NEWS,04.04.2013

EU-IMF experts resume Greek audit

Greece's finance minister met on Thursday with EU-IMF auditors who have resumed an audit in Athens that was interrupted last month, and said details would be available once a comprehensive agreement had been reached.
"Nothing will be sealed until everything is sealed," Finance Minister Yannis Stournaras said after speaking with representatives from the European Union, International Monetary Fund and European Central Bank, a group of creditors known as the troika.
Stournaras told journalists that the atmosphere in the meeting, which lasted more than three hours, was "good" and that further meetings were scheduled on a daily basis.
"There is still work to be done," Stournaras was reported by the Athens News Agency to have added.
The inspection of Greek reforms was initially suspended to give the Greek government time to work on outstanding matters, and attention then turned to the banking crisis in Cyprus.
Pending issues reportedly include the thorny issues of civil service job cuts and a revised property tax.
The auditors' report is required to release a €2.8bn ($3.6bn) rescue loan that has been delayed since March.
Another loan payment of €6.0bn, originally scheduled for the first quarter of 2013, will have to be postponed until at least mid-April.
According to the terms of its bailout deal, Greece has to cut the number of public sector workers by 25 000 this year and by 150 000 by the end of 2015.
The heavily-indebted country, which has been relying on international aid to avoid bankruptcy and is in its sixth year of recession, must also recapitalise its banks and speed up privatisation plans.
"Our goal is for 2013 to be the final year of recession," conservative Prime Minister Antonis Samaras said on Thursday.
Samaras is under pressure from his two coalition government partners, the socialists and moderate leftists, to ease the tax burden as the country suffers through a fourth year of austerity.

We can't replace government action - ECB

The European Central Bank cannot step into the breach left by a lack of action by eurozone governments to solve the region's debt crisis, but is ready to do whatever it can to play its part, ECB chief Mario Draghi said on Thursday.
"We cannot replace lack of capital in the banking system or the lack of actions by governments," Draghi told a news conference after the ECB left its interest rates unchanged for the ninth month in a row.
"The most stimulative measure is to pay the arrears. The ECB cannot replace governments on that front, or on structural reforms," he said.
Nevertheless, the ECB was willing and ready to act and looking at all policy options, both standard and non-standard, to help resolve the crisis, Draghi insisted.
"We are ready to act within our mandate," he said.
With regard to non-standard or anti-crisis measures, "we discussed a variety of measures. We have to be aware of what we can do and what we cannot do," Draghi said.
The ECB was also open to taking on board the experiences of other countries in trying to solve the eurozone's problems, he said.
"We will certainly look at other countries' experiences, what is feasible, institutionally acceptable and effective," he said. "We are thinking 360 degrees on non-standard measures," Draghi said.
Throughout the seemingly never-ending crisis - which appeared to have abated recently until political gridlock in Italy and the crisis in Cyprus sent shockwaves through financial markets once again - the ECB has never hesitated to act as firefighter.
It has slashed its key interest rates, pumped more than €1.0 trillion ($1.3 trillion) into the banking system to avert a credit crunch and sought to tame borrowing costs in worst-hit countries by buying up their sovereign bonds.
The multi-faceted approach appeared to pay off, allowing the markets to enjoy an extended period of calm.
But calls have arisen for the ECB to come to the rescue once again as tensions re-emerged after elections in Italy ended in a political stalemate and Cyprus's parliament rejected the terms of a tough bailout deal with its international creditors.
Finding a solution was not easy, and would require the participation of all actors, Draghi insisted.

Bank of England keeps rates at record low

The Bank of England on Thursday voted to leave its main lending rate at a record-low level of 0.50% and refrained from pumping out more new cash to help stimulate Britain's recession-threatened economy.
"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%," the BoE said in a brief statement at the conclusion of a regular monthly meeting, whose minutes will be published on April 17.
Thursday's outcome had been widely predicted by markets, which expected the BoE to wait for official data later this month to see whether Britain's economy has re-entered a period of recession.
With Britain struggling to sustain economic recovery following the 2008 global financial crisis, the BoE's main lending rate has stood at 0.50% for more than four years.
The central bank has meanwhile pumped out £375bn of new money under its quantitative easing (QE) stimulus programme since March 2009.
"Although the Monetary Policy Committee (MPC) left policy on hold again today, we suspect that the decision was still a close one," said Samuel Tombs at the Capital Economics research group.
BoE governor Mervyn King, who shortly steps down to be replaced by Canadian central bank chief Mark Carney in July, has in recent months unsuccessfully called for an additional £25bn of stimulus along with two other of the MPC's nine members.
"It is likely that BoE governor King, along with Paul Fisher and David Miles voted to expand QE by a further £25bn" at Thursday's meeting, said ING Bank analyst James Knightley.
Recent official data revealed that British gross domestic product (GDP) shrank 0.3% in the fourth quarter of 2012 compared with the previous three months.
Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years.

