he spoke in the lower chamber of parliament, the House of Commons.

"He almost needn't have bothered coming to the House because the whole budget, including the market sensitive forecasts, were in the Standard before he rose to his feet," Ed Miliband, leader of the opposition Labour party, told Osborne.

"I'm sure he'll investigate and report back to the House," Miliband said.

Osborne's ministry was unavailable for immediate comment.

The newspaper's editor, Sarah Sands, apologised and said the paper's journalists were "devastated" that an embargo had been breached.

"An investigation is immediately underway into how this front page was made public and the individual who tweeted the page has been suspended while this takes place," Sands said.

Sands told the BBC that a young journalist had tweeted a copy of the front page.

The budget is supposed to be kept secret until the chancellor of the exchequer, as the finance minister is known in Britain, briefs parliament on its contents.

In 1947, Labour finance minister Hugh Dalton resigned after divulging details of his budget to a newspaper journalist before his statement to parliament.

Britain sticks to austerity in budget

British finance minister George Osborne stuck firmly to the government's controversial austerity plan as he presented his annual budget to parliament Wednesday, despite a promise to spend on infrastructure to boost a weak economy.

Chancellor of the Exchequer Osborne, whose is facing calls from within his own Conservative party to change course, told MPs that Britain "must hold to the right track" as he outlined his tax and spending plans for 2013/14.

"We are slowly but surely fixing our country's economic problems," Osborne told the nation.

"We have now cut the deficit, not by a quarter but by a third. Despite the progress we have made there is much more to do and today I am going to level with people... It is taking longer than anyone hoped but we must hold to the right track."

This referred to sticking to his so-called Plan A of driving down the record budget deficit inherited from the previous Labour administration in 2010, despite calls from both inside and outside the coalition government to curb massive spending cuts to kick-start the economy.

Osborne's insistence on driving down the deficit comes despite the chancellor announcing that the government was halving its economic growth forecast for 2013.

Gross domestic product (GDP) was expected to grow by just 0.6% this year compared with a previous forecast of 1.2%, according to estimates issued by the Office for Budget Responsibility (OBR).

Economic growth guidance for 2014 was also cut to 1.8% from the previous estimate of 2% that was given in December.

Osborne added that Britain was on course to avoid sinking into its third recession since the 2008 global financial crisis, despite its economy contracting by 0.3% in the final three months of 2012.

In better news, Osborne said infrastructure plans would be backed by €3.5bn a year from 2015-2016, to ensure that the "economic arteries of every part of this country" could benefit.

On the eve of the budget, Prime Minister David Cameron's Downing Street office said some government departments would be made to cut their budgets to save 2.5bn over the next two years.

The money saved between now and 2015 -- the time of the next general election -- would be used on infrastructure spending, a spokesperson said.

The decision is at odds with Business Secretary Vince Cable, who has called on the government to consider borrowing more to stimulate economic growth.

Cable, a leading member of the Liberal Democrats which shares power with the Conservatives, said that the danger of slow growth may now be more damaging than the loss of confidence through increased borrowing.

But Cameron earlier this month insisted that his government, which passed the mid-term mark in January, would stick to the path of austerity despite a turbulent few weeks that saw Britain stripped of its top-level AAA credit rating.

In a further blow to the prime minister, civil servants were Wednesday holding a 24-hour strike in a row over pay and other working conditions.

The Public and Commercial Services union said up to 250 000 of its members would join the walkout, hitting government departments, jobcentres, tax offices, border patrols and courts.

On Tuesday meanwhile, a pool showed that more than four out of 10 voters believe Osborne should be sacked.

Cyprus in limbo after bank levy rejection

Cypriots faced uncertainty on Wednesday after parliament rejected a controversial levy on savings that had been agreed with international creditors as part of a bailout deal.

Lawmakers on Tuesday evening overwhelmingly rejected plans to apply a one-off tax of up to 10% on people's bank deposits, leaving decision makers scrambling on how to avert the Mediterranean island's bankruptcy or exit from the eurozone.

The euro was slightly down on the dollar, while the German stock market lost 0.6% during early morning trading Wednesday.

"The decision was the right one to take, but I would be lying if I said I am not worried - we need help and we need it now," said 50-year-old Michalis Michael, a shopkeeper in central Nicosia.

Banks across the island remained closed as the government and the country's central bank were working on an alternative proposal to find €5.8bn in funds, as requested by the European Union and the International Monetary Fund.

The eurozone, together with IMF, has asked the Cypriot government to raise the amount as part of negotiations for a €10bn package to bail out its banks and shore up the country's public finances.

Banks were not expected to reopen until Tuesday, according to news reports, although no official decision had yet been taken by the central bank.

ATMs have been dispensing cash, while credit and debit cards were working normally, although electronic transfers continued to be blocked, bank officials confirmed to dpa.

For the time being, the European Central Bank has vowed to continue to provide liquidity to the island's banks.

Cyprus' influential Orthodox Church has offered to help, with Archbishop Chrysostomos II saying the church was willing to mortgage its properties to invest in government bonds.

Nicosia was looking to renegotiate its bailout deal, with President Nicos Anastasiades due to meet creditors later in the day.

Meanwhile, Finance Minister Michalis Sarris was in Moscow to see if an existing loan of €3bn taken out in 2011 with Russia could be extended or increased to €5bn.

"We had a good meeting  no decision has been made - discussions will continue later in the day," Sarris said after he emerged from the talks in Moscow.

Anastasiades had a telephone conservation the night before with Russian President Vladimir Putin, whose country holds billions of euros in Cypriot banks.

Reports said Cyprus would attempt to also strike a deal with Moscow for the sale of troubled Popular Bank of Cyprus, known as Laiki, as well as the Bank of Cyprus.

Cypriot state broadcaster RIK said Russia would likely seek compensation for such an investment, possibly in the form of a naval port in Cyprus for the Russian fleet, and access to the country's natural gas reserves.

Anastasiades is also believed to be looking at the option of making use of social security fund reserves, which amount to €5bn, and offering depositors with more than €100 000 natural gas-indexed bonds in return for voluntarily paying a levy.

India's billionaires slow to share riches

They may build skyscraper mansions, travel by private jet and throw sumptuous wedding parties, but it seems India's super-rich are much slower at opening their wallets for charity.

India now has 55 dollar billionaires, the fifth-biggest number in the world, according to a Forbes ranking this month.

But like other emerging economies such as China, its charitable giving still lags markedly behind that in the West where the tradition of wealthy businessmen donating chunks of their fortunes is much more deeply ingrained.

High net worth Indians gave up an average 3.1% of their income to charitable causes in 2011 - up from 2010 but far behind the 9.1% average in the United States, according to global consultancy Bain & Company.

