NEWS,16. AND 17.05.2013

Pope rails against economic dictatorship

Pope Francis issued a strong call for world financial reform on Thursday, condemning a heartless "dictatorship of the economy" and saying the economic crisis had made life worse for millions in rich and poor countries.
"Money has to serve, not to rule," he told ambassadors in the first major speech about finance since his election in March in which he also urged states to take greater control of their economies and protect the weakest.
The economic crisis had created fear and desperation, diminished joy of life and increased violence and poverty as more people struggled to get by in "undignified" ways, the pope said.
There was a "need for financial reform along ethical lines that would produce in its turn an economic reform to benefit everyone," he added.
"We have created new idols. The worship of the golden calf of old has found a new and heartless image in the cult of money and the dictatorship of an economy which is faceless and lacking any truly humane goal," he said.
The reference was to the Book of Exodus in the bible, when the Israelites worshipped a golden calf while Moses was at the top of Mount Sinai receiving the Ten Commandments.
While Francis' predecessor Benedict also called for changes in economic systems, he did so in often dense intellectual language.
Francis seemed to be expressing very personal views forged from his experience with the poor in Latin America.
Francis, who has said he wants the 1.2 billion-member Catholic Church to defend the poor and be more austere itself, urged more state control over economies.
"While the income of a minority is increasing exponentially, that of the majority is crumbling," he said.
"This imbalance results from ideologies which uphold the absolute autonomy of markets and financial speculation, and thus deny the right of control to states, which are themselves charged with providing for the common good," he added.
Market tyranny
Speaking of financial markets he said: "A new, invisible and at times virtual, tyranny is established, one which unilaterally and irremediably imposes its own laws and rules."
In many cases, the value of people was judged by their ability to consume, he added.
The pope's comments add to growing expressions of concern about a global economic malaise that has left millions out of work or hanging on to insecure, short-term jobs.
Francis, the former Cardinal Jorge Bergoglio of Buenos Aires, said his pontificate would side with the poor on social and economic issues.
"The Pope loves everyone, rich and poor alike, but the Pope has the duty, in Christ's name, to remind the rich to help the poor, to respect them, to promote them," he said.
Francis, who will visit a slum during his trip to Brazil in July, urged "those in power to be truly at the service of the common good of their peoples" financial leaders "to take account of ethics and solidarity".

Pressure too much for some top CEOs

On approaching his 60th birthday this year, long-serving Tullow Oil boss Aidan Heavey told staff he felt "like two 30 year-olds".
A handful of recent shock departures by 50-something chief executives at European blue chip companies - none of them under any obvious pressure to quit - suggest some of his peers either lack that vigour, or want to channel it elsewhere.
Peter Voser is giving up one of the world's most challenging CEO roles at Royal Dutch/Shell next year, before his 55th birthday, in pursuit of a "lifestyle change".
Swiss engineering group ABB's 55-year old boss Joe Hogan is also going, for "private reasons". Pierre-Olivier Beckers, 53, is walking out on Belgian retailer Delhaize , and Paul Walsh, 57, is waving goodbye to drinks multinational Diageo.
All four are about average European CEO age.
While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted up in recent years, and not just because of the tough economic times.
"The reality is it's gruelling. It's really tough, and there comes a point where you don't want to do it any more," said Ian Butcher, who headhunts board-level and senior executives for MWM Consulting.
"The quarterly reporting, the governance, the regulatory aspects, it just becomes very wearing - the level of scrutiny, the pace at which things are moving, the short-term nature of how people look at any given situation. Even over the past five years these things have made CEO a tougher position to hold, and the travel that people have to undertake in these jobs - it's just something they run out of steam on."
Some recent early retirees, while still well short of traditional retirement age, also got to the top spot early.
"They're still in their early fifties, with energy and a desire to do something, but they want to do something different, something quite significantly different sometimes," says Butcher.
Voser fits that bill. He has no plans to collect well-paid chairmanships and non-executive directorships, as many ex-CEOs have done in the past. Former Tesco chief Terry Leahy has also resisted that gravy train since he left two years ago.
As for the early starters, executive search industry professionals point at people like Andrew Witty, the CEO of GlaxoSmithKline, who took on the job aged 44 in 2008 and would have to stay in harness for another decade to reach 60 in the role.
Blue-chip bosses as young as Witty are still rare, but over a quarter of Europe's current crop have less than two years in the job, and more than half have less than four, according to data from executive search specialists BoardEx.
Median CEO age is 55 years
The BoardEx data, collected for Reuters from 238 companies in the main stock indexes of Germany, Britain, France, Spain, Italy, Belgium, the Netherlands and Denmark, puts the median CEO age at 55, and the median tenure at four years. Only 16 percent of the group have held on for 10 years and more.
The longest serving of them is Martin Gilbert of the British fund Aberdeen Asset Management. Though younger, at 57, Gilbert pips the 28.3-year tenure of Tullow's double thirty year-old Heavey, with 29.8 years at the helm.
There are 17 top European CEOs who have been in the job for less than six months, and the youngest of the 225 in the group for whom ages were available is Vitaly Nesis, 37, who runs Polymetal International, the London-listed Russian precious metals miner.
While the recent spate of quitters are looking for something else to do, there are still some who appear to want nothing but.
In the BoardEx group there are four over 70, and the oldest by eight years is Albert Frere, CEO of Group Bruxelles Lambert .
Perhaps some linger on for fear that the pension pot is still a little light. Frere will have put such qualms behind him long ago. At 87, he is Belgium's richest man.

China steps up inspection of meat trade

China has begun a crackdown on the sales of fake, diseased and tainted meat products after a series of scandals that have further dented public confidence in the food industry, the official Xinhua news agency said on Thursday.

It said the State Council, China's cabinet, recently ordered local government departments to step up checks on meat and processed meat products, and carry out detailed inspections of rural factories, workshops and warehouses as well as private slaughterhouses. 

"The current water-injected meat, fake beef and mutton, dead livestock and other types of toxic and hazardous meat has aroused widespread concern," said the report.

"Local governments at all levels should strengthen their organisation and leadership, to severely crack down on fake beef and mutton and other illegal and criminal activities."

Pork and poultry prices have suffered this year as a result of a series of food safety scandals, a bird flu outbreak and crackdown on expensive government banquets. 

China has long been plagued by poor food safety standards, but many of the recent scares have involved its meat trade.

Earlier this month, the police said it had uncovered a crime ring that passed off more than $1m rat and small mammal meat as mutton. 

It came after pictures of thousands of dead pigs dumped in rivers supplying Shanghai caused widespread outrage. 