Cypriot bank staff boycotts bailout

Hundreds of Cypriot bank workers marched peacefully toward parliament on Thursday over fears that their jobs and pensions are at risk under an international bailout deal.

Bank employees earlier staged a two-hour walk-out, with unions saying that pension deposits at the now defunct Laiki bank totaling €27m ($34.7m) will be wiped out, while another €15m at the Bank of Cyprus will face losses of up to 60%.
Two of the country's banks are to be restructured in exchange for a €10bn ($12.8bn) bailout from the European Commission, European Central Bank and International Monetary Fund.
With one of the banks being wound down, retrenchments are expected, while the pension fund for more than 11 000 banking sector workers is also seen to be at risk.
Banks have been operating under strict capital controls since they reopened a week ago.
European Central Bank chief Mario Draghi conceded on Thursday that a failed attempt last month to tax small depositors in Cyprus as part of a bailout was "not smart".
Asked if it had been a mistake for the ECB to agree to the levy after Nicosia proposed it in negotiations, Draghi told reporters: "It was not a smart move and it was corrected the day after."
He insisted that the proposed levy on deposits under €100 000, which caused outrage in Cyprus and spooked financial markets, had never been part of the original ECB bailout proposals.

Pension fears grips Cyprus bank staff

Bank workers were to hold a work stoppage on Thursday over fears that pensions may be at risk under Cyprus's bailout, as the island looked set to top the agenda at a European Central Bank policy meeting.
Bank employees' union ETYK called the two-hour stoppage over concerns that pension funds at Laiki and Bank of Cyprus are not being protected under the island's €10bn ($12.8bn) bailout deal with the International Monetary Fund, European Commission and ECB.
The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.
There has been no labour unrest in Cyprus so far, but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.
The country's new Finance Minister Haris Georgiades vowed on Wednesday to implement the bailout terms in full.
"We... shall do whatever it takes to fix our public finances and put our economy back on track for growth," he said after swearing in to his new post.
Georgiades, a British-educated economist who had been serving as labour minister, took over from Michalis Sarris, who announced on Tuesday he was resigning to cooperate with a judicial probe into the causes of the crisis.
Sarris had been chairperson last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.
Cyprus is already in recession, with unemployment at around 15% and expected to grow sharply this year and next. Forecasts before the deal was agreed saw GDP contracting by 3.5% this year.
Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.
The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from €5 000 to €25 000 and allowed people to write cheques of up to €9 000.
But under the terms of the deal, those with savings larger than €100 000 in Bank of Cyprus, the country's largest, face losing up to 60% of their deposits over that amount.
Those in second lender Laiki will have to wait years to see any of their money over €100 000 as the bank is shuttered.
Cyprus was expected to top the agenda at the European Central Bank's policy meeting in Frankfurt on Thursday.
Markets panicked when Eurogroup chief Jeroen Dijsselbloem appeared to suggest that the Cyprus deal which rattled world markets might be used as a template for future eurozone bailouts.
The consequences of the Cyprus bailout for the eurozone were expected to be the main focus of ECB chief Mario Draghi's's monthly post-meeting news conference.
On the political front, Turkish President Abdullah Gul said on Wednesday the crisis was a chance to work towards a peace deal on the island, divided since Turkish troops invaded its northern third in 1974 after a Greek Cypriot coup.
"The economic crisis should also be an important lesson to all of us because at the end of the day if the island were united then there would be a greater economic potential," he said.

Clinton to pen her views on the US

Hillary Clinton, whose every move is being scrutinised for signs that she might make a 2016 presidential run, announced on Thursday she's penning a book outlining her views on the United States' role in the world.