But analysts say the upturn in giving as more Indians get seriously rich is going at a snail's pace.

"The pace for corporate India and especially the new rich giving up its wealth is excruciatingly slow," said Manjeet Kripalani, executive director at Gateway House, a Mumbai-based think tank.

"Corporate philanthropy needs to look at a thoughtful way of scaling up giving," she said.

While impressive growth in the past decade has created a swathe of Indian tycoons, the more recent economic slowdown has compounded the slow take-up of philanthropy, despite a pressing need to tackle widespread poverty.

"Giving is impacted by sentiment, which remains weak at the moment. It is likely to be flat or extremely moderate in terms of growth," said Arpan Sheth, author of Bain's annual Indian study.

The latest report released this month did not give fresh statistics, but said donors were "putting a higher bar on understanding the impact of their giving, before they commit to causes" in the tough business environment.

India's richest man Mukesh Ambani, chief of Reliance Industries and owner of a billion-dollar, 27-storey family home, has criticised Western corporate charity as a "disempowering tool" that "increases dependency".

India does not lack a culture of giving.

Reliance has followed the lead of large industrial groups such as Tata and Aditya Birla, which donate heavily to charity through their own trusts, with projects ranging from healthcare and education to rural infrastructure.

Azim Premji, chief of software giant Wipro, last month gave $2.3bn from his own pocket to the education charity he controls, and he is now considered "Asia's most generous man" by Forbes.

He was the first Indian to join the "Giving Pledge" club, set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet to encourage the world's wealthiest to donate at least half their fortunes to charity.

But the scale of Premji's donation has renewed the debate on why the richest are not giving away more of their wealth.

"Many others haven't demonstrated the same kind of generosity," said business journalist Anand Mahadevan in an Economic Times column.

One explanation from businessmen, Mahadevan said, is that wealth creation is still a recent phenomenon in India compared with countries such as the United States, and philanthropy usually comes further down the road.

Also, Indian charity often takes a more informal form: people might donate to local schools or hospitals in kind, or "give money, hair, gold, to our temples as charity", said Kripalani.

India currently ranks a lowly 133rd out of 146 countries in the latest World Giving Index - down from 91st position in 2011 - based on surveys of charitable behaviour around the globe.

Its far poorer neighbours Pakistan and Bangladesh came in respectively at 85 and 109 in the same survey.

Analysts say a major barrier to giving is not knowing whether donations will produce sustainable results, given the lack of accountability, transparency and impact assessments.

"When we met philanthropists, the message we got was: show us the impact, we will give more," said Anant Bhagwati, co-author of the Bain report, at a conference in Mumbai this month to encourage a greater philanthropic culture.

The trends may be encouraging: last year's Bain survey found more than 70% of donors had less than three years of philanthropic experience and more than a third were 30 or younger.

Manas Ratha, director of the non-profit Dasra group which helps to pair donors with charities, said willing philanthropists were there but needed more guidance.

"A lot of work needs to be done. There is good reason to be optimistic, but we are losing time and opportunity," he said.

Ripples from Cyprus

ONE of the most interesting banking countries in the world is Cyprus, as technically it is still a country at war with its northern neighbour, making it an unlikely candidate for a safe haven.

Cyprus also has the highest private sector debt to gross domestic product (GDP) ratio in the world, which should have set alarm bells ringing to any savers - let alone Russians - who are taking their money to the island.

The Russians too are an interesting bunch in this picture, as many of them are hiding money in Cyprus due to the Russian taxman. President Vladimir Putin is out fighting the European Union for Russian private interests, and not to collect rightful Russian taxes.

A friend said this of Russian money in Cyprus: “I believe that there is a lot of money from Russia that was stolen by members of the previous communist regime and banked in Cyprus.

"There are many exceptionally wealthy Russians living in Cyprus. I wonder what Putin's agenda is.”

Nothing is what it seems in Cyprus as the overall €15bn bailout is very, very small in the bigger €16 trillion EU picture.

Yes, the bailout is less than 7% of the size of that of Greece and would be the smallest country bailout in the EU by far - smaller than some private bank bailouts in 2008. 

Something changed here, and that is that Germany - which has been the major financier of the bailouts -  has an election in September. The citizens are worried that their country’s debt to GDP is staying high at 80%, and that they are picking up the tab for everyone else.

That is one thing; the other is that the never-ending bailouts are starting to get northern Europe in a tangle as country after country in the south has a problem but does not want to fix it.

Italy had an election and those newly elected do not want to fix state overspending; neither actually did the Greeks. The Spanish are also feeling pain, but much is done to avert future social spending cuts which are still needed.

So enter Cyprus: a small EU member which allowed its banking system to rise and rise until it was out of all proportion to its economic size.

It paid 4% plus interest while European Central Bank rates are under 1%, and savers in Germany only get 0.75% a year.

Germany started taxing social pensions to help pay for all the problems, and people with savings in the bank also get hammered as interest rates are very low.

The Finns and the Dutch have also been complaining in recent years about their payments to others, and with the Russians not part of the EU and some making use of guarantees in EU banking systems while evading taxes back home, Cyprus was never going to be such an important country for the EU to bail out.

Britain is not part of the eurozone but is seen by richer members as shouting solutions while not helping to pay for them.

The English are subscribers to the EU with a discounted subscription and many solutions northern Europeans have to pay for via taxes.

They are very, very unpopular at present and you can bet your bottom dollar that the most sane English advice is at least ignored in public.

So when Barclays shouted “fire” about Cyprus, that made the situation worse politically for Angela Merkel.

Yes, the wrong medicine was prescribed - “you get a third of the money from your depositors and we will present the rest”. Savers get hammered, even if Russian, and that makes other weak countries' savers very nervous.

Already, I suppose many in Italy are putting their money in German banks because they now fear a “Cyprus” in their own country. This policy was a mistake.

The problem is that the banking system in Cyprus could now be allowed to collapse, as parliament decided that this savers' tax option was not on. This too would make the rest of southern Europe nervous.

The banks are intertwined and I suspect that this may be a small problem that turns big, like Iceland, the Lehman Brothers, etc. Each of the banks allowed to fail would have assets in other banks, and so the situation would broaden.

But that would still be a small problem  the real issue however is the idea that a country goes back to the Middle Ages, as no money in the banks would result in a cash and barter economy and having all savings tied up for decades would also hurt.

Imagine you are have saving in Italy or Spain or worse, in Greece where banks are dicey and confidence is just coming back. The confidence in southern Europe could go up in smoke again - big time - with knock-on effects into the Middle East, Russia and other weaker European states.

Again, some world growth could get taken away.

The EU has drawn a line in the sand and said to governments and banks"'we will let you fail or make you pay a price".

