NEWS,23. AND 24.02.2013

Italians vote in cliffhanger elections

Voting was underway in Italy's general election on Sunday, amid uncertainty about who will prevail and signs of mounting support for a radical protest party which advocates a referendum on the country's eurozone exit.Polling stations opened at 8am (07:00 GMT) and were to close at 10pm. A second day of voting takes place on Monday, from 7am to 3pm, with exit polls due immediately thereafter.A total of around 50 million Italians are eligible to vote, but analysts predict abstention rates of around 30%. Snow in northern Italy was expected to hold some voters back.According the Ministry of Interior, voter turnout stood at 14.6% by noon, down from 16.3% at the last general elections in 2008.The frontrunner in the contest is centre-left leader Pier Luigi Bersani, but his "Italy Common Good" coalition risks falling short of a majority in the upper house of parliament, the Senate.Negotiations to form a government may be complicated by the likely success of comedian Beppe Gril, whose anti-establishment Five Star Movement drew hundreds of thousands of people for its final rally on Friday in Rome.Pollsters say the movement could emerge as the third or second-largest single party in parliament. Grillo is not standing himself, but has pledged to act as the party's "spokesperson."The other main contenders are scandal-prone former premier Silvio Berlusconi, whose conservative coalition was trailing the centre-left before an opinion polls blackout came into force on February 8, and outgoing premier Mario Monti.Monti's centrist alliance is seen as the most likely coalition partner for Bersani were he not to secure a solid majority but the prospective deal is hindered by policy differences between Monti and Bersani's leftist ally, Nichi Vendola.All the leaders except Grillo had cast their vote by Sunday morning.

Britain clings to austerity

British finance minister George Osborne insisted on Saturday that he would not abandon his deficit-cutting drive after Moody's stripped the country of its coveted triple-A debt rating.The opposition lashed Osborne, saying his plan for the economy was shot through, while analysts said that although it was an embarrassment for him, the downgrade would have a limited impact in the markets.In an expected rebuff to London's hopes that sharp spending cuts would both gradually eliminate the deficit and revive growth, Moody's rating agency cut Britain's grade by one notch to Aa1 on Friday.Osborne said it was a "loud and clear message that Britain cannot let up in dealing with its debts, dealing with its problems, cannot let up in making sure that Britain can pay its way in the world."What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling the country for years that we've got a debt problem, we've got to deal with it."What do they also say? That if we abandon our commitment to deal with that debt problem, then our situation would get very much worse and I'm absolutely clear that we must not do that."Asked if he had broken his commitment to protecting Britain's credit rating, he said the true test of credibility was whether Britain could borrow money."At the moment we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan," he said.Moody's said government debt was still mounting and that growth was too weak to reverse the trend before 2016.It described the British economy as constrained both by turgid global growth and the drag from businesses and the government rapidly slashing their debt burdens.Calling it a "humiliating blow", Labour opposition finance spokesperson Ed Balls said Osborne had failed in his chief stated mission of retaining Britain's AAA status."The reality is an economy which is not growing, a deficit which is getting bigger, families in real stress and a government which is ploughing on regardless with a plan which is not working," he told BBC television."Saying 'the medicine is not working, let's increase the dose of the medicine' that is completely crazy economics."However, Howard Archer, chief UK economist at IHS Global Insight research group, said that the market had been anticipating the downgrade for some time, though Britain's pound sterling currency may be vulnerable."It does focus attention on the UK economy's extended and ongoing serious problems," he said."The loss of the AAA rating certainly puts pressure on Mr Osborne to come up with more initiatives in the (March 20) budget to try and boost growth."While an embarrassment for the government and a cause for piqued pride, we suspect that the loss of the AAA rating will have only a limited negative impact for the UK economy." Mark Littlewood, director general of the Institute of Economic Affairs free-market think-tank, said: "The damaging impact of ballooning national debt, public spending raging out of control and tax rises should not be underestimated."Taking immediate action to tackle the deficit must now be the priority. George Osborne should focus on making sufficient savings in public spending to implement a substantial programme of tax reductions."Meanwhile Howard Wheeldon, senior strategist at stockbrokers BGC Partners, said the downgrade was not a reason for an economic policy change."Any amount of manipulation by attempted false stimulation of the economy in an attempt to create 'artificial' growth would in my view make an already bad deficit problem even worse," he said."We have all lived beyond our means for far too long."If the UK deficit is to be brought down and the task of reducing the debt mountain begun, Mr Osborne has no option but to stick to his guns."We are light years away from returning to growth."