A media report last year uncovered excessive levels of hormones and antiviral drugs in chicken meat supplied to KFC, whose parent company is Yum Brands, and McDonald's. 

Beijing has repeatedly called for greater inspection of food processing facilities to tackle food safety problems, but such actions appear to have done little to improve standards.

The latest clampdown will encourages local governments to offer rewards to people who inform on illegal activities.

The government also called for implementation of measures for the proper disposal of livestock that had died from disease.

Tycoon: Mining firms treated as ATMs

Australia's richest person Gina Rinehart on Friday accused the government of using the mining industry as an ATM, warning of an unhealthy reliance on the sector and unsustainable debt levels.

In a speech to be delivered at the Australian Mines and Metals Association conference, the outspoken tycoon, chairman of Hancock Prospecting, cautioned that without reform Australia risked the debt problems faced by countries like Greece.

"Let's not be too proud to admit that we're really just a large island with a small population with record debt," she said, according to extracts of the pre-recorded speech.

"Plenty of Australians know this in a casual way.

"What few seem to properly understand even people in government  is that miners and other resources industries aren't just ATMs (cash machines) for everyone else to draw from without that money first having to be earned and, before that, giant investments are made."

Australia's economy has been driven by the mining industry but the boom is approaching an investment peak and a bumpy transformation lies ahead as alternative sources of growth are sought.

Mining projects have faced headwinds from depressed conditions in Europe and the United States, softening growth in China and increased competition from other producers as well as falling commodity prices.

Earlier this week, the government revealed a significant plunge in revenues due to sluggish corporate tax earnings and announced an $18bn budget deficit for 2013/14, having previously forecast a surplus.

Rinehart said the government had been complacent in managing the commodities boom and its debt levels which are forecast to peak in 2014/2015 at 11.4 percent of GDP were unsustainable.

"It is incredible that after the last six years of record commodity boom times, we now find the once lucky country in record debt, with the budget tipped to deliver yet another deficit, to further increase our record debt," she said.

"Without mining and its related companies this country has no hope of repaying our record debt without facing the problems Greece and other countries faced with overspending and consequent debt traumas."

Rinehart has been a fierce critic of the government's mining and carbon taxes, saying that along with red tape and high wages it had made Australia "cost uncompetitive".

According to the Australian Financial Review, she was also to use her speech to urge Australia to borrow from the economic policies of Singapore, using low taxes to encourage investment and development.

NEWS,26.02.2013

US consumer confidence rebounds

Americans' confidence in the economy rebounded in February, reversing three straight months of declines as shoppers began adjusting to a payroll tax hike last month. The New York-based Conference Board says on Tuesday that its Consumer Confidence Index stands at 69.6, up from a revised 58.4 in January. Economists had expected 60.5, according to research firm FactSet.It was the highest reading since November's 71.5. Confidence has fallen since then as shoppers were worried about growing economic uncertainty.The consumer confidence indicator is watched closely because consumer spending accounts for 70% of US economic activity. The figure is still well below the 90 reading that indicates a healthy economy.

Denmark to cut corporate taxes

Denmark's government on Tuesday presented a controversial growth package that would reduce corporate taxes and increase public spending to spur growth and create 150 000 jobs. The centre-left coalition plan calls for a progressive reduction in corporate taxes from the current 25% to 22%, as well as an increase in public investment of six billion kroner (€804m or $1.05bn) to stimulate the economy."We are creating jobs now, but we are also getting Denmark ready to grab the economic recovery when the internal slump turns," Social Democratic Prime Minister Helle Thorning-Schmidt told a news conference, adding that while there were no quick fixes, the growth plan was a "step in the right direction."At the same time, Economy Minister Margrethe Vestager said no new taxes would be imposed on businesses."We are sending a clear signal to companies that we do not plan any new taxes and duties for businesses … This is not just a growth package, it is a complete growth plan towards 2020," she said.The corporate tax reduction would however not include a decrease in the tax on labour costs in the financial sector, nor would it apply to North Sea oil extraction.The proposal also calls for lower energy duties for companies, an increase in planned public sector investment and a reintroduction of tax rebates for Danes who make home improvements.While Danish industry was positive, the unions were not, with eight unions having written an open letter to the prime minister complaining that reduced corporate tax would be at the expense of public investment.The move came one week after a proposal to overhaul the student grant system, and a social security reform that would force all unemployed under-30's to pursue an education rather than live off social security.All three government proposals must now be negotiated with other parliamentary parties in order to win a majority.Although the left-wing Red Greens are expected to vote against the government's proposals, centre-right parties are expected to approve them.

US pushes trans-Atlantic free trade

US Secretary of State John Kerry pushed on Tuesday for a free-trade agreement between the United States and Europe, saying it is a priority for President Barack Obama's second term that would help create jobs and growth on both sides of the Atlantic.The proposal has been garnering support on both continents, with Obama saying earlier this month that the US believes "trade that is free and fair across the Atlantic supports millions of good-paying American jobs."Speaking after talks on Tuesday with Chancellor Angela Merkel and Foreign Minister Guido Westerwelle, Kerry said such an agreement would be a boon to the US and Europe."We think this is something that can help lift the economy of Europe, strengthen our economy, create jobs for Americans, for Germans for all Europeans, and create one of the largest allied markets in the world," he told reporters alongside Merkel. "It will help raise standards, it will help break down barriers, and we believe it is good for all of us."Germany, Europe's largest economy, has strongly supported the idea and Westerwelle said that he hoped the groundwork could be done quicikly to begin negotiations with the U.S. on the agreement by the summer."We see here a window of opportunity," Westerwelle said after his one-on-one meeting with Kerry. "It's a window of opportunity that we need to seize in the interest of growth, and jobs for Germany, the United States and Europe."Still, negotiations may not be easy or short, with agriculture likely to be one tricky area.Kerry's swing through Berlin was his second stop on a nine-country dash through Europe and the Middle East, Kerry's first trip as secretary of state.He started his trip in Britain and heads next to France.

