NEWS,22.08.2012

Russia finally joins WTO

After 18 years of negotiation, Russia on Wednesday entered the World Trade Organization, which restricts import duties and subsidies in an attempt to create a level playing field for international trade.Analysts and politicians hope that Russia, which has long proven a formidable market to foreign investors because of its byzantine bureaucracy and protectionist tariffs, would be transformed by its entry into the WTO. Russia is one of the last major global economies to enter the group, which has long included other developing nations like China.While consumers here will benefit from the lower cost of imported goods, some worry that struggling industries long coddled by state subsidies, such as agriculture or the automobile industry, will suffer from foreign competition.Russians often complain about the burdensome cost of Western-imported consumer products, which range from refrigerators to jeans. With its entry into the WTO, the country will cut its average import tariff by 5.9%, making those imports cheaper.M. Video, one of Russia's largest electronics retailers whose shelves are packed with foreign-made CD players and American movies, said Russia's entry into the WTO would bring more customers into their stores."We believe that (entry into the WTO) is going to be a very good decision for our customers in the future, because they will be able to purchase goods with prices harmonized with other economies," said Enrique Fernandez, chief commercial officer of the company.But uncompetitive domestic goods, which have long been propped up by Soviet-style subsidies, could be threatened by the invasion of higher-quality imports. Nearly 100 major business leaders and industry groups including dairy and meat producers signed a petition earlier this summer addressed to the ruling United Russia party, asking that its deputies vote against ratification of the WTO treaty.Agriculture, the automobile industry, and Soviet-style "Monogorods," or towns which revolve around a single factory or industry, are bound to suffer next to foreign competition unless they can reform quickly. These industries are based in regions that have often displayed the most support for President Vladimir Putin, but could easily turn into a hotbed for protest if already fragile industries were to collapse.At a car dealership in Moscow, 63-year-old engineer Alexei Tarakanov said he doubted that low-quality Russian cars could win on an open market."I already have a negative attitude towards our (Russian) cars," said Tarakanov, who was buying a Renault. "I doubt that they can win the preference of the modern buyer."Because state-subsidized industries proved such a pivotal issue in Russia's WTO negotiations, financial aid to struggling sectors will be gradually phased out, rather than abruptly cut off,over the course of seven years."The industry will not collapse immediately, (major Russian car-maker) AvtoVaz is going to continue steadily producing its 700 000 cars per year," said Ovanes Oganisyan, an analyst at the Moscow-based investment bank Troika Dialog. "But eventually there's going to be more competition, and if AvtoVaz doesn't change in seven years it will have to go out of business."In addition to the challenges faced by unreformed industries, the Russian government expects to take a short-term financial hit from the loss of income from import duties and taxes. But the government emphasizes long-term gains, and the World Bank has estimated that WTO membership could increase Russia's GDP by an extra 3.3% a year in the next three years.While the WTO will significantly open up the Russian market to foreign producers, the U.S. faces the threat of paying higher tariff rates than other WTO members to sell goods in Russia, leaving American producers at a competitive disadvantage compared to European or Asian industries.The reason for the disparity is the Jackson-Vanik Amendment, a law passed by Congress during Soviet times that denies Russia normal trade relations with the U.S.The U.S. president has been granting Russia annual waivers since 1992, but Moscow insists it will not lower its tariffs for the U.S. as much as for other countries until the law is scrapped."The last thing that America needs right now is for foreign companies to have lower tariff rates than American companies," said Andrew Somers, President and CEO of the American Chamber of Commerce.Vice President Joe Biden lobbied for the repeal of Jackson-Vanik in 2011, as have previous presidential administrations, but Congress has so far proven intransigent to executive pleas.Congress has increasingly taken fire at the Russian administration for its human rights record. In June, the U.S. House of Representatives passed the Justice for Sergei Magnitsky Act, a bill named for a Russian lawyer who died in a Russian prison last year after allegedly being abused at the hands of Russian authorities.This week, President Barack Obama expressed his disappointment after the three participants of Pussy Riot, a punk band who sang an anti-Putin prayer in Moscow's Cathedral of Christ the Savior, were convicted to two years in prison."Business hates uncertainty," said Somers, "If the Jackson-Vanik Amendment remains on the books and the U.S. continues not to have normal trade relations with Russia, who knows what will happen."

Israeli minister wants Palestinian leader's ouster

Israel's foreign minister urged the international community to help oust Palestinian President Mahmoud Abbas whose policies he called "an obstacle to peace" in a letter released Wednesday.Foreign Minister Avigdor Lieberman wrote to the Quartet of Mideast mediators  the U.S., the U.N., the EU and Russia this week calling for new elections in the Palestinian Authority in order to replace Abbas, accusing the Palestinian Authority of being "a despotic government riddled with corruption.""Despite Mr. Abbas' delays, general elections in the Palestinian Authority should be held and a new, legitimate, hopefully realistic leadership should be elected" he wrote. "Only such a leadership can bring progress with Israel. We must maximize the holding of new elections in the PA alongside the tremendous changes in the Arab world, in order to bring a serious change between Israel and the Palestinians."Abbas' spokesman, Nabil Abu Rdeneh, rejected Lieberman's statement, calling it an "incitement to violence" that "doesn't contribute in any way to an atmosphere of peace." He urged Israel and the international community to condemn the letter.Elections for new Palestinian leadership were scheduled for 2010, but have repeatedly been delayed because of the bitter dispute between Abbas' Fatah and the militant Hamas, bitter rivals who had a violent falling out in 2007 and now separately govern the West Bank and Gaza Strip respectively.Israeli Prime Minister Benjamin Netanyahu also sought to quickly disassociate himself from the letter. An official in the prime minister's office, who spoke on condition of anonymity because of the sensitivity of the issue, said the letter does not represent the government's position."While Abbas has created difficulties for restarting negotiations, the government of Israel remains committed to continuing efforts to restart a dialogue with the Palestinians,"he said.Lieberman, who leads a hardline party in Israel, is known for inflammatory rhetoric that has at times agitated his partners in government.He embarrassed Netanyahu in the past by expressing skepticism over the chances of reaching peace with the Palestinians. In a high-profile speech at the United Nations General Assembly in 2010, he contradicted a goal set by President Barack Obama of reaching a final peace deal in the coming year.Lieberman wrote that Abbas should be replaced so that peace talks that collapsed in 2008 could be revived.Abbas has refused to resume talks as long as Israel refuses to stop settlement construction in the West Bank and east Jerusalem, areas Palestinians want as part of their future state. Israel rejects the calls for a halt to settlement building, and instead has called for peace talks to resume, saying that the settlement issue should be resolved along with other core disputes through negotiations.Lieberman listed in his letter a number of gestures Israel recently has made to the Palestinians  including agreeing for an additional 5,000 Palestinians to work in Israel and reducing the number of roadblocks and accused Abbas in return of "encouraging a culture of hatred, praising terrorists, encouraging sanctions and boycotts and calling into question the legitimacy of the state.” Due to Abbas' weak standing, and his policy of not renewing the negotiations, which is an obstacle to peace, the time has come to consider a creative solution in order to strengthen the Palestinian leadership," Lieberman said In Washington, U.S. State Department spokeswoman Victoria Nuland said the U.S. has "a good working relationship with President Abbas. And so we expect to be able to continue to work well with him."She also noted that Netanyahu had "clarified that the foreign minister's letter doesn't reflect his position and that he (Netanyahu) has responsibility for these issues." 
 