Indian tycoon donates $2bn to charity

Indian software tycoon Azim Premji said Saturday he has given $2.3bn to an education charity that he controls, reportedly the biggest charitable donation in the country's recent history.It is his second recent big donation after giving almost $2bn to the charity in 2010, and came shortly after he joined the Giving Pledge club set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet.In Saturday's donation, the chairman of software firm Wipro transferred shares worth $2.3bn from the company to a trust which controls the education charity Azim Premji Foundation, a company statement said.The billionaire, who inherited a cooking oil company and transformed it into India's third-biggest outsourcing services firm, said the trust will use the funds to scale up the foundation's activities "significantly". The charity seeks to boost the quality of India's overstretched education system by improving teacher quality and setting up model schools.The Business Standard newspaper and other media reported it was the biggest one-off donation to charity in India in modern times.The media-shy tycoon is India's third wealthiest individual with a net worth of some $16bn, according to a 2012 Forbes rich list.Premji, whose trust funds initiatives including rural education and teacher training, has long promoted education as a way to tackle India's deep poverty.He told a recent World Economic Forum in Davos that "education is perhaps the most powerful enabler of human life and equity".A few days ago, he became the first Indian to join the Giving Pledge club, which encourages the world's wealthiest to donate at least half their fortunes to charity.Those who are "privileged to have wealth should contribute significantly to try and create a better world for the millions who are far less privileged," Premji said when joining the club.The billionaire's donation comes amid growing disquiet in India about the yawning divide between the country's burgeoning wealthy class and the hundreds of millions still living in deep poverty.A 2012 report on philanthropy by global consultancy Bain noted a "striking imbalance" in India, noting it was home to one of the world's fastest-growing wealthy populations but also one in three of the world's malnourished children.While the report noted that philanthropy was on the rise, it added there was "significant room for improvement if India is benchmarked against the US, one of the world's leaders in private giving".With Premji's latest donation, his educational charitable trust's shareholding in Wipro will go up to nearly 20%.

Horsemeat scandal: Now health fears

Horsemeat containing a drug potentially harmful to humans has likely entered the food chain, France said on Saturday, adding health concerns to the food scandal raging across Europe.A spokesperson for the French agriculture ministry told AFP several horse carcasses containing the drug Phenylbutazone have probably ended up being eaten by consumers.Phenylbutazone is an anti-inflammatory treatment for horses which is potentially harmful to humans and by law is supposed to be kept off plates.Britain alerted Paris that six tainted carcasses had been exported to France in January, but the meat had already been processed by the time the warning came.Agriculture Minister Stephane Le Foll said that although some of the meat had been recalled, the equivalent of three carcasses had "probably" made it to consumers, but added there was "no health risk" since the traces of phenylbutazone found in the meat were "extremely weak".The minister underscored that the find was in no way connected with the wider horsemeat scandal however, since the meat had not been disguised as beef.But the announcement still added a new dimension to the scandal over mislabelled meat that erupted in Europe in January after horsemeat was initially found in so-called beef ready-made meals and burgers in Britain and Ireland. Since then, supermarkets across the continent have pulled prepared meals from their shelves, with effects felt as far away as Hong Kong, where an imported brand of lasagne has been withdrawn from stores. On Saturday, Italy joined the long list of countries that have been hit by the fraud, reporting its first case of horsemeat-contaminated lasagne. The horsemeat was found in tests on six tons of mincemeat and 2 400 "lasagne bolognese" packages produced by a central Italian company that had used meat from suppliers based in the northern part of the country.The tests were carried out as part of sweeping checks by police on 121 brands across the country.French President Francois Hollande said on Saturday that he would push for mandatory labelling of meat in ready-made meals."I want there to eventually be mandatory labels on the meat contained in prepared meals," Hollande said while visiting an agricultural show in Paris."Until then, I will support... all initiatives for voluntary labelling" so that "consumers know the origin of the products they are consuming, especially meat".French firm Spanghero has been at the heart of the scandal after it allegedly passed off 750 tons of horsemeat as beef, with the product eventually finding its way into 4.5 million "beef" products sold across Europe.French authorities had initially suspended the company's sanitary license, but following protests from 300-odd workers allowed the company to resume production of minced meat, sausages and ready-to-eat meals.The company was banned, however, from stocking frozen meat.In Ireland, authorities on Friday suspended production at a meat processing plant after investigators found it was selling horsemeat labelled as beef.B&F Meats, a small company licenced to debone beef and horsemeat in Carrick-on-Suir in County Tipperary, was found to be sending horsemeat to a customer in the Czech Republic, the Irish agriculture ministry said in a statement.The label in the Czech language refers to beef, it added.

