NEWS,12.05.2013

G7 to press on with bank reforms

Group of Seven finance officials agreed on Saturday to redouble efforts to deal with failing banks and gave a green light to Japan's drive to galvanise its economy.
British finance minister George Osborne said the finance ministers and central bankers meeting 40 miles outside London focused on unfinished bank reforms, with signs that plans for a eurozone banking union are fraying.
"It is important to complete swiftly our work to ensure that no banks are too big to fail," Osborne told reporters after hosting a two-day meeting in a stately home set in rolling countryside.
"We must put regimes in place ... to deal with failing banks and to protect taxpayers and to do so in a globally consistent manner," he said.
The emergency rescue of Cyprus after a near meltdown in March served as a reminder of the need to finish an overhaul of the banking sector, five years after the world financial crisis began.
Germany has come under pressure to give more support to a banking union in the euro zone. The plan could help strengthen the single currency area, but Berlin worries it may pay too much for future bank bailouts if it signs up to a scheme to wind up stricken lenders.
While the first step to create a single bank supervisor under the European Central Bank - looks set to be in place by mid-2014, a second pillar, a 'resolution' fund to close failed banks, is in doubt. And there is little prospect that a single deposit guarantee scheme will ever see the light of day.
A senior US Treasury official said the talks at the 17th-century Hartwell House zeroed in on the need not just for better bank supervision but also to clean up balance sheets so lending can pick up.
"There was a sense of urgency among the euro area participants," the official said.
German Finance Minister Wolfgang Schaeuble countered that the eurozone was no longer the main risk to the world economy.
As at previous international meetings, Japan escaped any censure for printing money on a scale that has pushed the yen sharply lower.
Osborne said the G7 - the United States, Germany, Japan, Britain, Italy, France and Canada - reaffirmed that fiscal and monetary policy should be aimed at domestic concerns, not currency manipulation.
"We will not target exchange rates," Osborne said. "I would say that the statement by the G7 of earlier this year was a successful statement and one that has been held to."
The yen hit a four-year low against the dollar on Friday , driven in part by Japanese investors shifting into foreign bonds, a move that had been expected since the Bank of Japan unveiled a massive stimulus plan.
But having urged Tokyo for years to do something to revive its economy, other world powers are not in a strong position to complain now that it is doing so. Then there is the fact that central banks such as the Federal Reserve and Bank of England have printed money in the way the Bank of Japan is.
Japanese Finance Minister Taro Aso said the G7 had levelled no criticism at Japan's monetary policy but Schaeuble said there had been "intense discussions" and that the situation would be monitored carefully.
Growth debate
Debate has also heated up about the need for governments to ease up on austerity, something Germany, Britain and Canada view with caution but Washington, Paris and Rome favour.
Osborne said there was less disagreement about whether governments should focus on debt-cutting or growth-boosting measures than is commonly assumed.
"Everyone is clear that there needs to be credible medium-term fiscal consolidation ... We also agreed that there needs to be flexibility," he said. "Growth prospects remain uneven and we can't take the global recovery for granted."
But his suggestion before the meeting that it should consider what more monetary policy could do to support economic recovery appeared to fall on deaf ears.
"There wasn't any call to do more," European Central Bank chief Mario Draghi told reporters after the meeting.
"It is quite clear that all central banks have done a lot, each one within its own mandate. So (the meeting) was just taking note of this ... All of us have really been active."
Several officials from visiting delegations questioned why Britain had called the gathering just three weeks after they and others met at International Monetary Fund meetings in Washington, but Bank of England Governor Mervyn King said the informal nature of the discussions had paid dividends.
"Freed from burden to agree a communique, the principals engaged more with each than I can recall before and as a result genuinely made real progress in taking forward some of the questions and issues that are facing the G7," he said.

