NEWS,25.07.2013

Protesters block gas drilling site

Protesters blocked access to a drilling site in southern England on Thursday as part of a campaign against the controversial "fracking" process used in shale gas exploration, illustrating the potential battle ahead for Britain's nascent shale industry.
Estimates have said Britain may have major shale reserves which could help reverse a rising dependency on energy imports, but the industry is having to tread carefully in order to reassure a sceptical public and vocal environmental lobby.
Cuadrilla Resources is readying a site to drill a well near the village of Balcombe in West Sussex. The well is a conventional one that will not use fracking, but Cuadrilla has fracked elsewhere, and is one of a handful of companies with access to shale acreage that might be fracked in future, and so its activities have become a target for anti-fracking protests.
A spokesman for the privately-owned company said on Thursday that protesters had stopped vehicles from accessing the site.
Hydraulic fracturing or fracking retrieves gas and oil trapped in tight layered rock formations by injecting high-pressure water, sand and chemicals.
The protest has been organised by campaign group 'Frack Off'. They fear that Cuadrilla, the only company to have fracked a well exploring for shale gas in Britain at its Lancashire site, could seek to frack in Sussex at a later date.
"We have tried other methods. We now have no choice but to take matters into our own hands and protect ourselves from the threat fracking poses to our health and environment," said protester Alex Griffiths in an email from Frack Off.
Drilling and fracking wells will in the next few years be critical to establish whether shale gas can be commercially produced in Britain, where fracking is controversial. It was banned for a year in 2011 after triggering small earthquakes, and concerns remain amongst environmental groups that chemicals used could reach water supplies.
The Cuadrilla spokesman said that the company hoped to begin drilling at the site early next week and that the vehicles were carrying parts for the drilling rig.
UK utility Centrica recently bought a quarter stake in Cuadrilla's northern England shale licences. French oil company Total has also said it would like to explore for shale gas in Britain.

Eurozone credit slump deepens

Loans to the euro zone's private sector shrank by more than expected in June, starving the economy of the funds needed to sustain recovery and piling pressure on the European Central Bank to take fresh action.
Loans to the private sector shrank by 1.6% from the same month a year ago, ECB data released on Thursday showed, a bigger fall than even the lowest forecast in a poll of economists, which gave a mid-range reading of -1.1%.
The latest weak lending figures highlight one of main obstacles to recovery in the eurozone, where purchasing manager indexes (PMI) showed private industry expanded for the first time in more than a year in July.
Lacklustre demand is dragging on the appetite for credit, while banks restrain lending to repair their balance sheets.
In a step to reviving lending to the bloc's struggling small and mid-sized businesses, the ECB said last week it would let banks use more of the assets once blamed for triggering the financial crisis as collateral for cheap loans.
Howard Archer, economist at Global Insight, said the weak lending figures heaped pressure on the ECB to do more.
"The further marked fall in lending to eurozone businesses in June maintains pressure on the ECB to come up with concrete measures aimed at improving credit availability to companies, especially small and medium-sized ones," he said.
"We think it is very possible that the ECB will eventually take its key policy rate down from 0.50% to 0.25% as we anticipate that the euro zone will continue to find it very tough to develop clear growth," he added.
The ECB holds a policy meeting next Thursday. No change in interest rates is expected.
An ECB survey released on Wednesday showed that eurozone banks, facing tougher capital requirements, tightened lending standards for both companies and home loans in the second quarter even though their access to funding eased.
Seeking to reassure markets unnerved by the US Federal Reserve's exit plan from money printing, the ECB said earlier this month it would keep interest rates at record lows for an extended period and may yet cut further.
ECB policymakers have since qualified this forward guidance, with Bundesbank chief Jens Weidmann said on July 11 the ECB had not "tied itself to the mast".
A poll of 70 economists published on Wednesday showed the ECB is probably done cutting interest rates but may still take other measures to stimulate an economy that may soon creep out of recession.
The survey was conducted before the PMI survey suggested the euro zone private sector grew this month for the first time since January 2012 news that will ease pressure on the ECB to further loosen monetary policy.
Banks granted non-financial firms €12bn ($16bn) less in loans in June than in the previous month, data adjusted for sales and securitisations showed, after a fall of €18bn in May.
Euro zone M3 money supply a more general measure of cash in the economy grew at an annual pace of 2.3% in June, slowing from 2.9% in May and below the consensus forecast of 3.0% in a poll of analysts.

EU lagging behind on 4G

EU member states should do more, and faster, to introduce next-generation 4G mobile phone services if Europe is to reap the benefits of the new technology.
About 75% of the European Union population of about 500 million has no access to 4G services, EU Digital Agenda Commissioner Neelie Kroes said on Thursday.
In stark contrast, in the United States more than 90% of the population had 4G access, she said.
Kroes said that of the 28 member states, three - Cyprus, Ireland and Malta - had no 4G at all while only Germany, Estonia and Sweden had advanced systems in place.
There was virtually no 4G coverage in rural areas across the EU, Kroes said, with the EU accounting for only five percent of global 4G connections.
"This is no way to run an economy. It means ... that Europeans living in rural areas and those on holiday get treated like second-class citizens," Kroes said.
"It doesn't matter where you are, you pay money for a device and mobile subscription and it should work."
4G operates five times faster than the current 3G network and allows users to download large e-mail attachments quickly, watch live television without buffering, make high-quality video calls and play live games on the go.
It is seen as the next essential step in the telecommunications revolution and Kroes has repeatedly lambasted EU countries for lagging behind.
Earlier this week, she said she had to reluctantly agree to delays in nine out of 14 member states who had committed to free up 800 megahertz bandwidth for 4G use by January this year but had failed to make the deadline.