Ailing Egypt seeks $4.8 billion IMF loan

Egypt formally asked the International Monetary Fund for a $4.8 billion loan on Wednesday, seeking a desperately needed rescue package for its faltering economy but raising the possibility of painful restructuring in a country still reeling since its revolution more than 18 months ago.The loan deal, which Egypt says it will reach by the end of the year, presents a major test to the Muslim Brotherhood-rooted president, Mohammed Morsi, the country's first ever freely elected leader, brought to power after the fall of Hosni Mubarak.The IMF has avoided making specific conditions for a loan but it seeks a cohesive government plan for restarting economic growth and reducing a deficit that has grown to $23.6 billion, some 8.7 percent of gross domestic product.A key part of that will likely be reducing subsidies that suck up a third of the government budget every year. Touching those subsidies, however, could bring social upheaval, since they keep commodities like fuel and bread cheap for a population of around 82 million, some 40 percent of whom live near or below the poverty line."The government will have to take urgent measures, at the top of them cutting energy subsidies," said Mohammed Abu Basha, a Cairo-based economist at investment bank EFG-Hermes Holding SAE. The biggest subsidies are those on fuel including gasoline and cooking gas costing the government some $16 billion a year.Egypt's upheaval since the 18-day uprising that led to Mubarak's ouster on Feb. 11, 2011, has pushed its economy toward the brink. Amid near constant instability since, foreign investment has dried up. Revenues from tourism one of the country's biggest money makers and employers fell 30 percent to $9 billion in 2011 and the industry is only making a meager recovery.Meanwhile, the government has been burning through its foreign currency reserves, which have plummeted by more than half, to prop up the Egyptian pound and prevent a devaluation that could spur inflation.The government also faces mounting demands to increase salaries for the millions of civil servants and public sector workers and boost social spending. Infrastructure has crumbled, with electricity and water outages pervasive this summer, bringing angry complaints, some directed at Morsi.Egypt's hope is that the IMF package its first loan from the organization in nearly 20 years would provide not only a cash boost but, more importantly, a seal of approval that will bring back international investment.Morsi, his Prime Minister Hesham Kandil and other Egyptian officials met Wednesday with IMF chief Christine Lagarde in Cairo. State TV said Egypt requested a $4.8 billion loan, up from the $3.2 billion proposal discussed earlier this year. Finance Minister Momtaz el-Said told the state-run Al-Ahram newspaper that the increase was needed because the deficit had grown with the drop in income from investment and tourism.Lagarde's visit "gives a positive message to Egypt and the whole world that Egypt is stabilizing and that the economy is heading to a recovery," Kandil said. He said he expects a final agreement by December.Kandil said his government has drawn up a comprehensive economic recovery plan for the IMF that includes strategies to counter the deficit, encourage investment and ensure that subsidies reach those most in need. He did not provide details.Lagarde said "Egypt faces considerable challenges." An IMF team would start talks in September with the government over its recovery plan and the loan, she said."Getting the country's economy back on track and raising the living standards for all will not be an easy task," she said. "The Egyptian people have legitimate expectations for a better life aAbdel-Hafiz el-Sawy, a chief economist with the Muslim Brotherhood who met with earlier delegations from IMF, acknowledged that "the government is facing a mountain of problems, and whenever it gets out of one trap to fall in the next.""The IMF loan is small but its impact is in the fact that it gives Egypt a certificate that improves the country's economic prospects," he said.Initial talks over a $3.2 billion loan stalled earlier this year amid wrangling between the military generals who ruled the country since Mubarak's ouster and Islamists who won the majority in the now-dissolved parliament. The Brotherhood had opposed letting the interim, military-appointed government sign a deal putting financial burdens on the next government. The IMF insisted on political consensus before approving the loan.Since then, Morsi was inaugurated in late June and a month later formed the Kandil-led Cabinet, and the military handed over authority.The plan presented to the IMF appears to be more or less similar to the previous government's plan, which the Islamist-led parliament had opposed, according to el-Said, the finance minister who also served in the former government, in an interview with el-Shorouk daily.Now Morsi faces the tough task of economic reform. Already, the government has reduced fuel subsidies to energy-intensive factories which were seen as giving a bonus to the wealthy and increased taxes on Egyptians whose income exceeds 10 million a year.But still remaining is the question of how to deal with subsidies that keep prices dirt cheap for gasoline and for butane fuel that many rely on for cooking. The gasoline subsidies are widely seen as inefficient because wealthier drivers benefit from them as much as or more than the poor.The government is studying alternatives, such as distributing to the poor coupons for gas and fuel, while restructuring the tax system.El-Said, the finance minister, also ruled out a devaluation of the pound suggesting that the government hopes that an IMF will bring enough local liquidity to keep the currency strong without infusions from the state's reserves.The IMF loan will not be enough to cover all Egypt's financing needs. IMF officials said earlier that the country needs a total of $10 billion to $12 billion in outside funding over the next 12 to 15 months.Qatar has delivered around $500 million of $2 billion it has promised Egypt. Saudi Arabia promised to deposit $1.5 billion in Egypt's Central Bank. But other aid packages from the European Union, the oil-rich Arab Gulf states and other sources will heavily depend on Cairo's ability to secure the IMF loan.