Experts cautious over equities rally

Optimism is blowing through stock markets around the world, lifting many of them to record high levels but this contrasts with widespread economic gloom and leads some analysts to wonder if some of it is just hot air.
Records have been created with increasing speed since the beginning of May.
The main DAX index in Frankfurt has reached a new record high level, and the markets in London and Tokyo have returned to the levels reached in October 2007 just before the financial crisis began.
Wall Street in New York is leading the way and sets a fresh record almost every day.
But the stock market in Paris lags behind. The main CAC 40 index has just risen to the level last reached in the middle of 2011 and is far below the record high level of almost 7,000 points set in October 2000, and still trails the 4,332 points registered just before the collapse of Lehman Brothers bank in the United States in September 2008.
Analysts at Swiss Life private investment managers commented recently that the markets "are swimming in the midst of paradox", questioning the strong rises at a time when the global economic situation is a long way from being stabilised and is even deepening in some places, including in Europe.
In financial circles, experts give various explanations for the rise of stock markets in mature economies.
Some hold that it is an artificial bull market driven by huge amounts of money pushed into economies by central banks. Others say that the rises are justified because investors are anticipating a recovery of the world economy and a recovery of those stocks which have fallen heavily.
"The dichotomy between the real economy and the financial sphere is widening and this is worrying," commented Guillaume Garabedian, a portfolio manager at French brokers Meeschaert Gestion Privee.
He held that that stock markets were rising mainly because central banks had been applying highly accommodating monetary policies, reducing their key interest rates, and pushing huge amounts of liquidity into the financial sector.
All classes of assets have been boosted by this, even the riskiest assets such as debt bonds issued by crisis-hit countries in southern Europe which are able to place their bonds despite still being in difficulty.
The rise of asset prices could even lead to a new financial bubble, some analysts are beginning to warn.
At Capital Spreads, Jonathan Sudeira said that "despite the efforts of the central banks, the volume of trading is falling and the high levels reached by some shares is beginning to look unjustified for traders who are being asked at the same time not to take account of the economic situation."
The "bulls", meaning those who think that share prices will continue to rise on a healthy and justified basis, also have their arguments. At the moment, they seem to have the upper hand.
"Extremely favourable" context
Portfolio managers in dealing rooms say that investors are encouraged by signs that the US economy is recovering, by underlying strength of activity in Germany, encouraging statements by the leaders of big companies about the outlook for the end of the year, and by the removal of the risk that the eurozone might collapse.
At French Natixis bank, economist Philippe Waechter said that apart from the policies of the central banks, the situation in the United States, still the guiding light for stock markets around the world, was satisfactory and explained why optimism had lifted the indices.
"There is growth, certainly it is moderate, but it is there and so there is positive anticipation," he said.
He noted that portfolio managers were looking for good rates of return from the shares they hold and consequently were inclined to go for riskier shares which offered higher returns.
In addition, companies which were cautious about trying to expand their businesses, were buying their own shares which pushed up the value of those stocks.
"Overall, we are in a context which is extremely favourable for stock markets," he said.
Garabedian said that the question boiled down to analysing the fundamental causes of the rise.
"Because if the markets are rising for reasons which are not sufficiently viable, the correction will be severe," he warned.

Clinton did not make Benghazi call

A seasoned diplomat who penned a highly critical report on security at the US consulate in Libya that was attacked last year defended his scathing assessment on Sunday but absolved then-Secretary of State Hillary Clinton.

Thomas Pickering, whose career spans four decades, stood by his conclusion in the report that decisions about the consulate were made well below the secretary's level.
His comments during several television show appearances were unlikely to quiet renewed Republican demands for accountability for the attacks in Benghazi that left four Americans dead, including US Ambassador Chris Stevens. Democrats say Republicans are trying to exploit the Benghazi deaths to undercut Clinton, an early favourite for the Democratic presidential nomination in 2016.
"We knew where the responsibility rested," said Pickering, who headed the Accountability and Review Board that investigated the attack, along with retired Admiral Mike Mullen, the former chair of the Joint Chiefs of Staff.
"They've tried to point a finger at people more senior than where we found the decisions were made," Pickering said of Clinton's critics.
Pickering and Mullen's report released in December found that "systematic failures and leadership and management deficiencies at senior levels" of the State Department meant that security was "inadequate for Benghazi and grossly inadequate to deal with the attack that took place."
The Obama administration has tried to move past the controversy, but a steady drip of new information is fuelling Republican claims that the government initially misled the public about the nature of the assault.
The House Oversight and Government Reform Committee last week heard a riveting minute-by-minute account from a former top diplomat in Libya about the two night time attacks on 11 September, 2012. Gregory Hicks, a former deputy chief of mission to Libya, detailed his phone conversations from Tripoli with Stevens.
Hicks and two other State Department witnesses criticized the Pickering and Mullen's review. Their complaints centred on a report they consider incomplete, with individuals who weren't interviewed and a focus on the assistant secretary level and lower.
Cover-up
The hearing produced no major revelation but renewed interest in the attacks that happened during the lead-up to the November 2012 presidential election.
The top Republican on the oversight committee, Republican Darrell Issa, said he wants sworn depositions with Pickering and Mullen. Issa said his panel has not been provided sufficient details on the State Department review, such as a list of everyone the investigators interviewed or a full transcript of those conversations.
"We want the facts. We're entitled to the facts. The American people were effectively lied to for a period of about a month," Issa said.
Republicans are insisting on exploring what happened at the consulate, what might be done to prevent future such attacks and what political calculations went into rewriting talking points the US Ambassador to the United Nations, Susan Rice, used on news shows the Sunday after the attack.
A series of e-mails that circulated between the State Department and the CIA led to weakened - and, in some cases, wrong - language that Rice used to describe the assault during a series of five television interviews the Sunday after the attacks.
"I'd call it a cover-up," said Senator John McCain, a Republican. "I would call it a cover-up in the extent that there was wilful removal of information, which was obvious."
2016 campaign
"I was surprised today that they did not probe Secretary Clinton in detail," Senator Kelly Ayotte said, of the review board.
One Republican eyeing a White House run, Senator Rand Paul, said at a public appearance that he thinks the Benghazi attack "precludes Hillary Clinton from ever holding office".
Clinton's allies said Republicans were looking to weaken her ahead of a potential 2016 campaign.
"This has been caught up in the 2016 presidential campaign, this effort to go after Hillary Clinton," said Senator Dick Durbin, a Democrat. "They want to bring her in because they think it's a good political show and I think that's unfortunate."

