NEWS,08. AND 09.05.2013

Brazil wins race for next WTO director

The World Trade Organisation has settled on Roberto Azevedo of Brazil, a well-known diplomat and consummate insider in Geneva circles, to serve as its director general for the next four years, officials said on Tuesday.

The directorship is chosen by consensus in a complex and secretive process, and the runner-up is expected to concede afterward. Diplomats emerged from consultations Tuesday to rush past journalists out of the building, barely acknowledging that Azevedo had defeated Mexican former trade minister Herminio Blanco in the final round.
Two diplomats confirmed Azevedo's selection to journalists on condition of anonymity because they were not authorised to reveal the winner ahead of the formal announcement, but Azevedo also re-tweeted that he has been chosen for the job and comments from various trade circles began trickling in.
A formal announcement on his selection is not expected until Wednesday.
In Washington, Jack Colvin, a vice president of the National Foreign Trade Council, said Azevedo's selection reflects "his extensive experience and deep familiarity with international trade institutions and processes on behalf of Brazil and the focus he has placed on consensus-building in Geneva."
Under WTO rules, a meeting of member-nations must be convened no later than May 31 to formally appoint Azevedo. The selection - not an election - spanned months of consultations among ambassadors from all 159 members, most of them nations but also some territories such as Hong Kong and Macau.
Azevedo is to take over the organisation on September 1 from Pascal Lamy of France, who has been the director-general for eight years.
He is poised to become the first Latin American to head the Geneva-based trade organisation since its creation in 1995. He won out in a field that originally had nine candidates at the start of this year.
Azevedo will be taking over an organisation whose role as a multilateral forum for negotiations is, according to insiders and observers, in growing doubt.
In recent years, the WTO has been used more as forum to settle trade disputes and monitor policy than as a host for serious trade negotiations. That tendency reflects the rise of regional and bilateral trade negotiations among the major powers.
Azevedo, who has insider knowledge of the WTO's workings, calls himself a consensus-builder between developed and developing countries. He says he will set aside his Brazilian hat to take on the global role.
But it has been no secret during the selection process that member nations wanted the next director to come from a developing nation after having a director from one of Europe's major economies.
The original nine candidates also included contenders from Ghana, Costa Rica, Indonesia, New Zealand, Kenya, Jordan and Korea.

China's exports jump 14.7% in April

China's trade accelerated in April in a possible positive sign for its shaky economic recovery.

Exports rose 14.7% over a year earlier, up from March's 10% growth, customs data showed Wednesday. Imports gained 16.8%, up from the previous month's 14.1%.
The stronger data suggest growth of the world's second-largest economy might be improving after an unexpected decline to 7.7% in the first three months of the year from the previous quarter's 7.9%.
Some analysts suggest Chinese trade data are distorted by reporting errors and unreliable as an economic indicator. Still, April's stronger numbers might help to reassure companies and investors after the weaker first-quarter growth jolted global financial markets.
"Subdued actual export growth in April points to sluggish global demand," said RBS economists Louis Kuijs and Tiffany Qiu in a report. "Reasonable import growth suggests domestic demand has held up better so far."
Surveys by HSBC Corp. and a Chinese industry group showed Chinese manufacturing growth weakened in April. HSBC said new export orders fell for the first time this year.
Some analysts have warned China's recovery is being shored up by state-led investment and bank lending and could be vulnerable if trade or investment weakens. The weaker-than-expected first quarter numbers prompted the World Bank and private sector analysts to trim forecasts for full-year growth, though to still robust levels of about 8%.
Chinese leaders are trying to nurture self-sustaining growth driven by domestic consumption instead of trade and investment. But consumer spending is growing more slowly than they want.
A Cabinet statement last month promised to improve the role of consumption as a driver of economic growth. It pledged changes in medical, pension and other policies but gave no details. Analysts say more government spending on such social programs will be required to free up household budgets for consumer spending.
April's stronger gains in imports compared with exports caused China's global trade surplus to narrow by about 1%, though to a still-wide $18.2bn.
China runs a deficit with most of its trading partners, which supply oil, other raw materials and industrial components, and makes up for it by running large surpluses with its US and European export markets.
China's exports to Europe, hurt by the continent's debt troubles, declined 6.5% to $25.9bn and the surplus with the 27-nation European Union narrowed by 32% to $7.9bn.
Trade with some European countries suffered even bigger declines. Germany's imports of Chinese goods fell 7.2% and France's by 6.7%.
Exports to the United States edged down by a fraction of 1% to $28.1bn while the trade gap with the US narrowed by 13% to $14.7bn.
China's data on exports have been under scrutiny since some analysts pointed out last year that they failed to match up with its trading partners' lower figures for their purchases of Chinese goods.
Some analysts suggested Chinese exporters might be inflating values on customs declarations as a way to evade Beijing's currency controls and bring money into the country for investment.
Kuijs and Qiu of RBS said that after factoring out irregularities, they estimated China's exports rose only by about 5.7% in April, about 9 percentage points lower than the reported level. They said they saw no obvious irregularities in import data and no reason to inflate the values of goods.