North Korea ups readiness, tensions

North Korean leader Kim Jong-Un has overseen a military drill, state media said on Saturday, his third such inspection in as many days as tensions run high following Pyongyang's third nuclear test.Accompanied by top military commanders, Kim watched a flight exercise and a paratrooping drill by the Korean People's Army, the Korean Central News Agency (KCNA) said."He called on the KPA service personnel to put spurs to making preparations for going into action, keeping themselves at maximum alert at all times."Once the enemies make a provocation, you should give full play to the inexhaustible combat capability to deal deadly blows at them ... and blow up their strongholds of aggression," he was quoted as saying by KCNA.The state news agency did not to give the date of the visit but it was believed Kim's latest trip was on Friday.KCNA said on Friday Kim had also inspected a tactical attack exercise combined with live shell firing.On Thursday, KCNA reported he had visited KPA Unit 323, which is believed to be an anti-air missile unit.North Korea on 12 February carried out its third nuclear test in seven years in what it says was a riposte to the US hostility shown in the widening of existing UN sanctions following its satellite launch in December last year.World powers on the UN Security Council united to condemn the nuclear test, and the US led calls for tougher sanctions.But Pyongyang has threatened still stronger action, defying warnings of United Nations measures.North Korea is already under international sanctions for conducting two nuclear tests in 2006 and 2009, which both came after long-range rocket launches.