NEWS,23.07.2012

Hugo Chavez: Mitt Romney, Henrique Capriles Share An Agenda

 

Venezuela's Hugo Chavez has signaled a preference in the U.S. presidential campaign by comparing Mitt Romney to his own challenger.Chavez, who is up for re-election a month before U.S. President Barack Obama, has in recent weeks expressed a clear preference for the man currently in the White House.In a campaign speech Saturday night, Chavez equated the agenda of his challenger, Henrique Capriles, with that of Romney, saying both men represent the callously selfish capitalist elite.Chavez claims Capriles, a moderate former governor, is trying to trick Venezuelans into believing he genuinely cares about the poor, the core of Venezuelan president's constituency."I believe the person to best explain the loser's agenda isn't Barack Obama but rather Romney, because it's the extreme right-wing agenda that borders on the fascism of the United States," Chavez told tens of thousands of supporters in the western city of Maracaibo."In the end, it's the same project," Chavez said, referring to Obama as "a good guy."He alleged that the 220,000 families he says his government has provided with homes risk losing them if Capriles wins, while banks would make obtaining credit impossible for lower-income homebuyers. Chavez also says Capriles would eliminate the social programs that have been a hallmark of his 13 years in office a charge Capriles denies.Chavez's comments follow Romney's criticism of an Obama statement July 11 regarding the relative danger to U.S. interests of Chavez's deepening of ties with Iran.Obama said his "overall sense is that what Mr. Chavez has done over the past several years has not had a serious national security impact on us."Romney responded by saying it was "simply naive" to think Chavez does not pose a threat to the United States.Chavez denies his crusade to create a socialist Venezuela poses any threat to the United States, the chief purchaser of Venezuelan oil.He said in a July 13 television interview that "today's Venezuela doesn't present any kind of threat to anyone."In the same interview, Chavez said Obama "deep down is a good guy, if you remove him from the context of being president of an empire."Michael Shifter, president of the Inter-American Dialogue think tank in Washington, said he thinks U.S. voters generally perceive Chavez as a "nuisance" rather than a threat to U.S. national security."They believe Romney's more hardline stance will only boost up the verbal sparring with Chavez, and end up bolstering him, as has often been the case in the past."Romney could make points, however, with conservative Cuban-Americans who despise Chavez's close friend Fidel Castro as well Venezuelan exiles concentrated in Florida, a tightly contested state in the U.S. presidential election.

Trillions hidden in tax havens – report

 

The world's wealthiest individuals have stashed $21 trillion worth of assets in offshore tax havens, equivalent to the combined GDPs of the United States and Japan, a tax transparency report said on Sunday.The report commissioned by campaign group Tax Justice Network drew data from a wide range of sources including the Bank of International Settlements and the International Monetary Fund.Report author James Henry, former chief economist at consultancy McKinsey, said that the headline figure was conservative, adding that up to $32 trillion may have found its way into havens such as the Cayman Islands and Switzerland.According to Henry, these assets are "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy". The report found that the top 10 private banks managed more than $6 trillion in 2010, up from $2.3 trillion five years earlier.Tax expert and British government adviser John Whiting said he was doubtful of the figure. "There clearly are some significant amounts hidden away, but if it really is that size what is being done with it all?" he asked.The Tax Justice Network campaigns for tax transparency and against tax havens.

Spanish region denies seeking aid

         

Spain's eastern region of Murcia denied on Sunday that it has decided to tap a recently created emergency loan fund set up by the central government to help cash strapped regions.Earlier on Sunday regional daily newspaper La Opinion de Murcia quoted the president of the regional government of Murcia, Ramon Luis Valcarcel, as saying his government would seek "some €200m or €300m" from the fund.The regional government of Murcia would formally make the request in September, he added according to the newspaper.But in a statement the regional government of Murcia said it "roundly denies" that it has decided to request money from the fund worth up to €18bn that was set up last week by Madrid."Regarding the liquidity fund made available by the state, the regional government has said on numerous occasions that it is studying it, but there is no decision with respect to this," the statement added. Valcarcel was referring to the need to quickly set up "hispanobonds" - bonds backed jointly by all regions in order to meet debt and deficit payments - during his interview with the newspaper and was not talking about the liquidity fund, the statement said.The heavily indebted region of Valencia said Friday it would apply for aid from the fund because it cannot find the funds to meet its financial obligations, making it the first Spanish region to decide to tap the fund.The Valencia regional government did not say how much money it would seek from the fund but daily newspaper El Pais reported Sunday that the amount would be over €2bn.Spain's 17 regional governments, which fund education and health, are crucial to the country's efforts to slash its public deficits and rein in mushrooming sovereign debt.They are blamed for two-thirds of Spain's deficit slippage last year, when the country missed its target of keeping the deficit to 6.0 percent of economic output and instead let it slide to 8.9%.

Greece in "Great Depression", says PM

Greece is in a "Great Depression" similar to the American one in the 1930s, the country's Prime Minister Antonis Samaras told former US President Bill Clinton on Sunday.Samaras was speaking two days before a team of Greece's international lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default.Athens wants to soften the terms of a €130bn bailout agreed last March with the European Union and the International Monetary Fund, to soften their impact on an economy going through its worst post-war recession.By the end of this year Greek GDP is expected to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6% in the first quarter. "You had the Great Depression in the United States," Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen. "This is exactly what we're going through in Greece - it's our version of the Great Depression."Athens must reduce its budget deficit below 3% of GDP by the end of 2014, from 9.3% of GDP in 2011 - requiring almost another €12bn in cuts and higher taxes on top of the €17bn successive governments have cut from the budget shortfall.Greece wants its lenders to give it two more years to achieve the budget goal to avoid an even deeper economic slump but its lenders have opposed the idea because it would imply even more financial aid. Highlighting growing frustration with Athens, German magazine "Der Spiegel" reported on Sunday, citing high-ranking representatives in Brussels, that the IMF may not take part in any additional financing for Greece.The German and Greek finance ministries declined to comment on the report, which suggested additional support required for Athens could range from €10bn-€50bn. Officials have already indicated there would be a shortfall on the current bailout. How much is likely to depend on the extent by much Greece continues to miss its fiscal targets and the extent of support needed to keep its major banks afloat.German economy minister Philipp Roesler told ARD public television he did not expect Greece could fulfill its requirements and that that would mean no more money to Athens."I am more than sceptical," Roesler, who is the head of the junior party in Germany's ruling coalition and often outspoken on euro zone issues, said in an interview."If Greece does not fulfill its requirements, there cannot be any more payments to Greece," added Roesler, whose views often do not reflect those of Chancellor Angela Merkel or Finance Minister Wolfgang Schaeuble.The inspection team of the international "troika" of the EU Commission, the IMF and the ECB will focus on the €11.7bn of spending cuts Athens needs to take in 2013 and 2014.Clinton criticised Greece's lenders for focusing excessively on austerity, saying Athens will be more likely to repay its debt if its manages economic recovery first."(It) is self-defeating... if every day people are saying this may or may not work to give us back 100 cents on the dollar, so give us more austerity today," he told Samaras."People need something to look forward to when they get up in the morning - young Greeks need something to believe in so they can stake their future out here," Clinton said.

NEWS, 29.05.2012.

Greek Socialist leader slams IMF chief’s tax comments

 Greece's socialist leader Evangelos Venizelos accused the IMF chief Christine Lagarde on Sunday of trying to humiliate the country. His comments come after Lagarde had urged Greece to "help themselves" by "paying their taxes". 