The ex-secretary of state's first book since leaving office will be published by Simon & Schuster in the summer of 2014, midway through President Barack Obama's final term, the publisher said.
"This will be the ultimate book for people who are interested in world affairs and America's place in the world today," said Jonathan Karp, publisher of Simon & Schuster Publishing Group, and who is set to edit the work himself.
No title was announced, nor details of how much former president Bill Clinton's wife would be paid.
The publisher's CEO Carolyn Reidy said Hillary Clinton would "bring readers worldwide her unique insights into the most dramatic events and critically important issues of our time."
Topics covered will include the killing of Osama bin Laden, the US pullouts from Iraq and Afghanistan, the Arab Spring revolts, and the rise of China.
Broad issues including the role of women and girls, climate change, and human rights will also be addressed, the publisher said in a statement.
"And she will share her views as to what it takes for the United States to secure and sustain prosperity and global leadership. Throughout, Secretary Clinton will offer vivid personal anecdotes and memories of her collaboration with President Obama and his National Security team, as well as her engagement with leaders around the world," the statement said.
Clinton has stayed coy about her plans in 2016, but she is seen as a clear frontrunner this time, having lost the Democratic nomination in 2008 to Obama, who went on to become America's first black president.
Polls show that Clinton, who would be 69 in 2016, has strong support among Democrats should she bid to become the first woman elected to the White House.

Kerry returning to Middle East

US Secretary of State John Kerry is headed back to the Middle East for his third trip in a month, foraging for signs that Israel and the Palestinians are ready to make tough sacrifices for peace.

In a surprise move, the State Department announced on Wednesday that Kerry will return to Jerusalem and the Palestinian territories early next week to build on a series of talks last month between American and regional leaders.

Expectations are growing that the US administration is ready to resume some kind of shuttle diplomacy to rekindle the moribund peace process, which has stalled since late 2010 amid bitter recriminations on both sides.

But State Department spokesperson Victoria Nuland cautioned: "I would not expect the secretary to be putting down a plan."

President Barack Obama visited Israel and the West Bank in mid March, with Kerry then staying behind in the region to meet separately with both Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmoud Abbas.

"They've had some time to reflect on the visit," Nuland said. "So this a chance for the secretary to go back and to listen again and to hear what they think is possible."

Apology to Turkey

"But he'll also be making clear that the parties themselves have to want to get back to the table, that this is a choice that they have to make, and that they've also got to recognise, both parties, that compromise and sacrifices are going to have to be made if we're going to be able to help."

Kerry will start his trip with a visit to Istanbul this weekend, with the 2-year-old conflict in Syria that has cost more than 70 000 lives set to top the agenda of talks with senior Turkish officials.

Nuland would not go into details about the talks on Sunday, but many of the top Syrian opposition leaders are based in Istanbul and he may seek to carve out some time to meet them.

Kerry's latest trip to Turkey also comes after Israel apologised to Ankara in late March for the deaths of nine Turkish activists in a botched raid by Israeli commandos on a Gaza-bound aid ship.

The breakthrough brokered by Obama ended a nearly three-year rift between Israel and Ankara - both key regional US allies.

Kerry will head to Israel and the Palestinian territories on Monday and Tuesday for separate talks with Netanyahu and Abbas, Nuland said.

Stage set

The stops have been added to a previously announced trip during which Kerry will also travel to London for a meeting of G8 foreign ministers before heading to Asia for the first time as America's new top diplomat.

On his first overseas trip since taking up the post on 1 February, Kerry visited Egypt in early March for talks with President Mohammed Morsi.

Kerry has stressed he would like to find a path forward in the peace process which has bogged down for decades.

"I think the stage has been set for the possibilities that the parties can hopefully find a way to negotiations," Kerry said in Baghdad after meeting Netanyahu and Abbas.

Direct peace talks broke down just weeks after Obama made a failed bid to bring the sides together in September 2010 in a bitter row over Israel's settlement building.

Since then, the Palestinians have refused to return to the table without a settlement freeze while Israel has agreed to resume talks only if there are no preconditions.

Freeing of prisoners

Nuland refused to speculate on Wednesday on whether Kerry would try to lay out any confidence-building measures to kickstart the talks in his next round of talks.

But Abbas said on Wednesday that the freeing of prisoners held by Israel was a "priority" for the leadership in the West Bank.

"We cannot be silent about their staying behind bars... [we] have demanded the freeing of all prisoners, especially those arrested before the Oslo accords, and sick, child and women prisoners," he told his Fatah party.

Clashes broke out in the West Bank earlier in the day between Israeli soldiers and Palestinians protesting the death of a Palestinian prisoner serving a life sentence in an Israeli jail.

A 16-year-old Palestinian was killed by Israeli soldiers and two others were wounded in the unrest.