Detroit bankruptcy hearings begin

A judge is considering what to do with challenges to Detroit's bankruptcy from retirees who claim their pensions are protected by the Michigan Constitution.

US Bankruptcy Judge Steven Rhodes settled into his chair shortly after  14:00 GMT. The city wants him to put a stop to lawsuits in other courts, especially after an Ingham County judge said state officials ignored the constitution and acted illegally in approving the bankruptcy last week.
The state appeals court temporarily stopped three lawsuits challenging the bankruptcy process on Tuesday.
As lawyers for some of the thousands of creditors arrived Wednesday, they passed protesters holding a banner saying: "Cancel Detroit's debt. The banks owe us."
The case is expected to last at least a year.

Britain's economy picks up speed

Britain's economy sped up between April and June on the back of stronger spending by consumers and businesses and giving a boost to the government less than two years before an election.
It came at the same time as a raft of UK company earnings reports showing growth picking up.
Gross domestic product rose 0.6% in the second quarter compared with the previous three months, in line with forecasts, preliminary data from the Office for National Statistics showed.
That was double the pace of growth in the first three months of the year but the economy still remains smaller than before the 2008-09 recession, suggesting to some economists that it still needs nurturing by the Bank of England.
The numbers were a boost for finance minister George Osborne, who has fended off calls from the International Monetary Fund and the opposition Labour party to spend more to speed up growth.
"Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend - but there is still a long way to go and I know things are still tough for families," Osborne said in a statement.
"So I will not let up in my determination to make sure we put right all that went wrong in our economy."
Growing signs of a pick-up in the British economy have coincided with a narrowing of Labour's lead over the Conservatives in some opinion polls.
The recovery also comes as other countries in Europe are struggling to show any growth at all.
Compared with a year earlier, Britain's economy expanded 1.4%, faster than 0.3% in the first quarter. It was the fastest increase since early 2011 although it was boosted by an extra working day in the April-June period this year.
Sterling weakened after the data and British government bond prices pared losses as some investors had been betting on stronger growth which would have reduced further the chance of the Bank of England pumping more money into the economy.
It was the first time that all sectors of the economy  agriculture, production, construction and services - grew since the third quarter of 2010.
The Bank of England's new governor, Mark Carney, may see the data as a sign that the economy is edging closer to what he has termed "escape velocity" or sustainable growth, though he is still likely to judge it needs extra help to get there.
From next month, Carney is widely expected to start providing detailed guidance on how long interest rates will remain low, in an effort to encourage consumers to spend and businesses to borrow and invest.
Still smaller
Britain's economy remains 3.3% smaller than in the first quarter of 2008 which was its peak before the financial crisis plunged the country into recession, tempering the good news about the growth in the second quarter.
"This confirms our view that we are heading down the road to recovery, even if there are likely to still be a few bumps ahead," said Neil Bentley, deputy director-general of British employers group CBI.
"Underlying conditions are quite weak as consumers are still saddled with debt and despite the global economy picking up, the potential for getting knocked off course remains."
Thursday's data showed that output in Britain's service sector - which makes up 78% of GDP - rose by 0.6% in the second quarter after ticking up 0.5% in the first three months of the year.
Services provided the strongest contribution to overall growth, adding 0.5 percentage points, with the retail, hotels and restaurants and the business services and finance components accounting for the bulk of the increase.
Industrial output was 0.6 percent higher while construction - which now accounts for around 6% of GDP after shrinking sharply after the financial crisis - expanded by 0.9%.
Upbeat company news reinforced the sense of an economy on the mend. Telecoms operator BT, for example, posted first quarter profits comfortably ahead of forecasts driven in part by a good performance from the retail division.
Improving construction and housing markets helped two of the biggest trade suppliers, Travis Perkins and Howden Joinery post increased first-half profits.
Consumers, a key engine of Britain's economy, are perking up too. They are now more optimistic about the economy than at any point since April 2010, as measured by a new consumer confidence index by market researchers YouGov and the Centre for Economics and Business Research.
The ONS's preliminary estimates of GDP are among the first released in the European Union, and are based partly on estimated data. On average, they are revised by 0.1 percentage points up or down by the time a second revision is published two months later, but bigger moves are not uncommon.