NEWS,08.01.2013

Bumpy road for German economy - experts

More evidence of sliding German exports and industry orders on Tuesday compounded concerns that the eurozone crisis may have battered the region's largest economy into contraction at the end of last year.German imports and exports slid in November, narrowing the trade surplus, and industry orders fell more than expected.Imports slid 3.7%, while exports fell 3.4%, data from the Federal Statistics Office showed on Tuesday. Economists polled by Reuters had expected imports to increase by 0.4% and shipments abroad to drop 0.5%. Seasonally-adjusted industrial orders fell 1.8% in November, due mainly to a sharp fall in demand from non-eurozone countries. That was below a 1.4% drop forecast by a Reuters poll of 29 economists. Germany has served as a pillar of regional strength through the three-year eurozone debt crisis but the economy slowed in the third quarter of last year and economists expect it to have contracted in the last quarter. Although many see Germany escaping a recession and staging a steady improvement this year, Tuesday's data prompted some economists to predict a bumpy road." With a pick-up of global demand, exports could quickly return as the reliable growth driver. However, (the) latest new order data illustrate that the way out of contraction will not necessarily be a straight upward-sloped line," said Carsten Brzeski, senior economist at ING. Germany is unlikely to join eurozone stragglers, he added, but "could end up humming the 'things will get worse before they get better' tune still for some time."Trade surplus narrows The seasonally-adjusted trade surplus narrowed more than expected to €14.6bn from a downwardly revised 14.9bn in October. The consensus forecast in a Reuters poll was for it to narrow slightly to €15.0bn. Weakness in the European Union, where Germany sells roughly 60% of its exported goods, is weighing on exports. Sovereign debt crises have driven most of its partners to raise taxes and cut spending, weakening appetite for German goods, although demand from emerging markets has gone some way to compensating for that.A breakdown of the German trade data on an unadjusted basis showed exports to the eurozone slumped 5.7% on the year, even as exports to countries outside Europe rose 5.6%.The drop in imports raises questions about the ability of German consumers and companies to prop up growth during the eurozone crisis, as many had hoped, with unemployment on the rise and consumer morale deteriorating. Nonetheless, unemployment is close to a 20-year low and wages are rising for the first time in years. Purchasing managers' reports showed the private sector expanded for the first time in eight months in December, while the Ifo index showed morale at German businesses rising in November and December. The economy ministry played down the decline in manufacturing orders given strong October figures."Overall, demand seems to be stabilising. The slight improvement in sentiment indicators also points to this," said the ministry in a statement.Providing some reassurance about domestic demand, bookings from within Germany increased by 1.3%.However, foreign orders fell by 4.1%. While bookings from the eurozone inched up 0.2%, contracts from countries outside the currency union slumped by 6.5% after an 8% rise in October. "Demand for capital goods remains low in view of the weak economic environment in Europe, where there is significant overcapacity in many places," said Bernd Hartmann, head of investment research at VP Bank.