Greece's Socialist party leader accused IMF chief Christine Lagarde of trying to "humiliate" the crisis-hit country by saying Greeks dodge taxes as he campaigned Sunday for crucial June elections."Nobody can humiliate the Greek people during the crisis, and I say this today addressing specifically Ms. Lagarde... who with her stance insulted the Greek people," Evangelos Venizelos told an election rally.Lagarde told Britain's Guardian newspaper in an interview published Friday that Greeks must "help themselves collectively" by all paying their taxes, saying she was more concerned about sub-Saharan Africans in poverty than Greeks hit by the economic crisis.Her comments came as Venizelos's Pasok and other Greek parties squared off for a June 17 election that could determine whether it continues to receive IMF funds and stays in the eurozone.Lagarde's remarks drew thousands of comments on her Facebook page, many from annoyed Greeks.On Saturday the IMF chief responded: "I am very sympathetic to the Greek people and the challenges they are facing. That's why the IMF is supporting Greece in its endeavour to overcome the current crisis.""An important part of this effort is that everyone should carry their fair share of the burden, especially the most privileged and especially in terms of paying their taxes."Venizelos told a news conference on Sunday, the morning after his campaign rally: "Ms. Lagarde had to revise her comments. I am glad she did it because that means she takes into account a proud nation."Greece made a deal in 2010 to receive hundreds of billions of euros (dollars) from the IMF and the EFSF, a European Union bailout fund, to rescue it from financial collapse.The country will head to the polls for a second time in six weeks on June 17 since political parties failed to form a coalition after an inconclusive election on May 6.In that election, voters fed up with salary and pension cuts demanded by the bailout terms handed second place to radical left-wing party Syriza, which has threatened to renege on the bailout accords.Former prime minister Lucas Papademos warned on May 11 that Greece may run out of money by the end of June if international bailout funds are cut off following the election, To Vima newspaper reported Sunday.That could lead Greece to default on its debt and leave the eurozone."From late June onwards, the ability of the government to fund its obligations fully depends on the approval of the subsequent instalments of loans from the EFSF and the IMF," To Vima quoted Papademos as saying in a leaked memo."The available funds in the Greek government will be reduced gradually from about 3.8 billion euros on May 11 to about 700 million euros on June 18 and from June 20 will enter negative territory at the level of around one billion euros."Ahead of the June 17 election, Syriza has led at times in the opinion polls, but a series of polls published Sunday indicated conservative party New Democracy had taken the lead.Campaigning on Saturday, New Democracy leader Antonis Samaras said a victory for Syriza would cause "catastrophe" and drag Greece out of the euro.The new surveys by five separate polling groups forecast a New Democracy victory ranging between 23.3 percent and 25.8 percent, a result that would still require the party to join up with allies to form a viable government.Syriza polled in second place ahead of Pasok, which like New Democracy defends the bailout agreement while proposing to amend it.Venizelos said he wants to extend the loan repayments."The country needs a government that will unite the people and revise the loan agreement, but assure we stay in the euro," he said Sunday.One survey by pollster Marc, carried out on 1,075 households on May 22-24, showed that 82.4 percent of Greeks wished to stay in the eurozone.

IMF chief tells Greeks to ‘pay their taxes’

 IMF chief Christine Lagarde told Greeks on Friday to pay their dues and help drag their country out the crippling economic crisis. Lagarde said Greeks could "help themselves" by "all paying their taxes". 

The head of the International Monetary Fund on Friday urged Greeks to pay their taxes, saying she is more concerned about sub-Saharan Africans in poverty than Greeks hit by the economic crisis.Christine Lagarde told the Guardian newspaper in an interview published online Friday, "As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax."The IMF managing director said Greeks should "help themselves collectively" by "all paying their tax", adding that she thought "equally" about those deprived of public services by the crisis and those involved in tax avoidance.Caught in a fifth straight year of recession, Greece is struggling to apply a tough austerity overhaul in return for EU-IMF loans, but has already made drastic cuts to public services.On children affected by the cuts, Lagarde said their parents needed to take responsibility."Parents have to pay their tax," she was quoted as saying."I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education," she added."I have them in my mind all the time. Because I think they need even more help than the people in Athens."Asked whether it was "payback time" for Greece and other debt-ridden eurozone economies, she responded, "That's right", the newspaper said.Greece in 2010 committed itself to a reform programme in return for hundreds of billions of euros (dollars) in bailout funds from the EU and the International Monetary Fund to prevent a default.Many of the reforms are currently in limbo, however, as Greece awaits a new general election on June 17 after an inconclusive vote on May 6.The IMF, along with European leaders, has said it will not bend on tough conditions attached to its loans to Greece, with fears rising that the debt crisis could culminate in a Greek exit from the eurozone.

NEWS,19.05.2012

Europe's economic woes dominate G8 gathering

 

US President Barack Obama will press European leaders to ease up on fiscal austerity and focus on economic growth at a summit that will discuss ways to stem turmoil in the euro zone and head off the risk of global contagion.At the wooded Camp David retreat in Maryland's Catoctin Mountains, Obama and leaders from other large economic powers will try to forge a common approach to tackling a crisis that threatens the future of Europe's 17-nation single currency.Though no major policy decisions are expected from the Group of Eight summit, leaders hope they can bridge enough of their differences to soothe rattled financial markets after worries about the risk of a Greek exit from the euro zone sent European stock prices to their lowest level since December."Hopefully we'll get some stuff done," Obama told Italian Prime Minister Mario Monti as he and other summit participants arrived for Friday evening dinner at a lodge at the secluded presidential retreat.Obama earlier in the day aligned himself with Monti and new French President Francois Hollande by urging a solution to the euro zone crisis that combines fiscal belt-tightening measures with a "strong growth agenda."On the other side of the debate is German Chancellor Angela Merkel, who has pushed fiscal austerity as a means of bringing down huge debt levels that are burdening European economies.Voters in euro zone countries have shown frustration with that approach, ejecting governments such as that of Nicolas Sarkozy, who was defeated by Hollande, a socialist, in the May 6 French presidential election.A draft of the summit communique shown to Reuters will stress an "imperative to create growth and jobs."Also on the summit agenda are concerns about oil and food prices as well as Afghanistan, Iran, Syria and North Korea.Speculation has grown that Obama will use an energy session at the G8 to seek support to tap emergency oil reserves before a European Union embargo of Iranian crude takes effect in July.But with oil prices already sliding, a move by Obama to tap the Strategic Petroleum Reserve - alone or along with other countries - could expose him to criticism that the emergency supply should only be touched in a supply crisis.The Camp David summit kicked off four days of intensive diplomacy that will test leaders' ability to quell unease over the threat of another financial meltdown as well as plans to wind down the unpopular war in Afghanistan.After the Camp David talks wrap up late on Saturday afternoon, Obama will fly to his home town of Chicago where he will host a two-day NATO meeting at which the Afghanistan war will be the central topic.