N Korea leader monitors 'actual war' drill

North Korean leader Kim Jong-Un oversaw a live-fire artillery drill aimed at simulating an "actual war", state media said on Tuesday, a day after South Korea swore in its first female president."An endless barrage of shells were fired by artillery pieces on 'enemy positions', their roar rocking heaven and earth, and all of them were enveloped in flames," the Korean Central News Agency (KCNA) said."Feasting his eyes at the 'enemy positions' in flames, [Kim] was satisfied," the official agency added.KCNA gave no precise time or location for the drill, but its announcement followed Monday's presidential inauguration in the South, at which new leader Park Geun-Hye signalled a zero-tolerance policy to North Korea provocation.According to KCNA, Kim ordered the live fire exercise to test the capability of artillery units "to fight an actual war".It marked the latest in a series of high-profile military inspections by Kim following the North's nuclear test earlier this month.Last week Kim oversaw an air force demonstration, a paratroop drill and a separate tactical attack exercise combined with live shell firing.In her inauguration speech, Park demanded that Pyongyang "abandon its nuclear ambitions" immediately and warned that the North's test was a challenge to the future survival of the Korean people.While promising to pursue the trust-building policy with Pyongyang that she had promised in her campaign, Park stressed she would never compromise South Korea's national security.Cross-border tension has been high since the North's 12 February test which sparked global fury and condemnation from the UN Security Council.Pyongyang said the test was a response to a tightening of sanctions after the North's successful long-range rocket launch in December, which the international community condemned as a disguised ballistic missile test.

Tepid response over Castro retirement

Cuban-Americans in Miami are reacting with a collective shrug over the news that Raul Castro plans to retire from Cuba's presidency within five years.Many believe Castro's departure and the ascendance of Miguel Diaz-Canel won't bring change.Exiles such as 74-year-old Alberto Faustino have been waiting years for the Castro brothers to leave or be forced out. Fidel Castro handed power to his brother after falling ill in 2006. Raul Castro said on Sunday that his new presidential term would be his last.Diaz-Canel has been tapped to be Raul Castro's top lieutenant and possible successor.Faustino and other Cuban-Americans said the absence of free elections and continuation of rule by the Communist Party mean there will be little to celebrate when Castro is gone.Meanwhile, AFP reported that Venezuelan President Hugo Chavez, who is convalescing in a Caracas hospital, issued a statement on Monday congratulating President Castro for his re-election to a final five-year term.Chavez sent his "warmest congratulations to the revolutionary leader Raul Castro" and wished him "great success" after the National Assembly re-elected him on Sunday.The Venezuelan leftist leader has forged close ties with Cuba's the retired Fidel and his brother Raul. Chavez has undergone four rounds of cancer surgery in Cuba since June 2011.Chavez returned to Caracas on 18 February after spending two months in a Cuban hospital following his latest surgery in Havana.The Venezuelan government has issued sporadic statements since Chavez's 11 December operation and his face has only been seen in four pictures released on 15 February, showing him in bed, smiling with his two daughters.

NEWS,29.01.2013

RBS faces £500m fine over Libor scandal

Britain's Royal Bank of Scotland could face a £500m ($786m, €585m) fine from British and US authorities for its role in the Libor rate-rigging affair, media said Tuesday.The Wall Street Journal, citing people briefed on negotiations, added that US authorities were pushing for a settlement of allegations that would result also in an RBS division pleading guilty to criminal charges.The newspaper said that the deal could be completed within the next fortnight and added that RBS was resisting any guilty plea amid fears it would lose clients and spark costly litigation.A spokesperson for the state-rescued bank would not be drawn on the article, simply saying: "Discussions with various authorities in relation to Libor setting are ongoing."We continue to co-operate fully with their investigations," he added in a statement.Investors meanwhile took flight at Tuesday's development. RBS shares sank 5.98% to finish at 345.80 pence on London's FTSE 100 index of leading shares, which ended 0.71% higher at 6 339.19 points.The Edinburgh-based lender is 82% owned by the British government after a vast bailout during the global financial crisis.The Libor affair erupted in June 2012 when Barclays bank was fined 290m by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.In December, Swiss banking giant UBS was slapped with fines totalling $1.5bn after a major probe by Swiss, British and US regulators revealed evidence of massive misconduct."It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS," said analyst Ishaq Siddiqi at trading group ETX Capital."However, it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates."The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price."The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion. However, the system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.The London Interbank Offered Rate, or Libor, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.

Global tourism peaked in 2012 - UN

International tourist arrivals exceeded one billion for the first time last year, with the Asia-Pacific region posting the biggest increase in foreign visitors, and numbers will rise further in 2013, a UN body said on Tuesday. The number of international tourist arrivals grew by 4.0% to 1.035 billion in 2012, up from 996 million in 2011, the Madrid-based United Nations World Tourism Organisation said in an annual survey."2012 was a year of constant economic instability in the entire world, especially in the euro zone. Despite this international tourism managed to maintain its course," the body's Secretary General Taleb Rifai told a news conference.The organisation forecasts international tourist numbers will grow in 2013 although at a slightly lower rate of 3.0%  4.0%.Global tourism figures were hit hard by the 2008 global financial crisis, with the rise in international arrivals that year slowing to 2.1% after jumping 6.6% in the previous year.Arrivals plunged by 3.9% in 2009, its worst performance in 60 years, as the outbreak of the swine flu virus contributed to cash-strapped consumers' decision to stay home.But international tourism arrivals bounced back the following year, rising 6.6% in 2010 and by 5.0% in 2011 even though global economic crisis had not yet ended. The Asia-Pacific region posted the largest growth in visitor arrivals last year with the number of foreign tourists up by 14 million or 6.5% to 233 million.Growth in the number of foreign visitors was highest in Southeast Asia, with the number of arrivals up by 8.7% over 2011.Tourist numbers climbed 4.1% in emerging economies compared with a 3.6% rise in advanced economies.The only region to report a decline in tourist numbers compared with 2011 was the Middle East with 2.0% fewer arrivals because of political instability in popular tourist spots such as Egypt and Syria.But the drop in the number of visitors to the region was smaller than the decline of 7.0 posted in 2011, the UN body said.Asia and Africa are expected to post the greatest growth in tourist numbers this year.The agency predicts tourist arrivals will increase by 5.0%-6.0% in the Asia-Pacific region this year and by 4.0%-6.0% in Africa.The Middle East will see the number of foreign visitors to the region rise by 0 and 5.0% this year while Europe will post growth of 2.0%-3.0%.The forecast of continued growth in international tourist arrivals next year comes a week after the International Monetary Fund (IMF) predicted the global economy will grow slightly less in 2013 than expected.The IMF projects global gross domestic product annual growth of 3.5% this year, a dip of 0.1 point from its October forecast owing largely to weakness in the eurozone, and 4.1% in 2014.The UN World Tourism Organisation predicts international tourist arrivals will rise by an average of 3.8% each year between 2010 and 2020 and will reach 1.8 billion in 2030.