Isolated South Koreans tough it out

Fear and anxiety are spreading among hundreds of South Korean workers sitting 10km inside North Korea and trying to ride out a growing military crisis that is edging ever closer.

The Kaesong joint industrial area, the last remaining symbol of inter-Korean co-operation, has become a pawn in an increasingly dangerous, high-stakes game of brinkmanship between Pyongyang, Seoul and Washington.

A day after it blocked South Koreans from accessing the complex, Pyongyang on Thursday threatened to pull out the 53 000 North Korean workers who keep the South Korean factories in Kaesong running, and to shut it down entirely.

Although allowed to leave Kaesong, about 800 South Korean managers and staff have opted to stick it out for now, as dire threats of nuclear war and retaliation fly back and forth over their heads.

"The anxiety is really ramping up," said Kwon Sook-Mi, who decided to leave the mobile phone plant in Kaesong where she works and cross back into South Korea on Thursday morning.

"There's a lot of uncertainty and some people are finding it mentally very tough," Kwon, aged 37, said.

Supplies running low

By contrast, Kwon said she had seen "no particular change" in the attitude of the North Korean workers at her plant since the crisis began.

Kim Won-Soo, the manager of a footwear plant, said his company was running out of supplies, both for the assembly lines and employees.

"We'll have to stop operating soon as we're almost out of raw materials," said Kim, who crossed back to the South with another group in the afternoon.

"Food supplies are also low, and stocks in the local supermarkets are way down. It's going to be noodles from tomorrow," he added.

On the South Korean side of the border crossing near Paju city, around 100 people and 40 trucks turned up early in the hope of the access ban being lifted on Thursday.

Drivers, managers and workers huddled in small groups, discussing the situation, with much of the talk focused on how long the 123 South Korean companies in Kaesong can keep going.

Political games

"Time is going to run out very fast," said Ryu Koon-Sung, who works for a female underwear company, Young Inner Foam, in Kaesong.

"If I can't get the material packed in this truck over, then we're going to have to stop production in a few days," Ryu said.

At 08:30, the expected announcement was broadcast over loudspeakers: "Entry into Kaesong is impossible today". The trucks began turning away, although some drove straight to an adjacent car park to try again on Friday.

"Kaesong should not become a scapegoat for political games," Ryu said, shaking his head.

South Koreans in general have grown accustomed to the North's threats and provocations over the years.

Even now, there is some anxiety but little panic - in contrast to 1994, when a North Korean negotiator threatened to turn Seoul into "a sea of fire" and people stripped store shelves and bunkered down.

These days Seoulites, especially the young, largely shrug off such threats and the bars and clubs of the upscale Gangnam district remain as popular as ever.

Haven of co-operation in danger

The stock market is also remarkably resilient, down barely 1% since the war rhetoric intensified two weeks ago.

In the Customs, Immigration and Quarantine hall of the Paju border crossing, a slightly desperate Han Jae-Kwon, head of the association that represents the companies in Kaesong, urged an end to the impasse.

"Operations in the complex are in serious trouble because of North Korea's ban... and there is fear and apprehension that the complex could be shut down permanently," Han said.

Han spoke in front of a banner reading: "We appeal for normalisation of passage to Kaesong" - a simple, plaintive message compared to the bellicose rhetoric emanating from Pyongyang.

Han said production had already ceased at a few smaller plants and others would run out of food within a week, as well as gas for heating and cooking.

Kim Deok-Chul, who was trying to cross into Kaesong to reach his textile company, said the complex risked losing its special status as a haven of co-operation that has always weathered political storms.

"Kaesong is a place where people from both side communicate," Kim said. "Both sides should make concessions and keep this area as it is."