Slovenia scrambles to avert bailout

Slovenia pledged on Thursday to sell 15 state firms including its second-largest bank, biggest telecoms operator and the national airline under a crisis package to avert an international bailout.
Prime Minister Alenka Bratusek said value added tax would rise from 20% to 22% from July but that the government was still in talks with unions on planned cuts to the public sector wage bill.
She said the budget deficit would soar to 7.8% of national output this year but the government aimed to bring it down to 3.3% in 2014.

Finance Minister Uros Cufer said the package would result in total savings of around €1bn in spending cuts and revenues.

US jobless claims fall to 5-year low

The number of Americans filing new claims for unemployment benefits dropped to its lowest level in nearly 5-1/2 years last week, signaling labour market resilience in the face of fiscal austerity.
Initial claims for state unemployment benefits fell 4 000 to a seasonally adjusted 323 000, the lowest level since January 2008, the Labor Department said on Thursday.
Claims for the prior week were revised to show 3 000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to rise to 335 000 last week.
US stock index futures pared losses on the report, while Treasury debt prices trimmed gains. The dollar trimmed losses against the yen.
The third straight weekly decline in claims pushed them further below the 350 000 mark, which economists normally associate with a firming labour market.
Claims are showing no sign of a pick-up in layoffs even as other parts of the economy such as manufacturing start to show strain from tighter fiscal policy.
"It's nice to see improvement in claims. We are not worried about the separation side of the equation. We continue to be worried about the hiring side," said Jacob Oubina, senior economist at RBC Capital Markets in New York.
A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data.
The four-week moving average for new claims, a better gauge of job market trends, dropped 6 250 to 336 750 - the lowest level since November 2007.
Coming on the heels of data last week showing surprising strength in the labor market, the claims report could further assuage fears of an abrupt slowdown in the economy.
Employers added 165,000 new jobs to their payrolls in April and hiring in the previous two months was stronger than initially reported. The unemployment rate dropped to a four-year low of 7.5%.
The improvement in employment contrasts sharply with other data, including retail sales and manufacturing, that have suggested a cooling in the economy at the end of the first quarter, which persisted early in the April-June period.
The slowdown in activity after the economy expanded at a 2.5% annual pace in the first three months of the year has been blamed on higher taxes which went into effect on January 1 and $85bn in government budget cuts known as the "sequester."
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid dropped 27 000 to 3.0 million in the week ended April 27. That was the lowest level since May 2008.