Japan to approve $1.02 trillion budget

Japan's cabinet was Tuesday set to approve a $1.02 trillion annual budget with boosts in defence and public works spending amid a festering territorial row with China and a renewed assault on deflation.The cabinet is expected to approve a ¥92.61 trillion budget for fiscal 2013, with revenue estimated at ¥43.10 trillion and new bond issuance at ¥42.85 trillion - the first time in four years revenue will have been greater than new bond issuance, local reports have said.The budget is down from the ¥92.9 trillion allocated in the fiscal 2012 initial budget, the first decrease in seven years, they said.But the defence budget is up by ¥40bn or about 0.8% from the previous year to ¥4.75 trillion, the first rise in 11 years, at a time Japan is embroiled in a row with China over a chain of islands in the East China Sea.Beijing has repeatedly sent vessels to the disputed waters, prompting calls in Japan for more measures to defend the Tokyo-controlled islands, called the Senkakus in Japan but known as the Diaoyus in China.Defence Minister Itsunori Onodera has said the military will add nearly 300 personnel to help defend the disputed islands.Meanwhile, public works spending rises for the first time in four years, growing by ¥710bn to ¥5.29 trillion, reports said.Prime Minister Shinzo Abe, who took office in December, has pledged to pull Japan out of years of deflation by active government spending coupled with aggressive monetary easing by the Bank of Japan.Abe's government announced a $226.5bn stimulus package earlier this month.In the fiscal 2013 budget, the issuance of new government bonds decreases by ¥1.4 trillion from the preceding year to ¥42.85 trillion, Jiji Press said.The government is planning an $86bn bond sale to pay for the stimulus, stoking fears about spending by Tokyo, which already owes creditors cash equal to twice the size of its economy.

 

Japan, China set to boost economic ties

Japanese Prime Minister Shinzo Abe said on Tuesday he was open to a meeting with Chinese leaders to rebuild ties damaged by a territorial dispute but said there was no room for negotiations on their row over a group of small islands.The remarks came after China's Communist Party chief, Xi Jinping, told a Japanese envoy sent to Beijing last week that he was committed to developing bilateral ties and would consider holding a summit meeting.Relations between the world's second- and third-largest economies plunged after the Japanese government bought three disputed islands from a private owner last September, sparking anti-Japan protests across China.Some Japanese businesses were looted and Japanese citizens attacked."It is precisely because we have a problem that we should hold the summit between leaders and have high-level talks," Abe said on a television programme, "I would like to consider a top-level summit if circumstances allow."The conservative prime minister has just increased the defence budget for the first time in 11 years and swept back to power in a December election calling for the protection of Japan's "beautiful seas".He reiterated Japan's stance on the islands, which it controls. Japan calls them the Senkaku while China calls them the Diaoyu."The Senkaku Islands are our land and China has taken provocative steps against them ... we have been clear that there is no room for negotiation on this matter," he said."But on top of that, there's an economic relationship. Japan invests in China and reaps benefits from exporting its goods there while China creates job places thanks to Japanese investment," said Abe, adding that maintaining strong economic ties were vital for both countries."If top-level meeting was necessary to achieve that, we should do it and from that point on rebuild our relationship."

NEWS,05.12.2012

Euro zone downturn eases slightly

The euro zone's economic slump was a little less pronounced in November than previously thought, although there are few signs the region will emerge from recession any time soon, business surveys showed on Wednesday. Markit's Euro zone Composite PMI, which gauges business activity across thousands of companies, rose in November to 46.5 from 45.7 in October markedly higher than the preliminary reading of 45.8 reported 10 days ago.The PMI has lingered below the 50 mark that divides growth and contraction for all but one of the last 15 months and with no economic stimulus in the pipeline, there is little reason to expect a rebound.Survey compiler Markit said there was no single reason for the upward revision to the PMI from the mid-month flash estimate, which could simply be down to a stronger end to the month for businesses.France, Spain and Italy were the biggest drags on the euro zone economy through last month. Germany performed better. Overall, however, the survey still pointed to a deepening recession this quarter, following the economy's 0.1% decline in the third quarter."The (upward revision) is good news as it might be a sign that activity has bottomed out in Q3," said Annalisa Piazza, economist at Newedge Strategy in London."Nevertheless, we see no signs of improvement that suggest that the EMU economy might recover any time soon. Further contraction in GDP remains our baseline scenario at least until Q1 2013."The euro hit a seven-week high on Wednesday and European shares continued their recent rally, although that was mainly due to comments from China's new leader which boosted expectations for global growth. Monday's manufacturing PMI's told a similar story to Wednesday's composite and services numbers. The composite new orders index saw a sharp upward revision to 45.0 from 44.1 in the preliminary data but still showed company order books declining at a fast rate.Service sector businesses like banks, hotels and restaurants that account for the vast bulk of the euro zone's private economy, also saw activity decline at the slowest rate in three months.The final services PMI was revised up a full point from the flash reading, to 46.7 and compared with October's 46.0.Prices charged for products fell again in November, at a similar rate to the previous month, giving further weight to the view that inflation would pose little impediment to the European Central Bank if it wanted to further ease monetary policy.The ECB ends its monthly policy meeting on Thursday. While only a handful of economists polled by Reuters think it will cut interest rates at the meeting, overall they are split on whether the bank will do so early next year. "The improvement in the services sector purchasing managers' survey further reduces the likelihood that the ECB will cut interest rates on Thursday," said Howard Archer, chief UK and European economist at IHS Global Insight."Nevertheless, we believe a cut from 0.75% to 0.50% remains likely in the early months of 2013 as the euro zone continues to struggle to grow and underlying inflationary pressures are muted."

EU imposes record cartel fine on Philips

The European Commission imposed the biggest antitrust penalty in its history on Wednesday, fining six firms including Philips, LG Electronics and Samsung SDI a total of €1.47bn for running two cartels for nearly a decade.The Commission said executives from the European and Asian companies met until six years ago to fix prices and divide up markets for TV and computer monitor cathode-ray tubes, technology now mostly made obsolete by flat screens.Between 1996 and 2006 they met in Paris, Rome, Amsterdam and in Asia for "green meetings", so-called because they often ended in a round of golf.The EU antitrust regulator imposed the biggest penalty, of €313.4m, on Dutch-based Philips for its role in fixing prices and carving up markets. LG Electronics of South Korea must pay the second biggest fine, set at €295.6m."These cartels for cathode-ray tubes are 'textbook cartels': they feature all the worst kinds of anti-competitive behaviour that are strictly forbidden to companies doing business in Europe," EU Competition Commissioner Joaquin Almunia said in a statement. Taiwanese firm Chunghwa Picture Tubes blew the whistle on the cartels in TV and computer monitors and escaped a fine.The Commission also fined Panasonic €157.5m, Samsung SDI €150.8m, Toshiba €28m, and French company Technicolor €38.6m.A joint venture between Philips and LG Electronics was penalised €391.9m while two Panasonic joint ventures were also sanctioned. Almunia said the violations were especially harmful for consumers, as cathode-ray tubes accounted for 50% to 70% of the price of a screen.Cathode-ray tubes have largely been replaced by more advanced display technologies such as liquid-crystal display (LCD), plasma display and organic light-emitting diodes. Philips said it would make a provision of €509m in the fourth quarter for the fine, but Chief Executive Frans van Houten also said the group would challenge what he called the disproportionate and unjustified penalty. Philips sold off the business which committed the infringement in 2001.ING analyst Fabian Smeets told ANP-Reuters that the sanction was significant, but expected. Philips' shares were down 0.2% to €20 in mid-session, erasing earlier gains after news of the fines. Technicolor said the fine, which will be booked as an exceptional item in its second-half accounts, would not affect its 2012 earnings and free cash flow targets.Until now, the Commission's biggest antitrust penalty had been a €1.38bn fine imposed on participants in a car glass cartel in 2008.The Commission's sanctions followed a total fine of €128.74m levied last year against four producers of the glass used in cathode-ray tubes.Chunghwa Picture Tubes, Samsung Electronics, LG Display and three other LCD companies were penalised a total €648m two years ago for taking part in a cartel.

