NEWS,20.01.2013

World economy, conflicts top Davos agenda

Reviving the global economy and the conflicts in Syria and Mali will top the agenda as world leaders and business chiefs meet this week in the Swiss ski resort of Davos for its annual gathering of international power brokers.Some 45 heads of state or government will keep company with the 2 500 participants descending on the picturesque Alpine town for the five-day World Economic Forum starting on Tuesday.Russian Prime Minister Dmitry Medvedev, German Chancellor Angela Merkel and British Prime Minister David Cameron will deliver speeches expected to focus on efforts to maintain the nascent pickup in global economic activity.The event kicks off Tuesday night with Hollywood actress Charlize Theron providing a bit of sparkle as she accepts an award for her work supporting African youth in the fight against AIDS.The eurozone crisis is likely to take centre stage the rest of the week, but unlike last year - when fears of a eurozone collapse remained very real - this year's meeting takes place amidst guarded hope that Europe is finally tackling its debt woes.Italian Prime Minister Mario Monti and European Central Bank President Mario Draghi will speak on the way forward for the eurozone, while International Monetary Fund chief Christine Lagarde will address methods of generating stable growth.Noticeable by their absence will be high-profile officials from either China or the United States, though US Senator John McCain will be on hand for a panel on the future of conflict-torn Syria.The war in Syria and security issues throughout the Middle East and Africa will be on the table, with Jordan's King Abdullah II making a special address.The premiers of Egypt, Lebanon, Libya, Tunisia and the Palestinian Territories are due to attend, as well as Israeli President Shimon Peres.Though too fresh to make it on the official agenda, France's ongoing military intervention against Islamist rebels in Mali and the fallout from the Algerian hostage crisis will also be key talking points.Nigerian President Goodluck Jonathan, whose country will lead a West African ground force heading to join French troops in Mali, will share the stage with South African leader Jacob Zuma for a panel on risks in the continent.UN chief Ban Ki-moon will speak on the outlook for global development, joined on a panel with Cameron, Microsoft founder Bill Gates and Jordan's Queen Rania.More than 900 top business executives are expected to attend, with this year's forum co-chaired by the CEOs of Coca-Cola, Embraer, UBS, Dow Chemical and the head of Transparency International.One CEO pencilled in to take part, former Rio Tinto head Tom Albanese, is unlikely to show up following his resignation on Thursday after the global mining giant announced a $14bn write-down.Organisers have said the theme of this year's forum - "Resilient Dynamism" - focuses on how the global economic system can withstand and quickly recover from sudden shocks, like the eurozone crisis.The role of women in economic decision-making will also be highlighted in a panel featuring, among others, Lagarde and Facebook Chief Operating Officer Sheryl Sandberg. As well as politics, diplomacy and business, discussions will be held on "mega sporting events", jazz music, religion in the 21st century, education and the fight against obesity.Founded in 1971 by German economist Klaus Schwab, now 74, the Davos forum has become a not-to-miss gathering for the global elite, with participants shelling out tens of thousands of euros on attendance fees, travel and accommodation.The invitation-only meeting is also known for its informal luncheons and cocktail parties, often hosted by corporate sponsors and with exclusive guest lists, where political and business leaders can rub shoulders and network.