NEWS,22.03.2013

China, Russia eye energy, investment deals

China's new leader Xi Jinping, on his first foreign trip as president, held talks with Russian host Vladimir Putin on Friday which focused on a raft of energy and investment accords. A key deal expected to be signed between the two nations will see Russia ramp up oil supplies to China, which is the world's biggest energy consumer."We are grateful for your decision to make your first foreign trip to our country," Putin said at the start of the Kremlin talks."Russian-Chinese ties are an important factor of international politics."Xi, who arrived in Russia accompanied by first lady Peng Liyuan, said he was eager to boost "strategic cooperation" with Putin, stressing his personal rapport with the Russian strongman."We always treat each other with an open heart," said Xi, who will travel to Africa after his Moscow talks."We are good friends," said Xi, who will preside over the world's second-largest economy for the next 10 years.Putin and Xi first met in 2010 when the Chinese leader, then vice-president, travelled to Moscow for talks.Earlier in the day Russian Deputy Prime Minister Dmitry Rogozin and his Chinese counterpart Wang Yang oversaw the signing of a number of deals.These agreements included a $2bn (€1.5bn) deal involving Russian energy firm En+ Group and China's largest coal company Shenhua Group to develop coal resources in Russia's Far East.Experts say the two leaders will use the symbolic visit to try and map out a cooperation plan for the next 10 years."Essentially we are talking about a new epoch in relations between Russia and China," said Sergei Sanakoyev, a veteran China expert with links to the Russian government.Once bitter foes during the Cold War, Moscow and Beijing have over the past years ramped up cooperation as both are driven by a desire to counterbalance US global dominance.At the UN Security Council, China and Russia have both vetoed resolutions to impose sanctions on Syrian President Bashar al-Assad's regime, which is locked in a two-year conflict with the opposition.Both Syria and North Korea are set to be high on the day's agenda. But the economy is expected to be at the forefront of the talks between Russia, the world's largest energy producer, and China, the world's largest energy consumer.Russia, which wants to diversify its energy markets away from Europe, needs to finalise a potentially huge gas deal which could eventually see almost 70 billion cubic metres of gas pumped to China annually for the next 30 years.The Russian state's natural gas giant Gazprom is likely to sign an agreement although not a firm contract, said company spokesman Sergei Kupriyanov.The commercial contract has so far proved elusive as talks have become mired in pricing disputes.Russia's biggest oil company Rosneft is expected to sign an agreement to boost supplies to China from the current 15 million tonnes a year. A Rosneft spokesperson declined to comment but Rosneft chief Igor Sechin indicated that the firm could increase supplies to China to 50 million tonnes a year."China is a strategic market for Rosneft," he told Russian media. "The goal of 50 million (tonnes a year) is not something that's unattainable."Sanakoyev, general secretary of the Russia-China Chamber for Promotion of Trade in Machinery and Innovative Products, said the two countries will also sign a preliminary agreement allowing Chinese companies to help develop Russia's remote Far East. Xi's first overseas trip will then take him to Africa to shore up his resource-hungry country's soaring influence on the continent with visits to Tanzania, South Africa and the Democratic Republic of Congo.Russia and China are members of the BRICS grouping of emerging economies, which includes Brazil, India and South Africa and which will hold a summit in South Africa next week attended by both Putin and Xi.

Russia rebuffs Cyprus, EU awaits 

'Plan B'