Fiscal watchdog sees a million jobs lost

Britain's fiscal policy watchdog said on Wednesday that more than one million jobs would now be cut from the public sector by 2018 because of further government spending cuts.The independent Office for Budget Responsibility, which produces forecasts that underpin the government's economic policy, said gross domestic product would grow much more slowly than it forecast in March. According to the OBR, about 1.1 million general government jobs would be lost in total from the Conservative-Liberal Democrat coalition's austerity plans, which got underway in mid-2010, "reflecting the additional year of spending cuts pencilled in for 2017-18".In March, it had expected about 730 000 public sector jobs to be cut across the full period of austerity. There are roughly five and half million people employed in Britain's public sector.The watchdog predicted a 0.1% fall in GDP in the fourth quarter followed by growth of 0.3% in the first three months of 2013. In March, it had expected growth of 0.3% in the final three months of this year.It has also cut longer-term forecasts sharply. The economy will grow 1.2% next year and 2% in 2014, while 2015 and 2016 forecasts were revised down to 2.3% and 2.7% respectively.

Senate approves $631bn defence budget

The US Senate unanimously passed the Pentagon's 2013 budget on Tuesday, despite a political impasse over debt reduction that could see huge cuts to military spending next year.After months of negotiations, lawmakers voted 98-0 to approve the $631bn National Defence Authorisation Act for Fiscal Year 2013, which began on 1 October.The sweeping measure, passed after five days of debate and hundreds of amendments, would tighten sanctions on Iran, restrict the president's authorisation in handling terrorism suspects, and prohibit the military detention of US nationals.The bill must be reconciled with a version passed earlier this year in the House of Representatives before going to President Barack Obama's desk for his signature, though the White House has threatened a veto.The two versions have major differences, but both Senate Armed Services Committee chairperson, Carl Levin, and ranking Republican, John McCain, expressed confidence in reaching consensus in conference.The administration "strongly objects" to sections of the bill that would, among other things, impose restrictions on the use of funds to transfer detainees held at the US Naval base at Guantanamo Bay, Cuba to foreign countries; and to the proposed trimming of civilian and contract workers."If the bill is presented to the president for approval in its current form, the president's senior advisers would recommend that the president veto the bill," the Office of Management and Budget said last week. Obama had sought $614bn, of which $89bn would go to the war in Afghanistan.The Senate however, hiked the total figure by $17bn, even as lawmakers and the president grapple with how to avoid hundreds of billions of dollars in automatic spending cuts that kick in next month if no deficit reduction deal is reached. Tuesday's legislation saw more than 140 amendments added to the bill, including a ban on the US government detaining American citizens or US permanent residents without charge, and tough new economic sanctions on Iran aimed at stalling the Islamic republic's nuclear programme.It also includes an amendment requiring the administration to report to Congress on the US military options available for degrading Syrian President Bashar al-Assad's use of air power against his own people, although it does not expressly authorise the use of US military force and is not to be construed as a declaration of war against Syria.The bill also provides a 1.7% pay raise for military personnel, strengthens the Pentagon's anti-sexual assault programmes, and improves the care and management of wounded warriors, McCain said.The bill also approves funding for the deployment of additional US forces to protect American embassies and diplomatic missions abroad a reaction to the September 11 attack on the consulate in Benghazi, Libya.Four Americans including ambassador Christopher Stevens were killed in the attack by Islamist militants, and several investigations are under way to determine possible security lapses that contributed to the incident.Tuesday's vote marked a rare moment of cooperation between the two parties. Democrats and Republicans are engaged in fierce negotiations on deficit reduction for the next 10 years; they have until the end of the month to forge a compromise, but as of Tuesday, the discussions seemed stalled."Our efforts demonstrate that when it comes to addressing the issues important to the men and women in uniform, the Senate can work together in a bipartisan manner," McCain said.