The Re-emergence of Europe: Tackling Europe's Youth Unemployment

The European debt and banking crises have had a devastating impact on youth unemployment across the region. Millions of young people today face the prospect of becoming a lost generation living through a lost decade, and many worry that they have no future. Their trajectory, in contrast to that of their parents and grandparents, is defined not by hope, but fear.The media report that Europe's youth unemployment figure of over 22 percent makes it one of the worst regions in the world. The International Labour Organization has warned that the Eurozone risks losing a further 4.5 million jobs over the next four years, primarily among young people, unless it shifts its policies towards job creation.But despite the frightening speed at which young people have been expelled from the labour market, it is important to note that Europe has coped with high youth unemployment for many years. For example, Spain's youth unemployment figures were similarly high in the mid-1980s and mid-1990s, research shows.And unemployment estimates can be deeply misleading. Reports that youth unemployment in Spain and Greece is nearing 50 percent make the situation seem far worse that it is. This is because young people who attend university or vocational training programmes are not considered part of the labor force. So the 50 percent figure does not refer to all young people, just those actively looking for a job.A far better indicator is the youth unemployment ratio, which measures the number of unemployed against the total number of young people aged 16 to 24. These figures, while still serious, seem far less doom-laden. For example, the youth unemployment rate for the 27 countries of the European Union has risen from 20.1 percent to over 22 percent since 2009, while the youth unemployment ratio has risen from 8.7 percent to over 9 percent. Greece's youth unemployment rate may be approaching 50 percent, but its youth unemployment ratio is 13 percent. This is not to make light of the situation, but it is important not to be alarmist. And some research suggests that Europe's youth unemployment level is actually better on average than it is in the US. Mitigating these figures somewhat is the "boomerang" phenomenon  young people aged 25 to 34 who left home only to return to live with their parents for economic reasons. This is a widely accepted custom for unmarried children in southern Europe. Roughly 70 percent of Italian men aged 25 to 34 live with their mothers, for example. But there is no getting away from the fact that unemployment has a very negative and even devastating effect on the lifetime earnings and career paths of young people. This is known as the "scarring effect" in economic jargon.So what can be done? Here are a few suggestions from a World Economic Forum and ManpowerGroup report:· Higher participation in career guidance programmes for school children· Better career and labour market information for young job seekers· A more positive image for vocational education· Better training· Investment in entrepreneurship education One of the reasons why Germany has a youth unemployment ratio of just 4.5 percent is its relentless focus on training and vocational education. Talent is a by-product of education; the quality of a country's human capital depends on it. Four of the 12 pillars that determine the World Economic Forum's measure of competitiveness relate directly to education: health and primary education; higher education and training; technological readiness; and innovation. If we want to create more jobs, Europe has to invest heavily in the growth sectors of the future, be they genetics, nanotechnology or digitalization. This can only be done by strengthening research and innovation throughout the EU. Technology is going to revolutionize almost every sector, leading to the demise of many traditional professions. Economic and political power will be determined less by a country's size than by its technological superiority. To benefit from this new reality we need to foster a culture of entrepreneurship throughout Europe, investing in innovation hubs for example. Young people will have to realize that jobs will no longer be handed to them on a plate; they will have to create them for themselves.

The Road Forward: What Does the World Want From Obama?

A number of polls published before the U.S. presidential election in November indicated that, on a global level, if the world could vote, they would have re-elected President Barack Obama by a wide margin. Perhaps that isn't terribly surprising, given the immense interest Obama's rise in 2008 created outside the U.S., the general lack of enthusiasm for Mitt Romney even at home, and the fact that in Europe Obama "is perceived, rightly or wrongly, as the most European of North American leaders,". And the polls were, after all, entirely hypothetical.Yet the very fact that these polls are conducted, as well as the overwhelming support they illustrate for Obama, is a reminder that many people around the world are invested in the direction that America chooses to take, and more to the point, may also still feel, despite a mixed first term in office, that Obama can, as my colleague Howard Fineman put it, "turn great promise into true greatness."But recognizing that most of the world wanted Obama isn't the same as knowing what the world wants from Obama.To help us better understand what some of those things might be, we turned to international editions in the UK, Canada, France, Spain and Italy for a collection of articles as part of our series "THE ROAD FORWARD: Obama's Second Term Challenges."You can read the full series here.) The hope is that these pieces, written by our reporters in these countries, will illuminate how the world outside America views the challenges and possibilities facing a leader whose personal appeal still looms larger than his presidential accomplishments.If one is willing to hazard identifying a theme from these six articles, it is the simple but important fact that the world still looks to America to lead on a number of fronts, and that despite talk of the U.S.'s relative decline in geopolitical influence, the policies the country pursues and the positions it takes still matter greatly to those living beyond our borders.When it comes to the economy, the main political parties in the UK are closely watching the path out of the recession that Obama is trying to chart between austerity and stimulus, in hopes of proving that their fiscal policies will be vindicated by the public as the right ones. "To be economically credible in Westminster, it seems, is to be aligned with Barack Obama," . Meanwhile, "Paris relies on Washington to set the tone for a growth policy that would turn its back" on austerity measures.On the U.S. domestic front, Canadians are looking to Obama to approve TransCanada's controversial Keystone XL pipeline while also engaging in greater stewardship on the environment, says Canada Business Reporter Sunny Freeman, even though those goals are somewhat contradictory. For Spain, Obama's pledge to expand America's development of renewable energy presents an economic opportunity for the struggling country, as Spanish companies have invested heavily in U.S. projects in recent years .Regarding foreign policy, Italy readers are hoping that the president can show greater courage on issues ranging from the Israeli-Palestinian conflict to Guantanamo to Afghanistan, while on a more local level, Dina Rickman reports that many Brits would like to see Obama take action on reforming the process established by the U.S.UK Extradition Act, which allows for the extradition of UK citizens for breaking U.S. laws.As Obama begins his second term, these articles, and the issues they raise, are a reminder that the world beyond America's shores has a stake in the road ahead, and that our leaders, in turn, have an obligation to try to meet these expectations.