 

EU, ECB working on Greece exit plans

 

The European Commission (EC) and the European Central Bank (ECB) are working on an emergency scenario in case Greece has to leave the eurozone, EU trade commissioner Karel De Gucht said in an interview published on Friday. The comments would appear to be the first time that an EU official has confirmed the existence of contingencies being taken for a possible Greek exit from the currency bloc. Speculation has been rife about such plans, but their existence has not been confirmed. "A year-and- a-half ago there may have been the danger of a domino effect," he said in an interview with the Belgium's Dutch-language newspaper De Standaard. "But today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn't make it."He added: "A Greek exit does not mean the end of the euro, as some claim."” The source close to De Gucht said the commissioner was explaining that EU institutions had not been sitting on their hands for the past two years, and that they were now better prepared than they had been. Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-International Monetary Fund programme of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections. Greeks are scheduled to go the polls again on June 17. A victory by the far-left, anti-bailout coalition SYRIZA - which some opinion polls suggest is likely - would increase the possibility of the country leaving the euro. However, one opinion poll on Thursday showed the pro-bailout New Democracy party in first place, several points ahead of the SYRIZA, which has pledged to tear up the bailout agreement. The prospect of SYRIZA winning the election has sent the euro and markets across the continent tumbling this week. Earlier this week, the country's president said Greeks had withdrawn up to €800m from banks as the political uncertainty deepened. In a further blow, the ECB said it had halted liquidity operations with some Greek banks because their capital was too depleted. De Gucht told De Standaard he thought Greece would stay inside the eurozone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks. "The endgame has begun, and how it will finish I do not know," he said. "The question is, can everyone maintain their sangfroid over the coming weeks." Asked earlier this week about any contingency planning for a Greek exit, the spokesperson for the EC replied: "There are many, many questions arising and many questions open about Greece and most answers have to come from Greece and we have to respect the ongoing political process. "Clearly, the future of Greece is in the eurozone. We are working on that."

NEWS,16.05.2012.

Judge to lead Greece in emergency Government

 

 Greece put a senior judge in charge of an emergency Government yesterday to lead it to new elections on June 17.In a sharp blow to confidence, sources at the European Central Bank it had halted liquidity operations with some Greek banks because their capital had been too far depleted.The move would mean those banks are no longer able to park assets at the ECB in return for cash, and would have to seek costlier emergency financing from the Bank of Greece.It was not clear which banks, or how many of them, were affected. One person familiar with the matter said the capital of four Greek banks was so depleted they were operating with negative equity capital.Greeks have been withdrawing hundreds of millions of euros (dollars) from banks in recent days as the prospect of the country being forced out of the European Union's common currency zone seems ever more real - although there has so far been no sign of a run on bank branches in Athens.European leaders who once denied vociferously that they were fretting over Greece leaving their currency union have given up pretence.Asked if he was concerned about a Greek exit, European Central Bank chief Mario Draghi said simply: "No comment".Political leaders failed to form a government following an inconclusive parliamentary election on May 6, leaving the state with its coffers almost empty and no elected cabinet in place to satisfy lenders it deserves the money needed to stay afloat.President Karolos Papoulias, whose powers as head of state are limited, named supreme administrative court head Panagiotis Pikrammenos as caretaker prime minister.He will have no power to take political decisions, only to carry Greece into the vote.The parliament that was elected on May 6 will convene today and be immediately dissolved, a presidency source said.The interim leader is little known. State television said he was born in 1945 and studied law in Athens and Paris. A court source said he would name as few ministers as possible."Thank you for your trust, and I believe that I am worthy of this mission," Pikrammenos said at a meeting with the president. "This is purely a caretaker government. However, it escapes no one that our country is going through difficult times."He repeated a joke he said he had read in the press, that his own name, which translates as "sorrowful" in English, made him suited to be the last prime minister of a political era.Leftists lead A new poll confirmed what other surveys have shown: that radical leftists who reject a bailout agreed with the EU and IMF are poised for victory, and the two establishment parties that agreed the rescue are sinking further after an historic wipeout 10 days ago.The leftists argue they can tear up the bailout and keep the euro, but European leaders say if Greece fails to meet promises to them, lenders will pull the plug on financing, driving Athens to bankruptcy and a swift exit from the EU single currency.On Monday, according to an official account, the president told party chiefs that figures from the central bank headed by George Provopoulos showed savers had withdrawn up to 800 million euros ($1 billion) from banks."Mr. Provopoulos told me there was no panic, but there was great fear that could develop into a panic," the president was quoted as saying in minutes of a meeting that failed to yield agreement on a cabinet."Withdrawals and outflows by 4 pm when I called him exceeded 600 million euros and reached 700 million euros," he said. "He expects total outflows of about 800 million euros, including conversions into German Bunds and other such things."Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming.A senior executive at a large Greek bank: "There is no bank run, no queues or panic. The situation is better than I expected. The amount of deposit withdrawals the president mentioned referred to three days, not one."Still, some were taking no risks. A 60-year-old textiles store owner who gave his name only as Nasos said he had transferred 10,000 euros over the phone to a bank in fellow eurozone state Cyprus on Tuesday afternoon."Any way you see it, things are difficult. If they call elections on June 17 - then everyone will take their money out on the Friday." That June 17 date was later confirmed.Charles Dallara, chief negotiator for the body representing private sector holders of Greek bonds, said there had been "a pickup in deposit flight from Greece".Dallara, who as head of the International Institute of Finance spent months negotiating the largest ever sovereign debt restructuring, said a Greek exit from the euro zone would be "somewhere between catastrophic and Armageddon" for Europe.

Merkel, Hollande promise joint growth strategy

 