Saudi businesses fear impact of new fees

Glancing through the newspapers one morning last month Saudi Arabian businessperson Ihsan al-Naeem was stunned by a government announcement that he fears will threaten the survival of his family's 30-year-old contracting business.In the latest and most aggressive of a series of labour reforms, the government has started imposing fees on companies that hire more foreign than local workers. The requirement covers everyone from expat professionals to hospital workers and labourers on construction sites and is in addition to quotas already in place to limit foreign staff numbers.The new rule is aimed at reducing unemployment of 10.5% among Saudi nationals by getting them into jobs now performed by 8 million expatriates in the country, a long-term Saudi goal given fresh impetus by the uprisings in Arab countries last year that were partly driven by high unemployment. Labour Minister Adel al-Fakeih said in January that the largest Arab economy needed to create 3 million jobs for Saudi nationals by 2015 and 6 million by 2030, partly through "Saudi-ising" work now done by foreigners. However, in an economy in which imported labour fills nine in 10 private sector jobs, according to central bank data, many companies fear the new fees will hit their businesses hard by adding to their costs and shrinking the pool of available workers."There are no Saudis who can drill or operate heavy machinery ... Where will they work in the construction industry?" said Naeem, who employs more than 1,000 foreign labourers working on 17 government contracts. As of November 15, Naeem and other private sector employers who hire more foreigners than Saudis must pay a fee of 2 400 riyals ($640) a year for each additional expatriate when they renew an expat's one-year residency permit.The rule does not cover foreigners with Saudi mothers or nationals of other Gulf states. Businessmen protested outside Labour Ministry offices after the decision, threatening to raise their fees to cover the additional labour costs o r terminate existing government contracts. A Labour Ministry spokesperson said there were no plans to reverse or amend the decision. "The decision is based on detailed studies of the market mechanisms and it will hopefully increase the competitiveness of our local youth in a market that has no mercy, which has eight foreigners in every 10 employees of the private sector, who compete with our youth for their livelihood," the spokesperson, Hattab Alenezi, said. Businesses say the new system will not address the problem of Saudis unwilling to work in the private sector. Wages are much lower than in government jobs and in many cases people are better off on unemployment benefit, which pays 2 000 riyals a month for up to a year. A security guard in the private sector, for example, earns only around 1 500 riyals a month. After the 1970s oil boom, which propelled many Saudis into a lifestyle of wealth and luxury, locals viewed jobs requiring manual labour as menial and imported cheap foreign labour to build their cities and service their offices. Construction labourers from India, Pakistan, Bangladesh and the Philippines form the biggest group of foreign workers." I have never come across a Saudi willing to work as a labourer," Naeem said, estimating his medium-sized company will have to pay around 2.4 million riyals in annual fees. Businesses complain that the fees on foreign workers were introduced with immediate effect with no warning or consultation, and that they appear to contradict other recent reforms to encourage "Saudi-isation" that take account of different industries' requirements. Last year the Labour Ministry overhauled a crude quota system for Saudi and foreign employees to take account of a company's size and sector. Those who do not comply with the quotas, known as Nitaqat, face hiring restrictions. Before the overhaul the local quota was a flat rate of 30%. Now the rate varies depending on what sector a company is in and what size it is. A small construction company is allowed more foreigners than a large bank, for instance. The impact of the Nitaqat reform is not yet clear but some economists fear the introduction of fees on foreign staff fit an old pattern of ineffective measures that add costs for companies." I think that (the fee) is going to be treated as a tax by some companies rather than an incentive to employ additional Saudis. It doesn't really address the supply issue which is that Saudis need to be incentivised to take private sector jobs," said James Reeve, a senior economist at Samba Financial Group. There is no formal minimum wage despite government efforts to raise pay for Saudis in private companies. Under Nitaqat rules, construction and transport businesses only need employ one Saudi for 19 expatriates and fear the new fees will hit them particularly hard."Saudis can work in the administration, but there are only a few jobs there," said Mahfooz Bin Mahfooz, who owns a transport company and said he cannot find Saudis to work for him as truck drivers." I want a job in the field that I studied for. I did not go to college so I can work as a driver," said a 22-year-old unemployed Saudi in Jeddah w i th a computer science degree. Not all businessmen disagree with the fee. Some say it is important to achieve the kingdom's long-term goal of getting more Saudis into work. Mohammed al-Agil, head of the kingdom's largest listed retailer Jarir Marketing Co, said about 40 percent of his employees are Saudi although he accepted that it was easier to find local workers in his sector." I think it is a good initiative but I think they should have given enough notice," he said. Many newspaper commentators, however, have voiced vehement opposition."The first to be harmed by it are local business owners, and secondly consumers who will no doubt bear the brunt of rising prices," said Essam al-Ghafaily, a columnist in al-Watan daily newspaper. Even the price of bread could rise by as much as 7 percent as bakers expect to transfer the cost of the new fees onto consumers, said Ali al-Shehri, head of the Jeddah Chamber of Commerce bakers' committee, in remarks printed by al-Watan newspaper.Naeem, the contractor, said he feared missing out on important tenders because the price of his bids will have to rise."Coming from a medium-sized company I'm getting exhausted ... my activities internally may change and I may even look to shift business a b road," he said.

NEWS,26.11.2012

Obama drafts Geithner to crack budget

US President Barack Obama has made Treasury Secretary Timothy Geithner lead White House negotiator in budget talks with Congress aimed at averting the fiscal cliff, a report said Monday The Wall Street Journal said Geithner was viewed on Capitol Hill as a straight-shooter who had a better chance of brokering a deal than Jacob Lew, Obama's former budget chief who has burnt his bridges with some Republicans.If no deal is reached before the end of the year, a poison pill law of tax hikes and massive spending cuts, including slashes to the military, comes into effect with potentially catastrophic effects for the fragile US economy.The report said Geithner, who is preparing to leave his post as treasury secretary early in Obama's second term, has spent months already preparing for the fiscal talks, which will begin this week in earnest in Washington.Geithner will be joined by White House budget and tax experts, including Lew, now Obama's chief of staff, and National Economic Council Director Gene Sperling, the Wall Street Journal said.They will try to hammer out an elusive compromise with congressional aides but final decisions will be made by political leaders such as Obama and Republican House Speaker John Boehner, the report said.In recent days, several leading Republicans have indicated a willingness to accept a deal that includes more revenue from ending loopholes in the tax code in return for cuts in funding to Democrats' beloved welfare programs.Geithner, 51, is not affiliated with any party and has spent his career in government finance and on the political sidelines.He first joined the Treasury at age 27. When George W. Bush became president in 2001, he went to work for the Council on Foreign Relations and the International Monetary Fund.At 42, he was tapped to be head of the Federal Reserve Bank of New York, considered the Fed's second-most influential post because the New York bank interacts directly with a powerful constituency that includes Wall Street.Despite holding high office in the years leading up to the 2008 financial collapse, when regulatory authorities are accused of having been asleep at the wheel, he was tapped by Obama to lead the recovery.Upon assuming office in early 2009, he was charged with overseeing two major bailout packages worth more than $1.5 trillion and aimed at shoring up the country's distressed banking sector.The administration has said that the stimulus, while costly, averted another Great Depression, while conservative critics have branded it a costly expansion of government that has failed to revive the economy.

 

