NEWS,17.01.2013

EU tax ruling a blow to health firms

Spain's decision to cut VAT on some medical products was ruled illegal by Europe's highest court on Thursday, a fresh blow to health companies already struggling to get local authorities to pay their bills, who will now have to raise product prices.The ruling means that cuts made two years ago to bring value-added tax to between 4 and 10% will have to be reversed to the standard level of 21%.Fenin, an association that represents health technology companies in Spain, warned a VAT hike would increase costs for local governments by at least €1bn and lead them to rack up even more debt with pharmaceutical companies. "This ruling is unfair for citizens and could create difficulties for patients to access products that play an important part in the prevention, diagnosis and treatment of illnesses," Fenin said in a statement. Spain's cash-strapped local authorities, which control health budgets, have racked up billions of euros in unpaid bills for medical goods, missing budget targets set by central government as it grapples with a national economic crisis.Central government settled €6bn of outstanding bills by the end of the 2011 but the regions still owed €2.3bn as of last September.Pharmaceutical companies in Spain have warned their future could be jeopardised if the government does not stop over-spending regions from racking up debts.Spain's Treasury said it would work with the European Commission to identify which products would be affected by the court ruling.Brokerage Banesto Bolsa said the EU ruling was "very bad news" for companies that provide medical products like syringes for hospitals, estimating that their earnings before interest, tax, depreciation and amortisation could fall 15%. Lobby group Farmaindustria, which represents pharmaceutical companies, said the decision would have little effect on laboratories that produce new medicines, given that tax on raw materials used in the process was a very small part of total expenditure."Of course there will be impact but it won't be major," said Julian Zabala, spokesperson for the group.Spain found itself in the dock after the European Commission said it had breached EU rules."By applying reduced rates of VAT beyond what is authorised under the VAT Directive, Spain has failed to fulfil its obligations under EU law," the Luxembourg-based EU Court of Justice ruled.The court said Spain could not set lower taxes for medical substances, which are normally used in making medicines, or for medical products used to treat illnesses.