This actually should have been worked out before the eurozone was established so everyone knew what the rules were, but it is human to make rules up in a crisis.

My feeling is that this was not the time for it, as the world economy was just getting back to slightly faster expansion and better prospects.

If commodity prices fall again as a result of weaker growth if confidence slips again, then I am afraid South Africa’s current account will again get exposed. The rand may dip yet again and inflation will go another few basis points higher, exposing our already extremely low rates. 

Raising rates is something the South African Reserve Bank would be loath to do, but it creeps in and confidence and growth decline here again.

With ongoing wildcat strikes in the Post Office and parts of agriculture, the economy may also stall just as the first signs of higher growth showed up on the BankservAfrica Economic Transaction Index.

How ironic that another small situation is allowed to get big. Policy makers are looking at too many interest groups to make the right decisions.

Is this 2008 all over again? No, please no.

Britain awaits tough new budget

Britain's government was on Wednesday set to unveil plans to grow the country's recession-threatened economy, despite insisting on greater state savings as it struggles to meet its deficit-reduction target.

Finance minister George Osborne unveils his latest tax and spending plans in an annual budget likely to stick firmly to the coalition government's austerity drive, even though the country's economy is sailing close to another recession.

Chancellor of the Exchequer Osborne, whose Conservative party heads a coalition government with the Liberal Democrats, will present his 2013-14 budget to parliament at 12:30 GMT on Wednesday.

Analysts expect Osborne to stick to his so-called Plan A of driving down the record budget deficit inherited from the previous Labour administration in 2010 - despite calls from both inside and outside the government to curb massive spending cuts.

On the eve of the budget announcement, Prime Minister David Cameron's Downing Street office said some government departments would be made to cut their budgets to save €2.5bn over the next two years.

The money saved would be used to on infrastructure spending, a spokesperson said.

"All unprotected departmental resource budgets will be reduced by a further 1.0% a year for the next two years," the spokesman told reporters.

"That will help fund further investment in capital spending which will be announced" in the budget.

He added that spending on health, schools and overseas development aid would be protected, while defence would benefit over the next two years from €1.6bn in underspend in its previous budget allocation.

UniCredit Research economist Mauro Giorgio Marrano said that "any new measures implying an increase in expenditure... will need to be funded by spending cuts and/or higher taxes in other areas, leaving little scope for a significant stimulus to the economy."

Cameron earlier this month insisted that his government, which passed the mid-term mark in January, would stick to the path of austerity despite a turbulent few weeks that saw Britain stripped of its top-level AAA credit rating.

But Business Secretary Vince Cable has called on the government to consider borrowing more to stimulate economic growth.

Cable, a leading Liberal Democrat, said that the danger of slow growth may now be more damaging than the loss of confidence through increased borrowing.

Also on Wednesday, Osborne was expected to revise the government's growth and budget-deficit forecasts to better illustrate Britain's present economic woes.

Markets were also waiting to see whether Osborne uses the budget to announce changes to the Bank of England's inflation target to boost an economy at risk of its third recession since the start of the global financial crisis five years ago.

The chancellor traditionally uses the budget to state the central bank's policy mandate, which for many years has been to meet an inflation target of 2.0%.

Incoming Bank of England governor Mark Carney, the Canadian central bank chief who takes up his role in July, has suggested that economic output might be a better target measure than inflation.

The BoE uses interest rates as a tool to try and keep inflation close to the government-set target, but in recent years it has spiked above 5.0%, hampering economic recovery.

British 12-month inflation rose to 2.8% in February from 2.7% in January, official data showed on Tuesday.

NEWS,23. AND 24.02.2013

Italians vote in cliffhanger elections

Voting was underway in Italy's general election on Sunday, amid uncertainty about who will prevail and signs of mounting support for a radical protest party which advocates a referendum on the country's eurozone exit.Polling stations opened at 8am (07:00 GMT) and were to close at 10pm. A second day of voting takes place on Monday, from 7am to 3pm, with exit polls due immediately thereafter.A total of around 50 million Italians are eligible to vote, but analysts predict abstention rates of around 30%. Snow in northern Italy was expected to hold some voters back.According the Ministry of Interior, voter turnout stood at 14.6% by noon, down from 16.3% at the last general elections in 2008.The frontrunner in the contest is centre-left leader Pier Luigi Bersani, but his "Italy Common Good" coalition risks falling short of a majority in the upper house of parliament, the Senate.Negotiations to form a government may be complicated by the likely success of comedian Beppe Gril, whose anti-establishment Five Star Movement drew hundreds of thousands of people for its final rally on Friday in Rome.Pollsters say the movement could emerge as the third or second-largest single party in parliament. Grillo is not standing himself, but has pledged to act as the party's "spokesperson."The other main contenders are scandal-prone former premier Silvio Berlusconi, whose conservative coalition was trailing the centre-left before an opinion polls blackout came into force on February 8, and outgoing premier Mario Monti.Monti's centrist alliance is seen as the most likely coalition partner for Bersani were he not to secure a solid majority but the prospective deal is hindered by policy differences between Monti and Bersani's leftist ally, Nichi Vendola.All the leaders except Grillo had cast their vote by Sunday morning.

Britain clings to austerity

British finance minister George Osborne insisted on Saturday that he would not abandon his deficit-cutting drive after Moody's stripped the country of its coveted triple-A debt rating.The opposition lashed Osborne, saying his plan for the economy was shot through, while analysts said that although it was an embarrassment for him, the downgrade would have a limited impact in the markets.In an expected rebuff to London's hopes that sharp spending cuts would both gradually eliminate the deficit and revive growth, Moody's rating agency cut Britain's grade by one notch to Aa1 on Friday.Osborne said it was a "loud and clear message that Britain cannot let up in dealing with its debts, dealing with its problems, cannot let up in making sure that Britain can pay its way in the world."What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling the country for years that we've got a debt problem, we've got to deal with it."What do they also say? That if we abandon our commitment to deal with that debt problem, then our situation would get very much worse and I'm absolutely clear that we must not do that."Asked if he had broken his commitment to protecting Britain's credit rating, he said the true test of credibility was whether Britain could borrow money."At the moment we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan," he said.Moody's said government debt was still mounting and that growth was too weak to reverse the trend before 2016.It described the British economy as constrained both by turgid global growth and the drag from businesses and the government rapidly slashing their debt burdens.Calling it a "humiliating blow", Labour opposition finance spokesperson Ed Balls said Osborne had failed in his chief stated mission of retaining Britain's AAA status."The reality is an economy which is not growing, a deficit which is getting bigger, families in real stress and a government which is ploughing on regardless with a plan which is not working," he told BBC television."Saying 'the medicine is not working, let's increase the dose of the medicine' that is completely crazy economics."However, Howard Archer, chief UK economist at IHS Global Insight research group, said that the market had been anticipating the downgrade for some time, though Britain's pound sterling currency may be vulnerable."It does focus attention on the UK economy's extended and ongoing serious problems," he said."The loss of the AAA rating certainly puts pressure on Mr Osborne to come up with more initiatives in the (March 20) budget to try and boost growth."While an embarrassment for the government and a cause for piqued pride, we suspect that the loss of the AAA rating will have only a limited negative impact for the UK economy." Mark Littlewood, director general of the Institute of Economic Affairs free-market think-tank, said: "The damaging impact of ballooning national debt, public spending raging out of control and tax rises should not be underestimated."Taking immediate action to tackle the deficit must now be the priority. George Osborne should focus on making sufficient savings in public spending to implement a substantial programme of tax reductions."Meanwhile Howard Wheeldon, senior strategist at stockbrokers BGC Partners, said the downgrade was not a reason for an economic policy change."Any amount of manipulation by attempted false stimulation of the economy in an attempt to create 'artificial' growth would in my view make an already bad deficit problem even worse," he said."We have all lived beyond our means for far too long."If the UK deficit is to be brought down and the task of reducing the debt mountain begun, Mr Osborne has no option but to stick to his guns."We are light years away from returning to growth."