 New French President Francois Hollande and German Chancellor Angela Merkel have acknowledged differences over how to boost growth in recession-plagued Europe, but pledged to forge a joint approach in time for an EU summit next month.The Socialist Hollande jetted to Berlin yesterday only hours after being sworn in to meet Merkel, a conservative, for the first time, arriving over an hour late after his plane was hit by lightning and he was forced to return briefly to Paris.The meeting was being closely watched for signs the leaders of Europe's biggest economies will be able to move beyond a war of words over how to resolve the debt crisis that now threatens to tear apart the 13-year-old currency bloc.Hollande sharply criticised Merkel during his election campaign for insisting on tough austerity to bring down suffocating debt levels across the euro zone. She in turn had backed Hollande's rival, conservative incumbent Nicolas Sarkozy.Supported by others in southern Europe, Hollande has vowed to shift the focus to growth and reopen a tough new set of budget rules that Merkel and other EU leaders agreed to adopt earlier this year - a step considered taboo in Berlin."I said it during my election campaign and I say it again now as president that I want to renegotiate what has been agreed to include a growth dimension," Hollande told a joint news conference with Merkel at the Chancellery in the German capital.Merkel's five-year double act with Sarkozy earned the duo the moniker "Merkozy" for their close cooperation during Europe's debt crisis. The new Franco-German couple - referred to by some as "Merkollande" - took care to play down their differences on Tuesday, hoping to send a signal of unity at a time when speculation is growing that Greece may have to exit the euro zone and return to the drachma."Growth has to feed through to the people. And that's why I'm happy that we'll discuss different ideas on how to achieve growth," Merkel said.They said the goal was to present joint proposals at a European Union summit in late June.Growth pact Instead of reopening Merkel's "fiscal compact", they are expected to complement it with a new "growth pact".Berlin has already signalled it is open to several ideas favoured by Hollande, including more flexible use of EU structural aid, a bigger role for the European Investment Bank and the introduction of "project bonds" to foster investments in infrastructure like transportation and energy networks.But most economists agree that these steps will make little difference to countries like Greece, which is in its fifth year of recession and has seen unemployment surge to 22 percent.That means Germany is likely to come under pressure to take additional steps, like giving struggling euro countries more time to reduce their deficits, a step it has so far resisted for fear of spooking jittery financial markets.Although the reserved Merkel learned over time to work with the impulsive Sarkozy, her advisers often complained about his erratic behaviour and some believe she will ultimately form a closer bond with the more outwardly cautious Hollande.The two were born less than a month apart, grew up in religious households and both scorn the flashy styles of their more charismatic predecessors, Sarkozy and Gerhard Schroeder.Hollande noted that French and German leaders of different political stripes had a long history of working well together to promote the common European project, referring to Schroeder and Jacques Chirac, as well as to Helmut Kohl and Francois Mitterrand, and Helmut Schmidt and Valery Giscard d'Estaing.After the news conference, the two leaders dined on lamb schnitzel and asparagus on the eighth floor of the Chancellery, overlooking the Tiergarten park and the Reichstag parliament building. Aides said they had a broad conversation on topics ranging from economic and foreign policy to bilateral issues.Hollande later flew back to Paris. He is due in Washington later in the week to meet US President Barack Obama ahead of G8 and NATO summits at Camp David and Chicago.Hollande finds himself in the hot seat from day one. Earlier on Tuesday, Greece abandoned a nine-day hunt for a government and called a new election that could hand victory next month to leftists opposed to the terms of the country's EU/IMF bailout.A growing number of policymakers in Europe have warned over the past week that if Greece does not stick to the budget cuts and structural reforms agreed with its international lenders, it may have no future in the currency bloc.Both Merkel and Hollande said they wanted Athens to remain a part of the euro project and stood ready to explore ways to support the Greek economy so it could return to growth: "Like Mrs. Merkel, I want Greece to remain in the euro zone," Hollande said.

NEWS,13.5.2012

France and Greece out to change Europe

 

Two politicians have within a week thrown the spanner into the eurozone’s prevailing economic thinking. It isn’t all that bad.One is Francois Hollande, to be sworn as French president on Tuesday. He chased the diminutive but combative Nicholas Sarkozy from office with a 51.6 per cent election victory a week ago.Unlike the 58-year-old Hollande, an old timer in the French Socialist Party politics, Greek Alexis Tsipras is a newcomer to parliamentary politics. His Synaspismos party and allied Coalition of the Radical Left emasculated the leading political parties in election last Sunday, making formation of a government impossible. The helicopter-like political ascent of Mr Tsipras, 37, is impressive. He rose from the Communist Youth of Greece to head a parliamentary party at 33. He entered Parliament three years ago. His ability to manage national affairs though remains unknown.Greece isn’t an economic shaker in the eurozone or Europe. France is. However, Mr Hollande and Mr Tsipras have one thing in common: they loathe fiscal austerity. That’s tight control of government spending. German Chancellor Angela Merkel is the leading proponent. Unfortunately, her sidekick, Sarkozy, is in a political freezer.Governments can’t raise all the money they need from their main source of income: taxes. Consequently, they borrow or issue bonds to meet the deficit.Debts and bonds aren’t a problem par se. The problem comes when governments fail to meet repayment schedules or the value of bonds decline to levels that make investors consider them junk. For reasons known to economists and financial wizards, trouble begins when a country’s debt hits 7 per cent of the Gross Domestic Product. At $661.6 billion—lots of money in any language--Greece’s debt hit 160 percent of the GDP. Athens couldn’t meet repayment schedules.There are several ways of dealing with the problem. They include rescheduling, reducing government spending, declaring bankruptcy, and getting a consortium of nations, multilateral lenders like the International Monetary Fund and regional organizations” member states, for a bailout. Bailouts aren’t free and conditions are attached. Greece isn’t the only eurozone country facing this problem. Portugal and Spain are most hit. Italy is staring at one. France, one of Europe’s top borrowers, fears it’s headed there.The 17-member eurozone, like a ship crew, prefers all hands, including the sick, on deck. Better find a cure for the sick and fast. The cure for the sick members is bailout. Conditions include massive cuts on government spending—austerity. That means many people have lost benefits and jobs.They are angry and have voted out political parties responsible. Greek voters were especially vicious. Mr Tsipras, who has described the agreement for the Greek bailout “null and void,” is riding this wave. However, he’s yet to offer an alternative. Hollande, more mellowed by age and temperament, has offered a sweetener to austerity policies, an element of growth.

Thousands march against economic gloom in Spain, UK

 