Obama: Our economy can be stronger

US President Barack Obama sought to inject momentum into his economic and domestic policy agenda on Wednesday with a speech designed to clarify his vision for his second term and hammer Republicans in the House of Representatives for getting in his way.
Obama defended his government's record managing the economy through the recession in his first term and said new spending on infrastructure and education were needed now to grow the middle class, which he argued would boost the nation's economy.
"As Washington prepares to enter another budget debate, the stakes for our middle class could not be higher," Obama said in remarks prepared for a crowd of cheering supporters in a gymnasium at Knox College in Galesburg, Illinois.
Galesburg left a lasting impression on Obama, a former Illinois state senator, early in his political career when the town struggled after it lost its factories.
Obama faces a battle this fall with Republicans in Congress over the budget and raising the debt ceiling.
While the president wants to increase investment in areas he argues would spur economic growth, Republicans want to cut spending and try to force the administration to scale back its signature healthcare program.
"We'll need Republicans in Congress to set aside short-term politics and work with me to find common ground," Obama said.
"It may seem hard today, but if we are willing to take a few bold steps - if Washington will just shake off its complacency and set aside the kind of slash-and-burn partisanship we've seen these past few years  our economy will be stronger a year from now," he said.
Obama plans to expound on his ideas in speeches across the country in the weeks ahead. His address on Wednesday did not include major new policy proposals, but new ideas are expected to be sprinkled in future remarks.
Obama has said he doesn't believe his speech will change minds in Congress, but he hopes to reach their constituents to exert pressure on lawmakers from their home states.
The buildup to Obama's speech has been relentless, as the White House seeks to get past a rough start to his second term, which has been dominated by a series of thorny domestic and foreign issues.
An early push to toughen gun laws failed in Congress, and the Republican-led House of Representatives has said it will not move ahead on sweeping immigration reforms passed by the Senate.
The White House has also been thrown off-message by controversies over phone and internet surveillance, and over the Internal Revenue Service's targeting of conservatives groups seeking tax-exempt status.
Republicans dismissed the speech as being long on rhetoric and short on ideas.
"Americans aren't asking the question 'where are the speeches?' They're asking 'where are the jobs?'" said John Boehner, Speaker of the House of Representatives.

Don't discount the EU

THE 6th South Africa-European Union (EU) summit was held on July 18 and this was, perhaps, well overdue. Tensions between South Africa and the EU have been high since South Africa joined the Brics bloc, comprising Brazil, Russia, India, China and South Africa.

The theme of the summit was ‘Job creation through inward investment’ and aptly so, since several European countries, along with South Africa, are battling unemployment.

The situation worsened through European investors being wary of developments in South Africa after the country cut bilateral investment treaties with Belgium, Luxembourg and Spain and will do so with a total of roughly 12 EU countries.

South Africa’s joining of the Brics and the cutting of bilateral investment treaties has raised fears that these moves will be at the expense of its long-standing ties to Europe’s developed economies.

As an economic region, the EU remains South Africa's leading trade partner and, perhaps even more importantly, three-quarters of our foreign direct investment (FDI) stock originates from the EU.

Given the traditionally and current strong ties between us and the EU, any changes in the EU can consequently have a significant impact on the local economy.

For example, if the EU can turn around its 18 months of economic contraction, South African exports to the region might start to increase again and its contribution toward FDI might become even more substantial.

On the other hand, EU regulations impacting our exports to the region can just as easily hinder local manufacturers and exacerbate the trade deficit.

For example, in the week before the summit, the EU notified the World Trade Organisation (WTO) of a draft commission regulation on food.

As one of our major exports to the EU, this regulation will affect far more than just the agricultural sector. Consider the minimum wage for farmworkers, the rising petrol price and now the mandatory compliance to this regulation.

These costs, of whatever nature, all contribute to the already struggling economy through impacting the farmers and workers, the packaging, distribution and export companies.

The difference among the three costs (wages, petrol and regulation) is that we have a say in what the final EU regulation looks like. In other words, before the regulation comes into effect, we are allowed to review and comment on the draft regulation.

If the comments are of a national interest, the department of trade and industry takes a national stance on the regulation and engages the EU through the WTO. This formally initiates a dispute in the WTO.

If the consultations prove fruitless after 60 days, South Africa can request adjudication by a panel.

While it appears as though we are moving to favour the Brics nations, we cannot simply ignore developments in the EU.

Should it recover from its current slump, the EU still offers a significant market for our exports and a large source of investment for our development.