Indian tycoon donates $2bn to charity

Indian software tycoon Azim Premji said Saturday he has given $2.3bn to an education charity that he controls, reportedly the biggest charitable donation in the country's recent history.It is his second recent big donation after giving almost $2bn to the charity in 2010, and came shortly after he joined the Giving Pledge club set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet.In Saturday's donation, the chairman of software firm Wipro transferred shares worth $2.3bn from the company to a trust which controls the education charity Azim Premji Foundation, a company statement said.The billionaire, who inherited a cooking oil company and transformed it into India's third-biggest outsourcing services firm, said the trust will use the funds to scale up the foundation's activities "significantly". The charity seeks to boost the quality of India's overstretched education system by improving teacher quality and setting up model schools.The Business Standard newspaper and other media reported it was the biggest one-off donation to charity in India in modern times.The media-shy tycoon is India's third wealthiest individual with a net worth of some $16bn, according to a 2012 Forbes rich list.Premji, whose trust funds initiatives including rural education and teacher training, has long promoted education as a way to tackle India's deep poverty.He told a recent World Economic Forum in Davos that "education is perhaps the most powerful enabler of human life and equity".A few days ago, he became the first Indian to join the Giving Pledge club, which encourages the world's wealthiest to donate at least half their fortunes to charity.Those who are "privileged to have wealth should contribute significantly to try and create a better world for the millions who are far less privileged," Premji said when joining the club.The billionaire's donation comes amid growing disquiet in India about the yawning divide between the country's burgeoning wealthy class and the hundreds of millions still living in deep poverty.A 2012 report on philanthropy by global consultancy Bain noted a "striking imbalance" in India, noting it was home to one of the world's fastest-growing wealthy populations but also one in three of the world's malnourished children.While the report noted that philanthropy was on the rise, it added there was "significant room for improvement if India is benchmarked against the US, one of the world's leaders in private giving".With Premji's latest donation, his educational charitable trust's shareholding in Wipro will go up to nearly 20%.

Horsemeat scandal: Now health fears

Horsemeat containing a drug potentially harmful to humans has likely entered the food chain, France said on Saturday, adding health concerns to the food scandal raging across Europe.A spokesperson for the French agriculture ministry told AFP several horse carcasses containing the drug Phenylbutazone have probably ended up being eaten by consumers.Phenylbutazone is an anti-inflammatory treatment for horses which is potentially harmful to humans and by law is supposed to be kept off plates.Britain alerted Paris that six tainted carcasses had been exported to France in January, but the meat had already been processed by the time the warning came.Agriculture Minister Stephane Le Foll said that although some of the meat had been recalled, the equivalent of three carcasses had "probably" made it to consumers, but added there was "no health risk" since the traces of phenylbutazone found in the meat were "extremely weak".The minister underscored that the find was in no way connected with the wider horsemeat scandal however, since the meat had not been disguised as beef.But the announcement still added a new dimension to the scandal over mislabelled meat that erupted in Europe in January after horsemeat was initially found in so-called beef ready-made meals and burgers in Britain and Ireland. Since then, supermarkets across the continent have pulled prepared meals from their shelves, with effects felt as far away as Hong Kong, where an imported brand of lasagne has been withdrawn from stores. On Saturday, Italy joined the long list of countries that have been hit by the fraud, reporting its first case of horsemeat-contaminated lasagne. The horsemeat was found in tests on six tons of mincemeat and 2 400 "lasagne bolognese" packages produced by a central Italian company that had used meat from suppliers based in the northern part of the country.The tests were carried out as part of sweeping checks by police on 121 brands across the country.French President Francois Hollande said on Saturday that he would push for mandatory labelling of meat in ready-made meals."I want there to eventually be mandatory labels on the meat contained in prepared meals," Hollande said while visiting an agricultural show in Paris."Until then, I will support... all initiatives for voluntary labelling" so that "consumers know the origin of the products they are consuming, especially meat".French firm Spanghero has been at the heart of the scandal after it allegedly passed off 750 tons of horsemeat as beef, with the product eventually finding its way into 4.5 million "beef" products sold across Europe.French authorities had initially suspended the company's sanitary license, but following protests from 300-odd workers allowed the company to resume production of minced meat, sausages and ready-to-eat meals.The company was banned, however, from stocking frozen meat.In Ireland, authorities on Friday suspended production at a meat processing plant after investigators found it was selling horsemeat labelled as beef.B&F Meats, a small company licenced to debone beef and horsemeat in Carrick-on-Suir in County Tipperary, was found to be sending horsemeat to a customer in the Czech Republic, the Irish agriculture ministry said in a statement.The label in the Czech language refers to beef, it added.

North Korea ups readiness, tensions

North Korean leader Kim Jong-Un has overseen a military drill, state media said on Saturday, his third such inspection in as many days as tensions run high following Pyongyang's third nuclear test.Accompanied by top military commanders, Kim watched a flight exercise and a paratrooping drill by the Korean People's Army, the Korean Central News Agency (KCNA) said."He called on the KPA service personnel to put spurs to making preparations for going into action, keeping themselves at maximum alert at all times."Once the enemies make a provocation, you should give full play to the inexhaustible combat capability to deal deadly blows at them ... and blow up their strongholds of aggression," he was quoted as saying by KCNA.The state news agency did not to give the date of the visit but it was believed Kim's latest trip was on Friday.KCNA said on Friday Kim had also inspected a tactical attack exercise combined with live shell firing.On Thursday, KCNA reported he had visited KPA Unit 323, which is believed to be an anti-air missile unit.North Korea on 12 February carried out its third nuclear test in seven years in what it says was a riposte to the US hostility shown in the widening of existing UN sanctions following its satellite launch in December last year.World powers on the UN Security Council united to condemn the nuclear test, and the US led calls for tougher sanctions.But Pyongyang has threatened still stronger action, defying warnings of United Nations measures.North Korea is already under international sanctions for conducting two nuclear tests in 2006 and 2009, which both came after long-range rocket launches.