Eurozone jobless rate jumps to new high

Europe's unemployment numbers are rising to worrying new records with dire figures from Spain especially underlining a growing north-south divide, official data showed on Tuesday.The unemployment rate across the troubled eurozone hit 11.8% in November, up from 11.7% in October, with the number of people out of work in the 17-nation single currency area now nudging 19 million. The 19th rise in a row for the eurozone, home to some 330 million people, represented an increase of more than two million on the dole compared to a year ago. London-based IHS Global Insight analyst Howard Archer calculated the cumulative increase since April 2011 as 3.278 million out-of-work."The only crumb of comfort was that this was the smallest rise since August, although it did follow a particularly sharp rise of 220,000 in October," Archer said, adding that he expected the jobless rate to "move clearly above 12% during 2013."While the jobless numbers exceeded 26 million for the first time across the full 27-member European Union, which includes Britain and Poland, the EU as a whole recorded an unchanged 10.7-percent unemployment rate.Indeed, there were more jobless over the past year, according to Eurostat data, in the 17-nation eurozone where the number of newly unemployed was 2.015 million, compared to 2.012 million for the EU. Facing a bust property boom and riddled with bad debt in its banks, Spain recorded the highest unemployment rate of all the European countries - at 26.6%, worse even than bailed-out Greece. Among under-25s, both countries saw unemployment rates hovering around 57%.According to Eurostat figures seasonally-adjusted for comparative purposes, the November unemployment rate in key rival economies was 7.8% for the United States and 4.1% for Japan."2012 has been another very bad year for Europe in terms of unemployment and the deteriorating social situation," said European Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor. Giving his annual report on employment trends, he said that "appropriate labour market reforms and improvements in the design of welfare systems" could make countries more resilient to economic shocks. But with a north-south divide between Germany and similar satellite economies faring far better than Europe's southern Mediterranean rim, Andor said it was "unlikely that Europe will see much socio-economic improvement in 2013.""A widening gap is emerging," Andor said, even between the north and south just of the eurozone. The Commission concluded there was a divergence between "countries that seem trapped in a downward spiral of falling output, fast-rising unemployment and eroding disposable incomes, and those that have so far shown good or at least some resilience."Southern and peripheral countries whose governments and companies face much higher interest rates or no access to market financing will continue to struggle, the Commission said, citing an over-allocation of lending during the construction boom of the last decade.

Italian jobless ranks swell

Italy's jobless rate remained at a record high in November while youth unemployment jumped to a new peak above 37%, data showed on Tuesday. Italy has been in a deep recession since the middle of 2011 and unemployment has risen steadily as businesses clamp down on staffing levels to cope with crumbling domestic demand. The plight of the unemployed and particularly young people will be a crunch issue at the election and outgoing Prime Minister Monti, who heads a centrist group, has been criticised by opponents on the left and right of hurting the economy in his efforts to fix public finances. Unemployment was stable in November at October's record high of 11.1%, national statistics institute ISTAT reported. Joblessness rose above 11% in October for the first time since the first quarter of 1999. Before January 2004 ISTAT only issued quarterly jobs data. November's rate was marginally below a forecast of a further rise to 11.2% in a Reuters survey of analysts, but it was up 1.8 percentage points from November 2011 when Monti was appointed to save Italy from a mounting debt crisis. The youth unemployment rate, referring to 15-24 year-olds, jumped for the third month running in November to 37.1%, its highest level since records began in 1992.Companies are reluctant to give new recruits regular contracts because strong job protection means it is hard to fire them. So young people tend to move from one temporary contract to the next, and opportunities have dried up in the recession. Monti sought to address the problem with a hotly contested labour reform passed last summer, but critics say that by making it more costly and complicated for firms to offer temporary contracts the reform discouraged hiring in the recession. "You always hope that if you put some effort in you will get something back," said 22 year-old Michele Andaloro as he lined up in search of work at one of Rome's largest job centres. "The next government needs to work for the future of young people and not behave like in the past." Analysts say the growing financial difficulties of families are also forcing more young people to look for work rather than study or live off family income. In a dismal series of records, the employment rate edged down in November to a 12-month low of 56.8%, while the male employment rate fell to 66.3%, the lowest since records began in 1992."The worst hit by the crisis are those in the industrial section and construction," an ISTAT spokesperson said.I talian industrial output is still more than 25% lower than its level of mid-2008, before the recession brought on by the global financial crisis. Analysts say the real challenge for Italy is to increase its chronically low rates of employment and participation in the labour market, which are among the lowest in the industrialised world, especially among women, the young and the elderly.