NEWS,22.07.2013

Japan's Abe says he will focus on economy

Japanese Prime Minister Shinzo Abe, fresh from a strong election victory, vowed on Monday to stay focused on reviving the stagnant economy and sought to counter suspicions he might instead shift emphasis to his nationalist agenda.
The victory in parliament's upper house election on Sunday cemented Abe's hold on power and gave him a stronger mandate for his prescription for reviving the world's third-biggest economy.
At the same time, it could also give lawmakers in his Liberal Democratic Party (LDP), some with little appetite for painful but vital reforms, more clout to resist change.
"If we retreat from reforms and return to the old Liberal Democratic Party, we will lose the confidence of the people," Abe told a news conference on Monday.
He emphasized that his priority remains proceeding with his "Abenomics" programme of hyper-easy monetary policy, government spending and economic reform, describing it as the cornerstone of other policy goals.
"It is not easy to overcome 15 years of deflation," Abe said.
"It is a historic project. We will concentrate on that. We won't be able to strengthen the financial base for social security without a strong economy. The same goes for security and diplomacy."
Abe's LDP and its coalition partner, New Komeito, won 76 of the 121 seats contested. Along with seats that weren't up for election, the bloc now has a commanding 135 seats in the 242-seat upper chamber.
The win also raises the chances of a long-term Japanese leader for the first time since the reformist Junichiro Koizumi's rare five-year term ended in 2006.
It also ends a parliamentary deadlock that began in 2007 when Abe, then in his first term as premier, led his party to a humiliating upper house defeat that later forced him to resign. The LDP remains short of a majority on its own.
Ever since Abe stormed back to power with a big win in a December lower house poll, some - including Japanese businesses with a big stake in the matter - have worried the hawkish leader will shift focus to the conservative agenda that has long been central to his ideology.
That agenda includes revising the post-war pacifist constitution, strengthening Japan's defence posture and recasting Tokyo's wartime history with a less apologetic tone.
Despite the hefty win, Abe's mandate was undercut by low voter turnout, with 52.61% of eligible voters casting ballots, more than 5 percentage points below the turnout in the last upper house poll in 2010. That could keep up pressure to stay focused on the economy.
"Three faces"
For now, many experts suggest, Abe will stick with economic matters as he tries to beef up his so-far disappointing economic reform plans. He also confronts a decision on whether to go ahead with raising the 5% sales tax to 8% next April, part of a planned doubling by October 2015 aimed at reining in Japan's massive public debt.
"My understanding is that Abe-san has three faces: Abe as right-wing, Abe as a pragmatist, Abe as the economic reformer," said Shinichi Kitaoka, president of the International University of Japan.
"He has been showing the third face so far and will try to do the same after the election."
Still, Abe is moving towards security policy changes that mark a big shift in a country that has prided itself on pacifist ideals even as it built up a military bigger than Britain's.
Abe reiterated on Monday that he wants to debate changing a self-imposed ban on exercising the right of "collective self-defence", or aiding an ally under attack.
The ban means Japan would be unable to intercept an enemy missile fired at a US navy ship, Abe noted, which he said would call into question the US alliance itself.
Abe's government is also reviewing the possibility of acquiring a preemptive strike capability and creating a Marine force to protect remote islands such as those at the core of a territorial row with China.
One clue to how Abe intends to proceed on the touchy topic of wartime history will be whether he visits the Yasukuni Shrine for war dead, where Japanese leaders convicted as war criminals by an Allied tribunal are also honoured, on the emotive Aug. 15 anniversary of Japan's defeat in World War Two.
A pilgrimage to the shrine would outrage China, where bitter memories of Japan's past militarism run deep, and upset Washington, which fears a further fraying of Tokyo's already fraught relations with its neighbours.
Abe moved quickly to improve ties with China and South Korea at the start of his first 2006-2007 term but it is unclear whether he will repeat that success in his second.
He has since taken a tougher stance towards Beijing, but reiterated on Monday his "door is always open" to diplomacy.
Ties between China and Japan have been seriously strained by territorial rows and feuds over wartime history.
Concerns are simmering about the risk of an unintended clash near disputed isles in the East China Sea where Japanese and Chinese vessels have been playing a cat-and-mouse game for months.
"In that environment, something could go wrong," said Michael Green, Japan Chair at the Washington-based Center for Strategic and International Studies. "That's the Black Swan."
Abe again said he wants to revise the 1947 constitution, drafted by US occupation forces after Japan's defeat and not altered since, although he made clear that was a long-term goal.
Conservatives see the constitution as not only restricting Japan's right to defend itself but as responsible for eroding traditional mores such as duty to the state.
The LDP and smaller parties that also favour revising the constitution failed to obtain the two-thirds majority required in both houses before a constitutional revision can be put before the government in a referendum.
The LDP's coalition partner is cautious about changing the charter's signature war-renouncing Article 9 which, if taken literally, bans maintenance of armed forces.
Sunday's election also left many wondering about the future of a competitive two-party democracy in Japan.
The opposition Democratic Party of Japan, which surged to power in 2009 only to be ousted last year, suffered its worst drubbing since its founding in 1998. 

Japan ruling party wins elections

Japanese Prime Minister Shinzo Abe's ruling Liberal Democratic Party (LDP) won an overwhelming victory in elections for the upper house of parliament, recapturing control of the chamber, final returns showed on Monday.

The conservative LDP won 65 seats and its ally, the New Komeito, captured 11 seats in Sunday's voting. The ruling coalition had needed 63 for a majority.

"I must respond to people's hopes that I will bring about [an economic recovery] that they can actually feel," the premier said on Sunday night.

Abe, who took office in December, promoted aggressive monetary easing to prop up the economy and appealed to voters to support his economic policies as he vowed to pull the country out of 15 years of deflation.

On Sunday, the main opposition Democratic Party of Japan grabbed only 17 seats, its worst showing in an upper house election since its foundation in 1996, while the Japanese Communist Party made significant leaps, winning 8 seats, the biggest number since 1998.

"It is a crucial step forward for us to take the offensive" against the LDP, JCP leader Kazuo Shii told a news conference.

"Citizens are concerned that the LDP will go out of control," he said.

In the 2007 upper house elections, the LDP led by then-premier Abe suffered a crushing defeat, losing a majority for the first time in its history.

The upper house has elections for half of its 242 seats every three years, and this year 433 candidates competed for the 121 seats.

Voter turnout in Sunday's elections was estimated at 51.57%, the lowest since the 1995 race, according to a tally by the Kyodo news agency.