NEWS,27.06.2012

Europe's leaders at odds before summit

 

European leaders sound unusually divided before a high-stakes summit, with Germany's Angela Merkel saying total debt liability would not be shared in her lifetime and giving little support to Italian and Spanish pleas for immediate crisis action. Rome and Madrid have seen their borrowing costs spiral to a level which for Spain at least would not be sustainable as it battles to recapitalise banks ravaged by a burst property bubble and cut a towering government deficit. Spanish Prime Minister Mariano Rajoy said on Wednesday he would ask other European Union leaders to allow the bloc's bailout funds or the European Central Bank (ECB) to stabilise financial markets. Speaking in parliament before a meeting of European heads in Brussels on Thursday and Friday, Rajoy warned that Spain would not be able to finance itself indefinitely with 10-year bond yields near 7%. "The most urgent issue is the one of financing. We can’t keep funding ourselves for a long time at the prices we’re currently funding ourselves,” he told parliament. Even when there are profound disagreements, EU leaders have been burned by the markets enough times to generally make sure they sound united before major gatherings. But divisions have been exposed by the ousting of Nicolas Sarkozy by socialist Francois Hollande as French president and the fact that Rome and Madrid have muscled into the traditional Franco-German axis. The leaders held an unusually discordant news conference in Rome on Friday. Hollande said there must be more solidarity in Europe before countries hand over more sovereignty over their national budgets, while Merkel said she would not accept extra liabilities without overarching budget control. The pair will have a working dinner in Paris on Thursday evening, an opportunity to repair the damage. An initial attempt to smooth over differences came at a meeting of the four countries' finance ministers late on Tuesday after which nothing was said. In Rome, Italian Prime Minister Mario Monti said he would not simply rubber stamp conclusions at the EU summit and said he was ready to go on negotiating into Sunday evening if necessary to agree on measures to calm markets. With Hollande's support, Monti is pushing for the eurozone’s rescue funds to be used to help limit the spreads over German Bunds on bonds issued by countries that respect EU budget rules. Rajoy would settle for that or the ECB doing the same job by reviving its bond-buying programme. The proposal has run into stiff opposition from Germany, the largest economy in the EU and the bloc’s effective paymaster, and has been rejected by Jens Weidmann, the powerful head of the German central bank, the Bundesbank. Stock markets perked up last week on the hope that the 20th EU summit since the bloc’s debt crisis exploded into the open in Greece would come up with dramatic measures. Investors have since thought better of that view. European shares edged up on Wednesday and the euro was flat, with many investors out of the markets before the Brussels meeting. “People are waiting for the inevitable - which is that policymakers will probably fail to do what is necessary,” said Neil Mellor, currency analyst at Bank of New York Mellon.Borrowing costs Merkel stomped on the idea of mutualising debt - favoured by France, Italy and Spain - at a meeting of lawmakers from her Free Democratic coalition partners in Berlin on Tuesday, according to people who attended the closed-door session. “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”. The words may have been carefully chosen and do not at face value rule out mutualising some portion of eurozone members’ debts as the end point of a drive towards fiscal union. Merkel finds herself in a dwindling minority but holds the eurozone’s purse strings and therefore nearly all the cards. German opposition SPD leader Sigmar Gabriel told the Financial Times that urgent measures were needed to lower eurozone sovereign borrowing costs, otherwise the currency bloc could “simply explode”. Italy and Spain argue that they are stretching every sinew to cut their debt mountains and need some support from their currency area peers to keep the markets at bay. Monti won the first two of four confidence votes on Tuesday called to accelerate the passage of his labour reform that has been criticised by both by labour unions and the business establishment. The final two votes, and definitive approval, are due on Wednesday. Spain which has been offered loans of up to €100bn to recapitalise its banks but is determined not to ask for a sovereign bailout - is considering raising consumer, energy and property taxes. Spanish Economy Minister Luis de Guindos said he had talked with the finance ministers of Germany, France and Italy already on Wednesday with further discussions planned. Eurozone finance ministers will also hold a conference call on the bailout of Spanish banks and this week’s request for aid from Cyprus, EU officials said. The request made Cyprus the fifth of the eurozone’s 17 states to seek aid from EU rescue funds after Greece, Ireland, Portugal and Spain. Underlining the parlous state of Spanish finances, figures showed the central government’s deficit had already reached 3.41% of annual gross domestic product through just the first five months of the year, close to its target for the whole year of 3.5%. Spain’s central bank said on Wednesday it expected recession to deepen in the second quarter of the year. The Brussels summit is expected to agree on a growth package pushed by France worth around €130bn in infrastructure project bonds, reallocated regional aid funds and European Investment Bank loans. Leaders will also discuss proposals for a banking union, but while they are likely to agree to give the ECB power to supervise big cross-border banks, Merkel is resisting any joint deposit guarantee or common bank resolution fund.