Hundreds pray for Hugo Chavez

Hundreds of Venezuelans held a candlelight vigil Friday for President Hugo Chavez, praying for their leader while he remained in a hospital undergoing cancer treatment.Chavez's supporters gathered on a wide stairway in a hillside park near the presidential palace. They lit candles at sunset and sang along with a recording of a healthy Chavez belting out the national anthem.Some wiped away tears. Others closed their eyes and prayed.Some said they felt sad, yet still hopeful that Chavez might be able to survive."We're praying for the president, for him to get through all of this," said Ana Perez, a seamstress holding a candle and shielding her flame from the breeze with a piece of paper.Her eyes filled with tears as she talked about Chavez. "There is no other president like this one. He's unique," she said, wiping a wet cheek."He's going to come out of all of this, and he's going to get better," Perez said. "He's survived many hard things. He's strong."A group of indigenous people wearing colourful dresses, beads and feathers danced around a bonfire at the base of the stairs. One man blew on a conch shell, while others shook maracas as they danced around the flames.Chavez hasn't been seen since he returned to Venezuela on Monday from Cuba, where for 10 weeks he was recovering and fighting complications following his latest cancer surgery on 11 December.Vice President Nicolas Maduro said on Friday night that he and other officials had met with Chavez at the military hospital. Maduro said Chavez is continuing to undergo treatment for "respiratory insufficiency" and is breathing through a tracheal tube, which hinders speech."He communicated with us through various written ways to give us his guidance," Maduro said, speaking on television alongside other aides at the hospital. Maduro said Chavez was smiling and in an energetic mood, "with an immense strength of will."He said they talked with Chavez in three sessions lasting about five hours. "We came out filled with his strength," Maduro said.During the vigil, some in the crowd held photos of Chavez while a preacher spoke from a stage, saying: "The president is going to be healthy!"Lissette Cordero, who stood holding a candle next to her 5-year-old son, said she's grateful to Chavez for creating government-funded neighbourhood councils and inexpensive state-run food stores.Her son, who also held a candle, looked up at the stage where the minister was speaking and asked, "Is that Chavez?""No," his mother replied with a smile."I have faith he's going to recover. It's hard," she added. "I love him."The government has not given details about the treatment Chavez is undergoing, and hasn't identified the type or exact location of the tumours that have been removed from his pelvic region.Venezuela's opposition has demanded the government provide more specific information about Chavez's condition, and has criticized a decision by lawmakers last month that indefinitely postponed his swearing-in ceremony for a new six-year term.Two prominent Venezuelan jurists asked the Supreme Court on Thursday to determine whether Chavez is fit to remain in office. Former Supreme Court President Cecilia Sosa Gomez and professor Jose Vicente Haro called for the court to appoint a board of medical experts to determine whether Chavez is in physical and mental shape to remain president.They argued that if Chavez is fit to be president, the court should proceed to hold a public swearing-in.Government officials insist Chavez remains in charge and has been communicating with government officials about policy decisions and signing documents.Foreign Minister Elias Jaua read a lengthy letter from Chavez on Friday to a gathering of African and South American leaders in Equatorial Guinea.In the letter, which ran for about 1, 00 words, Chavez said he was sorry not to be able to attend the meeting. Chavez denounced Western military intervention in countries such as Libya in recent years, and called for more "South-South co-operation."The letter ended with the words: "We will live and be triumphant!"Prayer gatherings for Chavez this week have included a ceremony where indigenous shamans danced on Thursday, attended by Guatemalan indigenous activist Rigoberta Menchu.Menchu, who received the 1992 Nobel Peace Prize, said she had come to Venezuela "as one of the Maya spiritual guides" with knowledge of medicinal traditions."I'm completely sure that President Hugo Chavez has received the cosmic energies. He has received the strength of our Mother Earth. ... He is going to overcome big obstacles," Menchu said Friday at a televised event where she spoke alongside Maduro.As for Chavez, she said, "He has to have sufficient rest so that he can recover the strength of his vital energies as soon as possible."

NEWS,02.12.2012

Osborne sticking with UK austerity plan

British finance minister George Osborne said on Sunday that he would stick with his deficit-reduction programme when he presents a half-yearly fiscal statement on Wednesday. The Chancellor of the Exchequer declined to comment more specifically on whether he would be able to meet debt targets, but stressed he did not believe Britain should borrow more or increase spending. At his "Autumn statement" on Wednesday, Osborne is expected to defend his stringent economic policies as the only credible way of solving the government's biggest political problem - its failure to deliver a strong recovery. "It's clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than anyone would have hoped, but ... to turn back now ... would be a complete disaster for our country," he said in a BBC television interview. British media reported on Sunday that Osborne plans to cap the amount of tax relief high earners receive on their pension contributions alongside reining in the welfare budget. Osborne declined to comment on the reports, but did not reject the proposals directly when questioned in the interview. He also declined to say if the country's independent fiscal watchdog would show him still on track to eliminate Britain's underlying budget deficit within the next five years, or to have debt as a share of national income on a downward path by the 2015/16 tax year.

Merkel not ruling out Greek 'haircut'

German Chancellor Angela Merkel has not ruled out a so-called "haircut", or write-down, on Greek debt in the next few years, in an interview with a Sunday newspaper, marking an apparent softening in position.After being vehemently opposed to accepting a "haircut," Merkel told Bild am Sonntag that it could be considered from 2014 if Greece's financial situation improves, according to a pre-released article."If Greece one day again manages with its revenue without getting new debt, then we must look at and assess the situation. That is not the case before 2014/15 if everything goes according to plan," she told the paper.Opposition politicians have accused Merkel of playing down the need for a write-down of Greek debt holdings by public institutions such as other eurozone governments and the European Central Bank, because of federal elections expected to take place on September 22.In the Bild interview, Merkel contested that she had refused a "haircut" due to the looming elections."The current aid programme for Greece runs until 2014, for the achievement of certain budgetary goals we have given the Greeks two years more time until 2016," she said.Many in Germany consider a write-down of Greek debt holdings inevitable.But on Friday, Finance Minister Wolfgang Schaeuble said speculation on a "haircut" sent "the wrong incentive" to Greece because it reduced the pressure on the Athens government to enact structural economic reforms.Some eurozone states have said they would "not exclude" the possibility of writing off some debt from 2015 onwards.Merkel also said she favoured considering tougher sanctions for indebted eurozone states."In the long term I am definitely of the opinion that we consider how we develop in our law procedures for states which do not comply with their commitments," she said.Merkel also told Bild that she understood the scepticism of many of her compatriots over Greece but that she saw a determination in Athens to reorganise the country and that rescuing Greece from economic collapse was in Germany's best interests.On Friday she secured the vote from German lawmakers to release €43.7bn in aid to debt-wracked Greece agreed after tortuous talks between eurozone finance ministers.