NEWS,21.08.2012

Israel's Posturing: Behind Netanyahu and Barak's Threats to Attack Iran

Successive Israeli governments have consistently inhibited in the past any public discussion about Iran's nuclear program and what Israel might do to prevent Iran from acquiring nuclear weapons. In recent weeks however, Prime Minister Netanyahu and Defense Minister Barak have been openly discussing the issue while intimating their readiness to take whatever actions necessary to eliminate the Iranian threat. The question is why Netanyahu and Barak have chosen to "advertise" their deep concerns now and why they have such an urgency to act at this particular juncture, both of which have prompted newspaper reporters and bandits to speculate about what the real intentions are behind this public exposure and what is to be expected. Meanwhile, former and current officials, including President Peres, have expressed pointed objections to taking any unilateral military strikes against Iran, insisting that if such action became necessary, it must certainly be led by the U.S. to shield Israel from being singled out and blamed for the potentially disastrous regional consequences.Having concluded that sanctions and diplomacy have failed as Iran is either technologically nearing the point of no return or achieving a zone of immunity that will make their most advanced nuclear plants at Fordo (near Qom) impregnable to air attack, the Netanyahu government has decided on a new strategy designed to achieve multiple purposes. While Israel's determination to prevent Iran from acquiring nuclear weapons has not changed, the new strategy is meant to strongly convey that Israel is not bluffing. Israel's groundwork for the new strategy is as follows: Israel will alert its closest ally, the U.S., alarm its European friends, credibly threaten Iran and gather more information, warn other enemies such as Hezbollah and Hamas, test the private sentiments and public reactions of the Sunni Arab states, and will finally prepare the Israeli public while laying in wait for the right moment to strike, should everything else fail.The Netanyahu government has already expressed its displeasure with the strategy the Obama administration has adopted to prevent Iran from obtaining nuclear weapons. Whereas many Israelis believe that President Obama's credibility is on the line and he will act militarily should it become necessary, others, including Netanyahu and Barak, are not so sure. They are concerned that Obama may eventually have to choose between preventing or containing Iran and will settle on the latter by providing Israel and other Arab allies in the region with some kind of security umbrella.Netanyahu and Barak are troubled by the fact that Obama has relied excessively on a diplomatic solution knowing full well that the Iranians are masters of playing for time. Moreover, he chose to impose gradual sanctions to which the Iranian government was able to adjust instead of inflicting real, crippling sanctions, especially after the failure of the first few sets of negotiations, which could have forced Tehran to change course. This approach, from the Israeli perspective, played into Iran's hand while engaging the P5+1 (the U.S., the United Kingdom, France, Russia and China plus Germany) in futile negotiations that have never stood a chance of success.By asking the P5+1 to declare that the talks with Iran have failed, Netanyahu is alerting the U.S. that time is of the essence and challenging Obama to take more decisive actions against Iran. Netanyahu's rationale is that since Obama seeks to prevent an Israeli attack in an election year, he will be under immense pressure from his presidential rival, Mitt Romney, not only to adopt a final set of truly crippling sanctions but tobe clear about his willingness to use force against Iran before it reaches the point of no return or enters the zone of immunity.Netanyahu's message of alarm is directed against the EU, Turkey and China, which will be the most affected by the potential disruption of oil supplies should the Strait of Hormuz become imperiled. Netanyahu and Barak are convinced that the EU in particular is engaged in wishful thinking, believing that continuing diplomatic efforts coupled with stiffer sanctions will force the Mullahs to come to their senses. The EU clearly view Netanyahu as overzealous about Israel's national security, are extremely worried about an Israeli attack and are convinced that the repercussions will be catastrophic. Thus, for them, no attack should be contemplated as long as Iran is willing to continue to talk.Using the repeated Iranian existential threat against Israel, and while observing the Western powers' ineptitude in the past in dealing with the genocide in Bosnia, Sudan and now the wholesale slaughter in Syria, Netanyahu has little faith in what the EU can, or will, do to bring Iran to a halt. The EU, from Netanyahu's perspective, could have done a great deal more to cripple Iran economically but it still has yet to do so. At the same time, the EU refuses to declare Hezbollah, Iran's prime surrogate but Israel's staunchest enemy, as a terrorist organization while it continues to allow Hezbollah to freely raise tens of millions of dollars in Europe, when much of it is used for buying armaments to target Israel.The direct threat against Iran is based on Netanyahu and Barak's calculation that although public discussion about the potential attack on Iran provides Tehran more time to prepare for the worst, it will provide Israel with certain advantages. Fear of an imminent Israeli attack will force the Iranian authorities to take additional security measures to protect their nuclear facilities, which will reveal Iran's preparedness and capabilities, and expose its weaknesses and how much of its boastings of a damaging counter-attack against Israel are in fact accurate. Importantly, Israel will also be in a position to better assess the Iranian public's reaction and whether the rumors of an imminent attack will precipitate panic, which may reveal how the Iranian authorities react and pacify the public. More than anything, Israel wants Iran to take its threats seriously, which explains why Netanyahu and Barak openly stated that when it comes to Israel's national security, Israel must, in the final analysis, rely only on itself. Netanyahu's and Barak's exposé is also intended to warn all those who might think of coming to Iran's aid by engaging Israel on another front (in particular with groups such as Hezbollah and Hamas) that they should think twice before they dare to provoke Israel. By openly discussing their intentions, Netanyahu and Barak want these groups or states to assume that Israel would not have discussed such a sensitive national security matter had it not taken into full consideration their potential involvements. The message to Hezbollah is clear: there will not be a repeat of the 2006 war, Israel will break its back and that this time around no one will come to its aid considering Syria is in shambles and Iran is under intense economic pressure and too busy to deal with the potentially catastrophic effects of an Israeli attack.The other target of Israel's open discourse on attacking Iran is to test the Sunni Arabs, especially the Gulf States led by Saudi Arabia. There have been ongoing tacit discussions between Israel and the Gulf States about the potential Israeli strike and how that might affect both their public reactions and their private interests and concerns. There is no doubt that all Sunni Arab states would prefer to prevent Iran from attaining nuclear weapons peacefully. But after failing to do so by diplomatic means, they would support an attack on Iran's nuclear facilities, whether the attack is carried out by Israel, the U.S. or through a joint effort. Saudi Arabia in particular sees the conflict between Shiites verses Sunnis in terms of regional domination with a focus on the Gulf, and views Iran with nuclear weapons as a nightmarish scenario that must be prevented at all costs. Finally, Netanyahu's and Barak's message was intended for the Israeli public not only to prepare them for a potential Iranian counter-attack but to begin psychological and logistical preparations ( including the distributions of gas masks, stocking underground shelters with food and water) to avoid public panic and rally the nation around the government's prospective actions. Although the Netanyahu government is not dismissive of the voices of the Israelis who consider a unilateral attack as ill-conceived and extremely risky, Netanyahu and Barak want to demonstrate unshakable resolve in the face of an existential threat and that the public can ultimately trust their judgment. Moreover, such an exercise, even if a strike is avoided either because of the United States or because of Netanyahu's/Barak's readiness to act, will be good for Israel and good for the entire region as long as Iran never acquires nuclear weapons.Israel has time and again stated in the past that it will not allow Iran to acquire nuclear weapons or the technology to quickly assemble such arsenals. The Israelis insist that whatever repercussions arise from attacking Iran's nuclear facilities will be far less ominous than allowing Iran to obtain nuclear capabilities, which will have far more reaching geopolitical and security implications that will adversely affect every state in the region.In the final analysis, an Israeli strike on Iran's nuclear facilities may not come as soon as many predict. The strike can and may well happen but it is very unlikely that such an incredibly ominous undertaking will occur without a minimum of U.S. acquiescence, if not outright support and direct involvement. Regardless of how much Netanyahu and Barak may be sure of themselves and Israel's military capabilities, they cannot afford to make any mistakes or miscalculations because Israel's future is on the line.Yet, exactly because of that, no one should think for a moment that Israel is bluffing. Netanyahu and Barak have concluded that diplomacy has run its course and only extraordinary, crippling and immediate sanctions may still have a slim chance of success. Once Israel determines that Iran has either achieved the point of no return or is about to reach the zone of immunity and the U.S. is not prepared to take military action, Israel will attack Iran singlehandedly and no consequences of such an attack, from the Israeli perspective, will fare against such an existential threat.