Detroit not banking on Fed help - city

Detroit must dig itself out of the hole it created and cannot wait to see if the federal government will come to its rescue, the city's emergency manager said on Sunday.
Kevyn Orr, charged with guiding the collapsed Motor City out of the largest municipal bankruptcy in US history, said any outside assistance would be "great" but he is not banking on it.
"Hope is not a strategy from my perspective. I can't plan on the basis of what may or may not happen or what help may or may not come," Orr said on "Fox News Sunday."
"We are not expecting the cavalry to come charging in," he said. "We have to fix it because we dug the hole."
Detroit filed for bankruptcy on Thursday, setting the stage for a costly court battle with creditors and opening a new chapter in the long struggle to revive the cradle of America's auto industry.
If approved by a federal judge, the bankruptcy would force Detroit's thousands of creditors into negotiations with Orr to resolve an estimated $18.5bn in debt.
Detroit Mayor Dave Bing said he was talking to officials in Washington about what they could do to help.
"I'm not sure exactly what to ask for. I mean, money is going (to) help, no doubt about that, but how much?" Bing said on ABC's "This Week."
The mayor has had no executive authority since Orr's appointment as emergency manager in March.
Michigan Governor Rick Snyder told CBS' "Face the Nation" the city's problems had been 60 years in the making and he saw no prospect of a federal or state bailout.
Detroit has been hit hard by the move away from industrial manufacturing in America since the 1950s, its problems compounded by chronic mismanagement and a dwindling population. Retirees now far outnumber active workers among the city's 700 000 residents, and unfunded pension liabilities are a key source of its problems.
After the economic collapse of 2008, Washington injected billions of dollars into automakers General Motors and Chrysler as the first step of a quick bankruptcy process. But the federal government made no promises this time.
Vice President Joe Biden said on Friday said it was unclear whether Washington could help.
Steven Rattner, who led the auto industry restructuring in 2009, said it would be a mistake for Michigan and the federal government not to provide funds for the city.
"America is just as much about aiding those less fortunate as it is about personal responsibility. Government does this in so many ways; why shouldn't it help Detroit rebuild itself?" Rattner wrote in an opinion piece Friday in The New York Times.
The bankruptcy led investors to dump the city's municipal bonds on Friday but Orr deflected criticism that it will be hard for investors to lend the city money again.
"The reality is, they are going to look at the credit rating of a rehabilitated city. And if that city is capable, they're going to make rational decisions because they are financial institutions," Orr said on the Fox programme.

"After some time, after this little kerfuffle, we'll be back in business."

Biden on visit to fire up US-India ties

US Vice President Joe Biden was due in India on Monday at the start of a four-day visit designed to revive momentum in flagging diplomatic ties and fire up bilateral trade.
Biden, the first vice president to visit India in three decades, will meet senior leaders including Prime Minister Manmohan Singh in New Delhi before heading to the financial hub Mumbai to deliver a keynote speech on the economy.
In an interview published in Monday's Times of India newspaper, Biden said the world's two biggest democracies had a "tremendous capability to work together" but should be doing more.
He also emphasised that he wanted to see an acceleration in bilateral trade, which he said was on track to meet $100bn this year.
Emerging market
"The United States has welcomed India's emergence and both nations have profited from it," the vice president said.
"India's rise as a global economic power is one of the most powerful stories of the 21st century," he added.
The announcement of Biden's visit was made during a trip to India last month by Secretary of State John Kerry, who sought to assuage Indian fears about the aftermath of next year's withdrawal of US troops from Afghanistan.
India, which has spent more than two billion dollars of aid in Afghanistan, fears any return of the Taliban, hard-line Islamists who were strong allies of Pakistan before being toppled in 2001.
Nascent talks between the US and Taliban were due to start last month after the Islamists opened an office in Doha, but they collapsed before even getting off the ground.
Renounce violence
In his meeting with Indian leaders, Biden is expected to reiterate that the US will not back any peace process involving the Taliban unless they renounce violence.
"If the Taliban are to have any role in Afghanistan's political future, they will need to break ties with al-Qaeda, stop supporting violence and accept the Afghan constitution as part of the outcomes of any negotiated peace settlement," he told the Times of India.
"We strongly support the role India has played in Afghanistan, leveraging its economic strength to improve Afghanistan's economy ...in projects that will help to ensure our common goal of a stable and prosperous future for the Afghan people," he added.
Biden will fly on Wednesday to Mumbai where he is expected to hold a roundtable with business leaders and press for stronger intellectual property protection.
While bilateral trade has grown in recent years, there is still widespread frustration among US business leaders over what they see as unfair trading practices.
Among the points of contention is India's championing of generic drugs - which advocates say save lives in poor nations - despite protests from Western drug firms.
India in turn has been alarmed by proposals in the US Congress to curb visas for high-tech workers.
Insecurities
India's Finance Minister P Chidambaram and Commerce Minister Anand Sharma were both in Washington last week to pitch for investment and discuss India's readiness to open talks on a bilateral investment treaty.
"Economic engagement in both trade and investment, though robust, is well below potential, given the opportunities a growing economy like India offers and the opportunities in the largest economy of the United States," Sharma said.
Biden will be the most senior administration official to visit India since President Barack Obama visited in 2010.
While the US has been among the world powers calling for India to be given a permanent seat at the UN Security Council, observers detect a sense of drift in ties.
"India is a natural ally of the US but... relations require greasing occasionally because insecurities have crept in, especially on the Indian side," Subhash Agrawal, of the Delhi-based think tank India Focus, told AFP.
Biden will head from India to Singapore on Thursday, where officials say he will tackle tensions over the disputed South China Sea.