Hundreds pray for Hugo Chavez

Hundreds of Venezuelans held a candlelight vigil Friday for President Hugo Chavez, praying for their leader while he remained in a hospital undergoing cancer treatment.Chavez's supporters gathered on a wide stairway in a hillside park near the presidential palace. They lit candles at sunset and sang along with a recording of a healthy Chavez belting out the national anthem.Some wiped away tears. Others closed their eyes and prayed.Some said they felt sad, yet still hopeful that Chavez might be able to survive."We're praying for the president, for him to get through all of this," said Ana Perez, a seamstress holding a candle and shielding her flame from the breeze with a piece of paper.Her eyes filled with tears as she talked about Chavez. "There is no other president like this one. He's unique," she said, wiping a wet cheek."He's going to come out of all of this, and he's going to get better," Perez said. "He's survived many hard things. He's strong."A group of indigenous people wearing colourful dresses, beads and feathers danced around a bonfire at the base of the stairs. One man blew on a conch shell, while others shook maracas as they danced around the flames.Chavez hasn't been seen since he returned to Venezuela on Monday from Cuba, where for 10 weeks he was recovering and fighting complications following his latest cancer surgery on 11 December.Vice President Nicolas Maduro said on Friday night that he and other officials had met with Chavez at the military hospital. Maduro said Chavez is continuing to undergo treatment for "respiratory insufficiency" and is breathing through a tracheal tube, which hinders speech."He communicated with us through various written ways to give us his guidance," Maduro said, speaking on television alongside other aides at the hospital. Maduro said Chavez was smiling and in an energetic mood, "with an immense strength of will."He said they talked with Chavez in three sessions lasting about five hours. "We came out filled with his strength," Maduro said.During the vigil, some in the crowd held photos of Chavez while a preacher spoke from a stage, saying: "The president is going to be healthy!"Lissette Cordero, who stood holding a candle next to her 5-year-old son, said she's grateful to Chavez for creating government-funded neighbourhood councils and inexpensive state-run food stores.Her son, who also held a candle, looked up at the stage where the minister was speaking and asked, "Is that Chavez?""No," his mother replied with a smile."I have faith he's going to recover. It's hard," she added. "I love him."The government has not given details about the treatment Chavez is undergoing, and hasn't identified the type or exact location of the tumours that have been removed from his pelvic region.Venezuela's opposition has demanded the government provide more specific information about Chavez's condition, and has criticized a decision by lawmakers last month that indefinitely postponed his swearing-in ceremony for a new six-year term.Two prominent Venezuelan jurists asked the Supreme Court on Thursday to determine whether Chavez is fit to remain in office. Former Supreme Court President Cecilia Sosa Gomez and professor Jose Vicente Haro called for the court to appoint a board of medical experts to determine whether Chavez is in physical and mental shape to remain president.They argued that if Chavez is fit to be president, the court should proceed to hold a public swearing-in.Government officials insist Chavez remains in charge and has been communicating with government officials about policy decisions and signing documents.Foreign Minister Elias Jaua read a lengthy letter from Chavez on Friday to a gathering of African and South American leaders in Equatorial Guinea.In the letter, which ran for about 1, 00 words, Chavez said he was sorry not to be able to attend the meeting. Chavez denounced Western military intervention in countries such as Libya in recent years, and called for more "South-South co-operation."The letter ended with the words: "We will live and be triumphant!"Prayer gatherings for Chavez this week have included a ceremony where indigenous shamans danced on Thursday, attended by Guatemalan indigenous activist Rigoberta Menchu.Menchu, who received the 1992 Nobel Peace Prize, said she had come to Venezuela "as one of the Maya spiritual guides" with knowledge of medicinal traditions."I'm completely sure that President Hugo Chavez has received the cosmic energies. He has received the strength of our Mother Earth. ... He is going to overcome big obstacles," Menchu said Friday at a televised event where she spoke alongside Maduro.As for Chavez, she said, "He has to have sufficient rest so that he can recover the strength of his vital energies as soon as possible."

NEWS,25.11.2012

Thousands of Italians rally against austerity

Tens of thousands of students and workers rallied across Italy today, to protest against austerity measures imposed by Prime Minister Mario Monti's technocrat government.Appointed a year ago when Italy came close to a Greek-style debt crisis, Monti has pushed through painful tax increases and spending cuts to try to rein in public finances at a time when schools and universities say they desperately need more support."We need to fight for our rights. This government doesn't represent us and these austerity measures and all the cuts they've introduced are totally anti-democratic," said student protester Tommaso Bernardi, attending a rally in Rome.Far-right group Casapound marched through the capital Rome later on Saturday, chanting "Monti, go away!". Anti-fascists staged a counter-demonstration in another part of town."This government is making the nation starve and is destroying the social welfare system," said Casapound president Gianluca Iannone. "The weakest are hit hardest - the disabled, students and single-income families."Police organised different routes and times for the rallies to reduce the risk of violence after scuffles broke out between police and demonstrators during protests on November 14 that saw the police criticised for heavy-handed tactics.Several thousand students and workers also rallied in other cities including Naples, Florence and Catania.No clashes were reported but the widespread protests highlighted the scale of discontent in the recession-hit country ahead of parliamentary elections next year."We need to change this country, starting from investments in schools, universities and culture," said Michele Orezzi, a university union coordinator, adding that Italy's education system was "crumbling into pieces".With youth unemployment at about 35%, more than three times the national average, and Monti's austerity policies biting into education spending, school pupils and university students have taken an active role in anti-government protests.Much anger is focused on an education reform bill going through parliament that would give schools more autonomy and allow them to accept other sources of funding than the state. Protesters believe this is intended to encourage privatisation.Students have occupied schools around Rome in recent weeks to express their anger and frustration at repeated funding cuts, chaining gates shut and camping inside classrooms.Monti has defended his austerity plan, saying he believes his technocrat government will be remembered for having helped Italy pull itself out of a deep economic crisis without needing to resort to external aid.Italy has been the European Union's most sluggish economy for more than a decade, fuelling investor concerns about its ability to bring down public debt of around 126% of output.