Russia rebuffed Cypriot entreaties for aid on Friday, leaving the island's increasingly isolated leaders scrambling to strike a bailout deal with the European Union by next week or face the collapse of its financial system.In Nicosia, lawmakers considered proposals to nationalise pension funds, pool state assets and split the country's second-largest bank in a desperate effort to satisfy exasperated European allies.The governor of the Central Bank, Panicos Demetriades, warned political leaders the country would face a disorderly bankruptcy on Tuesday unless they approved the bills, an official present at the talks said."The next few hours will determine the future of the country," government spokesman Christos Stylianides said before the parliamentary debate. "We must all assume our share of the responsibility."Even if the measures are approved, there was no confirmation they would raise the €5.8bn demanded by the EU in return for a €10bn bailout to avoid a default.Hundreds of protesters rallied outside the parliament and depositors, who began raiding banks' cash machines last weekend, queued again to withdraw what they could.The clock was running down to a Monday deadline set by the European Central Bank for a deal to be in struck before it cuts funds to Cyprus's stricken banks, potentially pushing it out of Europe's single currency.Nicosia angrily rejected a proposed levy on tax deposits in exchange for the EU bailout on Tuesday and turned to the Kremlin to renegotiate a loan deal, win more financing and lure Russian investors to Cypriot banks and gas reserves."The talks have ended as far as the Russian side is concerned," Russian Finance Minister Anton Siluanov told reporters after two days of crisis talks with his Cypriot counterpart, Michael Sarris.Russians have billions of euros at stake in Cyprus's outsized and now crippled banking sector, a factor in the EU's unprecedented demand that bigger depositors take a hit in the interests of keeping Cyprus afloat.But Siluanov said Russian investors were not interested in Cypriot gas and that the talks had ended without result. Sarris was due to fly home, where lawmakers were locked in yet more crisis talks.New bills submitted to the Cypriot parliament included a "solidarity fund" to bundle state assets, including future gas revenues and nationalised semi-state pension funds, as the basis for an emergency bond issue.JP Morgan likened it to "a national fire sale", and eurozone paymaster Germany indicated it opposed the nationalisation of pension funds.They were also considering a bank restructuring bill that officials said would see the country's second largest lender, Cyprus Popular Bank, split into good and bad assets, and a government call for the power to impose capital controls to stem a flood of funds leaving the island when banks reopen on Tuesday after a week-long shutdown.There was no silver bullet, however, and Cyprus's partners in the 17-nation currency bloc were increasingly unimpressed. It was unclear whether parliament would even vote on the bills on Friday."I still believe we will get a settlement, but Cyprus is playing with fire," Volker Kauder, a leading conservative ally of German Chancellor Angela Merkel, told public television ARD.Merkel told lawmakers that nationalisation of pension funds was unacceptable as a way to plug a hole in finances and clinch the bailout, parliamentary sources said.Two lawmakers quoted the chancellor as saying debt sustainability and bank restructuring would have to be the core of any deal, which she called a matter of "credibility".They also quoted Merkel as saying: "There is no way we can accept that", and "I hope it does not come to a crash".Her finance minister, Wolfgang Schaeuble, said he did not know whether eurozone finance ministers would meet over the weekend. "I can't say in advance if and when Cyprus will deliver results," he said.Cypriots have been stunned by the pace of the unfolding drama, having elected conservative President Nicos Anastasiades barely a month ago on a mandate to secure a bailout.News that the deal would involve a levy on bank deposits, even for smaller savers, outraged Cypriots, who raided cash machines last weekend.While EU lenders, notably Germany, had wanted larger, uninsured bank depositors to bear some of the cost of recapitalising the banks, Cyprus feared for its reputation as an offshore banking haven and planned to spread the levy to deposits under €100000 were covered by state insurance.Senior eurozone officials acknowledged in a confidential conference call on Wednesday that they were "in a mess" and discussed imposing capital controls to insulate the currency area from a possible collapse of the small Cypriot economy.Cyprus itself refused to take part in the call. Several participants described its absence as troubling and reflecting the wider confusion surrounding the island's predicament.In Brussels, a senior European Union official told ECB withdrawal would mean Cyprus's biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro."If the financial sector collapses, then they simply have to face a very significant devaluation, and faced with that situation, they would have no other way but to start having their own currency," the EU official said.Cypriot banks have been crippled by their exposure to Greece, the centre of the eurozone debt crisis.On Thursday there were angry scenes outside parliament, where hundreds of demonstrators gathered after rumours spread that Popular Bank would be closed down and its staff laid off."We have children studying abroad, and next month we need to send them money," protester Stalou Christodoulido said through tears. "We'll lose what money we had and saved for so many years if the bank goes down."

Cyprus knocks German business confidence

German business confidence fell unexpectedly in March, data showed Friday, as weak economic data, political gridlock in Italy and the Cyprus crisis begin to sour business confidence in Europe's top economy.The Ifo economic institute's closely watched business climate index slipped to 106.7 points in March from 107.4 points in February. Analysts had been expecting a modest increase this month to 107.6 points."After rising sharply last month, the Ifo business climate index edged downwards in March," said Ifo president Hans-Werner Sinn. "Companies were slightly less positive about their future business outlook than in February, but assessed their current business situation almost as positively as last month."But he insisted: "The German economy remains on track in a challenging environment thanks to strong domestic demand."Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.The sub-index measuring current business slipped fractionally to 109.9 points in March from 110.2 points in February. And the outlook sub-index fell by one full point to 103.6 points.Cyprus's Parliament overwhelmingly rejected a proposed tax on bank deposits as a condition for aid, pushing the Mediterranean island a step closer to the brink of financial meltdown.The Cypriot Parliament is expected to discuss a new banking bill on Friday. This follows reports that the European Central Bank would withdraw its emergency liquidity assistance programme by next Monday if an agreement has not been agreed.