Obama set to renew focus on jobs

President Barack Obama travels to Texas on Thursday to put his focus back on job creation and economic growth after giving intensive attention to gun control legislation and immigration reform.
The president is due to hold events around the country to draw attention to his efforts to boost economic growth through jobs that benefit the middle class, a White House official said.
The trip comes as a poll shows Americans say what they want most from politicians in Washington is job creation and helping the economy grow.
In a visit to the Austin, Texas, area, Obama is due to visit Applied Materials which makes semiconductors and other technology, and a high school focused on math and science. He will also meet local residents and entrepreneurs.
Obama's jobs tour follows some policy frustrations for him. The president failed to persuade Congress to accept expanded background checks for gun buyers, a disappointing setback to his efforts to toughen gun rules after the December murders of 20 children and six adults at an elementary school in Newtown, Connecticut.
He is also at an impasse with congressional Republicans over a deficit reduction deal that he insists should include higher tax revenues, which Republicans oppose.
The president does appear to be making headway in his efforts to change immigration laws to open a path to citizenship for a portion of the 11 million people who are in the United States without proper documentation. However, final legislation is months off.
In the meantime, a Gallup poll released Tuesday found 86% of those surveyed this month ranked creating more jobs as their top priority for action by Congress and the president, tied at 86% with helping the economy grow.
Lower on the priority list were reducing the federal deficit at 69%, reforming the tax code 59%, reducing gun violence 55% and reforming immigration 50%.
The U.S. economy is recovering slowly after the deep recession of 2007-2009. Despite some encouraging signs of economic resurgence, such as stock market record highs, the jobless rate, while falling, remains at an elevated 7.5%.
The president will announce a competition for locations to site three manufacturing institutes where businesses, government and educational institutions will get funding to develop new technologies, the White House official said.
He will also issue an executive order requiring that newly released government data be made freely available in easily readable formats.
The president's jobs tour is also likely be a chance for him to argue that across-the-board spending cuts referred to as sequestration that went into effect March 1 are slowing economic growth and should be replaced.
The spending reductions went into force after congressional Republicans balked at the president's insistence that any alternative spending cuts be offset by some tax increases.
Some Republicans have welcomed the cuts as necessary austerity measures to check government overspending.

Cameron: Britain must stay in EU

British Prime Minister David Cameron took on critics in his own Conservative party on Thursday, saying it would be wrong for Britain to leave the European Union.
Some pessimists "say there is no prospect of reforming the European Union, you simply have to leave", Cameron told an investment conference
"I think they are wrong ... I think it is possible to change and reform this organisation."
Cameron came under renewed pressure from EU sceptics this week when former finance minister Nigel Lawson said the prime minister's plan to renegotiate Britain's commitments to the EU before a planned membership referendum in 2017 were doomed to fail and the country should leave the bloc.
Cameron used his speech on Thursday to underscore his determination to keep on narrowing Britain's budget deficit at a "sensible and measured pace" and to help push for new trade deals between the EU and the United States and Canada.
He also said he would continue to defend Britain's financial services industry against some European measures such as a planned financial transaction tax which has been agreed by most countries in the eurozone and would affect the City of London.
"We shouldn't spend our time in politics endlessly bashing banks and financial institutions. If you want the economy to recover and if you want the economy to grow, you have got to play to your strengths," Cameron said.