Medvedev does not rule out Kremlin return

Prime Minister Dmitry Medvedev said he is not ruling out a return to the Kremlin after his 2008-2012 single term as Russian head of state but was happy working as premier under his mentor Vladimir Putin."If I have sufficient strength and health, if our people trust me in the future with such a position, then of course I do not rule such a turn of events," Medvedev said in an interview with Agence France-Presse and Le Figaro when asked if he had the ambition for another Kremlin term.Medvedev, who on Monday embarks on a working visit to France, served as president after Putin stepped aside following the maximum two consecutive terms allowed by the constitution after his 2000-2008 stint.But Putin, aged 60, stayed on as a powerful prime minister and Medvedev, aged 47, never fully emerged from the shadow of his fellow Saint Petersburg native, an impression strongly reinforced when Putin returned to the Kremlin in May 2012.Medvedev, who in turn was then appointed prime minister in May, failed to bring about lasting change through a much-trumpeted modernisation programme in his one term as president.But in his interview with AFP, he revealed he had not lost his political ambition. "This returning to the presidency depends on a whole range of factors." "Never say never, especially as I swam in that river once and this is a river that you can swim in twice," he said.Russia will only go to the polls to vote for a president again in March 2018 and in the next half decade society is expected to see major change as the middle class grows and internet use explodes. Putin has also not ruled out standing again.This year's tightly choreographed job swap was criticised for being played out far from the public, and frustration over the return of Putin to the Kremlin fuelled the opposition protests that rocked Russia in the last year.Medvedev acknowledged the protests that began last December had shown a transformation in Russian society that the authorities could no longer ignore."Our society changed, it had become more active and the authorities needed to take account of this and react," said Medvedev, saying the government had done this by introducing electoral reform.Some of Medvedev's supporters who saw him as a possible champion of a refreshed, innovative and more pro-Western Russia were hugely disappointed by his apparent surrender of the Kremlin back to Putin.But Medvedev played up the tight links between the two men, saying he would find it impossible to work under anyone else."I would hardly have become prime minister under another president, I cannot imagine it at all," he said."If there is someone you can work with comfortably as prime minister after being president it is just one person, Vladimir Putin."However Medvedev has distanced himself from Putin on some issues, notably the case of feminist punk rockers Pussy Riot, two of whom have been sent to prison camps for performing a song against the Russian strongman in a church.Reaffirming his belief that they should be released, he said: "I think they have already tasted what prison is... So further punishment in the form of prison is not necessary. This is my personal position."On the case of Russia's best known prisoner, the former tycoon Mikhail Khodorkovsky, Medvedev said court decisions had to be respected but noted that the convict had never made a bid for clemency from the Kremlin.Medvedev admitted that his modernisation drive had so far fallen short but expressed hope there was still time to put his ideas into place."It's true that for the moment modernisation has not turned into a national idea and there has been no kind of radical progress reached."

 

Euro zone to seek Greek aid deal without write-off

Euro zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece today, with policymakers saying a write-down of Greek debt is off the table for now.Greek Finance Minister Yannis Stournaras said he was confident the ministers would reach a deal after Greece fulfilled its part of the deal by enacting tough austerity measures and economic reforms."I'm certain we will find a mutually beneficial solution today," he said on arrival for what was set to be another marathon meeting.Greece, where the euro zone's debt crisis erupted in late 2009, is the currency area's most heavily indebted country, despite a big "haircut" this year on privately-held bonds. Its economy has shrunk by nearly 25% in five years.EU Economic and Monetary Affairs Olli Rehn said it was vital to disburse the next 31 billion euro tranche of aid "to end the uncertainty that is still hanging over Greece". He urged all sides to "go the last centimetre because we are so close to an agreement".Negotiations have been stalled over how Greece's debt, forecast to peak at 190-200% of GDP in the coming two years, can be cut to a more sustainable 120% by 2020.Without agreement on how to reduce the debt, the IMF has held up payments to Athens because there is no guarantee of when the need for emergency financing will end.The key question is: Can Greek debt become sustainable without the euro zone writing off some of the loans to Athens?IMF Managing Director Christine Lagarde said on arrival that the solution must be "credible for Greece".A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece's debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfills its programme.Under the source's scenario, Greece's debt could be reduced to around 125% of GDP by 2020 using a variety of methods including a debt buyback, reducing the interest rate on loans and returning euro zone central bank 'profits' to Greece, but further steps would still be needed to hit the 120% goal.The ministers took an extended break in mid-afternoon while experts worked on how to formulate a link between short-term measures and a credible assurance of eventual debt relief.Germany and its northern European allies have so far rejected any idea of forgiving official loans to Athens.German Finance Minister Wolfgang Schaeuble told reporters on arrival that a debt cut now was legally impossible, not just for Germany but for other euro zone countries, if it was linked to a new guarantee of loans."You cannot guarantee something if you're cutting debt at the same time," he said. That might not preclude debt relief at a later stage if Greece has completed its adjustment programme and no longer needs new loans.The source familiar with IMF thinking said a loan write-off once Greece has established a track record of compliance would be the simplest way to make its debt viable, but other methods such as foregoing interest payments, or lending at below market rates and extending maturities could all help.The German banking association (BDB) said a fresh "haircut" or forced reduction in the value of Greek sovereign debt, must only happen as a last resort.Two European Central Bank policymakers, vice-president Vitor Constancio and executive board member Joerg Asmussen, said debt forgiveness was not on the agenda for now.Asmussen told Germany's Bild newspaper the package of measures would include a substantial reduction of interest rates on loans to Greece and a debt buy-back by Greece, funded by loans from a euro zone rescue fund.So far, the options under consideration include reducing interest on already extended bilateral loans to Greece from the current 150 basis points above financing costs.How much lower is not yet decided - France and Italy would like to reduce the rate to 30 basis points (bps), while Germany and some other countries insist on a 90 bps margin.Another option, which could cut Greek debt by almost 17% of GDP, is to defer interest payments on loans to Greece from the EFSF, a temporary bailout fund, by 10 years.The European Central Bank could forego profits on its Greek bond portfolio, bought at a deep discount, cutting the debt pile by a further 4.6% by 2020, a document prepared for the ministers' talks last week showed.Not all euro zone central banks are willing to forego their profits, however, the German Bundesbank among them.Greece could also buy back its privately-held bonds on the market at a deep discount, with gains from the operation depending on the scope and price. Officials have spoken of a 10 billion euro buy-back at around 30 cents on the euro, that would retire around 30 billion euros of debt, although since the idea was raised the potential gain has fallen as prices have risen.But the preparatory document from last week said that the 120% target could not be reached in 2020, only two years later, unless ministers accept losses on their loans to Athens, provide additional financing or force private creditors into selling Greek debt at a discount.The latest analysis for the ministers showed the debt could come down to 125% of GDP in 2020, one euro zone official with insight into the talks said.