China's scramble for patents

China's ambitious drive to produce millions of new patents in the next few years as part of a switch from a "made in China" to "designed in China" economic model will curtail innovation standards, a European study warned today.China is seeking to transform itself from being the world's factory floor into a global pioneer by setting ambitious state-mandated patent targets -- a goal that has already resulted in it surpassing the United States last year in patent filings.The European Union Chamber of Commerce said in a report that China filed more than 1.6 million patent applications in 2011, but only 32% met the highest threshold for patent quality - new inventions.The study noted that while China's innovation potential is "impressive", its actual innovation is "overhyped"."This explosion (of patent applications) has come with a price in terms of the quality and mix of patents. This is not in the right direction," European Chamber Secretary General Dirk Moens said.In some cases, financial incentives and performance evaluations for state-owned firms, officials and academics drive the filing of low-quality patents as they seek to meet quotas - 2 million annually by 2015 under one national plan.In addition to inventions, China also gives patents for designs and "utility models", incremental developments that can advance an existing product but rarely result in technological breakthroughs.The United States does not use utility model patents, though some developed countries, such as Germany, do.Sixty-five percent of patent applications filed by medium and large-sized Chinese state-owned enterprises in recent years have been for the lower end design or utility model patents, making them among the country's least effective innovators, the study said."One cannot drive or 'force' creativity, but only nurture it, whereas creativity leading to breakthroughs of the type that typically produce the highest quality patents at best comes in spurts," it said, noting that at least 20 countries have greater innovation potential than the world's second largest economy.But Elliot Papageorgiou, an intellectual property expert at Rouse Legal in Shanghai, said utility model patents are good for China."In developing economies, you're not going to get a new wheel, you're going to get an improved or cheaper wheel," Papageorgiou.Indigenous rules rile foreigners Experts say weak intellectual property rights (IPR) have scared off some foreign firms from transferring technology or filing patents in China. Last year, U.S. Treasury Secretary Timothy Geithner lamented Beijing's lax controls that made possible the "systematic stealing" of American innovations.China has said it would drop some of its "indigenous innovation" rules that have riled foreign companies who say access to government equipment and technology orders hinge on their transferring patents and other intellectual property to Chinese firms or partners.But the EU Chamber study said indigenous intellectual property ownership was still a requirement for firms to access some Chinese government financing and subsidies, with the language writ large into many of the country's more than 10 national and 150 sub-national patents target plans."The essence of the IIP (indigenous innovation policy) system, in terms of setting forth controversial IPR requirements with financial incentives, appears very much still in force," the study said.