NEWS,25.03.2013

Only two banks to reopen in Cyprus

Cyprus' central bank says all banks in the country except the two biggest will reopen for business on Tuesday, more than a week after they shut down to prevent a run.Laiki and Bank of Cyprus will remain closed until Thursday, and a withdrawal limit from ATMs of €100 ($130) a day will also remain in place until then, the bank said.Financial institutions in the country have been shut since March 16 as Cyprus and its international lenders struggled to agree on a plan to raise funds so the island could qualify for a bailout package.Cypriots express fearsCypriots expressed fears for their jobs and their businesses on Monday after the island agreed to a tough bailout, while accusing other European nations of trying to destroy their country.Although there were none of the violent protests that have hit other bailed-out euro nations, anger bubbled below the surface of the cafes in Nicosia where hundreds of young people gathered on what was a national holiday."We laugh about it because if we did not laugh we would lose our minds," said Antonia Epaminondou, 28, who was with a group of friends sitting in bright sunshine on Ledra street, downtown Nicosia's busiest shopping area.Epaminondou said she worked for a subsidiary of debt-stricken Laiki, or Popular Bank, the Mediterranean nation's second largest bank. Laiki will effectively be shut down under the deal agreed in the early hours of Monday."Of course I am afraid I will lose my job. But it is the same for all of Cyprus - we are all afraid," she said.The government has defended the 11th hour deal, which will also deal a major hit to investors in depositors in the island's top bank, the Bank of Cyprus, as necessary to avoid a default and remain in the euro.Most Cypriots put the blame on the "troika" of the European Union, International Monetary Fund and European Central Bank, saying they had bullied an island whose economy is just a fraction of a percentage of the EU's.'A victim of the Germans'"Cyprus is a victim of the Germans," said George Evagorou, 50, who runs a transport company."They want to be leaders of Europe. The Germans and the French want to conquer us through the economic system."Evagorou said capital controls imposed to stop a run on struggling Cypriot banks meant he had been unable to get enough cash to prepare his fleet of vehicles for the coming tourist season.Other Cypriots had more immediate worries as they tried and failed to get money out of ATM machines."It's a disaster," Tudor Neagu, a client of Laiki Bank, as he unsuccessfully tried to withdraw cash from an ATM in Ledra Street.Cypriot authorities closed banks for 10 days as the government scrambled to seal a deal. Banks have also imposed tough daily ATM limits of €100 a day for Laiki bank and €120 a day for Bank of Cyprus.No cash in ATMs"I'm unable to withdraw cash as the machine doesn't work. I doubt Cyprus will ever revive again," he lamented, before the customer who was in the queue behind him was also unable to get any cash from the machine.The controls also threaten Cyprus businesses, with the possibility that many will not be able to pay employees or conduct normal business."Personally I don't know whether I will have work in the future, because the company I work for has accounts with one of the banks, said Maria Makri, 33, an employee of a fertilizer export company."The payroll of the company, the provident fund of the company, we do not know what will happen," she said at a cafe in Nicosia.Makri added that the "European idea does not exist any more" after the behaviour of Cyprus's European partners.Travel agency employee Maria Spyrou, 31, said foreign clients had been calling to cancel contracts because of uncertainty over Cyprus's future."We have been treated very badly. I don't know the reason that other countries want to destroy us," she said, adding that she blamed "the German government, although not the German people."The Russian linkIlias Toursidis, the owner of a shop in one of the Old City's narrow lanes that sells only Russian products, and his assistant Melina were also very concerned.Russian clients stood to be among the biggest losers as many had put their money in banks in Cyprus because of its reputation as a tax haven."If people have their jobs, we also have work. If they don't have their jobs, then we don't have (them)," a flustered Toursidis said as he took his cap off and wiped his brow.Melina added: "If the Russians leave, then we will probably close because only Russians buy from here," she said.The situation also affected Cyprus's significant migrant workforce, which includes many Filipinos and South Asians."No money in the bank. I need food, I need to pay my rent. I need everything. I came but the bank did not give us our money," said Fawzi Allada, a Pakistani who showed his anger by pretending to tear up his Bank of Cyprus cheque book.

Govt: Cyprus deal heralds new beginning

The Cyprus bailout deal concluded early Monday in Brussels ended uncertainty and prevented a "disorderly default" that could have seen Cyprus exit the eurozone, the Cypriot government spokesperson said. "Finally, Cyprus has ended a period of uncertainty and insecurity for the economy. A disorderly default was avoided, which would have meant leaving the eurozone, with devastating consequences," spokesperson Christos Stylianides said in a statement."A disorderly default was avoided, which would have meant leaving the eurozone, with devastating consequences."Early Monday the eurozone struck a deal with Cyprus to resurrect a bailout for its government, but only after a radical downsizing of the island's financial sector.Under the terms of the agreement the island's second largest lender Laiki (Popular Bank) will be wound up while the Bank of Cyprus, the island's No.1 lender, will have to endure a major "haircut" on all deposits of more than €100 000."The important thing is that we have reached an agreement that allows us to kick-start the economy and lay the groundwork for a new beginning," Stylianides said."Without doubt that there are painful aspects that will place a burden on all of us."Diko MP and chairperon of parliamentary finance committee, Nicolas Papadopoulos, too spoke of the pain the deal will deliver to Cypriots."Without a shadow of a doubt the eurogroup deal and bailout agreement with the troika is a very painful one," he said.In other early reaction, Green party MP George Perdikes told state television, "once the pressure has lifted we should seriously look at whether staying in the euro is in our interest or whether it is worth changing our currency".Former Cyprus central bank governor Afxentis Afxentiou told state radio "Cyprus has suffered a big hit and our standard of living will spiral downward, although the economy maybe able to recover in 2-3 years our standard of living will take at least 10 years to return." Cyprus President Nicos Anastasiades, meanwhile, sent a tweet in which he expressed gratitude to Cypriots."Thank you for your messages of support. They gave me strength during last night's struggle to secure the best possible outcome for Cyprus," said the tweet.