NEWS,16.11.2012

Road closures in Israel indicate military build-up

The Israeli army said today it was closing three roads that lead to, or border the Gaza Strip, in an indication of a probable military build-up in the area.Shortly before, political sources said Defence Minister Ehud Barak was seeking government approval to mobilise up to 75,000 reserve troops for Israel's Gaza campaign, in a sign of preparations for a possible ground offensive.Western governments are watching Egypt's response to the attacks for signs of a more assertive stance towards Israel since an Islamist came to power in the Arab world's most populous nation.President Mohamed Mursi is mindful of anti-Israeli sentiment among Egyptians emboldened by last year's Arab Spring uprising but needs to show Western allies his new government is no threat to Middle East peace.His prime minister, Hisham Kandil, visited Gaza today in a demonstration of solidarity after two days of strikes by Israeli warplanes targeting Gaza militants."We see what is happening in Gaza as blatant aggression against humanity," Mursi said in comments carried by Egypt's state news agency. "I warn and repeat my warning to the aggressors that they will never rule over the people of Gaza."I tell them in the name of all the Egyptian people that Egypt today is not the Egypt of yesterday, and Arabs today are not the Arabs of yesterday."The Egyptian foreign minister also spoke to his counterparts in the US, Jordan, Brazil and Italy on Friday to discuss the situation in Gaza, a statement from the foreign ministry said.Mohamed Kamel Amr spoke to US Secretary of State Hillary Clinton about the necessity of cooperation between the US and Egypt to end the military confrontations. Amr stressed the necessity of Israel ending attacks on Gaza and a truce being rebuilt between the two sides, the statement said.Mursi's toppled predecessor Hosni Mubarak was a staunch US ally who upheld a cold but stable peace with Israel.The new president has vowed to respect a three-decade peace treaty with the Jewish state. But ties have been strained by protests that forced the evacuation of Israel's ambassador to Cairo last year and cross-border attacks by Islamist militants.More than 1000 people gathered near Cairo's al-Azhar mosque after prayers, many waving Egyptian and Palestinian flags."Gaza Gaza, symbol of pride", they chanted, and "generation after generation, we declare our enmity towards you, Israel"."I cannot as an Egyptian, an Arab and a Muslim just sit back and watch the massacres in Gaza," said protester Abdel Aziz Nagy, 25, a member of the Muslim Brotherhood.Protesters were marching from other areas of Cairo towards Tahrir Square, the main rallying point for last year's uprising.

Iran ready to double nuclear work in bunker -IAEA

Iran is set to sharply expand its uranium enrichment in an underground plant after installing all the centrifuges it was built for, a United Nations report said, a move likely to increase Western alarm about Tehran's nuclear course.It also showed Iran's stockpile of its most sensitive nuclear material grown and was getting closer to an amount that could be sufficient for a nuclear weapon.The latest quarterly International Atomic Energy Agency (IAEA) report on Iran came 10 days after the re-election of US President Barack Obama, which raised hopes for a revival of nuclear diplomacy with Iran following speculation that Israel might attack the nuclear facilities of its arch-enemy soon.But the UN watchdog's findings underlined the tough task facing world powers seeking to pressure Iran to curb atomic activity they fear is aimed at developing a nuclear weapons capability, a charge Tehran denies."The report paints the picture of Iran's continued lack of cooperation with the IAEA, and details its continued enrichment and installation of centrifuges in violation of UN Security Council resolutions," a senior Western diplomat said.The Islamic state has put in place the nearly 2800 centrifuges that the Fordow enrichment site was designed for and is poised to double the number of them operating to roughly 1400 from 700 now, according to the confidential IAEA report."They can be started any day. They are ready," a senior diplomat familiar with the IAEA's investigation said.If Iran chose to dedicate the new machines to produce higher-grade uranium, it could significantly shorten the time required for any bid to build an atomic bomb. Iran says it needs to refine uranium to make reactor fuel.In another potentially worrying development for the West, Iran appears to have virtually stopped converting this uranium into making civilian reactor fuel since the previous report.As a result, the stockpile of uranium gas refined to a fissile concentration of 20 percent increased by nearly 50 percent to 135 kg, the latest report said, still below the level of 200-250 kg experts say would be sufficient for an atomic bomb if refined further."This puts added pressure on the West's diplomacy with Iran, which has to operate on a tighter schedule," said research fellow Shashank Joshi at the Royal United Services Institute.Israel has recently signalled that an attack on Iran was not imminent - after months of talk that it might be on the cards soon by pointing to Iran's decision earlier this year to use part of its 20 percent uranium for civilian purposes."As Iran's 20% stockpile approaches around 240 kg, the Israeli sabre-rattling will resume,"

French PM tries to reassure Berlin

France's German-speaking prime minister has offered a worried Berlin reassurances his government would reduce the deficit and prevent France from becoming the next victim of the euro crisis by applying a new economic model.Jean-Marc Ayrault, making his first visit to Berlin since Francois Hollande became president, told German Chancellor Angela Merkel that France would find its own way to reduce spending and boost economic growth and jobs, rather than copying Germany."My challenge, the government's challenge, is to reform what isn't working, to correct what is too weak, but to keep the profound values that make France what it is," he told a joint news conference after talks with the conservative chancellor."The job that is under way is constructing the new French model," said Ayrault, a Socialist.A  report that Merkel's finance minister had asked the German government's economic advisers to consider preparing policy recommendations for France has stirred outrage in Paris.But Merkel said she would never dare to evaluate the decisions of the French government and added diplomatically: "We want a strong France just as France wants a strong Germany, so that together we can become a strong Europe."Ayrault also held a 20-minute meeting with German Finance Minister Wolfgang Schaeuble, who emerged saying Germany and France did not "grade" each others' economic policies.But it was clear French pride had been stung. Ayrault told a conference in Berlin organised by the Sueddeutsche Zeitung newspaper that his host country Germany also had its problems."The German population is ageing quicker than the French, which poses problems for pensions and social security," said the French premier."This sort of understanding for other countries' problems I expect it for my own country too."Paris is under intense pressure to improve French economic competitiveness relative to Germany and southern European countries that have implemented painful reforms to bring down their own debt in the face of a crippling three-year crisis.German officials are worried that without bolder reforms, France could get sucked into the crisis which has forced bailouts of Greece, Portugal and Ireland in what would be a crushing setback for the bloc's efforts to stem the turmoil.In response to calls by industrialist Louis Gallois for cuts in labour charges to reverse decades of industrial decline, the French government has now announced plans to grant companies 20 billion euros in annual tax credits to lower labour costs.Ayrault cited this as one example of the "courage" France's Socialist government was showing on economic reforms.His knowledge of Germany and its language may have been one of the reasons for his appointment. Relations between Merkel and the new president are often contrasted with the close partnership - especially on the euro crisis that she enjoyed with Hollande's conservative predecessor Nicolas Sarkozy.Hollande criticised Merkel's focus on austerity for the euro zone during his election campaign and the new Franco-German leadership couple have not got off to the best start."The main thing is to build a personal relationship," Ayrault said, adding that although the two governments belonged to opposing political factions, their relationship had to be "ueberparteilich" the German word for non-partisan.Ayrault and Merkel both rejected suggestions that the French premier's plans to meet Germany's centre-left opposition Social Democrats on Friday - less than a year before federal elections when Merkel will seek a third term undermined this ideal."The important thing is for us to work together well," said Merkel.