G7 finance chiefs to discuss bank reforms

Some of the world's most powerful finance chiefs will meet in an English stately home on Friday and Saturday to try to speed up banking and finance reforms, with Cyprus' near meltdown fresh in their minds.
Finance ministers and central bank governors from the Group of Seven industrialized economies probably will not break new ground on how to fix the weak world economy as discussions at the International Monetary Fund took place just three weeks ago.
Officials from two of the G7 economies said the talks - on Friday and Saturday at a 17th-century country house 40 miles northwest of London - were likely to focus more on the slow progress of reforms to banking and finance around the world.
"It's very rare for a G7 to focus on financial regulation," one of the officials said, speaking on condition of anonymity.
The emergency rescue of Cyprus in March acted as a reminder of the need to finish an overhaul of the banking sector, five years after the financial crisis began.
"It makes sense for the G7 financial leaders to send out a message, from high up, that global efforts to ensure financial stability via appropriate regulation must continue," the official said.
Germany may come under renewed pressure to give more support to a banking union in the euro zone as it did at the recent IMF/G20 meeting in Washington.
The idea was proposed last year to help strengthen the single currency area but Berlin worries it may foot the bill for future bank bailouts.
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' agency and fund to close failed banks, is in doubt. And there is little prospect that a third leg, a single deposit guarantee scheme, will ever see the light of day.
"We welcome those discussions," a senior US Treasury official told reporters in Washington. "I think Cyprus just further highlighted the importance of moving to break that feedback loop between sovereigns and bank balance sheets."
Another G7 official said new rules for derivatives trading and the Basel III plan for minimum bank capital levels were running behind schedule and would be among the issues the G7 would discuss, as well as the risk of a reversal in soaring share prices in some countries which contrasts with weak growth.
But some of the officials said they said they did not know why Britain, which is chairing the G7, had called the meeting.
"I am really annoyed that I've got to give up my weekend for this," one complained, adding the talks could have taken place on the sidelines of IMF's meetings in Washington in mid-April.
A British finance ministry official said there was value in informal talks among the world's biggest industrialized economies but declined to comment on the agenda.
Changed role for G7
G7 finance ministers and central bank governors used to hold global markets in their thrall when they met, given the combined financial firepower of the group's members - the United States, Germany, Japan, Britain, Italy, France and Canada.
But it lost its mantle as the main forum for thrashing out differences over the global economy in 2009 when responsibility was passed to the wider Group of 20 which includes emerging heavyweights such as China, Brazil and India.
Since then, the G7 has met on the sidelines of G20 and IMF meetings but has held few standalone meetings although officials say the smaller grouping makes for more open discussion.
"As often is the case, the G7 is a photo opportunity. But it's important that it stays together as a forum to address the issues," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
The U.S. official said Washington would keep up its calls on Europe to boost demand and maintain its focus on Japan's aggressive monetary policy which has raised US concerns about a weakening of the yen.
A Canadian official said discussions would again focus on the right degree of belt-tightening for debt-laden countries which are struggling to get their moribund economies growing and have relied heavily on massive central bank stimulus.
No communique and no formal decisions are expected at the meeting which would instead help prepare the way for a G20 leaders' summit in Russia in September.
It comes at a relatively good time for its host, UK finance minister George Osborne. He will be able to point to a few signs of life in Britain's stagnant economy that have taken some of the heat out of criticism of his austerity policies.
The meeting will also be a chance for the G7 to get to know new members of the group - such as the finance ministers of the United States and Italy - and to bid farewell to Mervyn King, who retires from the Bank of England in June.

NEWS, 28.05.2012.

Greek Exit Fears Cause Wealthy Greeks To Transfer Money To Safer Northern Banks

 

After Greece's inconclusive elections on May 6 led to political deadlock and heightened doubts about the country's future in the euro zone, Nikos, a successful businessman in the pharmaceutical supply industry, sent 7 million euros to a bank in Luxembourg."I have worked hard all my life and took risks in business. I am 62 years old now and cannot risk my money becoming drachmas. Most Greeks want to stay in the euro, that's what polls show, but it's better to be safe than sorry," he said.His precaution reflects a trend among southern Europe's wealthy. Greeks fear devaluation while Spaniards and Portuguese fret about the health of their banks so they are sending money to banks in the stronger economies of northern Europe.Nikos sent his cash to a Swiss bank offering much lower interest rates than his Greek bank paid but he said the sacrifice is worth it for peace of mind.Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros, are reporting a "bank run by wire transfer" that has picked up during May.Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say."It's been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer," said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm."Where there is liquidity it is moving to the safest part of Europe and the perceived safest part of Europe is in the North... It's a no brainer," he said.Another private banker specialising in Spanish clients at a global banking group said Spain's wealthy remembered Argentina's 'corralito' a decade ago when authorities restricted withdrawals to prevent bank runs."We are taking calls from new clients who want part of their money outside of Spain because of the potential risk of a corralito though we don't think that will happen and we don't incentivise our clients to do that," the banker said.As deposits in European banks are guaranteed up to 100,000 euros, all but the wealthiest savers would get their money back in the event of a bank failure.But if a country left the euro, as economists think could happen to Greece, bank accounts would be redenominated into a new currency that could then devalue, eroding the value of deposits.Depositors could also face controls to prevent capital flight and further devaluation, or a freeze on withdrawals to defend the banks.One senior private banker based in London said colleagues had taken calls from Greeks "very keen" to open accounts in the UK to protect their wealth if Greece leaves the euro and returns to its old currency, the drachma.However, there is much legal uncertainty surrounding a potential exit from the euro zone and lawyers say moving money abroad may not necessarily protect it from conversion into the new currency."It is clear that Greek investors are looking to find ways to hold euros that will not get converted into drachmas," said Damian Bloom, partner at law firm Berwin Leighton Paisner."There is a concern whether euro deposits held by a Greek person in a non-Greek account would also get converted, or indeed whether Greek issued euro notes held by non-Greek persons would be converted. I don't know if these practical issues have yet been resolved."