US gun measures face tough road ahead

President Barack Obama's sweeping gun-control package faces an uncertain future in Congress, where majority Republicans in the House of Representatives are rejecting his proposals, while the president's allies in the Democratic-controlled Senate are stopping well short of pledging immediate action. Obama's plan marks the most comprehensive effort to tighten gun laws in nearly two decades as he tries to build on the high emotions over last month's school shooting in Connecticut, where a gunman with a legally purchased high-powered rifle killed 20 children and six adults. Obama has called that day the worst of his presidency.The president's announcement on Wednesday appealed to both common sense and conscience, but frustrated observers of Congress say the growing partisan divide is little swayed by either."To make a real and lasting difference, Congress must act," Obama said. "And Congress must act soon."Obama must try to push through an assault weapons ban and other sensitive measures through a Congress that is already busy preparing for fights over three looming fiscal deadlines and a debate over comprehensive immigration reform.The country's most powerful pro-gun lobby, the National Rifle Association (NRA), is already rejecting many of Obama's proposals as it insists on an absolute reading of the Constitution's Second Amendment-guaranteed right to possess and bear firearms. The group, which also represents a gun industry that since the Civil War has promoted a national gun culture, has long warned gun owners that Obama wants to take their guns away.Critics counter that the country's founding fathers never could have foreseen assault weapons more than two centuries ago, when guns were intended for the common, not individual, defence, guns were often stored in community areas and rifles fired one shot at a time.The head of the NRA on Thursday morning said the organisation has no problem with tighter background checks of gun purchasers, another key Obama proposal. But David Keene told CBS that too much emphasis has been placed on banning certain firearms and said officials should focus instead on the "devastatingly broken mental health system in this country”.The fate of Obama's gun plan could ultimately hinge on a handful of moderate Democratic senators. Although they are unlikely to endorse the president's call for banning assault weapons, they might go along with other proposals, such as requiring universal background checks on gun purchases and limiting ammunition magazines to 10 rounds or less.Several of these senators responded warily after Obama unveiled his proposals."I will look closely at all proposals on the table, but we must use common sense and respect our Constitution," said Senator Jon Tester. The Democrat told the Missoulian newspaper in his home state recently that he supports background checks but doesn't think an assault weapons ban would have stopped the Connecticut shootings.Seeking to circumvent at least some opposition in Congress, Obama signed 23 executive actions on  Wednesday that don't require lawmakers' approval, including orders to make more federal data available for background checks and end a freeze on government research on gun violence. But he acknowledged that the steps he took on his own would have less impact than the broad measures requiring approval from Congress."I will put everything I've got into this, and so will Joe," the president said, referring to his vice president. "But I tell you, the only way we can change is if the American people demand it."Republican leaders in the House of Representatives have made clear they'll wait for the Senate to act first, since they see no need to move on the contentious topic if it doesn't."House committees of jurisdiction will review these recommendations. And if the Senate passes a bill, we will also take a look at that," said Michael Steel, spokesperson for House Speaker John Boehner.Many rank-and-file Republicans criticised Obama's proposal. "The right to bear arms is a right, despite President Obama's disdain for the Second Amendment," said Republican Tim Huelskamp.Senators are expected to begin discussions on how to proceed when they return to Washington next week from a congressional recess, according to a Democratic leadership aide who requested anonymity to discuss internal deliberations. They could end up breaking the president's proposals into individual pieces, with votes possibly starting next month.While the assault weapons ban is seen as having little if any chance of passage, support may coalesce behind requiring universal background checks, which is a top priority for advocacy groups that see it as the most important step to curbing gun crimes. The Brady Campaign to Prevent Gun Violence says 40% of gun sales are conducted with no criminal background checks, such as in some instances at gun shows or by private sellers over the Internet. Obama would seek to require checks for all sales.Senator Chuck Schumer, a Democrat, already has sponsored a bill to require universal background checks that the Senate could take up, while Senator Frank Lautenberg, another Democrat, has legislation banning ammunition magazines with more than 10 rounds.Senate Majority Leader Harry Reid, a Democrat and gun-rights backer who's been supported by the NRA in the past, responded cautiously, saying he was committed to ensuring the Senate considers legislation on gun violence early this year. He didn't endorse any of Obama's proposals.Despite the uncertainty in Congress and opposition from the powerful NRA, outside groups are encouraged by polling showing public support for change.A lopsided 84% of Americans back broader background checks, according to a new AP -GfK poll. Nearly six in 10 Americans want stricter gun laws, the same poll showed, with majorities favouring a nationwide ban on military-style weapons."Now it's up to us," said Dan Gross, president of the Brady Campaign. He said his group would be working "to bring that voice to bear in this process, because without that it's not going to happen”.

Israel's voting system breeds pluralism

Israel's voting system reflects the many different political currents in society, but it has also been behind the repeated failure of governments to form stable coalitions.The proportional representation system means that any party can enter the 120-member parliament, or Knesset, if it passes a threshold of 2% of the popular vote.The number of seats that party secures is proportional to the number of votes received.In Tuesday's election to choose the country's 19th Knesset, 5.6 million citizens are eligible to vote. There are 10 133 polling stations nationwide.Thirty-eight parties on 34 lists will battle for seats in the next Knesset, reflecting the country's eclectic political map. However, polls predict that fewer than half of them are expected to enter parliament.After the official results, President Shimon Peres has seven days in which to entrust forming the next government to the party leader who says he or she is ready to do so.The party leader then has 28 days to put together a coalition. If necessary Peres can extend the deadline by another 14 days.If a coalition fails to emerge, he can assign another party leader with the task, and this person also has 28 days to form a government.If this bid fails, Peres can then assign the task to a third person, but should this person not succeed within 14 days the president then calls a new election.Whoever gets first shot at forming a coalition of at least 61 MPs is generally the leader of the party that wins the most votes, although this is not mandatory.No single party in Israel has ever been able to secure the necessary 61 seats to enable it to rule alone.Twice - in 1996 and 1999 - Israelis voted directly for a prime minister as well as for a party list. In 2001, a special prime ministerial election was held after then Labour Premier Ehud Barak was unable to win the Knesset's support.Creating a coalition can be painstaking, as the leading party must accommodate different parties demanding portfolios in the new cabinet, each with its own agenda.This is the main source of instability in most Israeli governments, with only six of the past 18 parliaments able to complete their four-year mandate.The success of the political haggling that begins immediately after the election will determine how strong and viable Israel's next government becomes.