Cyprus secures bailout, avoids bankruptcy

Cyprus secured a €10bn package of rescue loans in tense, last-ditch negotiations early Monday, saving the country from a banking system collapse and bankruptcy that could have destabilised the entire euro area."We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatise state assets, he said. The country's second-largest bank will be shut down immediately, with all bond holders and people with more than €100 000 in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.The cash-strapped Mediterranean island nation has been shut out of international markets for almost two years. It first applied for a bailout to recapitalise its ailing lenders and keep the government afloat last June, but the political negotiations stalled. After a botched agreement last week, the European Central Bank moved forcefully to focus leaders' minds, threatening to cut off crucial emergency assistance to the country's banks by Tuesday if no agreement was reached."It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone," said Cyprus' Finance Minister Michalis Sarris. "A long period of uncertainty and insecurity surrounding the Cyprus economy has ended."The eurozone finance ministers accepted the plan, reached after more than 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors - the International Monetary Fund, the European Commission and the ECB."We believe that this will form a lasting, durable and fully financed solution," said IMF chief Christine Lagarde.Without a bailout deal by Monday night, the tiny nation of about 800 000 would have faced the prospect of bankruptcy, which could have forced it to become the first country to abandon the euro currency. That would have roiled markets and spurred turmoil across the entire eurozone of 300 million people, analysts said, even though Cyprus only makes up less than 0.2% of the eurozone's €10 trillion economy.After the eurozone's finance ministers' approval, several national parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.Under the plan, Cyprus' second-largest bank, Laiki, will be restructured and holders of bank deposits of more than €100 000 there will have to take losses, Dijsselbloem said, adding that it was not yet clear how severe the losses would be."This will have to be worked out in the coming weeks," he added, noting that it is expected to yield €4.2bn overall. Analysts have estimated investors might lose up to 40% of their money.Savers' deposits with all Cypriot banks of up to €100 000 will be guaranteed by the state in accordance with the EU's deposit insurance guarantee, Dijsselbloem said. Laiki will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation's biggest lender, Bank of Cyprus.Large deposits with Bank of Cyprus above the insured level will be frozen until it becomes clear whether or to what extent they will also be forced to take losses, the Eurogroup of finance ministers said in a statement.Dijsselbloem defended the creditors' approach of making deposit holders take heavy losses, saying the measures "will be concentrated where the problems are, in the large banks."The international creditors, led by the IMF, were seeking a fundamental restructuring of the country's outsized financial system, which is worth up to eight times the Cypriot gross domestic product of about €18bn. They said the country's business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation had backfired and needed to be upended.The drastic shrinking of the financial sector, the wiping out of wealth through the losses on deposits, the loss of confidence with the recent turmoil and the upcoming austerity measures all mean that Cyprus is facing tough times."The near future will be very difficult for the country and its people," acknowledged the EU Commission's top economic official, Olli Rehn. "But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis."Cypriot banks have been closed this past week while officials worked on a rescue plan, and they are not due to reopen until Tuesday. Cash has been available through ATMs, but long lines formed and many machines have quickly run out of cash.Amid fears of a banking collapse, Cyprus' central bank on Sunday imposed a daily withdrawal limit of €100 from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.The Cypriot government also approved a set of laws over the past week to introduce capital controls, in order to avoid a huge depositor flight once banks reopen.To secure the rescue loan package, the Cypriot government had to find ways to raise several billion euros on its own. The bulk of that money is now being raised by forcing losses on large deposit holders, with the remainder coming from tax increases and privatisations.The creditors had insisted that Cyprus couldn't receive more loans because that would make its debt burden unsustainably high. The IMF's Lagarde said Cyprus would now reach a debt level of about 100% of GDP by 2020.A plan agreed to in marathon negotiations earlier this month called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger because it also targeted small savers. It failed to win a single vote in the Cypriot Parliament.Cyprus' bid to secure more financial aid from its long-time ally, Russia, then failed, forcing it to turn again to its European partners. Russia was expected, however, to extend a €2.5bn emergency loan granted last year, also lowering the interest rate due and extending then repayment schedule.