UK over-50s ignorant about retirement

Britain's over-50s are in blissful ignorance of how little their pension pots will pay out and need an urgent financial health check if their retirements are to be as comfortable as they expect, an industry report said. Workers approaching retirement in the next 15 years need to see their pension pots grow by almost 80% to meet their expectations, the National Association of Pension Funds (NAPF) said on Friday. "Millions of people are within a decade of their state pension but have still not thought about how long their retirement might last," Joanne Segars, chief executive of the NAPF, said in a statement. The burden of managing a pension at retirement has increasingly fallen on employees, as defined contribution (DC) pensions, rather than final-salary schemes, become the more dominant form of retirement saving. The introduction of the government-backed auto-enrolment scheme where people are required to opt out rather than opt into retirement saving could lead up to 8 million additional workers being signed up for pensions, which will likely be DC pension memberships. Yet a third of workers aged 52 to 64 remain ignorant about what their private pension income may provide in retirement, while 59% of workers have never thought about how many years of retirement they need to finance, a report by the Institute for Fiscal Studies and supported by the NAPF said. Women in their 50s are living to an average of 88 - four years longer than expected - while men are living to 85, overshooting life expectancy by around two years, when compared with national projections of life expectancy, the report said. Annuities, which many British retirees buy to ensure a steady income, are meanwhile becoming more expensive, meaning people will expect their savings pots to generate a higher annuity income than it actually does. Private pension firms have also been accused of failing to disclose some of the costs they levy on customers' investment funds, leaving people unaware that their pension savings were being eroded by the charges. The NAPF represents 1 300 pension schemes in the UK with 16 million members and assets of around £900bn.

North Korea plans new rocket launch

North Korea said it would carry out its second rocket launch of 2012 as its youthful leader Kim Jong-un flexes his muscles a year after his father's death, in a move that South Korea and the US swiftly condemned as a provocation.North Korea's state news agency announced the decision to launch another space satellite on Saturday, just a day after Kim met a senior delegation from China's Communist Party in the North Korean capital of Pyongyang.China, under new leadership, is North Korea's only major political backer and has continually urged peace on the Korean peninsula, where the North and South remain technically at war after an armistice, rather than a peace treaty, ended the 1950 - 1953 conflict.No comment on the planned launch was available from Beijing's foreign ministry.In Washington, US State Department spokesperson Victoria Nuland condemned the launch plan as a provocative threat to the Asia-Pacific region that would violate UN resolutions imposed on Pyongyang after past missile tests."A North Korean 'satellite' launch would be a highly provocative act that threatens peace and security in the region," she said in a written statement."North Korea must abide by its international obligations under UN Security Council resolutions that clearly articulate what it can and cannot do with respect to missile technologies," said Pentagon spokesperson George Little.Seoul's foreign ministry called the move a "grave provocation". Japan's Kyodo news agency said Prime Minister Yoshihiko Noda had ordered ministries to be on alert for the launch."North Korea wants to tell China that it is an independent state by staging the rocket launch and it wants to see if the United States will drop its hostile policies," said Chang Yong-seok, a senior researcher at the Institute for Peace Affairs at Seoul National University.North Korea is banned from conducting missile or nuclear-related activities under UN resolutions imposed after earlier nuclear and missile tests. The country says its rockets are used to put satellites into orbit for peaceful purposes, but that assertion is not widely accepted outside of Pyongyang.Washington and Seoul believe that the impoverished North is testing long-range missile technology with the aim of developing an intercontinental ballistic missile capable of carrying a nuclear warhead.Pyongyang's threats are aimed, in part, at winning concessions and aid from Washington, analysts say.The failed April rocket launch took place to celebrate the 100th anniversary of the birth of North Korea founder Kim Il Sung and the latest test will take place close to the 17 December date of the death of former leader Kim Jong-il.It will also come as South Korea gears up for a 19 December presidential election in a vote that pits a supporter of closer engagement with Pyongyang against the daughter of South Korean dictator Park Chung-hee.The April test was condemned by the UN, although taking action against the North is hard as China refuses to endorse further sanctions against Pyongyang.North Korea is already one of the most heavily sanctioned states on earth thanks to its nuclear programme.Pyongyang has few tools to pressure the outside world to take it seriously due to its diplomatic isolation and its puny economy.The state that Kim Jong-un inherited last December after the death of his father boasts a 1.2 million-member military, but its population of 23 million, many malnourished, supports an economy worth just $40bn annually in purchasing power parity terms, the US Central Intelligence Agency asserts."The North's calculation may be that they have little to lose by going ahead with it at this point," said Baek Seung-joo of the Korea Institute for Defence Analyses in Seoul.Baek said the test planned for December would likely be no more successful in launching a satellite than the April one that crashed into the sea between China and North Korea after flying just 120km. "Kim Jong-un may be taking a big gamble trying to come back from the humiliating failure in April and in the process trying to raise the morale for the military," Baek said.North Korea's space agency said on Saturday that it had worked on "improving the reliability and precision of the satellite and carrier rocket" since April's launch.