World Week Ahead: Deal or no deal for Greece?

Two deals might help extend last week's momentum on equity markets in the US and Europe -one that helps the US avoid its fiscal cliff and a second that would end the immediate threat of Greece defaulting on its debt.Optimism was fuelled on both fronts last week, though the timing for an agreement by US lawmakers on preventing automatic tax increases and spending cuts worth about US$607 billion set to kick in on January 1 remains more open-ended. Officials from the White House and Congress will resume negotiations this week.US President Barack Obama said on November 18 he was "confident" a new US budget deal would be reached. Meanwhile, EU commissioner Olli Rehn on Thursday said he saw no reason a deal on Greece could not be concluded tomorrow when euro-zone finance ministers, the International Monetary Fund and the European Central Bank meet again.Greek Finance Minister Yannis Stournaras expressed confidence that the IMF would ease earlier deficit targets imposed on the debt-stricken nation, thus opening the door to the transfer of more funds."It's a done deal," Stournaras told reporters in Brussels on Friday after meeting with EU officials and IMF Managing Director Christine Lagarde, Bloomberg reported.Commitment to resolving budgetary and debt issues that risk hampering both US and European economies bolstered stocks last week.In the Thanksgiving holiday shortened week in the US, the Dow Jones Industrial Average gained 3.3%, the Standard & Poor's 500 advanced 3.6% and the Nasdaq Composite climbed 4%.In the past five days, the benchmark Stoxx Europe 600 Index jumped 4%. It is the first time the gauge has gained every day of the week since July 1, 2011, according to Bloomberg.The advance in European stock prices came even though EU leaders struggled to see eye to eye in talks about the next seven-year budget for the region and a two-day meeting late last week ended in failure.European Council President Herman Van Rompuy said they decided to abandon the special summit on the 2014-2020 EU budget, worth about 1 trillion euros, and would try to reach a compromise early next year, according to Reuters.On the US economic front in the days ahead, investors will eye the latest reports on durable goods orders and consumer confidence on Tuesday, weekly jobless claims on Thursday, the Chicago Purchasing Managers Index and personal income and outlays on Friday. The Federal Reserve's beige book is due on Wednesday.Also, three reports on the housing market might confirm the recent data indicating strength and optimism in this industry's pace of recovery.The S&P/Case-Shiller home price index for September, due Tuesday, is expected to show the eighth straight month of increases, while new home sales for October, due Wednesday, and October pending home sales data, due Thursday, are also expected to show a stronger housing market.The US Treasury is set to auction US$35 billion of two-year notes on Tuesday, US$35 billion of five-year securities Wednesday and US$29 billion of seven-year debt on Thursday.The first clues on how retailers fared on Black Friday, the day after Thanksgiving, will also provide a helpful indicator on the state of the American consumer. The National Retail Federation predicts sales during the holiday season to increase 4.1% this year, down from last year's 5.6% growth.On Friday, Europe offered some surprisingly good economic news. The Ifo institute's business climate index unexpectedly rose, climbing to 101.4 in November from 100 in October, the first increase in eight months.That helped the euro finish what had already been a good week on an even more positive note, rising 1.8% against the greenback and climbing 3.2% against the Japanese yen in the past five days."Certainly sentiment towards euro has changed," Camilla Sutton, chief currency strategist in Toronto at Bank of Nova Scotia, told Bloomberg News. The euro "rallied slightly again after we got German confidence numbers, which highlighted better-than-expected business sentiment."