Britain's Blair faces grilling over ties to Murdoch

 

Tony Blair's decision to openly court Rupert Murdoch to win power and ensure favourable coverage during his decade-long tenure as British prime minister will come under scrutiny when he faces a media inquiry today.The inquiry, ordered by Prime Minister David Cameron after Murdoch's now defunct News of the World tabloid admitted hacking phones, has tarnished Britain's elite by laying bare the collusion between politicians, the police and the media.Blair kicks off an important week at the Leveson inquiry by answering questions about his often obsessive media management which included courting Murdoch.The inquiry has so far focused on the conduct of the media and the close ties between Murdoch's empire and serving ministers, helping the opposition Labour Party leader Ed Miliband consolidate his position with attacks on Cameron.But the grilling of Blair, who recast the relationship between the media and politicians by 'spinning' news to gain the most favourable coverage, could undermine Miliband's attempt to portray Labour as a party above courting media tycoons.While Blair is no longer active in British politics, the inquiry may still prove uncomfortable as it examines issues such as his decision after stepping down as prime minister to become a godfather to Murdoch's daughter Grace at a ceremony on the banks of the river Jordan."Blair led the way in having no shame about courting Murdoch," said Ivor Gaber, professor of political journalism at City university."He set the style and the standard and if you regard Cameron as the 'heir to Blair' then it's not exactly surprising that he followed suit."Murdoch told the inquiry last month that he had never asked a prime minister for anything.Blair set the tone for his relationship with Britain's press when he flew to Australia in 1995 to speak before a gathering of Murdoch's executives who had previously used their British tabloids to vilify his Labour Party predecessors.The decision infuriated much of his left-of-centre party who saw the Australian-born tycoon as a right-winger who had helped to keep them out of power for years."People would be horrified," Blair said later in his autobiography. "On the other hand ... not to go was to say carry on and do your worst, and we knew their worst was very bad indeed.""The country's most powerful newspaper proprietor, whose publications have hitherto been rancorous in their opposition to the Labour party, invites us into the lion's den. You go, don't you?"The speech received a standing ovation and Murdoch indicated for the first time that he could be willing to switch the allegiance of his newspapers to the Labour Party."If our flirtation is ever consummated Tony then I suspect we will end up making love like porcupines, very, very carefully," he told him.With the backing of Murdoch's top-selling Sun tabloid, Blair swept to power in 1997 and again in 2001 and 2005. But with an ever increasing reputation for public relations 'spin', he started to face questions over his sincerity."Tony Blair quickly became famous in Fleet Street for inviting in one group of newspaper people and telling them how sceptical he was about Europe; and then inviting in another lot and telling them how keen he was on Europe," Andrew Marr, a senior BBC journalist, told the inquiry."But the different groups compared notes, and his reputation was not hugely enhanced."Much of that came to a head when Blair and then US President George W. Bush agreed to invade Iraq, going against the public opinion in Britain.Blair is likely to be asked why he spoke to Murdoch three times in the days leading up to the Iraq war and whether this had any impact on the fact that all Murdoch's papers supported the unpopular invasion.He will also be asked whether his reliance on Britain's press meant that he did not properly scrutinise their role in society and whether any group, such as Murdoch's News International, had too much control of the market."There was a desperation to get the Sun onside and to get News International on side, basically at all costs," Liverpool University's political professor Jonathan Tonge, told Reuters."And if that meant sacrificing a serious analysis of the relationship and the health of the relationship, then so be it."