NEWS,08.11.2012

Draghi open to ECB rate cut

The euro zone economy shows little sign of recovering before the year-end despite easing financial market conditions, European Central Bank President Mario Draghi said today, leaving open the possiblity of an interest rate cut in the months ahead.But after keeping rates on hold, Draghi said the ECB cannot do much more to help Greece with its debt burden and gave Spain none of the assurance it wants that ECB bond buying will lower its borrowing costs."The ECB is by and large done," Draghi told his monthly news conference when asked what the bank could do for Greece.The euro zone is grappling to find a formula to make Greek debt sustainable, with Germany and the International Monetary Fund at odds over the need for governments and the ECB to take a "haircut" on Greek bonds they hold to make the numbers add up.The ECB agreed earlier this year to hand over to euro zone governments profits on its Greek bonds but has refused to take a hit on the value of the paper, saying that would be "monetary financing" which it is prohibited from doing.The ECB held its main rate at 0.75%, deferring any cut while it waits for a cue to use its new bond-purchase plan. That wait may be prolonged after Spain completed its 2012 funding at affordable rates on capital markets on today.A  poll had given an 80% chance the ECB would hold its main rate, but most of the 73 analysts polled expect it will be cut to a new record low of 0.5% within the next few months.Draghi said ECB monetary policy is "very accommodative". He declined to comment when asked whether markets were right to expect a rate cut next month and said the policymaking Governing Council had not discussed what it would do next year.Economist Howard Archer at IHS Global Insight said: "Draghi appeared to ease open the door to a cut in interest rates over the coming months and potentially as soon as December." Not everyone expects a cut that soon. "Our sense is that the ECB is firmly on hold," said JP Morgan economist Greg Fuzesi, though he added: "Next year, the ECB will act if growth disappoints more fundamentally." Describing "a picture of weaker economies" in the euro zone, Draghi said this would influence new ECB economic forecasts due next month. Inflation would remain above the ECB's target for the rest of the year, before falling below 2% in 2013."We certainly continue monitoring economic activity and we stand ready to act," he said." We stand ready to act with OMT (bond-purchase plan) once the prerequisites are in place. We also stand ready to act with the rest of standard, normal monetary policy instruments. "Recent survey evidence gave no sign of improvement towards the year-end and the risks surrounding the euro area remain on the downside, Draghi said. As he spoke, the euro fell against the dollar and hit a session low in early New York trade.Gloomy data this week indicated the euro zone economy will shrink in the fourth quarter, which the ECB could eventually respond to by cutting rates.Before making any decision to cut rates further, the ECB will focus on making sure that its looser policy reaches companies and households across the euro zone, a mechanism that has been broken by the bloc's debt crisis.The new bond-purchase plan - dubbed Outright Monetary Transactions (OMTs) is the ECB's designated tool for this but can only be activated once a euro zone government requests help from the bloc's rescue fund and accepts policy conditions and strict international supervision.So far no request has been made, but the announcement of the policy alone has calmed markets."We are ready to undertake OMTs which will help to avoid extreme scenarios, thereby clearly reducing concerns about the materialisation of destructive forces," Draghi said.Asked whether he could imagine an extreme scenario in which the bank began buying bonds without conditions, he said the answer was 'no'.Investors and euro zone policymakers have been urging Spain to seek aid but Prime Minister Mariano Rajoy has so far held off a request, saying he wants assurances that ECB intervention would bring down Spain's debt costs.Draghi gave Rajoy no comfort."The Governing Council will take the final decision in total independence," he said of any decision on whether to use the OMT programme."In so doing, it cannot give any assurance ex ante".Spain sold 4.8 billion euros of debt including its first longer-term issue in 18 months on Thursday, enough to complete its 2012 financing programme and begin raising funds for next year. So there is little immediate pressure on that front.Yields on Spanish government bonds have dropped by around 2 percentage points since Draghi said in late July the ECB was ready to do "whatever it takes to preserve the euro" - a pledge that heralded the bond-buying plan.

Obama mulls new cabinet picks

US President Barack Obama, fresh from re-election and facing a new clash with congress, got back to work on Thursday, with an important item on his to-do list, stocking his new cabinet.Obama is expected to lose his heavyweights including Treasury Secretary Tim Geithner, Secretary of State Hillary Clinton and Defence Secretary Leon Panetta, for most if not all of his second four-year term.The president will also likely have to make changes to his White House staff with some senior aides, exhausted by a crisis-strewn four years, expected to move on and others shifting to different administration jobs.Speculation is already rife about who will replace Clinton, who has reiterated that she wants to reclaim a private life put on hold by decades in the spotlight of top level politics. Clinton has said she has no interest in another White House race, but the campaign blitz for Obama by her husband former president Bill Clinton, and the power couple's passion for politics, has sparked renewed speculation.Until Clinton makes her final decision known, the Democratic Party's other possible 2016 presidential candidates will likely hold their fire, as the former first lady would be a prohibitive favourite if she did run.UN ambassador Susan Rice, who has been close to Obama for years, has long been seen as a likely replacement for Clinton at the state department, despite being caught up in the furore over the raid in the US consulate in Benghazi.Another possible contender is John Kerry, chairperson of the senate foreign relations committee, whose stock rose in Obama world after he played Republican nominee Mitt Romney in Obama's practice dry runs for the presidential debates.Rice would be the second African American woman to hold the post after Condoleezza Rice, to whom she is not related. She is known at the United Nations for an assertive manner and not shy about pounding home the US point of view.A report in Russia's Kommersant newspaper on Thursday said that Moscow, with whom Rice has clashed heatedly over Syria, would prefer to see Kerry get the job, at a sensitive time between Obama and restored Russian President Vladimir Putin."It would be more difficult for Moscow to work with Washington" if Rice became secretary of state, the unnamed Russian official was quoted as saying.Kerry would have to step down from the senate, however, and there is concern that his Massachusetts perch could fall prey to Republican Scott Brown, who lost a race with Democrat Elizabeth Warren for the state's other senate seat.White House sources said that the usual timetable for replacing cabinet members  in plenty of time for confirmation by the Senate after the presidential inauguration in January could slip this time.Geithner and Panetta are key figures in the year-end budget and tax showdown looming with Republicans, and may not move on until the so-called "fiscal cliff" drama is resolved.Some insiders talk about White House chief of staff Jacob Lew, himself a budget specialist, as a possible successor for Geithner while others speculate that Obama may reach for someone with business credentials to improve his shaky standing with the corporate world.Panetta is expected to leave the administration at some point, but did not serve for the full four-year first term, having taken over just last year from Robert Gates, a holdover from the previous Bush administration.Also known as a budget specialist, Panetta may stay in place until expected spending reductions are factored in to the Pentagon's budgetary plan to return to his walnut farm in California's Carmel Valley.The current favourite to succeed him is Michele Flournoy, who served as under secretary of defence for policy early in Obama's first term.Her appointment may appeal to Obama's sense of history as she would be the first woman to hold the role.Should Flournoy not get the job, some defence analysts think that the current deputy defence secretary Ashton Carter could be in the frame.There may also be other cabinet departures. It is unclear whether Attorney General Eric Holder, a close associate of Obama who has had a bruising from Republicans, will stay on.Education Secretary Arne Duncan is expected to remain in place to pilot through congress Obama's reform programme, likely a highlight of his second term agenda.Obama may also have some shuffling to do at the White House, especially if Lew moves to Treasury. His political guru, David Plouffe, is expected to leave and there may be other high profile departures.The president sparked speculation on Tuesday when he said he wanted to sit down with Romney to work out how they could take the country forward.Obama's first term "Team of Rivals" approach of choosing former political foes like Clinton, modelled on that of his hero Abraham Lincoln, could apply in Romney's case, perhaps in a job like Commerce Secretary.However, it is unclear whether Romney would be prepared to swallow his pride and work for the man who vanquished him in a bitter White House campaign.