NEWS,04.12.2012

Steel reprieve comes at price for Hollande

Francois Hollande's bid to rescue steel furnaces in France's historic industrial heartland was to be the mark of a president on the side of the workers and a state with the courage to bring a multinational to heel.But the two-month stand-off over steel giant ArcelorMittal's  Florange plant in Lorraine has unnerved investors in the eurozone's second largest economy, confused France's unions and exposed his six-month-old government to international ridicule.The dispute began in September with reports that ArcelorMittal would shut the idled furnaces at the plant, the last survivor in the once bustling northeastern steel region. The government immediately ordered the company to restart the furnaces or put them up for sale. Hollande's Socialist allies have hailed as a victory a late-Friday compromise under which ArcelorMittal agreed to invest €180m to expand the site near the German border over five years and hold off making forced redundancies. But as the European steel sector struggles to cope with over-capacity, the furnaces themselves will remain shuttered for now, and questions remain over the exact fate of the some 630 workers employed there and further funding needed for expansion.With unemployment at 14-year highs of 10% and his popularity ratings at record lows for a president only half a year into his mandate, there was clear political advantage for Hollande to lock horns with Indian steel magnate Lakshmi Mittal.But the result is at best a no-score-draw, and the tactics used - anti-business rhetoric and the threat of nationalisation could damage his wider reform effort.While his pugnacious, micro-managing predecessor Nicolas Sarkozy led from the front, Hollande let his ministers lead the fight, creating confusion over who runs industrial policy.Arnaud Montebourg, the firebrand leftist industry minister who pushed the nationalisation option hardest, declared Mittal a persona non grata in France and revealed he had found an anonymous potential buyer ready to invest in the plant.That was lapped up by international critics including London mayor Boris Johnson, who told executives in New Delhi that the "sans culottes" revolutionaries had taken control in Paris and advised them to bring their investment rupees to Britain.Montebourg later retracted his personal attack on Mittal but then had to watch as aides of Prime Minister Jean-Marc Ayrault, who announced the final accord, briefed media that his putative investor was neither "credible or solid".Facing opposition calls to resign, Montebourg went on local television on Saturday to announce he had Hollande's support and insist he felt "not betrayed, merely let down" by the outcome.But worse than the damage done to the credibility of one of Hollande's most high-profile ministers, many fear the cacophony further shakes France's image as a place to do business just when it needs all the help it can get to avert recession. "It has been a disaster," a senior French banker said last week as the episode unfolded."Even for sophisticated investors who understand that in France there is a difference between the rhetoric and the reality, this is hugely unnerving."Elie Cohen, economist at the CNRS public research institute, told the commercial i Tele television network that by raising the option of nationalisation, Montebourg risked encouraging copy-cat demands by workers at other struggling sites.It is still too early to say whether the Florange wrangling will hurt foreign investment in France, which Bank of France data show has grown modestly since the 2008/2009 global turndown to hit €30bn or 1.5% of output last year.Barely noticed last week, US online giant Amazon  said it was opening a new distribution centre in northern France that will create up to 2 500 jobs - four times the number at the Florange furnaces and a reminder that 80% of France's economy is now in the services sector.Vital to France's long-term prospects is whether Hollande obtains in coming weeks the overhaul of the country's unwieldy and expensive labour regulations which he has tasked employers and unions to achieve in negotiations by year-end.For that, France's trade unions must make unprecedented concessions to allow business more flexibility in hiring and firing. But the government handling of the Florange tussle has left many labour leaders feeling betrayed."Until the last minute, basically, we were made to believe that temporary nationalisation was essentially a given," Edouard Martin, head of the Florange chapter of France's large CFDT union, told RTL radio. "We did not understand this last-minute fix-up in which Jean-Marc Ayrault unveils an option never before discussed ... We get the feeling he was lying to us all along."A big test now will be whether unions have been riled so much that they stonewall in the labour reform talks. It could also make some more prone to protest if the government makes the extra public spending cuts that analysts say could be needed next year to ensure France hits its deficit-cutting target.For now, both sides hope the battle of Florange is over. ArcelorMittal has welcomed a deal that includes commitments on voluntary redundancies and re-deployment of furnace workers elsewhere in its French activities that go little beyond what it would likely have offered without government intervention.Hollande's office concedes he did not manage to get the furnaces re-opened as he promised during his election campaign,  but argue the deal to expand activity in the current poor economic climate is a victory of sorts.Whether the accord goes ahead in its entirety partly depends on variables outside the two parties' control, including €400m worth of European Commission funding.It may not be quite the end of the story.Referring to the nationalisation threat, one Hollande aide noted: "We are still keeping that revolver on the table."