US congress OKs funding stopgap

US lawmakers approved a funding stopgap on Thursday that prevents a government shutdown, but their clash over budget blueprints signaled a contentious debate over the future of federal spending. A trio of key votes bookended the action in Congress ahead of a two-week congressional recess, the most urgent one being on the so-called continuing resolution, a $1.2 trillion appropriations measure that will keep the doors of federal agencies open through September, the end of the fiscal year. The Senate passed the measure on Wednesday, and with the House following suit and making no changes, it now heads to President Barack Obama's desk for his signature.The CR locks in the $85bn in automatic spending cuts mandated by the so-called sequester, although it cushions the blow by providing some flexibility within the Pentagon and other departments to make more targeted, less reckless cuts.Obama must sign the CR into law by March 27 or the US government will go into partial shutdown.With 2013 funding largely resolved, lawmakers turned immediately to the impasse over future government spending, as well as the looming battle over raising the country's borrowing cap. The House passed the plan crafted by Paul Ryan, the House Budget Committee chairperson and last year's failed Republican vice presidential nominee, along a mostly party-line vote, 221 to 207."We've done the hard work of bringing this plan forward," House Speaker John Boehner told members on the floor.All US budget blueprints are essentially political messaging documents, leaders on both sides acknowledged on Thursday.Still, 10 Republicans voted against the Ryan plan. And when it was brought to a vote in the Democratically-led Senate, it was rejected 40-59, with five Republicans opposed, potentially weakening the Republican bargaining hand during upcoming negotiations.The Ryan blueprint aims to balance the budget over the next 10 years, but Democrats denounce it as a recipe for a decade of austerity marked by slow economic growth and dramatic cuts to social programs, education and training.It would slash federal spending, reform entitlements and repeal Obama's landmark healthcare law. It also insists on no new taxes, despite aiming to pare down the $16 trillion national debt.Chris Van Hollen, top Democrat on the House Budget Committee, criticised the Ryan plan as "an uncompromising ideological approach to our budget issues."The Democrats introduced their own budget this week for the first time in four years, and with the Ryan plan rejected, the blueprint by Senate Budget Committee chair Patty Murray could be voted on as early as Friday.Murray is pushing what she says is a balanced approach to deficit reduction, including targeted spending cuts and new tax revenue."The House Republicans have doubled down on the failed policies" that lost them the 2012 election Murray said.An ideological battle is brewing, with House minority leader Nancy Pelosi accusing Ryan of seeking to line the pockets of the wealthy by hollowing out programs for seniors and the poor like Medicare, Medicaid and Social Security.Pelosi said she was ready to discuss ways to strengthen such entitlements, but warned: "If your goal, though, is to have them wither on the vine or be reduced in a way that does not meet their purpose, then them's fighting words."Boehner hinted that a battle over the debt ceiling loomed too, saying the only way the House would raise the ceiling before it is reached in May would be if Obama agreed to an equal amount in spending cuts."Dollar for dollar is the plan," Boehner told reporters. "The president has been clear that he's not going to address our entitlement crisis unless we're willing to raise taxes. I think the tax issue has been resolved.""So at this point then, I don't know how we're going to go forward."Asked if he saw the debt ceiling as leverage in getting Obama to agree to entitlement reform, Boehner said "there might be some there" but stressed: "I'm not going to risk the full faith and credit of the federal government."Meanwhile the Defense Department, thanks to the CR which tweaked the defense cuts, said it was delaying by two weeks this week's notices to 800 000 civilian workers that they would face rolling furloughs through September.

Airfares climb 25% - report

Airfares to some of the most popular U.S. and international destinations rose by 25% or more last year, and June was the most expensive month to travel, according to the website Kayak.com.The costs of flights from North America to Lima soared 33%, London fares were up 30% and tickets to New Orleans, Madrid, Munich and Sydney jumped 28%.Data compiled by the website, which compares hundreds of travel sites at once, showed a ticket to Paris, Beijing, Key West in Florida and Hong Kong was 25% more last year than in 2011, while the airfare to Toronto slumped 3%."We found that overall airfare increased 17% across the board from 2011 to 2012," said Maria Katime, a Kayak spokesperson."Toronto, of all the popular destinations that we looked at, was the only one where the airfare decreased," Katime added. Kayak did not analyze the reasons for the price increases.Despite the jump in airfare to London, which hosted the Olympics and celebrated Queen Elizabeth's Diamond Jubilee in 2012, was the top international destination for North American travelers, followed by San Juan, Cancun, Paris and Rome.Gambling mecca Las Vegas topped New York, Los Angeles, Orlando and San Francisco as the most popular US city to visit.Destinations that increased in popularity in 2012 but did not have hefty increases in airfare included Punta Cana and Santo Domingo in the Dominican Republic, Tokyo, Mumbai and Nashville.Kayak found that the cheapest flights were in January, February, September and October for domestic flights, and February and March for international fares. January was the least busy month to travel.The cheapest average airfares for domestic trips of up to one week are for flights leaving on Saturday and returning on Monday. For longer stays, leaving on Tuesday and returning on a Wednesday can lower airfares by an average of 10%.The website found the opposite for international trips. Prices were 21% lower than average for passengers on short trip of up to a week if they left on Tuesday and returned on a Wednesday, and 9% lower for longer stays with a Saturday departure and a Sunday return.