Iran not ruling out nuclear talks with US

Iran, reeling from international sanctions over its nuclear programme and facing four more years with Barack Obama as leader of arch-enemy the United States, does not rule out direct talks with Washington but says they will not come overnight.Obama's re-election drew an ambiguous response from President Mahmoud Ahmadinejad, who dismissed the US elections as a "battleground for the capitalists," at a forum on democracy in Indonesia.Without directly commenting on Obama's victory, he lambasted democracy in the West as having "turned into the rule of a minority over the majority".But behind the flamboyant rhetoric, senior regime figures have expressed cautious signs of interest in the election of Obama, who four years ago famously "extended his hand" to Tehran and may be preparing to do so again.Not overnight An influential cleric among the ruling conservatives, judiciary chief Ayatollah Sadeq Larijani, did not rule out Tehran and Washington coming "to the negotiating table" one day but warned it would not happen "overnight."Larijani said on Wednesday that "relations with the United States are not simple".The United States, which Tehran dubs the "Great Satan", severed diplomatic relations with Iran after the 1979 takeover of the US embassy in Tehran, and the two have been in a tense stand-off ever since."Four years ago, Obama was elected on a platform for change and said he was extending his hand for co-operation with Iran, but he acted otherwise and unprecedented sanctions were imposed," Larijani said.Obama has rallied US allies against Iran, toughening sanctions, with Tehran's oil exports and access to world financial systems being key targets.The United States and other world powers, including Tehran's arch-enemy Israel, accuse Iran of using its nuclear programme to mask a drive for atomic weapons. Tehran denies that, saying it is for purely peaceful purposes.The last offer called for Iran to cease enriching uranium to purities of 20% - technically not far from the 90% needed for a nuclear weapon. It also wanted Iran to close its Fordo enrichment facility and to export existing stockpiles of 20% purity uranium.Iran rejected that, saying it did not offer sufficient relief from sanctions that have begun to cause real economic problems.Larijani's brother and international affairs adviser, Mohammad Javad Larijani, reiterated that negotiating with Washington "is not taboo," but any decision to renew contact "is a prerogative of the supreme leader"."If the interest of the regime requires it, we are prepared to negotiate with the Satan in the pits of hell," he said on Wednesday.A Western ambassador in Tehran said the regime "gives the impression of being willing to be more realistic in its negotiations with major powers, providing they offer it an honourable way out of the crisis".This could include, according to many Western diplomats in Iran, the revival of bilateral contact with the United States.Another European ambassador said "both sides have shown some interest (in such a revival), but the question is what the Iranians are going to ask for, and if Washington is willing to give it."In recent months, Washington has repeatedly expressed readiness for direct talks with Iran. Tehran has declined, saying its conditions were not met.Foreign ministry spokesperson Ramin Mehmanparast has said Iran "respects the vote of the American people".But "the wall of mistrust can only be reduced if the US government respects the will and the rights of the Iranian people and changes its past mistaken policies".The second European ambassador sees hope nonetheless."Whether it's nuclear talks or a possible resumption of dialogue with Washington, the Iranians are insisting on what they call the recognition of their rights as well as mutual respect," he said."The wording is vague enough to allow solutions if both parties are open to it," he added. "The re-election of Obama in any case opens a window of a few weeks or months to overcome the crisis."As it stands, a new round of talks between Iran and six world powers, the first since June, is expected by the end of the year, or in early 2013, analysts say.Mark Fitzpatrick, nuclear expert at the International Institute for Strategic Studies in London, said "it's pretty clear that the United States and its European allies are gearing up to try again for diplomatic engagement. But the question is, what will be on the table? Iran won't be making concessions unless it gets some form of sanctions relief," he said.As put by Mark Hibbs, at the Carnegie Endowment for International Peace: "There is reason for some optimism, but it is guarded optimism because in the final analysis it depends on whether Iran will 'play.' If they won't, all bets are off."

Greece passes crucial austerity bill

 

Greece's parliament passed a crucial austerity bill early on Thursday in a vote so close that it left the coalition government reeling from dissent.The bill, which will further slash pensions and salaries, passed 153-128 in the 300-member Parliament. It came hours after rioters rampaged outside parliament during an 80 000-strong anti-austerity demonstration, clashing with police who responded with tear gas, stun grenades and water cannons.Approval of the cuts and tax increases worth €13.5bn ($17bn) over two years was a big step for Greek efforts to secure the next installment of its international rescue loans and stave off imminent bankruptcy.The country's international creditors have demanded that the bill and the 2013 budget, due to be voted on Sunday, pass before they consider releasing an already delayed €31.5bn installment from Greece's €240bn bailout. Without it, Prime Minister Antonis Samaras says Greece will run out of money on November 16."Greece made a big decisive and optimistic step today. A step toward recovery," Samaras said, adding that he was "very happy" with the result.Development and growth for the country, which faces a sixth year of a deep recession in 2013, will come "only with a lot of work, with coordinated action, with investments," he said.But the close vote was a major political blow to the three-party coalition government, which holds a total of 176 seats in Parliament. The result shows support for continued austerity three years into Greece's financial crisis is dwindling fast."The government now has very little margin to take measures like this again," said Dimitris Mardas, associate professor of economics at the University of Thessaloniki. "But unless it takes various obvious actions like limiting the black economy, addressing tax evasion and improving the country's investment framework, we may end up needing new measures. And then things will be very difficult."Straight after the vote, two of the three coalition parties  Samaras' conservatives and former finance minister Evangelos Venizelos' socialists  expelled a total of seven dissenting deputies from their ranks.Lawmakers from the third, the small Democratic Left, mostly abstained from the vote in accordance with their party's line. Leader Fotis Kouvelis had said he could not back labour reforms included in the bill.During hours of acrimonious debate in parliament, Samaras acknowledged that some of the measures in the bill were unfair, but insisted they were vital to avoid bankruptcy and Greece being forced out of the euro zone and back to its old currency, the drachma."This (bill) will finally rid the country of drachmophobia," he said."Many of these measures are fair and should have been taken years ago, without anyone asking us to," Samaras said. Others are unfair cutting wages and salaries and there is no point in dressing this up as something else." But, he said, the alternative was bankruptcy that would trigger financial chaos as the country would likely have to leave the 17-country euro bloc.The measures are for next year and 2014, and include new, deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life.The reforms aim to lower public debts but will in the process also hurt the economy, which is set to enter a sixth year of recession with unemployment at a record 25%."You are throwing people onto to the street, people who need a few more years till they get their pensions," said Panagiotis Lafazanis of the main opposition Syriza, or Radical Left, party. "What will happen to them? Will they starve?"