S Korea, US to 'maximise' bid to stop North

South Korea and the United States will "maximise" diplomatic efforts to stop North Korea's planned rocket launch, Seoul's top nuclear envoy said on Tuesday as he left for talks in Washington. Lim Sung-Nam's US trip will be dominated by Pyongyang's announcement on Saturday that it intends to launch a long-range rocket between 10 and 22 December. The United States and its key Asian allies South Korea and Japan have condemned the move as a disguised ballistic missile test that violates UN resolutions triggered by Pyongyang's two nuclear tests in 2006 and 2009.Lim told Yonhap news agency that his talks with US officials would seek to "maximise diplomatic efforts and the co-ordination between South Korea and the US to block North Korea's launch". Lim met in Seoul on Monday with ambassadors from China, Russia and Japan other members of the six-party talks on North Korea to discuss a common response. Pyongyang insists the launch is a "peaceful" and purely scientific mission aimed at placing a satellite in orbit. A previous attempt in April failed when the carrier exploded shortly after take-off. During his three-day visit to Washington, Lim will hold talks with his US counterpart, Glyn Davies, and other senior officials. China, the North's closest ally, has expressed "concern" at the launch plan, with the foreign ministry urging "relevant parties to act in a way that is more conducive to the stability of the Korean peninsula". Russia on Monday added its "regret" at Pyongyang's announcement and noted that North Korea was obliged to abide by UN resolutions. Analysts say the international community is running out of options for pressuring the impoverished but nuclear-armed North, which is already under layers of sanctions. The six-party, aid-for-denuclearisation talks have been at a standstill since Pyongyang walked of the forum in April 2009. It staged its second nuclear test a month later.

China's Xi vows to rule by law

China's newly appointed leader Xi Jinping pledged on Tuesday to implement rule of law, in comments that appeared aimed at rising social discontent over government corruption and police brutality.In a speech at the Great Hall of the People that marked the 30th anniversary of China's 1982 constitution, Xi spoke of curbing the near-dictatorial powers of the ruling party.His comments appeared to be the strongest yet by a Chinese leader on the need for legal restraints on the party and come amid a series of graft scandals and reports of the unbridled wealth of China's top communist families."We must firmly establish throughout society the authority of the constitution and the law and allow the overwhelming masses to fully believe in the law," Xi said in comments carried by China Central Television. "To fully implement the constitution needs to be the sole task and the basic work in building a socialist nation ruled by law."Xi was last month named as the head of the ruling Communist Party and is slated to take over the state presidency from current President Hu Jintao in March as part of China's once-a-decade leadership transition.This year's transition was badly rocked by the case of disgraced politician Bo Xilai, whose wife was convicted in August of murdering a British businessman, in a scandal that has revealed rampant graft and lawlessness at the pinnacle of political power.Bo is awaiting trial for corruption and abuse of power after allegedly using police in Chongqing city where he ruled to remove political opponents and dissidents, practices that are routine in China.Since becoming party head, Xi has repeatedly pledged to fight graft and on Tuesday he further vowed to rein in China's top leaders. "We must establish mechanisms to restrain and supervise power, power must be made responsible, power must be supervised, violations of law must be investigated," he said."We must ensure that the power bestowed by the people is constantly used for the interest of the people.""No organisation or individual has the special rights to overstep the constitution and law, any violation of the constitution and the law must be investigated."China's current constitution has enshrined the basic freedoms of speech, press, religious belief and association, but such rights are routinely sanctioned and violated, rights groups say.Xi also appeared to address such alleged rights violations."To ensure the implementation of the constitution, is to ensure the realisation of the basic rights of the people," he said."By defending the dignity for the law, we are defending the will of the party and the people for dignity."