Emerging markets thrive amid global woes

No matter how Cyprus's financial drama ends, its troubles show yet again that rich countries enfeebled by the great financial crisis remain a weak link in the world economy.By comparison, emerging markets are not only looking stronger but are also contributing more consistently to global growth.At worst, if Cyprus has to abandon the euro, fragmentation of the single-currency bloc would chill investment and could reduce trend growth in the eurozone's four major economies by a full percentage point on average in the period 2015-2020, according to economists at Bank of America Merrill Lynch.Under that scenario, trend growth in Germany could fall to zero, they said.Even if a solution is found that keeps the tiny Mediterranean island afloat, the inept handling of the crisis has revived political risk. Confidence in the eurozone economy, already relapsing after a fairly bright start to the year, can only suffer.Several banks lowered their forecasts for the bloc on the heels of grim purchasing managers' surveys, and a clutch of sentiment indicators and money supply figures this week are likely to further underscore the economy's precarious position.While policy makers in the eurozone struggle to keep the single currency together, the leaders of Brazil, Russia, India, China and South Africa (Brics) will meet to strengthen the foundations of emerging markets' growth.The summit, to be held in Durban, South Africa, on Tuesday and Wednesday, is expected to give the go-ahead for a joint foreign exchange reserves pool as well as an infrastructure bank.The initiative is being hatched partly out of frustration with international financial institutions that they judge to primarily reflect the interests of industrialised countries. Jim O'Neill, the chairman of Goldman Sachs Asset Management, noted that, for all the havoc that Cyprus can potentially cause, its annual output of $22bn is no more than China produces in a week."For the Cyprus fiasco week to be followed by a Brics summit week sums up the changing fortunes of global economic development," O'Neill, who coined the Brics acronym in 2001, said.Source of strengthPortugal, mired in recession due to austerity measures demanded by international lenders, provides a vivid illustration of the growing importance of emerging markets.The number of Brazilians visiting Portugal has been growing by double digits for more than five years, according to Francisco Calheiros, president of the Portuguese Tourism Confederation.Sales to China from Volkswagen's factory outside Lisbon, the country's second-largest exporter, jumped 54% in 2012 even though the plant's total output fell 15%.Angola is now Portugal's fourth-largest market, accounting for 6.6% of its exports more than the United States."This is how we've been able to grow our exports, which is the only component in our GDP which is going up," said Joao Leite, an economist with Banco Carregosa in Lisbon.Global figures illustrate the relative vigour of developing countries.Trade in goods between advanced economies is down by 6% over the past four years whereas trade among emerging markets is up by 38%, according to Ebrahim Rahbari and Deimante Kupciuniene, economists at Citi."Trade transformation towards emerging markets has a long way to go," they said in a report.America's wary eye on emerging marketsA stronger net export performance is one reason why the United States grew modestly in the fourth quarter 2012 after a preliminary report that the economy shrank.Thursday's final revision for gross domestic product for the October-December period is likely to show a 0.5% rate of growth, according to economists polled by Reuters.Among the week's other data highlights, US durable goods orders and personal income are both expected to have rebounded in February from a swoon in January induced in part by an increase in payroll taxes.The debate in the United States on whether free trade is to blame for the stagnation of middle-class incomes and rising inequality is likely to heat up as talks over transatlantic and transpacific market-opening deals gather momentum.In a study for the Peterson Institute for International Economics in Washington, Lawrence Edwards and Robert Lawrence acknowledge that some of the public's fears are well founded because free trade can cause short-term job losses that put communities under strain.But they conclude that rapid growth in emerging markets is part of the solution to America's problems, not their source, because a rising tide lifts all boats."Developing country growth has therefore contributed toward faster US export growth, an increase in the variety of imports available to Americans, and higher terms of trade associated with any given trade balance," they wrote.

Saudi: $100 a fair price for oil

Oil prices at around $100 a barrel are reasonable for consumers and producers, Opec heavyweight Saudi Arabia's oil minister said on Monday, again highlighting the top crude exporter's preferred oil price.Saudi Arabia's Gulf ally Kuwait echoed the comments on price, saying the current levels were fair, with the market a little bit oversupplied. "I just came from Hong Kong and I told everybody, in 1996, I thought $20 a barrel was reasonable; in 2006 I thought $27 a barrel was reasonable and now it is around $100 a barrel. I told them again it is reasonable," Ali Al Naimi told reporters asking him what the fair price for consumers and producers would be. Current oil prices will not deter economic growth, he told an investment conference in Hong Kong last week, amid warnings from the International Energy Agency earlier this month on worsening Chinese business sentiment, a European slowdown and the prospect of US budget cuts potentially limiting demand for oil worldwide.In the second quarter, Saudi Arabia is expected to increase its oil output to match higher Chinese demand, industry sources said in February. Benchmark Brent has traded above $100 a barrel for most of the time since early 2011, driven by supply concerns. Unrest in Libya to a standoff over Iran's nuclear programme have all helped keep prices high, worrying investors that elevated energy costs will hurt the fragile global recovery. Brent swung between a high of $128.40 and a low of $88.49 and gained just 3.5% in 2012 from a year earlier. Prices for the benchmark crude so far this year have swung between $119.17 and the $106.80 a barrel it hit on Monday before rebounding to above $108 a barrel. Both Naimi and his Kuwaiti counterpart were speaking on the sidelines of an energy conference in Kuwait.Hani Hussein, Kuwaiti oil minister, said Opec member Kuwait's average oil production in March was a little less than 2.9 million barrels per day, but the market was a little bit oversupplied. Kuwait produces on average around 3 million bpd.