International arbitration for tax disputes

The United States is undefeated in the nearly two years since it began settling corporate tax disputes with Canada through a winner-takes-all process popularly known as baseball arbitration.Tax lawyers and accountants in both countries said the US Internal Revenue Service had won three of the binding decisions and Canada none. They said the IRS had collected a significant sum of money, possibly in excess of $100m.Launched in December 2010, the arbitrations follow the rules for resolving salary disputes between Major League Baseball players and their teams. In the tax game, however, the companies forced to pay and the payments remain confidential. The United States has had similar agreements with France since 2004 and Belgium and Germany from 2006, but no cases involving them have gone to baseball arbitration, the tax experts said.Baseball arbitration plans are in pending tax treaties with Hungary, Luxembourg and Switzerland. Future treaties with the United Kingdom and Japan may have the same provisions, tax experts said.The arbitration process arises often in tax questions involving a multinational company's transfer pricing taxes, where two countries disagree over which of them should collect corporate taxes. The winning country gets the tax revenue. The loser goes home empty-handed. Companies like the baseball arbitration provision because it lends certainty to their tax bills. Companies can request that countries go to arbitration if revenue agents cannot settle their tax disputes in two years.Aiming too high?The arbitration panels are made up of three experts, one chosen by each country and the third by the other two experts. Revenue agents from each country submit a tax bill number to the panel. The panel picks the number it thinks is closest to the right answer. Tax experts on both sides said Canada had lost all three disputes because it was trying to hit home runs  seeking too much in taxes during arbitration."Canada has lost three in a row," said Dale Hill, a former manager of Canada's cross-border tax negotiations with the United States and a partner with Gowling Lafleur Henderson LLP in Ottawa. "Maybe Canada has been more aggressive," Hill said.David Rosenbloom, a Washington, DC-based US tax lawyer at Caplin & Drysdale, said: "The Canadian Revenue Agency has developed over the years a habit of taking really extreme and unwarranted positions. It's almost as though they're unaware arbitration is in the treaty." Richard McAlonan, who directs the IRS negotiating program,his month that the agency had resolved a "handful" of the cases. He declined further comment. The Canadian Revenue Agency said in a statement that it prefers to resolve its tax disputes with the United States "at the negotiating table". Going to arbitration "would be the last resort", the CRA said. It declined to comment on the cases, citing confidentiality rules in the treaty. Canada's losses may mean its revenue agents will be more cautious in tax negotiations with the United States. The countries negotiate 75 to 100 cases a year, Hill said. "It's going to get tougher for Canada to negotiate," he said. Treaties pending The tax treaties with Hungary, Luxembourg and Switzerland passed the US Senate Foreign Relations Committee in 2011. But Republican Senator Rand Paul has so far prevented all three treaties from going before the full Senate.A spokesperson for Paul could not be reached for comment. Paul has previously objected to the treaties' provisions that require more sharing of US taxpayer information. New treaty arbitration provisions with Switzerland and the UK would especially benefit the pharmaceutical industry, while auto companies would appreciate the provision in a Japanese treaty, said Lorraine Eden, a professor at Texas A&M University.Companies in both sectors have a lot of transfer pricing tax uncertainty and can face double taxation if unable to force countries into binding arbitration, she said.UK-based GlaxoSmithKline reached a $3.4bn transfer pricing settlement with t he IRS in 2006. But the UK did not accept the US settlement, and Glaxo faced UK taxes on the same profits, Eden said."Would they like the opportunity to go to binding arbitration and settle this? Absolutely," Eden said.