S&P cuts Cyprus rating

Ratings firm Standard & Poor's dealt a further blow to reeling Cyprus on Thursday, cutting its credit rating as the eurozone country struggles to avoid a banking sector meltdown.S&P lowered Cyprus's rating to 'CCC' from 'CCC+' as the country raced under a tight deadline to formulate an acceptable rescue plan with the European Union.The lowered credit rating would make it more costly for Cyprus to borrow, further exacerbating the stricken nation's woes.The US ratings firm warned the outlook was negative for the country, and that the rating could be lowered further if critical financing was not secured "soon."While a bailout deal is possible, S&P said, "In light of building economic and financial stability pressures, the terms of any support package are likely to be unpopular and challenging to implement in the context of a severe, protracted economic downturn and an extended bank holiday.""As a consequence, we believe that risks of a sovereign default are rising."S&P said that neither Cyprus's government nor bank shareholders appeared capable to meet the pressing capital needs of its teetering banks."In the absence of foreign private or official capital injections into the Cypriot banks, we see few means to recapitalise the distressed portion of the system without converting bank liabilities, including deposits, into equity claims," it said in a statement.The S&P downgrade came as the Cyprus cabinet, meeting in a crisis session, was attempting to approve an alternative bailout plan after parliament rejected an agreement with the EU and International Monetary Fund because it included a heavy tax on bank deposits.The European Central Bank, ratcheting up the pressure, said that Cyprus must agree a bailout deal by Monday or it will withdraw emergency financing of Cypriot banks.Standard & Poor's warned: "We would likely lower the rating if Cyprus's government fails to obtain a financing program soon."The CCC rating is three notches above sovereign default.S&P discounted speculation that the crisis may force Cyprus to exit the eurozone."Our baseline expectation is that Cyprus will remain a member of the European Economic and Monetary Union," it said.

Eurozone ready to discuss Cyprus bailout

Eurozone finance ministers extended a Cypriot olive branch late on Thursday, as their leader said currency partners were willing to work with Nicosia on new plans to make work a bailout that re-draws the island's stricken banking sector."The Eurogroup stands ready to discuss with the Cypriot authorities a draft new proposal, which it expects the Cyprus authorities to present as rapidly as possible," Eurogroup chairperson and Dutch Finance Minister Jeroen Dijsselbloem said in a statement after a two-hour conference call with peers.As the ministers huddled around their video screens, the Cyprus cabinet was in crisis session bidding to approve a "Plan B" after an earlier agreement with the EU and IMF collapsed amid anger over a weekend raid on savers that Dijsselbloem says should have been understood as a "wealth tax" aimed principally at mainly Russian oligarchs' investments.The European Central Bank has given Cyprus until Monday to find a way out of a crisis that has left Moscow furious over frozen government agency accounts with banks in the offshore finance centre shut for a full week, the worst affected imposing radically lowered cash withdrawal limits.With EU sources semi-openly floating a willingness to cut Nicosia loose if it doesn't clobber a finance industry Germany and others associate openly with the onward eurozone circulation of ill-gotten money-laundering gains, and a nervous crowd gathered outside the Cypriot parliament, Dijsselbloem's remarks served as an inducement to lawmakers there."The Eurogroup would subsequently, on the basis of a Troika analysis that needs to be undertaken, be prepared to continue negotiations on an adjustment programme," Dijsselbloem added, teeing up a tense weekend of negotiations from Moscow to Nicosia and Brussels or Berlin.However, in what analysts have warned is a dangerous game of Russian roulette, he also underlined that any new plan to fill a €6bn hole and so unlock up to €10bn in eurozone and IMF loans between now and 2016 would need to "respect" other demands already made by creditors.Rapid passing of legislation then provides a further hurdle in a race against time to prevent a collapse in the island's banking sector - one heavily based on deposits rather than credit, and so potentially more vulnerable than other victims during the debt crisis to runs on weak banks.As the political point-scoring continued, Dijsselbloem finished by insisting that ministers "reaffirmed the importance of fully guaranteeing deposits" below the sensitive threshold of €100 000 - the cut-off point for European Union legal protections.