Thousands of Spaniards fed up with economic misery and waving banners against bankers marched on yesterday to mark the first anniversary of the grassroots "Indignados" movement that has sparked similar protests around the world.Up to 600 people denouncing the Bank of England rallied in London and a Reuters witness said scuffles broke out between some demonstrators and police, with at least 12 arrests.The Indignados and the offshoot Occupy and Take the Square movements had called for a global day of action against anti-debt austerity policies and the widening gap between rich and poor, but nowhere were protests as large as in Spain.A year after tens of thousands set up a month-long camp in Madrid's central Puerta del Sol square, drawing international attention, indignant Spaniards have even more to be angry about.Unemployment has soared to over 24%, over half the country's youth is out of work, the economy has dipped back into recession and one of its largest banks has been nationalised.Prime Minister Mariano Rajoy's conservative government has passed painful austerity measures that have hit once-sacred public health and education spending in an effort to appease international markets and avoid a Greek-style bailout."We have to stand up and say enough is enough! They pull our hair telling us we're lazy so they can dismantle social welfare and take away health and education and now they're bailing out the bankers," said Gloria Bravo, 48, a civil servant.Rescue money for banks, crippled after a 10-year building bubble burst four years ago, is a touchy subject for Spaniards, especially after the government took a stake in lender Bankia on Wednesday."They bail out banks but not people," banners read in Cantabria, northern Spain, home to Spain's biggest bank Santander.Demonstrators gathered in more than 80 cities across Spain, chanting the slogan that has become a mantra at protests over the past year: "They say it's democracy but it's not."In central Madrid, streets were blocked as activists convened in various neighbourhoods across the capital to march towards Puerta de Sol, which filled up with people waving flags and chanting to the beat of horns and drums."The situation is getting worse but the root of the problem remains the same; this is a moment of crisis for capitalism," Jesus Gonzalez, 38, an airline employee said as he made for the Puerta del Sol.Some 2,000 anti-riot police deployed to prevent protesters from setting up tent in the capital in a repeat of last year's camp-out.Protesters vowed four days of demonstrations to inject fresh life into a movement that has suffered internal divisions.The group behind the Puerta de Sol encampment last May - "Democracia real Ya!" (Dry), or Real Democracy Now - recently voted to register as a formal organisation, drawing the ire of the group's unconventional purists.In London, up to 600 people marched through the centre of the city, the number dwindling to around 200 after the demonstration reached its destination at the Bank of England.Protesters erected 11 tents nearby and flew banners that read "Bank of England, the St Paul's of money," in reference to St Paul's Cathedral, from which a long-running Occupy tent encampment was evicted in February."We're all here to show solidarity with the global movement..., groups that are forming against financial repression, political oppression," said Mark Weaver, 31, who is unemployed."We're here to make change, and making change doesn't happen overnight, you've got to do it for weeks, months, years, and you've got to be consistent."Occupy activists said they would dismantle the tents within hours and complained of police "aggression" and heavyhandedness."We're under siege," said activist Ronan McNern.Police declined comment on their tactics. They said only that four people had been arrested for public order offences.In Moscow, a few hundred people camped by the central city pond in an Occupy-style protest over the police crackdown on a May 6 anti-Kremlin rally held ahead of the inauguration of President Vladimir Putin.

NEWS, 12.05.2012.

Greek president to urge unity government

Greece's president was set on Saturday to call last-ditch talks in a bid to forge an emergency unity government and avoid fresh elections, after the main parties failed to form a working coalition.Highly-indebted Greece is deeply torn over the tough austerity measures imposed as conditions for its IMF-EU bailouts, and the crisis has raised the threat it could default and leave the 17-member eurozone.Legislative elections last Sunday saw voters punish the mainstream parties and left a fractured political landscape that has raised the spectre of new elections within weeks, amid intense EU pressure over Greek finances.Socialist Pasok leader Evangelos Venizelos said Friday he had failed in the latest bid to form a government, after radical leftist party Syriza refused to join a pro-austerity coalition with the socialists and conservatives.The latest twist in the tortuous political drama came as EU paymaster Germany threatened to cut off the country's loan lifeline and hinted that the crisis-ridden eurozone could get along without Greece.Venizelos was the third party leader who tried and failed to cobble together a government after the inconclusive elections."I am going to inform the president of the republic (Saturday) and I hope that during the meeting with Carolos Papoulias, each party will assume its responsibilities," Venizelos told reporters in Athens.The head of state is then expected to urge party leaders to form a government of national salvation. If the parties cannot agree a compromise by next Thursday, new elections will have to be called.Venizelos had been hoping to win the support of Syriza, a party deeply opposed to the terms of the $311bn EU-IMF bailout and which surged to second place in Sunday's vote.Earlier, another possible ally, the small Democratic Left party, said it would not join a government made up of only Pasok and the conservative New Democracy party that did not include Syriza.Earlier this week both Syriza and the New Democracy party failed in their own attempts to assemble a coalition government.German leaders warned Friday that Athens could expect no more money without reforms and also suggested that the eurozone would cope if the cash-strapped country left the 17-member currency union.

Syria refuses to submit torture report

Syria's authorities have refused to submit a report on torture in the country to a United Nations committee scheduled to discuss the situation there next week, its secretary said on Friday.The Committee Against Torture monitors the implementation of the UN's anti-torture convention by state parties and is currently meeting in Geneva."There is no assurance that a delegation [from Syria] will come but we have been informed that no report would be submitted," committee secretary Joao Nataf told AFP in an email.He added that the meeting would take place on Wednesday as scheduled.The Committee Against Torture is holding its 48th session from 7 May to 1 June when it will focus on a number of countries including Canada, Cuba and Syria.All states party to the convention are required to submit regular reports to the panel of 10 independent experts which then makes recommendations.In November last year chairperson Claudio Grossman wrote to the Syrian authorities highlighting the committee's concern over reports of the spread of torture in the country where a bloody crackdown on protesters was unleashed in March 2011.Grossman asked Damascus to provide a special report stating the measures being taken to ensure its obligations under the Convention Against Torture were being fulfilled.Since the crackdown observers estimate more than 12 000 people have died, including more than 900 since an 12 April truce went into effect.On Tuesday UN-Arab League envoy and broker of the peace plan Kofi Annan told the UN Security Council of his fears that torture, mass arrests and other human rights violations were intensifying in Syria.

NEWS,11.05.2012.

Greek parties scramble to avert new election

 

The leaders of Greece's once-dominant political parties make their final effort today to form a coalition and avert a new election, which a poll showed would all but wipe them out and give victory to a radical leftist who rejects an EU bailout.The overwhelming majority of Greeks want to stay in the euro zone but voted last Sunday for parties that reject the severe terms of a bailout negotiated last year.European leaders say Greece will be ejected from the common currency if it turns its back on the package of tax hikes and wage cuts.Socialist PASOK leader Evangelos Venizelos, whose party once towered over Greek politics but placed a distant third in the election, will be the last politician given a chance to form a Government.He was due to meet conservative rival Antonis Samaras, whose New Democracy party came first in the election, but who has already failed to form a coalition.If Venizelos fails as well, all parties will have one last chance to try before a new election must be held in the coming three to four weeks.PASOK and New Democracy jointly negotiated the 130 billion euro EU/IMF bailout in a reluctant coalition last year and now are the only parties in Parliament that support it.Enraged voters punished them by reducing their combined share of the vote from 77 % to 32 % at last Sunday's election, leaving them two seats short of forming a coalition Government.Samaras and Venizelos may be hoping Greeks, frightened by the prospect of hasty ejection from the euro, will return to the two traditional mainstream parties if the election is re-run next month.But a new poll showed the main beneficiary of a new vote would be the hardline Left Coalition SYRIZA, whose leader Alexis Tsipras rejects the bailout and has demanded it be torn up.The first opinion poll to be published since the election showed SYRIZA would win with 27.7% of the vote, almost 11 points up on their election result, consolidating votes that had been split among smaller anti-bailout groups.Under a rule designed to make it easier to form a Government, the party that places first gets 50 bonus seats in the 300 seat Parliament.Those seats went to New Democracy on Sunday. If SYRIZA were to win them in a new election, the marginalisation of the once-mighty parties would be complete and it would be impossible to form a Government supporting the bailout.Venizelos's hope of reaching a last-ditch deal have rested with the Democratic Left party, a small moderate splinter group.But its leader, Fotis Kouvelis, insisted on Friday he would not join a coalition with the pro-bailout parties unless anti-bailout parties were also included and the new government pulled out of the loan deal."Our proposal for an ecumenical government seeks to ensure the participation of all those forces that can serve two aims: the gradual disengagement from the loan agreement and staying in the euro zone", Kouvelis told Skai TV.One socialist party official said on Thursday there was a "very slim" chance for a coalition if Kouvelis agreed, "but his party is split right down the middle."The political deadlock has prompted warnings by European leaders that Greece could be thrown out of the euro if it does not stick to the spending cuts and economic reforms required by the bailout.German Finance Minister Wolfgang Schaeuble said Europe and the IMF were still determined to help Greece, but the country could not be helped if it did not help itself.The EU and IMF say they will not give Greece any more money under the bailout until it has a government in place that renews its commitment to the terms agreed last year. Greece could run out of money as soon as the end of June if the loans stop."We do not have an infinite amount of time. Time is flying because there are financing needs, but the first steps have to be taken now from the Greek side," European Central Bank governing council member Ewald Nowotny said in Vienna.A senior SYRIZA party official said European leaders were bluffing by threatening to eject Greece from the euro to force it to stick to the bailout terms."Not only can't Greece be kicked out of the euro, they will be begging us to take the money," because if Greece were kicked out the crisis would spread to other European countries and the euro would collapse, said Dimitris Stratoulis.The prospect that Greece might declare bankruptcy and be pushed out of the euro caused panic across the single currency zone last year. But since then, European banks have written off the value of most of their Greek debt, which makes them less susceptible to shock if Greece should default.