Italy to pass new labour laws ahead of EU forum

Italy’s Parliament is on Thursday set to approve a controversial labour market reform so Prime Minister Mario Monti can go to a key Brussels summit with it in hand to reassure his EU partners.The reform, which Mr Monti’s government says is key to restarting growth in the recession-hit economy, was to get final approval the day before the summit, as Italy races to prove it is doing what it takes to stave off the debt crisis. The summit starts on Thursday, June 28.Rome had called on Parliament to make sure the reform is approved in time, but Prime Minister Monti whose technocratic government depends on the support of bickering coalition parties has had to compromise on the details.Addressing Parliament on Wednesday, he said it was “important that Italy arrives at the summit with the force of a parliament-government tandem.”The project, which was unveiled in March after months of bitter disputes with trade unions, is based on the Danish “flexicurity” model, which aims to ensure both flexibility and security in the labour market.It includes incentives for employers to hire workers but also eases the procedure for letting them go in case of a downturn, and will help young people get jobs though apprenticeships, in a country hit by high youth unemployment. Workers will also all be eligible for a modernised welfare scheme from 2017.Greater labour flexibility is one of the so-called structural reforms that the European Commission, International Monetary Fund and Organisation for Economic Cooperation and Development have long advised Italy to adopt to invigorate its economy.Watered downBut Mr Monti’s original package was watered down as parties, trade unions and employer groups fought to defend their turf, leaving many economists fearing the reform is too timid to shake up the labour market.The centre-right insisted businesses be left wiggle room to give people shorter-term contracts, while the left demanded greater measures be included to protect workers.The country’s biggest union, the left-wing CGIL, says the reform risks increasing unemployment, while the Confindustria association says it does not go far enough in strengthening employers’ rights.