NEWS,25.03.2012.

US puts forward World Bank nominee

Jim Yong Kim, the US nominee to lead the World Bank, will win broad international support despite an unprecedented challenge by candidates from emerging economies, US Treasury Secretary Timothy Geithner said in an interview.Washington's hold on the World Bank presidency is being contested for the first time by candidates from emerging economies.Two respected economists and diplomats, Nigerian Finance Minister Ngozi Okonjo-Iweala and former Colombian finance minister Jose Antonio Ocampo, have been nominated.Kim, a Korean-American health expert, is well known among development experts for his work in fighting HIV/AIDS and bringing healthcare to the poor.President Barack Obama nominated him for World Bank president over the weekend.."The president was looking for a candidate who could command broad support across the world," said Geithner."That's very important, because we don't make this decision alone.""Dr. Kim's mix of skills will be particularly compelling to the bank at this time and I think the world will be very impressed with him," he said.Emerging economies such as China, India, South Africa, Brazil and Russia have sought to use their growing economic clout to pry open the selection process for the heads of the World Bank and its sister organization, the International Monetary Fund.The World Bank has always been headed by an American and the IMF by a European since their inception after World War Two.Geithner said it was not a surprise that candidates from other countries had been nominated after a 2009 agreement by leaders of the Group of 20 nations for an open and transparent process to select leaders of the two institutions."We expected that to happen and think it is healthy for the institution as a whole," Geithner said. "But I can tell you from my conversations with developing and developed countries, I am confident he (Kim) will win broad support."US officials have acknowledged that giving up the World Bank presidency would make it difficult for the White House to obtain funding from Congress for the global lender, especially with lawmakers worried about mounting budget deficits.The United States has also argued that it does not head any other global organization.After a broad search that looked at US bankers, economists and politicians, Obama settled on Kim because the Dartmouth College president has a deep commitment to development issues, Geithner said.In particular, he cited Kim's experience in programs to fight HIV/AIDS and tuberculosis in impoverished nations, which he said demonstrated that the nominee could get things done in tough environments.In coming weeks, Kim will visit nations in Africa, Asia and Latin America to try to convince them he is the best candidate to lead the poverty-fighting institution, US officials said.Kim was recommended to Obama by US Secretary of State Hillary Clinton and her husband, former President Bill Clinton, officials said. Kim and his long-time collaborator Paul Farmer worked with former President Clinton on reconstruction efforts in Haiti following a devastating earthquake in 2010.The White House has acknowledged it considered candidates tied more closely to Washington political circles, including US Senator John Kerry, US Ambassador to the United Nations Susan Rice and former White House economic adviser Lawrence Summers."The president wanted somebody who had defined their life through a commitment to the cause of development but had also demonstrated an ability to solve complex problems in a creative way," said Geithner, a Dartmouth alumnus who played a lead role in the search for a successor for outgoing World Bank President Robert Zoellick.Kim's development successes involving HIV/AIDS, tuberculosis and the provision of inexpensive medicine to the poor have received wide praise. However, some development experts say he lacks the economic credentials and diplomatic skills of rival nominees Okonjo-Iweala and Ocampo.While the World Bank's mission remains focused on eradicating poverty, the rise of some once poorer clients such as China and India have forced it to also focus on impediments to development in emerging economies, including power supply and governance issues.Okonjo-Iweala and Ocampo would bring more expertise in these areas, some development economists say.A senior Obama administration official said the bank has ample expertise and what is needed at the top is someone who can get things done.The World Bank is involved in the design of health systems in developing countries, but its funding and influence in the area has been eclipsed by groups such as the Geneva-based Global Fund and the Bill and Melinda Gates Foundation.Geithner said Kim has "an incredible feel for what matters most in development and recognizes that for economies to grow they have to invest in expanding opportunities for their people, in healthcare and in education.""Those are lessons that the most successful emerging and developing countries have learned and been forced to learn, and in that sense he has the ideal feel," Geithner added. "His experience comes from what he has done in the field, not just from his academic research."People who had worked with Kim were impressed by his ability to handle complicated situations in tough environments such as Haiti, Geithner said. In Haiti, Kim was credited with persuading the government to take steps to avoid an outbreak of tuberculosis.