NEWS,13.04.2012.

Russia rebukes North Korea for rocket launch

 

Russia has criticised North Korea for its rocket launch, saying that Pyongyang had defied the UN Security Council and that neighbouring powers all opposed it. Russia had urged Pyongyang not to conduct the launch, warning it would violate a UN Security Council resolution regardless of its purpose and complicate efforts to revive six-party talks over North Korea's nuclear programme."UN resolutions contain concrete calls not to conduct such launches, and this is the shared approach of ... Russia, China, the United States, South Korea and Japan," the Interfax news agency quoted Foreign Minister Sergei Lavrov as saying."These five (nations) are united in their position," said Lavrov, who was meeting the Chinese and Indian foreign ministers in Moscow today.Lavrov, whose country is a Group of Eight member along with six Western states and Japan, joined G8 foreign ministers in a statement condemning the launch and saying they were ready to consider measures in response.China's initial reaction sounded less critical, calling for calm and restraint from all sides.North Korea admitted its much hyped long-range rocket failed to deliver a satellite into orbit today while US and South Korean officials said it crashed into the sea a few minutes after launch.Regional powers have said that what North Korea has described as the launch of a weather satellite, months after Kim Jong-un succeeded his father as the leader of the reclusive state, is a disguised test of a long-range ballistic missile."UN Security Council Resolution No. 1874 demands that the DPRK (North Korea) refrain from any launches using ballistic rockets. This applies to both military and civilian launches," Interfax quoted an unnamed Russian diplomat as saying.Russia, which shares a short border with North Korea - Moscow's client in the Soviet era - called on Pyongyang last month to refrain from the launch, expressing serious concern and calling for restraint from all sides.Russia has often balanced criticism of North Korea's nuclear activities and its missile launches with calls on other major powers to refrain from belligerent actions against Pyongyang, which it says can be counterproductive.A permanent member of the UN Security Council, Russia is displeased when nations defy council resolutions, and North Korean missile tests have sparked concern among Russians living on the country's Pacific coast in the past.The UN Security Council was to meet today to discuss a possible condemnation of the launch, but Western diplomats said China was not expected to support new sanctions.Russia has been a participant in six-party talks with Pyongyang last held three years ago and hosted the late North Korean leader Kim Jong-il last August in Siberia, but has less influence on Pyongyang than China.McCully said the launch had violated the UN Security Council Regulations and had undermined efforts to build peace and stability in the region."It is a major disappointment following their recent agreement with the United States to put a moratorium on long-range missile launches," he said.  "The New Zealand government strongly urges North Korea to abide by its obligations under UN Security Council resolutions, cease its provocations, and take steps to denuclearise." 