Hollande worth $1.9 million

 

Francois Hollande, the Socialist 'Mr Normal' who will be sworn in as French president next week, says he is worth almost $1.9 million, considerably less than his predecessor Nicolas Sarkozy.Hollande, who campaigned on a promise to ditch the showbiz style that won Sarkozy the nickname of 'President Bling Bling', says in a declaration published on Friday that his principal asset is a house on France's southern Riviera coast.The declaration shows that Hollande, who rents his apartment in Paris but could now move into the presidential Elysee Palace, has declared assets of 1.17 million euros, primarily the house of 130 square metres in the chic Riviera village of Mougins.Other assets declared are bank accounts worth 8,200 euros, a life insurance contract worth 3,550 euros and 15,000 euros of furniture, said the declaration.The man who used to travel to work by scooter, and described himself as 'Mr Normal' during campaigning, does not own a car, the declaration says.Sarkozy, who hands the reins over to Hollande on May 15 and may go back to work as a lawyer, said in an official declaration in March he was worth about 2.7 million euros, up from 2.1 million when he took power in 2007.Most of that is in life insurance products but Sarkozy also declared a collection of autographs, watches and statuettes worth 100,000 euros, and a joint bank account of 57,000 euros he shares with his wife, the singer and former model Carla Bruni.Hollande's wealth falls just below the threshold that would make him liable to pay wealth tax in France.His French Riviera residence was bought in 1986 for just over half its current declared value and is the place where he spent summer breaks with former partner Segolene Royal, with whom he had four children in a quarter of a century together.He now lives with Valerie Trierweiler, a journalist who says she wants to remain working mother to pay the way for three sons she had before meeting Hollande.Hollande, whose doctor father Georges dabbled in property investment, said in his declaration he had part ownership of two apartments in Cannes that are worth 370,000 euros in all.Among the first measures he says he will implement after he takes over is a 30 percent cut in the presidential salary of more than 19,000 euros a month.

NEWS,08.05.2012.

Greek vote poses new challenge for IMF

The International Monetary Fund's (IMF) already fragile rescue for Greece has taken a serious battering after Greek voters rejected the government that accepted the Fund's harsh austerity programme in exchange for bailout funding.The weekend vote that sent a centrist government packing also sent a message to the IMF and the European Union that the medicine tied to their €130bn second bailout of the country is not acceptable to the Greeks.Where that leaves the deal is still unknown, but it is likely the IMF, the fiscal disciplinarian behind the deal, will come under new pressure to modify its terms - which Athens was already having trouble meeting, just months into the programme.Analysts say the vote, which gave huge boosts to both far left and far right parties, amounts to a cold shower for the Fund.IMF chief Christine Lagarde has already been at pains to convince IMF members that the Fund will hold Greece and other eurozone borrowers to its tough conditions.The vote will make it hard for Greek legislators to come together into a new government, much less to confirm a commitment to reforms promised by the previous regime.The election results "show an unprecedented segregation of the political landscape that leaves the door wide open for political instability", said Lefteris Farmakis and Dimitris Drakopoulos of Japanese securities house Nomura.Already the first stage review of the IMF-EU bailout - used to assess Athens' progress and then decide the release of more funds - will likely be delayed, said Gillian Edgeworth of Italian bank UniCredit.Even if the Greek centrist parties do cobble together a new coalition, "What was already difficult just got even more so," Edgeworth said.The IMF was only a small portion of the €130bn European Union-led bailout plan reached just a few months ago, itself a refashioned programme after the previous one failed to get Athens on an even keel.But the IMF's role is crucial: It takes the role as the enforcer which will gauge Athens' progress in meeting both fiscal goals and reform requirements of the programme.They include slashing its debt-to-GDP ratio, and shaking up a range of government institutions and private sector structures that hobble growth.The IMF itself took a wait-and-see position on Monday."We understand that discussions will be under way in coming days to form a government," IMF spokesperson Conny Lotze told journalists."We look forward to being in contact with the new government once it has been formed. Until that time, we have no further comment."The wait could be long: Already the signs are that forming a new coalition government in Athens will be hard.To analysts at Barclays Bank, the writing is on the wall: The election results "makes a renegotiation of some of the terms of the EU-IMF programme more likely, including the fiscal consolidation measures".Speaking in Zurich on Monday, Lagarde seemed to hint at possible compromises, stressing that if countries miss some of their specific targets for closing budget deficits, it might be okay as long as they keep meeting economic reform needs. 

Rather than focusing, for instance, on spending cuts, she cited the need to break up job-stifling labour cartels, like the truckers in Greece who make it more expensive to get a locally grown tomato to market in Athens than one from the Netherlands."Some countries under severe market pressure have no choice but to move faster," she said.Mark Weisbrot, an economist at the Centre for Economic and Policy Research, suggests the IMF will have little choice but to adjust to the new Greek political reality - because Europe will have to as well to protect the eurozone."They're going to adjust their strategy to political developments," he said.Whether the Fund really believes in what they will do, "they don't have much of a say. The Europeans call the shots".