NEWS,20.2.2012

Iranian ships reach Syria, Assad allies show support

Russia, China and Iran showed support for Syrian President Bashar al-Assad today, days before an international meeting likely to pile more pressure on him to step down in the face of an increasingly bloody uprising. Assad met a senior Russian politician in Damascus, who reiterated Moscow's support for his self-styled reform programme and spoke out against any foreign intervention in the conflict, Russian and Syrian news agencies reported. China accused Western countries of stirring up civil war in Syria, and two Iranian warships docked at a Syrian naval base, underscoring rising international tensions over the near year-long crisis. Government forces pressed on with their crackdown on the anti-Assad uprising, with opposition activists reporting five people killed in renewed shelling of an opposition-held district of Homs and troops and militia blockading Hama. Both cities have been in the forefront of the revolt.The crisis is entering an important week, with Western and Arab powers due to meet at a conference in Tunisia on Saturday to pressure Assad to give up power, while Assad forges ahead with plans for a referendum on Monday for a new constitution. The referendum, which would lead to multi-party elections within 90 days, is part of what Assad describes as a reform programme to address demands for more democracy. Syria's official SANA news agency said about 14,600,000 people are eligible to take part in the referendum. The West and Syrian opposition figures have dismissed the plan as joke, saying it is impossible to have a valid election amid the continuing repression. Alexei Pushkov, head of the international affairs committee of Russia's lower house of parliament, met Assad in Damascus today and affirmed Russia's support for the plan. Moscow is Syria's main arms supplier and an ally dating back to the Cold War.Pushkov also stressed the need "to continue working for a political solution to the crisis based on dialogue between all concerned parties, without foreign intervention," SANA said.Assad, who shows no inclination to relinquish power, told Pushkov Syria was being targeted by armed terrorist groups supported by foreign elements aiming to destabilize Syria.China, which sent an envoy to Damascus this weekend, also backs Assad's idea of a political solution and has appealed to the government and opposition alike to halt the violence. China’s Communist Party mouthpiece, the People's Daily, took the West to task in a commentary today, saying: "If Western countries continue to fully support Syria's opposition, then in the end a large-scale civil war will erupt and there will be no way to thus avoid the possibility of foreign armed intervention.” The West has so far ruled out any Libya-style military action but the Arab League, led by Saudi Arabia, has indicated some of its member states were prepared to arm the opposition. A more immediate concern for the West is the plight of civilians caught up in the offensive against the opposition and a nascent rebel army. Activists in embattled cities such as Homs say food supplies are running out and doctors lack medicine to treat the wounded. The International Committee of the Red Cross (ICRC) said in Geneva it was negotiating with Syrian authorities and opposition fighters for a ceasefire to bring life-saving aid to civilians. Diplomatic sources said the ICRC was seeking a two-hour ceasefire in hotspots including Homs.Opposition activists said five people had been killed in government shelling of Homs's Baba Amro district today, adding to a reported death toll of several hundred since the operation began on February 3.Activists in the western city of Hama said troops, police and militias had set up dozens of roadblocks, isolating neighbourhoods from each other."Hama is cut off from the outside world. There are no landlines, no mobile phone network and no internet. House to house arrests take place daily and sometimes repeatedly in the same neighbourhoods," an opposition statement said. Rebel fighters have been attacking militiamen, known as shabbiha, while avoiding open confrontations with armoured forces that had amassed around Hama, a city north of Homs on the Damascus-Aleppo highway. The government restricts foreign media access in Syria, making it hard to independently verify the activists' reports.