Cancer hasn't dimmed Hugo Chavez's electoral hopes

With less than six months left until Election Day, Venezuelan President Hugo Chavez has hardly hit the campaign trail. Instead, he has been consumed with his fight against cancer, repeatedly traveling to Cuba for treatment and publicly vowing to defeat his illness. While cancer would end the presidential ambitions of many politicians, Chavez's struggle against the disease has in fact become his main rallying cry. Cancer could serve as a political asset if his health holds through the October vote, and that's the big "if" hanging over Venezuelan politics. Last week, Chavez offered his starkest outlook yet as he wept while holding hands with his parents at a Mass and then pleaded to Jesus Christ to give him more life. "Give me your crown, Christ," Chavez said in live footage broadcast nationwide. "Give me your cross, 100 crosses. I'll carry it, but give me life because there are still things left for me to do for these people and for this homeland. Don't take me away yet." Chavez said later that he has faith in a "miracle" as he undergoes radiation therapy in Cuba following two surgeries that removed tumors from his pelvic area. So far, what appears to be a serious life-or-death crisis hasn't dented his political support. To the contrary, one recent poll showed Chavez with a lead of 14 percentage points over rival Gov. Henrique Capriles. The poll by the firm Datanalisis had a margin of error of 2.5 percentage points. Chavez has managed to hold on to support even while his main image has been that of an ailing president climbing or descending airplane stairs on his frequent flights to and from Cuba for treatment. On top of that, many Venezuelans are supporting him despite 25-percent inflation and one of the worst homicide rates in the world. Information Minister Andres Izarra, one of Chavez's key aides, said on Monday that the president won't be out campaigning door-to-door like his rival because "he doesn't need to." Izarra also said Chavez's spirits are being lifted by his supporters. "That love of the people, it's arisen like a balsam, like part of his medicine, like part of his treatment to completely recover," Izarra said during a televised speech. On Friday, Chavez is expected to rally his supporters on the 10th anniversary of his return to power after a short-lived 2002 coup, and he has drawn a parallel between his cancer fight and his survival during that coup, when he was restored to the presidency amid large pro-Chavez street protests. "At that time, the love of the people rescued Chavez from the edge of death," Izarra said. "This time the love of the people is also rescuing Chavez from a particular health situation, in which if it weren't for that love, I'm sure his ailments would perhaps be greater." Eduardo Gamarra, a Latin American studies professor at Florida International University in Miami, said compassion elicited by Chavez's illness "has naturally played to his advantage in the electoral process." "Not only President Chavez but certainly his supporters and certainly the people handling his political campaign are taking full advantage of it. And I think it would be crazy for them not to do so," Gamarra said. Chavez's illness also presents a challenge for the opposition, Gamarra said, because it might appear "cold and callous" to attack a seriously ill leader. For both sides in Venezuela's divided political landscape, Chavez's illness has the potential to be a game-changer. The subject of what would happen if Chavez were to die is taboo among his political allies, as leaders of his United Socialist Party of Venezuela insist that Chavez will be their candidate and that there is no backup plan. In the meantime, Chavez is adeptly using the uncertainty to once again cast himself as the protagonist in a larger narrative, at times evoking his own tragic hero, 19th century independence leader Simon Bolivar, who survived an assassination attempt and then resigned the presidency amid failing health. Bolivar was 47 when he died, and historians have generally cited tuberculosis as the cause. At a televised meeting this week, Chavez, 57, said the independence leader had been "left without people, left without soldiers." "What a painful end," Chavez said. In speeches and rallies, Chavez has regularly shouted the slogan: "We will live and we will win!" It appears to be both his personal mantra and his political bet. The odds of that bet remain unclear. Since he announced his diagnosis last June, Chavez has kept secret specifics about his illness such as the type of cancer and the precise location of the tumors that have been removed. Some medical experts say based on Chavez's accounts, it's very possible his cancer could come back yet again. "The tumor is recurrent, and to us that indicates that his chances for a cure are minimal because in cancer care, the best treatment is the first treatment," said Dr. Julian Molina, an oncologist at the Mayo Clinic Comprehensive Cancer Center in Rochester, Minnesota. He noted that Chavez underwent surgery for a second tumor in February, indicating that his chemotherapy was ineffective. Other medical experts say that depending on the type and grade of Chavez's cancer, the outlook might not be so grim. Given Chavez's treatment regimen, he could have a soft-tissue sarcoma, said Dr. Steve Hahn, professor of radiation oncology at the University of Pennsylvania's Perelman School of Medicine. "It's not necessarily pessimistic," Hahn said. "If he had a low-grade sarcoma, then he really has very little chance of it spreading elsewhere and the radiation, if it prevents it from coming back in the pelvis ... that should pretty much hopefully be the end of the story for him, end of the story meaning control of his disease." Chavez's face has at times appeared puffy during his cancer treatments, and in September he acknowledged taking steroids along with other medications. Doctors say steroids can be prescribed as an anti-nausea medication to cope with the effects of chemotherapy and can help increase appetite and energy levels. Molina noted that excessive steroids use can spur side effects such as fluid retention, mood swings and increased blood pressure. "It's always possible that they gave him a short course of steroids, he felt good, and then he requested that, you know, keep on this. It's very hard when you're a president and you have the powers to say 'this is what I want to do,'" Molina said. The dearth of hard information about Chavez's illness, as well as the fluctuations in his tone and appearance, have fueled speculation and rumors about Chavez's health in the Venezuelan media and on the street. Chavez, for one, has urged political allies not to waste time responding to the gossip. Chavez communicated with the nation on Wednesday through several messages on his Twitter account while finishing his latest round of radiation treatment in Cuba. "I'm putting on my combat boots!" one of the messages read. "Wait for me!!" That night, Chavez made yet another homecoming at Caracas' airport, smiling as he descended the airplane stairs next to one of his daughters and saying he was doing well. He appeared vigorous as he chatted with aides at the presidential palace and reminisced about the 2002 coup during a televised talk that ended nearly an hour after midnight. Chavez's legions of supporters have shown intense loyalty to their hero, regularly gathering at government-organized events to pray for his health. On a downtown Caracas avenue, lampposts have been festooned with banners showing a healthy Chavez smiling and wearing the red beret of his years as an army paratrooper, along with the slogan: "Onward Commandant!" At one recent pro-Chavez rally outside the presidential palace, Magalys Martinez said she's optimistic Chavez can overcome his illness. "He very much wants to live," said Martinez, herself a cancer patient. "For this illness, what he needs to have is ambition to live." Another supporter at the rally, 63-year-old Bernarda Mena de Palacios, said she's thankful to Chavez for a government-run education program that helped her earn her high school diploma. "We're praying for the president," she said. "I have faith he's going to come out victorious. We can't lose a president like him."